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S. HRG. 109–781

MISCELLANEOUS WATER AND POWER BILLS

HEARING

BEFORE THE

SUBCOMMITTEE ON WATER AND POWER

OF THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON

S. 1106 S. 3851

S. 1811 S. 3798

S. 2070 H.R. 2563

S. 3522 H.R. 3897

S. 3832

SEPTEMBER 21, 2006

(

Printed for the use of the 

Committee on Energy and Natural Resources 

(II)

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

PETE V. DOMENICI, New Mexico, Chairman 

LARRY E. CRAIG, Idaho 

CRAIG THOMAS, Wyoming 

LAMAR ALEXANDER, Tennessee 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

MEL MARTINEZ, Florida 

JAMES M. TALENT, Missouri 

CONRAD BURNS, Montana 

GEORGE ALLEN, Virginia 

GORDON SMITH, Oregon 

JIM BUNNING, Kentucky 

JEFF BINGAMAN, New Mexico 

DANIEL K. AKAKA, Hawaii 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

DIANNE FEINSTEIN, California 

MARIA CANTWELL, Washington 

KEN SALAZAR, Colorado 

ROBERT MENENDEZ, New Jersey 

FRANK J. MACCHIAROLA, Staff Director 

JUDITH K. PENSABENE, Chief Counsel 

ROBERT M. SIMON, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SUBCOMMITTEE ON WATER AND POWER

LISA MURKOWSKI, Alaska, Chairman 

GORDON SMITH, Oregon, Vice Chairman 

LARRY E. CRAIG, Idaho 

RICHARD BURR, North Carolina 

MEL MARTINEZ, Florida 

CONRAD BURNS, Montana 

JIM BUNNING, Kentucky 

JAMES M. TALENT, Missouri 

TIM JOHNSON, South Dakota 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

DIANNE FEINSTEIN, California 

MARIA CANTWELL, Washington 

KEN SALAZAR, Colorado 

ROBERT MENENDEZ, New Jersey

PETE V. DOMENICI and JEFF BINGAMAN are Ex Officio Members of the Subcommittee

NATE GENTRY, Counsel 

MIKE CONNOR, Democratic Counsel 

(III)

C O N T E N T S 

STATEMENTS 

Page

Allard, Hon. Wayne, U.S. Senator from Colorado ................................................. 5

Craig, Hon. Larry E., U.S. Senator from Idaho .................................................... 2

Donnelly, Thomas F., Executive Vice President, National Water Resources 

Association ............................................................................................................ 46

Feinstein, Hon. Dianne, U.S. Senator from California ......................................... 4

Hatch, Hon. Orrin, U.S. Senator from Utah ......................................................... 2

Johnson, Hon. Tim, U.S. Senator from South Dakota .......................................... 4

Long, Bill, President, Southeastern Colorado Water Conservancy District ....... 38

McNulty, Hon. Michael R., U.S. Represenative from New York ......................... 59

Murkowski, Hon. Lisa, U.S. Senator from Alaska ................................................ 1

Radanovich, Hon. George, U.S. Represenatative from California ....................... 14

Rinne, William, Acting Commissioner, U.S. Bureau of Reclamation .................. 17

Robinson, Mark, Director, Office of Energy Projects, Federal Energy Regulatory Commission ............................................................................................... 26

Salazar, Hon. Ken, U.S. Senator from Colorado ................................................... 15

Schumer, Hon. Charles E., U.S. Senator from New York .................................... 8

Smith, Hon. Gordon H., U.S. Senator from Oregon .............................................. 35

Thalacker, Marc, Manager, Three Sisters Irrigation District, on behalf of 

the Oregon Water Resources Congress .............................................................. 41

APPENDIXES 

APPENDIX I 

Responses to additional questions .......................................................................... 53

APPENDIX II 

Additional material submitted for the record ........................................................ 59

(1)

MISCELLANEOUS WATER AND POWER BILLS 

THURSDAY, SEPTEMBER 21, 2006 

U.S. SENATE, SUBCOMMITTEE ON WATER AND POWER, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The subcommittee met, pursuant to notice, at 2:32 p.m., in room 

SD–628, Dirksen Senate Office Building, Hon. Lisa Murkowski presiding. 

OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. 

SENATOR FROM ALASKA 

Senator MURKOWSKI. I call to order the subcommittee. It is a 

pleasure to welcome everyone today to the Water and Power Subcommittee. We have Senator Allard with us this afternoon at the 

subcommittee. We are expecting Senator Schumer and Congressman Radanovich will be joining us a little bit later. He is in a committee over on the House side, but will be coming across. 

But we do have a busy agenda, so I would like to begin with the 

bills that we have before us today. We have nine pieces of legislation: S. 1106, sponsored by Senators Allard and Salazar, to authorize construction of the Arkansas Valley Conduit in Colorado; S. 

1811, sponsored by Senators Hatch and Bennett, which authorizes 

a feasibility study to enlarge the Arthur V. Watkins Dam; S. 2070, 

sponsored by Senator Schumer, to provide requirements for hydropower projects on the Mohawk River; S. 3522, sponsored by Senators Wyden, Smith, Craig, and Murray, to reauthorize and amend 

the Fisheries Restoration and Irrigation Mitigation Act of 2007; S. 

3798, sponsored by Senator Feinstein, to address Folsom Canal 

costs; S. 3832, sponsored by Senators Domenici and Bingaman, to 

direct the Interior Secretary to establish transfer title criteria for 

reclamation facilities; S. 3851, which I have sponsored, which extends FERC preliminary permits for hydro projects in Alaska; H.R. 

2563, sponsored by Mr. Otter, to authorize feasibility studies to address water shortages within the Snake, Boise, and Payette River 

systems. 

We also have H.R. 3897, which is sponsored by Mr. Radanovich, 

to authorize the Secretary of the Interior to enter into a cooperative 

agreement on the Madera water supply and groundwater enhancement project. 

The subcommittee has received written testimony on several of 

the bills before us today and that testimony will be made part of 

the official record. After we hear from our congressional witnesses, 

2

we will have two panels which we will welcome at that point in 

time. 

Before we get started, I would like to ask, Senator Craig, if you 

have any opening statements that you would like to present. 

[The prepared statement of Senator Hatch follows:]

PREPARED STATEMENT OF HON. ORRIN G. HATCH, U.S. SENATOR FROM UTAH

Mr. Chairman, I am grateful for the opportunity to share my support for the Arthur V. Watkins Dam Enlargement Act of 2005 (S. 1811). The bill, if enacted, would 

authorize the Bureau of Reclamation to conduct a feasibility study on raising the 

height of the Arthur V. Watkins Dam in Weber County, Utah. 

The dam is a 14.5 mile long earthfill dam which encloses Willard Bay Reservoir. 

The reservoir has a storage capacity of roughly 215,000 acre-feet of water. It is estimated that raising the dam by five to 10 feet would increase the reservoir’s storage 

capacity by 50,000 to 70,000 acre-feet. My bill simply authorizes a feasibility study 

to determine whether enlarging the dam is an appropriate way to help address the 

Weber Basin’s expanding water needs. I believe it is, and I believe it will be an easy, 

cost effective, environmentally sound way to increase water storage capacity in the 

Weber Basin. 

Thousands of Utah residents and businesses already rely on the reservoirs in the 

Weber Basin system to provide both culinary and secondary water. But, Mr. Chairman, the Weber Basin is one of the state’s fastest growing areas. In order to meet 

the area’s growth demands, we must find additional water sources and make better 

use of existing resources. 

Further, Utah is the second most arid state in the union, and increasing water 

storage capacity will help citizens in the Weber Basin better manage the state’s frequent drought cycles. I believe that my bill is a simple way to help improve water 

management in Utah and provide citizens in the Weber basin with increased capacity to meet their rapidly-growing needs. 

Again, Mr. Chairman, thank you for holding this hearing today. I recognize that 

we are quickly running out of time in this legislative session, but I hope that the 

Committee will make S. 1811 one of its priorities and send it to the Senate floor 

this year. Thank you.

STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR

FROM IDAHO 

Senator CRAIG. Well, thank you very much, Madam Chairman, 

for holding this hearing and for getting all of these bills before the 

subcommittee and therefore the full committee. As you have mentioned, I am here on S. 3522, the Fisheries Restoration and Mitigation Act. Also, H.R. 2563, put in by my fellow colleague from Idaho, 

Congressman Otter, as it relates to studies in the Snake and the 

Payette River watersheds for purposes of looking for additional 

storage. 

Let me ask unanimous consent that my full statement be a part 

of the record and I will make some brief comments. 

Senator MURKOWSKI. It will be included. 

Senator CRAIG. In fact, this afternoon I am flying out to San 

Diego to host a water conference. It will be the second that the 

Center for the New West, once in Denver, now in Boise, has hosted 

dealing with water in our Western arid States. I and my colleagues 

are putting a special emphasis now on the West and our very limited water resources, for obvious reasons, Madam Chairman. Three 

of the most arid States in the Nation are now some of our fastest 

populating States: Arizona, Nevada, and my State of Idaho. New 

Mexico is beginning to grow and there will be in time some very 

fundamental decisions to be made as to the allocation of water or 

the reallocation of water as it relates to human uses versus agricultural, fisheries, all of those other important issues. 

3

H.R. 2563 embodies an approach toward looking to see if we cannot retain more runoff, storage water. Obviously, more water is a 

part of a solution, but making decisions as it relates to how water 

gets used or where it gets used as a finite resource is another approach. So it is critical that through the Bureau of Reclamation we 

reenergize the reality that the West may some day need to build 

more storage, while at the same time recognizing the critical nature of water quality within our systems for fish and fish habitat, 

mitigation, all of those types of things that are addressed in S. 

3522. 

So it is an issue that I am spending a good deal more time on, 

as are my Western colleagues, and I thank you very much for holding these hearings today. It is an issue in the West that we worry 

about because we do not have enough of it, whereas in some areas 

of our country they worry about it because there is too much of it. 

It is an interesting juxtapose. 

Thank you. 

[The prepared statement of Senator Craig follows:]

PREPARED STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR FROM IDAHO

Madam Chair and members of the committee, the arid West is what it is today, 

with vast fields of green and growing, healthy, vibrant communities, because of our 

ability to store water and channel it through irrigation. The West is also fortunate 

to have a variety of fish populations that at times creates multiple demands from 

providing increased flows to fish screens. 

I would like to join my colleagues from Oregon in supporting S. 3522, the Fisheries Restoration and Irrigation Mitigation Act (PRIMA) of 2006. It is important 

that we pool our resources and work together in the region to get serious about fish 

restoration. PRIMA has proven to be cost effective and efficient at this goal and, 

therefore, should be reauthorized. 

The FRIMA program exemplifies the great potential of forward-thinking publicprivate partnerships, and the wisdom of working closely with local communities. 

Since it was enacted in 2000, we have achieved real results. In my home state of 

Idaho, according to the Fish and Wildlife Service, 13 projects have been completed 

and 206 miles of streams have been ‘‘protected, enhanced, or made accessible to 

fish.’’ One example of work being done is in the Salmon River Basin near Salmon, 

Idaho, where partners such as the Lemhi Soil and Water Conservation District and 

the U.S. Forest Service have installed fish screens on three irrigation water diversions. These screens protect salmon and other fish species and allow farmers to continue to irrigate their farms. Let me emphasize that in supporting the reauthorization of this program, there are important projects such as these that are yet to be 

completed. 

This program makes sense, especially from a financial perspective. FRIMA extends the reach of federal dollars by enlisting other interested parties. This results 

in more money for FRIMA projects and more talent and experience working to 

achieve success. In fact, from fiscal years 2002 to 2004, local and state government, 

businesses, irrigation districts, and environmental groups, to name just a few, have 

shouldered 58% of the cost. This cost-sharing surpassed the 35% threshold required 

in the original legislation. This program is making a difference on the ground and 

deserves to be reauthorized. 

Also helping fish is Idaho’s storage capacity that is being stressed by increasing 

demands from irrigation, power generation, industrial users, municipal users, and 

also fish habitat. 

Idaho is growing at an unprecedented rate, particularly in the Treasure Valley. 

The assessment has already pointed out that, in less than 30 years, over 100,000 

additional acre feet of water per year will be needed to meet increased demand. Beyond additional water, there is concern over current flood control because the increasing development and channelization of the Boise River is decreasing flood control capacity. Additionally, Idaho has four species of salmonids that are listed as 

threatened or endangered under the Endangered Species Act that require a significant amount of water for flow augmentation. This will reduce the pressure of other 

impoundments that are losing significant amounts of water causing different resource concerns. 

4

These increasing demands, coupled with limited storage, have caused concern for 

me and many of my constituents. In 2003, dialogue regarding needed water supplies 

began and a Stakeholder Working Group was created from many interest groups 

from federal, state and local partners to address irrigation, municipal, and environmental interests. These parties have worked collaboratively with the Bureau of Reclamation to locate appropriate storage options from adding to existing impoundments to building new structures to recharge. 

As you know, Madam Chair, the Bureau of Reclamation needs congressional authorization to take the next step and do feasibility studies in the areas identified 

by the Stakeholder Working Group. I support this legislation and hope through the 

feasibility study process, we can determine needed additional storage for my constituents in Idaho. 

Again, I support Representative Butch Otter and H.R. 2563 that authorizes the 

Secretary of the Interior to conduct feasibility studies and address certain water 

shortages within the Snake, Boise, and Payette River systems in Idaho. 

I ask unanimous consent that the Idaho Water Users Association testimony be 

made part of the record. 

Thank you Madam Chair.

Senator MURKOWSKI. Thank you, Senator Craig, and your full 

comments will be included as part of the record. 

Senator Johnson, did you want to make an opening statement? 

STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM 

SOUTH DAKOTA 

Senator JOHNSON. Just briefly, Madam Chairman. Thank you for 

convening today’s hearing. We have got a large number of bills before us today that address a diverse set of interests, so I will keep 

my remarks very short. 

I would like to extend a quick welcome to Senators Schumer and 

Allard and Congressman Radanovich, who are providing their 

statements today. I would also like to welcome back Acting Commissioner Rinne of the Bureau of Reclamation and Mark Robinson 

of FERC, who are once again giving testimony to the subcommittee, and thank our second panel of witnesses for making 

themselves available this afternoon. 

From the testimony we have received from the administration 

witnesses, it looks as if a number of today’s bills will require some 

additional work before they can move through the committee. 

Nonetheless, this afternoon’s hearing is an important first step in 

that process and I am ready to work with you, Madam Chairman, 

and the sponsoring members to try to address the identified issues 

and secure committee action on these bills in the near future. I 

look forward to receiving today’s testimony and appreciate everyone’s input, and thank you again, Madam Chairman. 

Senator MURKOWSKI. Thank you, Senator. 

Senator Feinstein, would you care to make an opening statement? 

STATEMENT OF HON. DIANNE FEINSTEIN, U.S. SENATOR

FROM CALIFORNIA 

Senator FEINSTEIN. No, Madam Chairman. Thank you. I want to 

thank you. You have been just terrific and I really appreciate it. 

There are a couple of bills on the calendar that relate to California 

and I just want to be here just in case. 

[Laughter.] 

Senator MURKOWSKI. I appreciate you being here and again appreciate your cooperation as we work through the title 16. 

5

With that, we welcome to the committee Senator Allard and Senator Schumer. Senator Allard, if you would care to present your 

comments here this afternoon, and again welcome. 

STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR

FROM COLORADO 

Senator ALLARD. Madam Chairman, thank you. 

Today Colorado is experiencing the fifth year of an unprecedented drought. This drought is a strong reminder that water is indeed our most precious natural resource. This is true most especially in rural Colorado. In southeastern Colorado, home of the Arkansas River, it is difficult to find clean, inexpensive water that 

can meet the ever-increasing Federal water standards. It is for this 

reason that I, along with my colleague Senator Salazar, introduced 

S. 1106. Identical legislation has been introduced by Congresswoman Musgrave in the House of Representatives. 

S. 1106 will ensure the construction of the Arkansas Valley Conduit, which is envisioned as a pipeline that will provide the small, 

financially strapped towns and water agencies along the lower Arkansas River with safe, clean and affordable water. By creating an 

80 percent Federal and 20 percent local cost-share formula to help 

offset the construction costs of the conduit, this legislation will protect the future of southeastern Colorado’s drinking water supplies 

and prevent further economic hardships. 

It is extremely important to note that the Arkansas Valley Conduit was originally authorized by Congress in 1962, over 40 years 

ago, as a part of the Fryingpan-Arkansas Project. The original FryArk Project authorizing legislation grants the Secretary of the Interior the authority to construct the Arkansas Valley Conduit. Our 

legislation simply authorizes that authority and adds a cost share 

provision. 

Due to the authorizing statute’s lack of a cost share provision 

and southeastern Colorado’s depressed economic status, the conduit 

was never built and until recently there was no urgent need for it. 

The region was fortunate to enjoy an economical and safe alternative to pipeline transportation of project water and that was the 

Arkansas River itself. 

Unfortunately, this is no longer the case. While the Federal Government has continued to strengthen its unfunded water quality 

standards, these communities have fallen further and further behind in attaining those standards. As far back as 1950, the Bureau 

of Reclamation determined that the quality of local drinking water 

supplies were simply unacceptable, and you can see that in House 

Document No. 187, 83rd Congress. 

In response to a number of water providers falling out of compliance with existing EPA water quality standards, the local communities formed a committee to evaluate alternative approaches to 

solving this problem. The committee ultimately hired an independent engineering firm to evaluate two competing options: constructing a series of treatment facilities and constructing the Arkansas Valley Conduit. 

That evaluate resulted in the recommendation to construct the 

conduit because of greater savings in taxpayer dollars. The engineers concluded that local communities were unable to fund either 

6

solution under existing circumstances. The long-term costs of operating individual water treatment facilities, including potential new 

Federal standards and the costs of disposal of treatment facility 

water, removed treatment as a viable long-term solution. 

The fixed long-term cost of the conduit contributed to the engineers’ recommending this solution. In other words, the communities may be too poor not to spend the millions of dollars they 

would have to spend in partnership with the Federal Government 

to build the Arkansas Valley Conduit. When you weigh the promise 

of the conduit versus the fate of building new individual water 

treatment facilities, it is clear that the conduit is the best choice 

of action. 

S. 1106 is essential if we are to bring local water providers into 

compliance with Federal water quality standards and it will finally 

provide a long-term solution to the region’s water quality concerns. 

The Arkansas Valley Conduit would deliver fresh, clean water to 

dozens of valley communities and thousands of people along the 

river. To be exact, the conduit will supply 16 cities and 25 water 

agencies in Bent, Crowley, Kiowa, Prowers, Pueblo, and Otero 

Counties with water when completed. The largest city served by 

the conduit is La Jonta, Colorado, population of 12,000. 

At this time, if the members would direct their attention to the 

maps—they should have those in their folders—you will see exactly 

where the conduit’s beneficiaries are situated. One of the most 

stunning facts that I would like to point out is that the conduit will 

serve an area slightly larger than the State of New Hampshire. 

As I mentioned, the local sponsors of the project have completed 

an independently funded feasibility study of the conduit and have 

developed a coalition of support from water users in southeastern 

Colorado. I am also pleased that the State of Colorado has contributed a great deal of funding for the study through the Colorado 

Water Conservation Board. These local stakeholders continue to explore options for financing their share of the costs and are working 

hard to complete the final details surrounding the organization 

that will oversee the conduit project. 

Now, I would like to turn my attention to the Bureau of Reclamation, some of the questions they have raised pertaining to the 

legislation. I first want to make it clear that the purpose of the legislation is to provide an 80 percent Federal, 20 percent local cost 

share formula for the cost of construction. The local beneficiaries 

are to be 100 percent responsible for operation and maintenance. 

If the Bureau of Reclamation believes that the language of S. 1106 

does not reflect this commitment, I am prepared to make such 

changes as the Bureau believes are necessary to ensure local payment of operation and maintenance. 

I also understand that the Bureau of Reclamation is concerned 

about the cost of the project in light of the current project backlog. 

As a member of the U.S. Senate Appropriations Committee, you 

have my full commitment that if the cost share language is approved I will work tirelessly on behalf of this project to make sure 

that it does not impact other important Reclamation projects. This 

project was authorized 40 years ago. If the money is not spent now 

it will be spent later as communities seek Federal grants to fund 

7

their projects individually instead of using a systemwide conduit 

approach. 

The Bureau of Reclamation is also concerned that the cost share 

legislation will create a new precedent that it opposes changes to 

the Bureau’s standard 100 percent repayment policy. I realize that 

my legislation is a change to standard policy. Indeed, that is the 

very purpose of this legislation. However, there are a number of 

other authorized projects that legislatively change the standard repayment policy. Therefore the Arkansas Valley Conduit cost share 

would not set a precedent. The precedent has already been set. 

With the help of my colleagues, the promise made by Congress 

40 years ago to the people of southeastern Colorado will finally become a reality. 

Madam Chairman, thank you for your leadership and for holding 

this hearing today. I apologize for going over my time, but I felt 

like it is important that the committee get the full picture on this, 

and thank you for your patience. 

[The prepared statement of Senator Allard follows:]

PREPARED STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR FROM COLORADO

Madam Chairman, today Colorado is experiencing the fifth year of unprecedented 

drought. This drought is a strong reminder that water is indeed our most precious 

natural resource. This is true most especially in rural Colorado. In Southeastern 

Colorado, home of the Arkansas River, it is difficult to find clean, inexpensive water 

that can meet the ever increasing federal water standards. 

It is for this reason that I, along with my colleague Senator Salazar, introduced 

S. 1106. Identical legislation has been introduced by Congresswoman Musgrave in 

the House of Representatives. S. 1106 will ensure the construction of the Arkansas 

Valley Conduit, which is envisioned as a pipeline that will provide the small, financially strapped towns and water agencies along the lower Arkansas River with safe, 

clean, affordable water. By creating an 80 percent federal—20 percent local cost 

share formula to help offset the construction costs of the Conduit, this legislation 

will protect the future of Southeastern Colorado’s drinking water supplies, and prevent further economic hardship. 

It is extremely important to note that the Arkansas Valley Conduit was originally 

authorized by Congress in 1962, over forty years ago, as a part of the FryingpanArkansas Project. The original Fry-Ark Project authorizing legislation grants the 

Secretary of the Interior the authority to construct the Arkansas Valley Conduit. 

Our legislation simply reauthorizes that authority and adds a cost-share provision. 

Due to the authorizing statute’s lack of a cost share provision, and Southeastern 

Colorado’s depressed economic status, the Conduit was never built. And, until recently, there was no urgent need for it—the region was fortunate to enjoy an economical and safe alternative to pipeline-transportation of project water: the Arkansas River. Unfortunately, this is no longer the case. While the federal government 

has continued to strengthen its unfunded water quality standards, these communities have fallen further and further behind in attaining them. As far back as 1950, 

the Bureau of Reclamation determined that the quality of local drinking water supplies were ‘‘unacceptable’’ (House Document Numbered 187, Eighty-third Congress). 

In response to a number of water providers falling out of compliance with existing 

EPA water quality standards, the local communities formed a committee to evaluate 

alternative approaches to solving this problem. The committee ultimately hired an 

independent engineering firm to evaluate two competing options: constructing a series of treatment facilities and constructing the Arkansas Valley Conduit. That evaluation resulted in the recommendation to construct the Conduit. 

The engineers concluded that local communities are unable to fund either solution 

under existing circumstances. The long-term costs of operating individual water 

treatment facilities, including potential new federal standards and the cost of disposal of treatment facility waste, remove treatment as a viable long-term solution. 

The fixed long-term costs of the Conduit contributed to the engineers recommending 

this solution. In other words, the communities may be too poor not to spend the millions of dollars they would have to spend, in partnership with the federal government, to build the Arkansas Valley Conduit. 

8

When you weigh the promise of the Conduit versus the fate of building new individual water treatment facilities, it is clear that the conduit is the best choice of 

action. S. 1106 is essential if we are to bring local water providers into compliance 

with federal water quality standards and it will finally provide a long term solution 

to the region’s water quality concerns. 

The Arkansas Valley Conduit will deliver fresh, clean water to dozens of valley 

communities and thousands of people along the river. To be exact, the Conduit will 

supply 16 cities and 25 water agencies in Bent, Crowley, Kiowa, Prowers, Pueblo 

and Otero counties with water when completed. The largest city served by the Conduit is La Junta, Colorado (population nearly 12,000). At this time, if the members 

would direct their attention to the maps, they will see exactly where the Conduit’s 

beneficiaries are situated. One of the most stunning facts that I would like to point 

out is that the Conduit will serve an area slightly larger than the state of New 

Hampshire. 

As I mentioned, the local sponsors of the project have completed an independently 

funded feasibility study of the Conduit, and have developed a coalition of support 

from water users in Southeastern Colorado. I am also pleased that the State of Colorado has contributed a great deal of funding for the study through the Colorado 

Water Conservation Board. These local stakeholders continue to explore options for 

financing their share of the costs, and are working hard to complete the final details 

surrounding the organization that will oversee the Conduit project. 

Now I would like to turn my attention to the Bureau of Reclamation and some 

of the questions they have raised pertaining to the legislation. I first want to make 

it clear that the purpose of the legislation is to provide an 80 percent federal—20 

percent local cost share formula for the costs of construction. The local beneficiaries 

are to be 100 percent responsible for operation and maintenance. If the Bureau of 

Reclamation believes that the language of S. 1106 does not reflect this commitment, 

I am prepared to make such changes as the Bureau believes are necessary to ensure 

local payment of O&M. 

I also understand that the Bureau of Reclamation is concerned about the cost of 

the project in light of their current project back-log. As a member of the United 

States Senate Appropriations Committee, you have my full commitment that, if the 

cost-share language is approved, I will work tirelessly on behalf of this project to 

make sure that it does not impact other important Reclamation projects. This 

project was authorized 40 years ago. If the money is not spent now, it will be spent 

later as communities seek federal grants to fund their projects individually instead 

of using a system-wide conduit approach. 

The Bureau of Reclamation is also concerned that the cost-share legislation will 

create a new precedent and that it opposes changes to the Bureau’s standard 100 

percent repayment policy. I realize that my legislation is a change to standard policy—indeed that is the very purpose of the legislation. However, there are a number 

of other authorized projects that legislatively change the standard repayment policy. 

Therefore, the Arkansas Valley Conduit cost-share would not set a precedent the 

precedent has already been made. 

With the help of my colleagues, the promise made by Congress forty years ago 

to the people of Southeastern Colorado, will finally become a reality. 

Madam Chairman, thank you for your leadership and for holding this hearing 

today.

Senator MURKOWSKI. We appreciate your comments and your attendance here today, Senator Allard. 

Senator Schumer, if you would like to give us your comments. 

Welcome. 

STATEMENT OF HON. CHARLES E. SCHUMER, U.S. SENATOR 

FROM NEW YORK 

Senator SCHUMER. Thank you, Madam Chairman. First I want to 

thank you for replacing my sign. It said ‘‘Sentor Schumer.’’ It reminds me, I was once in New York City and I had an appointment 

with somebody I wanted very much to see and I said: It is Senator 

Schumer. She called back a few minutes and said: ‘‘Sendar’’—she 

thought that was my first name—‘‘you have no such appointment.’’ 

Anyway——

9

Senator MURKOWSKI. Well, we are glad that you are here with 

us. 

Senator SCHUMER. So my staff kept joking that I was Sendar 

from some foreign planet or something like that. 

Anyway, I am glad to be here and I thank you all for your time. 

I want to thank my two dedicated staff people, Christine Parker 

and Bridget Petruczok, and one other gentleman who has been 

running my capital region office—that is Albany area—since I have 

been Senator, and does a great job and has been, as they say up 

in Albany, like white on rice about this issue, and that is Steve 

Mann. 

The purpose of S. 2070, the Mohawk River Hydroelectric Projects 

Licensing Act, is to require FERC to reopen the relicensing proceeding for the School Street project. It is currently a 38 megawatt 

hydroelectric project located in the city of Cohoes on the Mohawk 

River near Albany. The bill simply asks that FERC consider all 

valid license applications when a facility has been operating under 

annual license for 10 years or more. 

My view, Madam Chairman, is that we should not let a technicality of the Federal licensing process stand in the way of progress. 

The existing situation, temporary annual licenses, should not continue when there are alternatives that will provide more power in 

an environmentally friendly way. 

The history goes like this. In 1991 when the relicensing proceeding for this facility started, the then owners, Niagara Mohawk 

Power, operated as a monopoly in New York’s regulated energy industry. Given that a State-approved monopoly was operating and 

applying, it came as no surprise there was no competition. No one 

else applied. 

The original license for the current School Street project expired 

in 1993 and since then FERC has only issued annual licenses, 

which include no requirement to make improvements, as would the 

longer license. So this is the 15th year that this relicensing procedure has been before FERC. I understand that it often takes several years for FERC to work through one of these proceedings, but 

by any measure 15 years is an extraordinary amount of time. It is 

the second oldest application still pending before FERC. 

When former Chairman Patrick Wood attempted to address the 

backlog of these thorny relicensure cases a few years ago, this was 

one of the few that was left uncleared. They made an effort to clear 

all the others. 

When alternative projects attempted to raise the issue in the licensing case, relicensing case, the Commission issued a decision 

that stated it was barred from considering any alternative because 

of FERC’s rules, that they prohibit consideration of applications 

that were not filed at the time the license expired. As I already 

mentioned and will explain in more detail, at the time the license 

was set to expire Niagara Mohawk had a monopoly. It was the only 

logical applicant. 

But unless FERC can look at other applicants who were not 

around at the time, this problem is going to be left in limbo for another 15 years. Now, I appreciate FERC is in a bind here. In 2005, 

in response to a letter I sent on this issue, Chairman Wood said: 

‘‘Should you decide that you would like to propose legislation to 

10

allow this type of application to be considered, we would be glad 

to provide technical assistance.’’ FERC really wanted us to do this 

because they are sort of stuck as well. 

Now, absent such legislation, I have been informed by the Chairman of FERC that the Commission believes it is barred by law 

from considering any alternative. So we are going to be stuck with 

this [indicating] instead of that [indicating] forever. According to 

FERC, it cannot consider any alternative for Cohoes because the 

Federal Power Act requires them to only consider proposals that 

were 24 months before the expiration of the existing license. That 

was in 1991 in this case. 

But as I said, the circumstances were different then. We now 

have the opportunity to have low-cost, pro-environmental power. It 

is GIPA, the Green Island Power Authority, which is a public authority, that wants to do this. Everyone is on board, but we are 

stuck by this technicality. 

Cohoes Falls is a natural and historical landmark. It is on the 

Mohawk River. It is the second largest river waterfall in our State. 

I guess you can all guess the first. It is over there in Niagara. It 

was featured in paintings by John James Audubon, a poem by 

Thomas Moore, the national poet of Ireland. They are beautiful. 

But since 1911 these falls have remained dry on all but the rarest 

of occasions, because when the project was built it diverted the 

river through a canal, which leaves a one-mile stretch of the Mohawk River dry. 

The current situation prohibits an alternative. We could bring 

back the beauty of the falls. There are fish lanes that are proposed 

that would allow fishing. Most important of all, you would get 

much more power at a much lower cost. So it is a win-win-win for 

the one million people of the capital region. 

Our bill will allow FERC simply to consider other applications, 

to ensure the public does not lose the benefits of more energy production and a revitalized falls through a more environmentally 

sound and friendly approach. 

My bill takes into account the sweeping changes that have occurred since deregulation of the energy market and the important 

technological advances like the state of the art fish screens. Those 

did not exist 15 years ago and they would preserve the fish, and 

fishing again is a recreational activity that is very much appreciated and prized on the Mohawk. 

Most important, it would permit alternative applications that are 

supported by all of the surrounding communities. The existing 

owner does not want to change things. It is just sitting there. The 

new owner has great plans, as you can see, for lower cost energy, 

preserving the fish, and bringing back the beauty of the falls. 

So I hope that the committee will consider that. We do not want 

to be stuck with this for another 15 years. I have tried to abbreviate my statement. I feel pretty strongly about this, Madam Chair. 

But in the interest of time I would like that—I will conclude my 

remarks and ask that my full remarks be written into the record. 

[The prepared statement of Senator Schumer follows:]

11

PREPARED STATEMENT OF HON. CHARLES E. SCHUMER, U.S. SENATOR

FROM NEW YORK

Thank you Madam Chair and members of the committee for welcoming me here 

today to talk about a critically important project for the Capital Region in upstate 

New York. The purpose of S. 2070, the Mohawk River Hydroelectric Projects Licensing Act of 2005, is to require the Federal Energy Regulatory Commission (FERC) 

to reopen the re-licensing proceeding for the School Street Project, currently a 38 

Mega-Watt hydroelectric project located in the City of Cohoes on the Mohawk River. 

This bill simply asks that FERC consider all valid license applications when a facility has been operating under annual license for 10 years or more. We should not 

let a technicality of the. federal licensing process stand in the way of progress. The 

existing situation, temporary annual licenses should not continue when there are alternatives that will provide more power in a more environmentally friendly way. 

In 1991, when the re-licensing proceeding for this facility started, the then owners, Niagara Mohawk Power Corporation, operated as a monopoly in New York’s 

regulated energy industry. Given that a state-approved monopoly was operating and 

applying for the re-license, it should come as no surprise that there was no competition from other entities for the application. 

The original license term for the current School Street Project expired in 1993. 

Since then, FERC has issued only annual licenses, which include no requirements 

to make any improvements 

Madam Chairwoman, this is the fifteenth year that this re-licensure proceeding 

has been before FERC. I understand that it often takes several years for FERC to 

work through one of these proceedings, but by any measure, fifteen years is an extraordinary amount of time. Indeed, it is the second oldest application still pending 

before it. 

And, when former FERC Chairman Patrick Wood attempted to address the backlog of thorny re-licensure cases a few years ago, this project was one of the few that 

was left uncleared. 

When alternative projects attempted to raise the issue in the School Street re-licensing case, the Commission issued a decision that stated it was barred from considering any other alternative because of FERCs rules prohibit consideration of applications that were not filed at the time the license expired. As I already mentioned, at the time the license was set to expire in 1993, Niagara Mohawk had a 

monopoly and thus was the only logical applicant. But unless FERC is permitted 

to look to other applicants who were not around at the time of the re-licensure, I 

am afraid this the problem could be left in limbo for another fifteen years. That in 

sum is why we are here today. 

I appreciate that FERC is in a bind here. In March, 2005 in response to a letter 

that I sent on this issue, former FERC Chairman Wood said, ‘‘Should you decide 

that you would like to propose legislation to allow this type of application to be considered under the Federal Power Act, we would be glad to provide technical assistance.’’ Soon after, based in large part on Chairman Wood’s response, I proposed this 

legislation. 

Absent such legislation, I have been informed by the Chairman that FERC believes it is barred by law from considering any other alternatives, even a superior 

alternative. According to FERC, it cannot consider any alternative proposal for Cohoes Falls because the Federal Power Act requires them to only consider proposals 

that were filed 24 months before the expiration of the term of the existing license, 

which in this case was all the way back in 1991. 

But circumstances were very different then. At that time, New York’s regulated 

electric industry permitted Niagara Mohawk (NIMO) to have a monopoly. New 

Yorkers knew that this low-cost power would remain in the Region at state-regulated prices. But with deregulation, the world has changed. The monopoly is gone, 

and NIMO has long since sold off this facility. In fact, it has been sold and resold 

several times. 

In addition, the region served by the facility has changed. Any plant licensed at 

Cohoes Falls should meet the power needs of the growing Capital Region and protect the aquatic life and scenic beauty that have been nearly ravaged by the current 

facility. 

Cohoes Falls is a true natural and historical landmark and is located on the Mohawk River, just west of its confluence with the Hudson River. It’s the second largest waterfall in New York State and the site is still considered sacred to the Iroquois. It is also was featured in a painting by John James Audubon and a poem 

by Thomas Moore, the National Poet of Ireland. 

Since 1911, these majestic falls have remained dry on all but the rarest of occasions. When the School Street Project was built, it diverted the flow of the river 

12

through a canal, which leaves a one mile stretch of the Mohawk River, including 

the Cohoes Falls dry on all but a handful of days a year. 

The current situation prohibits consideration of alternative projects or additional 

evidence into the existing School Street re-licensing record despite the need of the 

electricity consumers in my State for clean, renewable resources. Existing regulations have thus created a situation where it has but one choice and that one choice 

is to re-license a power plant that under-utilizes the waters of the Mohawk River 

and wreaks adverse environmental effects. Now, 15 years have passed and it makes 

no sense to pretend, at the time of decision making, that we are back in 1991, when 

the world was a very different place. 

This is especially true when the decision making involves the next fifty years as 

well. Here, where the application of the existing law in this case works so patently 

against the public interest, then it is time for Congress to take steps to remedy the 

situation. My bill will allow FERC to consider other applications to ensure that the 

public does not lose benefits of more energy production and revitalized falls through 

a more environmentally friendly approach. 

My bill will take account of the sweeping changes that have occurred since the 

deregulation of the energy market and important technological advancements in 

areas like state of the art fish screens, which didn’t exist fifteen years ago. 

Most important, however, it would also permit consideration of alternative applications that would be supported by the surrounding communities. The communities 

around the Projects are very enthusiastic both about the benefits of the new Cohoes 

Falls power project and the prospects of replacing the School Street Project, which 

has long been an eyesore. Local interests and associations thus support consideration of alternative applications in the re-licensing proceeding. 

I hope the committee will agree with me that this proceeding has gone on too 

long. In fact, it has been going on for twice the length of a FERC Commissioner’s 

term. If a re-licensing proceeding cannot be worked out in that length of time, I believe it is in the best interest of the community that the process be opened up for 

alternative proposals. 

I believe that S. 2070 would preserve the integrity of FERC’s procedures while 

allowing for new applicants to compete for this license. I look forward to working 

with the committee to move this important matter forward. 

As the Committee knows well, the Federal Power Act requires FERC to license 

only the ‘‘best adapted’’ proposal that will be in the public interest. Federal Power 

Act (‘‘FPA’’) § 10(a)(1),16 U.S.C. § 803(a)(1). I believe Congress gave FERC clear instructions that the public deserves ‘‘the best’’ project when FERC issues a license 

and that it authorized FERC to include conditions to protect the public interest. It 

is unfortunate that other provisions of FERC regulations have hampered this mandate from Congress in this case. 

Under these circumstances, the most appropriate way to avoid a bad result for 

the public and the Nation lies in the passage of a law to remove the barrier to 

FERC’s inability to consider other applicants in the School Street re-licensing case. 

Specifically, S. 2070 would require the Commission to reopen the current School 

Street proceeding within 90 days of the enactment of this legislation, for a reasonable period of time to permit the filing of other license applications that would use 

the same waters as the School Street Project. 

After that time period, which must include adequate time to process a license application under the Commission’s own regulations, the Commission would proceed 

to process all timely-filed applications and promptly make its decision as to which 

of the proposals before it constitutes the best adapted Project. If no acceptable license applications are filed, FERC would issue a license to the existing licensee, 

with appropriate conditions to protect the opportunity in the future for a better 

project to be developed. 

FERC may also want to consider the benefits of local ownership in the development of local resources when reviewing additional applications. Productive power 

projects can initiate other beneficial projects in local communities, whether economic, recreational or environmental. Local populations are highly aware of the potential uses for the natural resources in their respective communities and should 

be given the opportunity to develop them. All they ask for is an equal opportunity 

to participate in the process Congress established to issue licenses for these public 

natural resources in the public interest. 

I want to emphasize the uniqueness of this situation at Cohoes Falls. For almost 

15 years, the public has been denied the benefits that could be achieved if a competitive application process were available including lower cost electricity and environmental protections and enhancements. Because the existing licensee has received 

annual temporary licenses, it has recouped substantial economic benefits of an outVerDate 0ct 09 2002 09:26 Jan 31, 2007 Jkt 109781 PO 32736 Frm 00016 Fmt 6633 Sfmt 6621 H:\DOCS\32736.TXT SENERGY1 PsN: RSMIT
13

dated license, especially as the prices for electricity have sharply risen, without having to invest in the facility. 

FERC’s role is to consider all options and select the one that best ensures the public interest will be served. That is what my legislation will do in this very unique 

circumstance where previous regulation of the industry created a monopoly and no 

other applicant was eligible. In other words, it will free FERC to allow it to engage 

in the very kind of reasoned and comparative decision making intended by the provisions of the Federal Power Act. I urge the Committee to move this bill forward 

as quickly as possible. I thank my colleagues for their time and consideration of this 

important bill.

Senator MURKOWSKI. They will be include as part of the full 

record. 

Senator SCHUMER. Thank you. 

Senator MURKOWSKI. We appreciate you being here today. 

Senator SCHUMER. Thank you. I thank all the members of the 

committee for taking the time here. 

Senator MURKOWSKI. Thank you. 

Senator Feinstein. 

Senator FEINSTEIN. Could I ask a question of Senator Schumer? 

Senator SCHUMER. Please. 

Senator MURKOWSKI. Certainly. 

Senator FEINSTEIN. Let me ask you, talk about these two charts. 

Now, this is today [indicating]. 

Senator SCHUMER. Correct. 

Senator FEINSTEIN. And this was when at the latest [indicating]? 

Senator SCHUMER. I cannot see that, but——

Senator FEINSTEIN. When the falls were there. 

Senator SCHUMER. That is how it was and would be in the future. 

Senator FEINSTEIN. When? When was it? 

Senator SCHUMER. 1911. That is a rendition. 

Senator FEINSTEIN. When did it stop being that way? 

Senator SCHUMER. 1911. 

Senator FEINSTEIN. Ah. And now, so you are——

Senator SCHUMER. See, what they did is they built—back then, 

Niagara Mohawk built a bypass, so the falls are gone. Even though 

they were very famous in the 19th century, they were less environmental then, less environmentally oriented. 

It was a monopoly, so no one, when the license came up, no one 

tried to change it in 1991. Since then we have had deregulation 

and you have a group of people interested in going from this [indicating] to that [indicating]——

Senator FEINSTEIN. Oh, I see. 

Senator SCHUMER [continuing]. Which would provide three benefits——

Senator FEINSTEIN. So what is it you need? 

Senator SCHUMER. We simply need this legislation, which 

would—the rules of FERC are you can only consider a license within the 24 months. This license has not been renewed since 1991. 

This would make an exception and allow—we do not even tell 

FERC what to do. We say just consider alternatives as if they have 

applied a year and a half ago. 

Senator FEINSTEIN. Thank you. 

Senator MURKOWSKI. Thank you for the clarification. 

Congressman Radanovich, your timing is impeccable. We have 

just concluded with the comments by Senator Allard and Senator 

14

Schumer on their respective pieces of legislation. We are delighted 

to have you come across to the Senate side and give us your comments to the subcommittee this afternoon. Welcome. 

STATEMENT OF HON. GEORGE RADANOVICH, U.S. 

REPRESENTATIVE FROM CALIFORNIA 

Mr. RADANOVICH. Thank you very much, Madam Chairwoman. I 

do appreciate your indulgence. We had votes on the other side, and 

also chairing a hearing on California water as well. 

But the bill that I wanted to speak today to is H.R. 3897, which 

is the Madera Water Supply Enhancement Act. It is legislation 

that is vital to the economic wellbeing of Madera County in the 

San Joaquin Valley. Water is the lifeblood of this region and the 

project ensures that Madera County has a stable, reliable, and efficient water supply. Specifically, the project will enable water users 

to store excess river flows in a nearby aquifer underground. This 

stored water bank would then be used during dry years and could 

prove critical to meeting water demands. 

The over 13,000-acre ranch where the water bank is located is 

well suited for this project. The soils on and underneath the land 

are ideal for percolating water from the surface into the aquifer for 

storage. In addition, the land is valuable habitat for numerous species and contains large sections of the region’s native grasslands. 

In fact, this is a rare part of the San Joaquin Valley that has never 

been tilled since man arrived on the scene. 

Funding for the project is under way. The Madera Irrigation Dis- trict which will operate and maintain the project issued a $37.5 

million bond to purchase the property. Also, a fiscal year 2006 energy and water appropriations measure allocated $200,000 to conduct an appraisal study of the water bank, which is nearly complete. 

Further, H.R. 3897 includes a 50 percent Federal cost share for 

a feasibility study and a 25 percent Federal cost share for the capital cost of the project. The remainder of the funding will come 

from local and State funds. 

I recognize that there may be some questions raised as to why 

this legislation both authorizes a feasibility study and an underlying project in one bill. A little bit if history, if you will indulge 

me, will explain why we have chosen to take this comprehensive 

approach. For over a decade the Madera Ranch property on which 

the project will be located has been recognized as an ideal site for 

a water bank. In 1996 the Bureau of Reclamation began water 

bank investigations on the property. Two years later in 1998, the 

Bureau finalized plans to fund a water on the property in the 

amount of approximately $60 million. 

But the Bureau withdrew from the project due to local concerns 

regarding sizing, water quality, and the lack of ownership. As a 

part of this process, the Bureau conducted numerous studies of the 

property and the feasibility of utilizing it for a water bank, including the Madera Ranch groundwater bank phase 1 report in 1998 

and other studies and reports. 

Following the Bureau’s efforts to fund a water bank project, 

Azurex, which was an Enron subsidiary, attempted to pursue the 

same water bank project, but ran into the same local concerns. 

15

*The additional material has been retained in subcommittee files. 

In 2003, millions of dollars were spent on feasibility studies for 

a reformulated project to ensure local concerns were addressed. To 

date over $8 million have been spent on studies related to the 

project, not counting the Bureau’s own substantial efforts to fund 

a water bank at the site. All of this work, including four successful 

pilot tests, has verified that the project is not only feasible, but, 

with a certified environmental impact report now in place, is ready 

to move to the construction phase. 

I would like to submit for the record a document prepared by the 

Bureau entitled ‘‘Suggested Content Feasibility Report and/or Planning Report, IES.’’ And I am also submitting an annotated version 

of the Bureau document that identifies the specific studies and reports that have been done by the Bureau itself, the Madera Irrigation District and others that address each of the subject matter categories that the Bureau wants covered in a feasibility report and 

corresponding material for such category.* 

This project may be studied more than any other comparable 

project in the history of the Bureau. As such, the Bureau should 

be able to utilize previously prepared material, updated required 

information, and complete the feasibility study soon for a modest 

cost. 

Madam Chairwoman, thank you so much for consideration of 

H.R. 3897. It does enjoy broad, widespread support in the district 

and I appreciate its fair consideration. 

Senator MURKOWSKI. Thank you. We appreciate your being here 

and the reports that you referenced in your comments will be made 

a part of the full committee record. 

Mr. RADANOVICH. Thank you very much. 

Senator MURKOWSKI. So we appreciate that and appreciate your 

willingness to come over this afternoon. 

Senator Salazar, I have given other members of the subcommittee time to make opening comments, if you would like to do 

the same. 

STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR

FROM COLORADO 

Senator SALAZAR. Thank you. Thank you very much, Madam 

Chairman. I appreciate the opportunity. And thank you, ranking 

member Johnson, for holding this hearing today. 

I will submit a much longer comment for the record, but I want 

to summarize just a couple of points if I may. I join my colleague 

Senator Allard in support of S. 1106 for the construction of a conduit that would essentially fulfill a promise that was made back in 

1962, take a pipeline from Pueblo Reservoir and essentially provide 

clean water supply for about 100 miles downstream of Pueblo to an 

area in the lower Arkansas Valley which is very rural and struggles economically, perhaps more than any other region in the State 

of Colorado. 

Without us being able to build this pipeline to provide clean 

water into those communities, many of those communities do not 

have any economic development opportunities and will wither on 

the vine and we are going to have a southeastern part of Colorado 

16

that essentially is going to dry up and blow away. So I very much 

look forward to working with this committee, working with my colleague Senator Allard and all the stakeholders of the communities 

in the Lower Arkansas River Valley to get this project finally done 

after some 44 years in waiting. 

With that, Madam Chairman, I do have a more formal statement 

that I will submit for the record. 

[The prepared statement of Senator Salazar follows:]

PREPARED STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR FROM COLORADO

Thank you Madam Chair and Ranking Member Johnson for holding this hearing 

today to consider S. 1106, the Arkansas Valley Conduit Act. I want to welcome 

County Commissioner Bill Long and thank him for coming all the way from Las 

Animas, Colorado to be here today. 

In 1962, Congress authorized the Fryingpan-Arkansas project, a water diversion 

and delivery project that brings water from the Western Slope of Colorado to communities in the Arkansas Valley on the Eastern Slope of the Rockies. 

Much of the Fry-Ark Project is complete. Each year, over 69,000 acre-feet of water 

flow from the Roaring Fork Basin through the Fry-Ark’s tunnels and reservoirs to 

farms and households in the Arkansas Valley. This water is the lifeblood of southeastern Colorado. 

But one key piece of the Fryingpan-Arkansas Project remains unfinished. Congress envisioned that the Bureau of Reclamation would not only help bring water 

for agricultural and municipal use to southern Colorado, but also that it would help 

deliver clean, safe, drinking water to towns like Eads, La Junta, Ordway and 

Lamar. Congress envisioned the construction of a pipeline, or conduit, which would 

pipe drinking water from the Pueblo Reservoir down the Arkansas River corridor 

to the communities in the southeastern corner of Colorado. 

Unfortunately, the original legislation did not include the federal-local cost-share 

provision needed for the conduit’s construction. As a result, these communities have 

to rely on the compromised Arkansas River to deliver water for their citizens, factories and farms. Unfortunately, by the time the Arkansas River winds its way 

through eastern Colorado and reaches these small communities in the Lower Arkansas Valley, it is laden with natural contaminants like selenium and has picked up 

effluent from upstream communities and users. 

The small towns of Southeastern Colorado have been struggling for years under 

the weight of protracted drought, soaring energy costs and low commodity prices. 

Farms are drying up, Main Street shops are shuttering their windows, and families 

are struggling to pay the bills. And Washington seems to have forgotten its fourdecade old commitment to help build the Conduit. Like so many other communities 

in Rural America, the southeastern corner of the state is withering on the vine. 

It is time for the federal government to keep its promise from 40 years ago, and 

to help provide clean, safe, drinking water to southeastern Colorado. If we fail to 

fulfill this commitment, I am afraid that we will see more small farms dry up and 

more towns disappear. Colorado will lose a large component of its economic base. 

The agricultural heritage that built this country will be one step closer to becoming 

a quaint memory. 

Many of the towns and municipal water treatment systems in the Lower Arkansas Valley have already received notices from the Colorado Department of Public 

Health and Environment, advising them of the need to upgrade or replace their 

water treatment systems to treat water taken out of the Arkansas River. The fact 

is, these communities cannot afford to pay the estimated $640 million for new treatment systems that would be necessary to meet the new federal water quality standards. And if those communities were forced to upgrade their water treatment systems individually, they would have to come to the federal government for help—because they simply cannot afford to do it themselves. 

Therefore, Madam Chair, even though this is an expensive project and has a large 

federal cost-share, the conduit will be far more economical in the long run. And as 

you will hear today, it still places a sizable burden of funding on the local communities. 

I am proud to report, however, that the affected towns and counties have shown 

that they are able and willing to cover the local cost-share. Remarkably, they have 

collected letters of intent for 94% of the Conduit’s projected capacity, at a sufficient 

price to cover the local cost-share. The local communities have made this financial 

17

commitment because they understand that this is a valuable and wise long-term investment for the region. 

As one who feels that it is critical that local communities participate in and support these types of water projects, I am pleased that this bill has such strong backing in southeastern Colorado. 

And I am optimistic that the construction of the conduit will help spur a rural 

renaissance in southeastern Colorado. Farmers and ranchers are already excited 

about the new opportunities that renewable energy production offers—from hosting 

huge wind turbines to growing fuel for biodiesel. With a reliable, affordable source 

of clean drinking water, these communities can be at the forefront of our renewable 

energy economy. We need to get the conduit built for this to happen, and we need 

to do so as quickly as possible. 

Madam Chair and Ranking Member Johnson, I again thank you for holding this 

hearing today and I thank you for responding to my request that Mr. Long be invited to testify. This bill is of great importance to the future of tens of thousands 

of people across my state and I hope we will soon have an opportunity to pass it 

out of committee.

Senator MURKOWSKI. Your full comments will be included as part 

of the record. 

With that, we will go to our first panel and invite up William 

Rinne, the Acting Commissioner of the U.S. Bureau of Reclamation, as well as Mark Robinson, Director of Energy Projects at the 

Federal Energy Regulatory Commission. 

Welcome, gentlemen. Mr. Rinne, if you would like to proceed 

with your comments first. 

STATEMENT OF WILLIAM RINNE, ACTING COMMISSIONER,

U.S. BUREAU OF RECLAMATION 

Mr. RINNE. Thank you, Madam Chairwoman. members of the 

subcommittee, I am Bill Rinne, Acting Commissioner of the Bureau 

of Reclamation. Thank you for the opportunity to present the Department’s view on S. 1106, S. 1811, S. 3832, S. 3798, H.R. 2563 

and H.R. 3897. Madam Chairman, I am sensitive of the committee’s time and will be as brief as possible, although I may go a little 

over the 5 minutes since there are 6 bills to address, and I request 

my full statement be submitted for the record. 

Senator MURKOWSKI. It will be included. 

Mr. RINNE. S. 1106 is a redraft of the Arkansas Valley Conduit 

legislation previously introduced. We commend the sponsors for addressing a number of Reclamation’s concerns expressed in our prior 

testimony before this subcommittee in October 2003. Among these 

concerns was the assurance that the costs of the operation, maintenance, and replacement of the conduit will not be borne by the Federal Government. However, the current bill states that the Federal 

share of planning, design, and construction costs shall be 80 percent. This is contrary to the original Fry-Arkansas authorizing legislation, general Reclamation law, and current policy, in that generally municipal and industrial beneficiaries pay 100 percent interest of the M&I project costs. Therefore the administration cannot 

support the bill as introduced. 

S. 1811 authorizes study of enlarging Arthur Watkins Dam in 

Utah. The proposed feasibility study would analyze alternatives for 

water storage and consider environmental issues, foundation stability, and public safety. Due to the limited focus of the one to twofoot dam raise, the estimated cost of this study is $2 million. The 

Department cannot support S. 1811 in its current form. However, 

if the bill were amended to include the appropriate Federal cost 

18

ceiling and a minimum of 50 percent non-Federal cost sharing in 

the financing of the feasibility study in line with Reclamation policy and practice, the Department would not oppose enactment of S. 

1811. Of course, any potential authorization to raise the dam would 

have to compete with the many other Reclamation projects vying 

for funding. 

S. 3832 would require the Secretary of the Interior to establish 

criteria to transfer title to Reclamation facilities, and for other purposes. The Department believes that S. 3832 is consistent with an 

initiative that the Bureau of Reclamation currently has under way 

under its Managing for Excellence Action Plan. The goals of S. 

3832 would be furthered by those efforts and the Department supports passage of the measure. 

S. 3798 would defer payment and the cost of unused water capacity in Folsom South Canal in California. It would also authorize 

CVP customers to convey an equivalent amount of non-CVP water 

through the canal without additional payment. Because of the incomplete status of the Auburn Dam, water deliveries from the 

canal have never occurred at the levels anticipated. This act would 

compute the deferred use of the canal based upon the unused capacity and adjust the reimbursable costs accordingly. 

However, the Department has not prepared a detailed cost estimate for this bill and has unanswered questions about its fiscal impact. The Department cannot support S. 3798 as written, but is 

willing to work with the sponsor on this legislation. 

Turning to H.R. 2563, it authorizes feasibility studies to address 

water shortages within the Snake, Boise, and Payette River systems in Idaho. I previously provided testimony before the House 

Subcommittee on Water and Power in November 2005 and said 

that the administration could not support H.R. 2563 because it did 

not contain time or funding limitations and had no requirement for 

a 50 percent non-Federal cost share, as is required by Reclamation 

policy. 

Since that time Reclamation has worked with congressional staff 

to modify the legislation. I am pleased to testify that the administration now supports H.R. 2563 as passed by the House and referred to this committee. 

H.R. 3897 would authorize a feasibility study for the Madera 

Water Supply Enhancement Project in Madera County, California. 

The bill would also authorize construction of the project and would 

allow the Secretary to enter into a cooperative agreement with the 

Madera Irrigation District for planning, design, and construction. 

The Department does not support this bill. An appraisal report 

for this project is expected to be complete by the end of calendar 

2006, so sufficient information about this project is not yet known. 

H.R. 3897 also directs that a feasibility report, which usually requires up to 3 years to complete, be completed by the end of 2006. 

Additionally, H.R. 3897 does not set a construction cost ceiling, but 

only limits the Federal share of the construction cost not to exceed 

25 percent of the total cost of the project, which is not known at 

this time. This underscores the Department’s position that it is premature to authorize construction of the project and establish the 

Federal share of the cost prior to completion of the feasibility level 

cost estimates and a determination of Federal interest. 

19

Madam Chairman, this concludes my remarks and I would be 

pleased to try to answer any questions. 

[The prepared statements of Mr. Rinne regarding S. 1106, S. 

1811, S. 3798, S. 3832, H.R. 2563, and H.R. 3897 follow:]

PREPARED STATEMENT OF WILLIAM RINNE, ACTING COMMISSIONER, BUREAU OF

RECLAMATION, DEPARTMENT OF THE INTERIOR

S. 1106

Madam Chairwoman, I am William Rinne, Acting Commissioner of the Bureau of 

Reclamation. I appreciate the opportunity to provide the Department of the Interior’s views on S. 1106, legislation to authorize the construction of the Arkansas 

Valley Conduit in the State of Colorado. The Administration cannot support S. 1106. 

The Conduit is an authorized feature of the 1962 Frying-Arkansas Project, but 

was never constructed. The Conduit would transport water from Pueblo Dam, a feature of the Fry-Ark Project, to communities along the Arkansas River, extending 

about 110 miles to near Lamar, Colorado. The Lower Arkansas River Basin is comprised of rural communities, with the largest town, Lamar, having an estimated 

population of 8,600. The population anticipated to be served by the Conduit is approximately 68,000. This proposed rural water project would tap into an existing 

reservoir and provide municipal, residential, and industrial water via 160 miles of 

pipeline to a series of small towns and surrounding rural areas; one option would 

also include a water treatment plant. Total project costs are roughly estimated at 

between $265 million and $340 million, depending on the particular project features. 

While the project is technically do-able, the project sponsors have not identified 

where they would get all the water identified as needed for the project, and the financial capabilities of the project sponsors is unclear. 

The Fryingpan Arkansas Project Act required that municipal water supply works 

either be constructed by communities themselves or, if infeasible, by the Secretary, 

with repayment of actual costs and interest within 50 years. 

During development of the original Project, Reclamation found the Conduit to be 

economically feasible, but the beneficiaries lacked the bonding capability to construct the works themselves. The beneficiaries of the Conduit found that it also was 

financially infeasible to repay Reclamation within 50 years if Reclamation were to 

construct the Conduit. 

Increased water treatment costs, due to the poor quality of locally available 

groundwater, and requirements of the Safe Drinking Water Act have renewed local 

interest in the need for alternative means of obtaining safe and clean water supplies. We understand that the beneficiaries are looking for Federal financing for the 

Conduit, given that some of the communities in the Arkansas River Valley may be 

facing considerable expense to comply with federally mandated water quality standards. 

S. 1106 is a re-draft of legislation previously introduced. The legislation addresses 

a number of Reclamation’s concerns, including some that the previous Commissioner 

Mr. John Keys discussed in testimony before this Subcommittee on October 15, 

2003. This includes clarification that the cost for operation, maintenance and replacement of the Conduit will not be borne by the Federal Government. 

The current bill, as introduced, again contains a Federal and a Non-Federal cost 

share. The legislation states that the Federal share of total costs of the planning, 

design, and construction of the Conduit shall be 80 percent. This is contrary to the 

original Fry-Arkansas authorizing legislation, general Reclamation law and current 

policy, in that generally municipal and industrial beneficiaries pay 100 percent, plus 

interest, of M&I project costs. The legislation as drafted is also inconsistent with 

the 35 percent local cost share set forth in the Administration’s proposed rural 

water legislation that was transmitted to Congress on March 3, 2004. Therefore, the 

Administration does not support the bill. 

At the request of Otero County Water Works Committee, and with funding provided in fiscal years 2003 and 2004 appropriations bills, Reclamation prepared a Reevaluation Statement on the feasibility and viability of the conduit. The Statement 

assesses if the construction of the conduit would be responsive to current needs and 

are consistent with the Principles and Guidelines; and the National Environmental 

Policy Act. The Re-evaluation statement contains updated implementation costs for 

construction and O&M, and provides an assessment of the Conduit sponsors’ ability 

to pay. The final Statement incorporates comments received from direct beneficiaries and includes a revised draft cost estimate, which compares favorably with 

20

the cost estimate recently prepared by Black & Veatch, under a contract with Conduit proponents. 

In addition, Reclamation has a concern about the requirement in the current legislation requiring the Federal Government to pay the entire cost of fundamental design changes conducted at the request of any person other than the lead non-Federal entity. This language leaves open the possibility that design changes recommended by the direct beneficiaries become the sole financial responsibility of the 

Federal Government. This provision is not in the best interest of the taxpayer. Furthermore, we are concerned about the implications this has to restrict the ability 

of Reclamation’s engineers to exercise their professional judgment in designing 

projects. The legislation as written could create undue pressure to avoid changes to 

the original project, even if those changes would be in the best public interest. 

In conclusion, Madam Chairwoman, the Administration cannot support a bill with 

a Federal cost share that is inconsistent with Fry-Ark legislation, general Reclamation law and current policy. There are also many uncertainties regarding project 

water supply and the financial capability of the project sponsors to go forward with 

project authorization. I would like to emphasize that the existing Fry-Ark Project 

authorization appropriately address the responsibility of the beneficiaries to pay for 

associated reimbursable costs. Finally, if authorized, this project would need to compete with other, ongoing rural water projects for scarce funds. Although we cannot 

support this bill, the Administration recognizes the water quality issues facing the 

Arkansas River Valley and we are open to working with the project sponsors and 

members of the Committee to explore other options. 

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

S. 1811

Madam Chairwoman, thank you for the opportunity to present the Department 

of the Interior’s views on S. 1811, a bill to authorize the Secretary of the Interior 

to study the feasibility of enlarging the Arthur V. Watkins Dam. I am William 

Rinne, Acting Commissioner of the Bureau of Reclamation. The Department regrets 

that it is not possible to support S. 1811 in its current form because it contains neither non-federal cost sharing for the study nor an overall Federal cost ceiling. 

Arthur V. Watkins Dam, built in 1964, is located 12 miles northwest of Ogden, 

Utah, on the shore of the Great Salt Lake. It is an off stream structure which extends into the Great Salt Lake and is constructed on lake deposits. The embankment is 14.5 miles long, has a structural height of 36 feet, and contains about 17 

million cubic yards of material. It encloses a reservoir of 215,000 acre-feet, with a 

surface area of more than 9,900 acres. 

Arthur V. Watkins Dam forms Willard Bay Reservoir. The dam is a Reclamation 

feature of the Weber Basin Project and was authorized by Congress in the Weber 

Basin Project Act of August 29, 1949 (PL 81-273). The Weber Basin Project was constructed in the 1950’s. 

The original design anticipated settling of the foundation of the embankment during the life of the dam. In the early 1990’s, the embankment was raised, re-establishing the original elevation of the embankment. The project was completed by the 

Weber Basin Water Conservancy District (WBWCD) under a Rehabilitation and 

Betterment loan. 

The proposed feasibility study would analyze viable alternatives for water storage 

and consider environmental issues, foundation stability, and public safety. In addition, the feasibility study would evaluate potential future foundation settling. Due 

to the limited focus of the 1 to 2 foot dam raise, the estimated cost of this study 

is $2 million. 

Growth in the project area has been significant during the last decade. The State 

population projections for the future show continued growth. With the extensive 

growth, water development projects and supplies are being investigated for the 

northern part of the Wasatch Front. The WBWCD has asked Reclamation to provide 

additional storage in Willard Bay for approximately 10,000 acre-feet of annual yield 

available under existing Weber Basin Project water rights. 

The additional storage of water would be used for municipal and industrial, flood 

control, fish and wildlife enhancement, and recreation purposes along the Wasatch 

Front in northern Utah. The added capacity could postpone the need for the State 

of Utah to begin development of the water resources of the Bear River in northern 

Utah. The additional storage of water would be consistent with the purposes identified in the original authorizing legislation (PL 81-273) and current contracts. 

If the legislation were amended to include a reasonable Federal cost ceiling and 

a minimum of fifty percent non-federal cost-sharing in the financing of the feasibility study, in line with Reclamation policy and practice applied in virtually every 

21

similar situation, we would not oppose enactment of S. 1811. Of course, we will be 

happy to work with the bill’s sponsors, Senator Hatch and Senator Bennett, and this 

Committee to make this improvement. However, any potential authorization to raise 

the dam would have to compete with the many other Reclamation projects vying for 

funding. 

This concludes my testimony. I am happy to answer any questions. 

S. 3798

Madam Chairwoman, I am William E. Rinne, Acting Commissioner of the Bureau 

of Reclamation. For the reasons discussed below, the Department cannot support S. 

3798. This legislation would defer repayment of the capital cost of the unused capacity in the Folsom-South Canal, Auburn-Folsom South Unit, Central Valley Project 

(CVP), Public Law 89-161 (79 Stat. 615). It would also authorize entities that pay 

capital and operation costs associated with CVP water assigned to the Folsom-South 

Canal service area to substitute for conveyance through the Folsom-South Canal up 

to an equivalent amount of non-CVP water without additional payment. 

Only the initial two reaches of the planned five reaches of the Folsom-South 

Canal were constructed. Both reaches contained deferred-use capacity for the East 

Side Division. However, because of the incomplete status of the Auburn-Folsom 

South Unit, water deliveries have never developed as anticipated. Annual water deliveries generally average less than 2% of the designed capacity of the canal. This 

act would allow the Secretary to compute the deferred use capacity of the facility 

based upon the overall unused capacity of the canal rather than just that portion 

of the facility that was provided for the East Side Division. 

Under the bill, these computations would be reevaluated ‘‘as appropriate’’ to reflect any changes in the use of the canal and reflect those changes in the pooled 

reimbursable capital conveyance costs of the CVP. This act would not be retroactive 

to previous year payment computations. As current and future capital costs are 

identified for CVP cost repayment purposes they will be calculated in accordance 

with the then-current CVP water rate setting policies. 

Reclamation is still in the process of trying to ascertain the costs of implementing this bill, but the bill sponsors estimate the reduced revenues to the Treasury at $2.2 

million per year. The Department has concerns about deferring the repayment of 

the costs of a Reclamation facility based on the amount of capacity in use and its 

implications for other projects. This precedent, if applied to other projects, could result in significantly reduced revenues to the United States. 

Estimating unused capacity also poses implementation challenges. This is illustrated by the ambiguous language contained in this bill requiring that the minimum 

unused conveyance capacity in the canal should ‘‘be based upon actual historic 

measured flows in the canal and planned future flows.’’ Given the many factors that 

impact actual use of a facility, making a determination about how to balance between historic flows and planned future flows would not necessarily be straightforward. 

Reclamation would support section 1(e) of the bill. This provision allows entities 

that are paying costs associated with the Folsom-South Canal to substitute for conveyance through the Folsom-South Canal up to an equivalent amount of non-CVP 

water without additional payment. This bill addresses a situation where an assignor 

may have use of the Folsom-South Canal but assigns all or part of their share of 

project water entitlement to an assignee that does not use the facility. In an assignment of this water, the assignee is required to pay for the canal facilities so that 

the costs are not stranded for repayment by either the federal government or other 

water users. The bill addresses the concern that payments are made for the canal 

facilities but that the assignee should be able to receive some benefit of FolsomSouth Canal use for non-project water without additional payment. 

While Reclamation cannot support S. 3798 as written, we are willing to continue 

to work with the sponsors and this subcommittee to address issues of fairness in 

the allocation of Folsom Canal costs. That concludes my prepared remarks. I would 

be pleased to answer any questions. 

S. 3832

Madam Chairwoman and members of the Subcommittee, I am William Rinne, 

Acting Commissioner of the Bureau of Reclamation. I am pleased to provide the 

views of the Department of the Interior on S. 3832, The Reclamation Facility Title 

Transfer Act of 2006. We support passage of this measure. 

S. 3832 would require the Secretary of the Interior to establish criteria to transfer 

title to Reclamation facilities and for other purposes. The Department believes that 

S. 3832 is consistent with an initiative that the Bureau of Reclamation currently 

22

has underway, that I will outline in my statement. We also believe that the goals 

of S. 3832 would be furthered by those efforts and we would appreciate the opportunity to work together to develop a comprehensive approach to title transfer. 

BACKGROUND

In 1995, the Bureau of Reclamation began an effort to facilitate the transfer of 

title to Reclamation projects and facilities in a consistent and comprehensive way. 

Reclamation developed a process known as the Framework for the Transfer of 

Title—establishing a process whereby interested non-Federal entities would work 

with and through Reclamation to identify and address all of the issues that would 

enable the title transfer to move forward. Once completed, Reclamation and the entity interested in taking title would work with the Congress to gain the necessary 

authorization for such a title transfer. Over the past ten years, the process has 

evolved and improved as we worked through various transfers—some were successful and some not. Over that time period, we’ve learned important lessons and have 

modified the process to improve the efficiency and reduce the associated costs. 

Since 1996, the Bureau of Reclamation has transferred title to eighteen (18) 

projects or parts of projects across the west—pursuant to various Acts of Congress. 

On October 2, 2006, several features of the Provo River Project including the Salt 

Lake Aqueduct, as authorized by P.L. 108-382, are scheduled to be conveyed to the 

Metropolitan Water District of Salt Lake and Sandy. The remaining features of this 

project, that are authorized to be transferred by that Act, are scheduled to be transferred by the end of 2007. Before that can take place, however, several water districts and municipalities that benefit from these facilities are working together to 

address a number of complicated post-transfer project management operational 

issues. There are two additional transfers that are authorized and awaiting completion. In both of these cases, the districts receiving title are completing real estate 

surveys and preparing the quit claim deeds necessary to record the change of ownership with the county. In addition, there are two other authorized transfers which 

require compliance with various Federal laws including the National Environmental 

Policy Act (NEPA) and the National Historic Preservation Act (NHPA) as called for 

by the authorizing legislation. 

Since each project is unique, each of the authorizing laws enacted has different 

terms. Each requires that different actions be taken prior to transfer such as the 

completion of the process under NEPA, or agreements with State and local agencies 

over recreation or cultural resources management. 

LESSONS LEARNED

While Reclamation has had success with title transfer of projects and facilities 

over the past ten years, we remain concerned that the process still takes too long, 

is potentially too costly and the number of new proposed transfers is declining. We 

believe that there may be a number of opportunities of mutual benefit that could 

come from the transfer of projects or facilities that are not being realized. 

As such we have undertaken a number of important activities that I want to outline that fit in with the goals of S. 3832. 

Comprehensive Review of Title Transfer: In 2003, a Team lead by the Department 

of the Interior’s Office of Policy Analysis undertook a comprehensive review of Reclamation’s title transfer effort. The review looked, not only at the process, but also 

at the individual transfers that succeeded and those that did not move forward. This 

effort included a survey of Reclamation employees involved in title transfer, a water 

users workshop and numerous interviews with water users that both pursued title 

transfer and those that opted not to pursue title transfer. It also included interviews 

with stakeholders from states, local governments, the environmental community 

and congressional staff members who were involved in various legislative efforts related to individual transfers at the time. 

With that data, the Team identified a number of important lessons and a number 

of programmatic changes were implemented to make the process more efficient and 

cost effective. 

I would like to highlight some of the lessons that this Team identified:

Each Project is Unique: One of the early lessons that we learned and that 

is reinforced with each new title transfer effort is that each project and set of 

facilities is unique. Each project was authorized to address a particular set of 

circumstances, both hydrologic as well as economic. As such, a ‘‘cookie cutter’’ 

or ‘‘one size fits all approach’’ wouldn’t meet the needs of the water users, the 

customers, other stakeholders or Reclamation. That isn’t to say that there cannot be a set of criteria developed, but those would need to be flexible. 

23

No Such Thing As a ‘‘Simple Project’’: Many Reclamation projects may appear 

to be ‘‘simple’’ title transfers or ‘‘simple’’ projects for title transfer because complex or controversial issues are absent. However, even the ‘‘simple’’ title transfers such as those involving the American Fall Reservoir District #2 in Idaho, 

the Carpinteria Valley Water District in California, and the San Diego Aqueduct in California, had unique complexities that were unknown when we started the process that must be identified and addressed. 

Older projects or projects with facilities that cover a relatively large geographical area and particularly those where significant amounts of land or 

structures, such as houses or warehouses, are to be conveyed, tend have complicating issues that arise unexpectedly. Land records associated with older 

projects may be missing or the quality of the information in existing records is 

poor. Projects covering a wide geographical area, such as the San Diego Aqueduct, have a large volume of land records which must be located, assembled, 

and reviewed. 

Develop Local Agreements Prior to the Legislative Process: While Reclamation’s title transfer process has evolved, we believe that one central tenet of the 

process continues to hold true. Since each project is unique and has their own 

potentially complex circumstances, the analysis of the implications of that 

transfer should be completed and an agreement should be reached on the terms 

and conditions before seeking authorization of the transfer of projects and facilities. 

Early on in the title transfer effort, some districts opted not to go through 

Reclamation’s locally negotiated process. Instead, they immediately approached 

their congressional representatives in hopes of getting legislation passed and 

the facilities transferred quickly. In most cases, this proved to be a slower route 

than those that went through Reclamation’s cooperative process. In many of 

these cases, there were issues or controversies related to the facilities that were 

not addressed at the local level between customers and stakeholders of the facilities. Instead, they were being negotiated through the legislative process. In 

some situations, where legislation was authorized prior to the analysis being 

completed, circumstances or problems were identified that required further legislative action to address, thereby delaying the ultimate transfer even further. 

In many recent cases, we have seen districts and interested non-Federal entities work with Reclamation to complete all the necessary analysis and public 

involvement, then reach an agreement prior to pursuing the legislative authorization from Congress. This has made the legislative process less controversial 

and has made implementation, once the transfer was authorized, smoother, less 

costly and more efficient. Two excellent examples are two proposed transfers 

currently before this Committee—S. 2129, the American Falls Reservoir District 

#2 Conveyance Act of 2005 and S. 1965, the Yakima Tieton Irrigation District 

of 2005. In both these cases, Reclamation worked closely with the districts, the 

states involved and other stakeholders to identify all the issues and concerns 

and reached agreements. In doing so, we worked through some complications 

that arose, we reached agreement and the Administration was able to enthusiastically support both bills in testimony before this Committee. 

Not a Significant Budgetary Savings Available: When the title transfer effort 

began in 1995, there was an expectation that title transfer would result in a 

smaller Bureau of Reclamation (in terms of fewer staff and/or lower appropriations levels). While Reclamation’s budget declined by 19% (between 1992 and 

2000) and the number of Reclamation employees (FTEs) was reduced by 26 percent during this timeframe, this result has not occurred as a result of title 

transfer. The explanation for this is multifaceted:

1. Nearly all those facilities transferred to date were already being operated and maintained by non-Federal entities. This means that neither Reclamation employees nor Reclamation appropriated funds were being used to 

operate and maintain the facilities. Therefore, there is limited budgetary 

savings, related to project operations, to be identified. 

2. Reclamation’s administration of the facilities prior to transfer involved 

relatively few Reclamation employees (by FTE) and limited appropriated 

funds were associated with the projects and facilities that have been transferred. In those cases where some staff time may have been freed up, those 

resources have been redirected to other ongoing issues faced by their offices. 

3. The administration costs avoided due to the transfers have been relatively minor. 

4. Only relatively small facilities which tend to be widely scattered across 

Reclamation’s jurisdictional areas have been transferred—thereby diluting 

24

any potential Reclamation-wide, region or even area office impacts. In other 

words, there has not been a concentration of title transfers which would result in a significant savings. 

MANAGING FOR EXCELLENCE

While Reclamation’s work thus far has lead to procedural improvements and efficiencies, we determined that we needed to take further steps to find ways to reap 

the benefits of title transfer for Reclamation and for its customers. In 2006, as part 

of the Secretary’s Managing for Excellence initiative (M4E), a Team was established 

to ‘‘determine if opportunities exist for mutually beneficial transfer of title to project 

sponsors in order to eliminate Reclamation’s responsibility and costs for those facilities. ‘‘This M4E Team is following up on the previous effort to identify the barriers 

that exist and the incentives that may encourage more entities to pursue title transfers. 

The M4E Team, using the data, conclusions and analysis of the previous effort 

is developing a set of recommendations on how Reclamation might reinvigorate its 

title transfer effort—finding ways to reduce the barriers that discourage entities 

from pursuing title transfer and identifying appropriate incentives that might encourage entities to pursue title transfer. 

The Team received significant input from stakeholders at the Managing for Excellence workshop held in July, 2006 in Las Vegas, NV and they are expected to complete their effort early in 2007. 

We believe that the result of that effort will provide a significant benefit to meeting the goals that the sponsors have identified, and which we share, for title transfer. We hope we will have the opportunity to continue to work with this Committee 

when that Team’s effort has been completed. 

We laud and share the goal identified in S. 3832 for title transfer of Reclamation 

projects and facilities. Transferring title can result in increased efficiencies and 

other benefits that would be of significant importance to both the project beneficiaries as well as Reclamation. Furthermore, we believe that our M4E effort will 

add significant value to meeting this goal and we look forward to working with the 

Committee in this effort. 

That concludes my statement. I would be happy to answer any questions. 

H.R. 2563

I am William Rinne, Acting Commissioner for the Bureau of Reclamation. I am 

pleased to be here today to provide the Administration’s views on H.R. 2563, legislation to authorize the Secretary of the Interior to conduct feasibility studies to address water shortages within the Snake, Boise, and Payette River systems in Idaho. 

I previously provided testimony before the House Resources Committee’s Subcommittee on Water and Power on November 3, 2005, regarding the Administration’s views on H.R. 2563. At that time, I testified that the Administration could 

not support H.R. 2563 as introduced because it did not contain any time or funding 

limitations and it had no requirement for a 50 percent non-federal cost share, as 

is required by Reclamation policy. Since that time, Reclamation has worked with 

congressional staff to modify the legislation. I am pleased to testify that the Administration now supports H.R. 2563 as passed by the House and referred to this committee on July 11, 2006. 

The State of Idaho continues to experience the effects of a prolonged drought as 

well as tremendous growth and urbanization in the Boise and Payette River basins. 

Projected population growth will eventually over-extend existing ground water supplies for these rapidly growing areas. In light of this and other water resource issues 

elsewhere in the state, the Idaho House of Representatives issued Joint Memorial 

No. 24 in 2004, which ‘‘recognizes the need for additional water to meet Idaho’s 

emerging needs and encourages Federal and State agencies to cooperate with Idaho 

in identifying and developing such water supply projects.’’

Under existing authorities, Reclamation initiated an assessment level water supply study specifically in the Boise and Payette basins. Stakeholders with wide representation from the State, Federal, agricultural, environmental and municipal sectors participated in that study. The Final Boise/Payette Water Storage Assessment 

Report was completed in July 2006 and was distributed to local State, Federal, agricultural, environmental and municipal parties. 

H.R. 2563 would go the next step by authorizing Reclamation to conduct feasibility studies within the Boise and Payette River basins. Reclamation supports focused, basin-by-basin water resource studies with input and local involvement from 

the State and the stakeholder communities. We recognize the need to address projected water supply shortages in the Boise and Payette River systems. We would 

25

welcome the opportunity to be an active partner in addressing these water supply 

issues with the State of Idaho and its water users. However, even though the technical difficulties with the legislation have been addressed, any studies conducted 

under this new authority would still need to compete with other needs within the 

Reclamation program for priority for funding in the President’s Budget. 

That concludes my testimony. I would be pleased to answer any questions. 

H.R. 3897

My name is William Rinne, and I am Acting Commissioner of the Bureau of Reclamation. I am pleased to provide the Department of Interior’s views on H.R. 3897, 

a bill to authorize the Secretary of the Interior, acting through the Bureau of Reclamation, to prepare a feasibility study for the Madera Water Supply Enhancement 

Project, Madera County, California. The bill would also authorize construction of the 

Project and would allow the Secretary to enter into a cooperative agreement with 

the Madera Irrigation District for planning, design, and construction. The Department does not support this bill as currently written. 

In Fiscal Year 2006, Congress appropriated $200,000 to conduct an appraisal investigation. The purpose of the appraisal investigation is to determine if the project 

is potentially feasible and if there is a potential Federal interest. The Appraisal Report is in draft form at this time. It is our hope to have it completed by the end 

of Calendar Year 2006. Since the appraisal level report is not yet completed sufficient information about this proposed project is not yet known. 

H.R. 3897 would authorize the Secretary to (1) study the feasibility of the Madera 

Water Supply Enhancement Project, that would provide additional water supply, reduce the overdraft of the groundwater aquifer, and improve water management reliability through the development of new groundwater storage, extraction, and conveyance facilities; (2) enter into a cooperative agreement with the Madera Irrigation 

District for planning, design, and construction; and (3) construct the project. Clearly 

there are many water supply issues in the San Joaquin Valley and in Madera County in particular. Many of these issues, related to the Central Valley Project, have 

a clear federal nexus. The federal nexus with this project is unclear and speculative. 

H.R. 3897 directs the Secretary, not later than December 30, 2006, to complete 

and transmit to the Committee on Resources of the House of Representatives and 

to the Committee on Energy and Natural Resources of the Senate, a feasibility 

study. Although the bill does not establish a ceiling for the Federal share of the cost 

to complete the study, under current Reclamation policy the Federal share would 

not exceed 50 percent of the total study cost. Feasibility studies, which integrate 

National Environmental Policy Act compliance documentation, and are completed in 

conformance with the Principles and Guidelines for such studies, typically require 

a minimum of 3 years to complete, contingent upon appropriation of funds by Congress. Legislation authorizing a feasibility study should allow a minimum of 3 years 

for completing the feasibility study after the appraisal investigation is concluded, 

and should be separate from legislation to authorize project construction. Moreover, 

project authorizing legislation should not be considered until the results of the feasibility study are known. 

It is premature to authorize a feasibility study before the appraisal study has 

been completed and reviewed. Moreover, this study would compete for funding with 

other currently authorized projects, including several authorized storage feasibility 

studies authorized under CALFED. 

I should also note that Reclamation did not seek funding for this project in the 

President’s Fiscal Year 2007 budget. 

H.R. 3897 would also authorize the construction of the Madera Water Supply Enhancement Project. However, the bill does not set a construction cost ceiling, but 

only limits the Federal share of the construction cost to not exceed 25 percent. We 

appreciate that the total cost of the project may not be known at this time. This 

underscores our belief that it is premature to authorize construction of the project 

and establish the Federal share of the cost prior to completion of the feasibility level 

cost estimates and the determination of the Federal interest. 

The Administration appreciates local efforts to address future water issues. However, in light of the concerns expressed above, the Department cannot support this 

bill authorizing Reclamation participation in a feasibility study for, and construction 

of, the Madera Water Supply Enhancement Project. We would be happy to work 

with local sponsors when the time is right to make improvements to the bill, at 

which time the Administration will also consider whether pursuing further studies 

for this project is in the best federal interest. That concludes my prepared remarks. 

I would be pleased to answer any questions.

26

Senator MURKOWSKI. You did that in pretty good order. I think 

it was 13 seconds over your 5 minutes. Very fine job. We will probably have some questions for you. 

Mr. Robinson. 

STATEMENT OF MARK ROBINSON, DIRECTOR, OFFICE OF ENERGY PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION 

Mr. ROBINSON. Thank you, Madam Chairman. My name is Mark 

Robinson. I am the Director of the Office of Energy Projects at 

FERC. We are responsible for LNG terminals, natural gas pipelines, and, more appropriate to the discussion today, the 1,600 hydroelectric projects that we monitor and authorize across the 

United States. 

I would like to thank you for the opportunity to discuss S. 2070, 

which would provide for the commission to review an application 

for a project at an existing project on the Mohawk River in New 

York, and S. 3851, which would provide for extensions of preliminary permits for three preliminary permits in Alaska. 

First I would like to say I have to do a disclaimer. I do not speak 

for the Commission or for the Chairman. I just represent my own 

views here. 

First, on S. 2070. As you heard earlier, specifically this goes to 

the School Street Project, which has been under relicensing since 

1991. The Commission—I want to make this very clear up front. 

The Commission has been unable to relicense that project for one 

reason specifically. The Clean Water Act, section 401, requires that 

we have a Clean Water Act certification from the State prior to licensing. We do not have that certification from the New York Department of Environmental Conservation—New York DEC—and 

therefore by law we are precluded from relicensing. 

However, it has gone through the relicensing process and in 2005 

the School Street——

Senator FEINSTEIN. Madam Chairman. 

Senator MURKOWSKI. Senator Feinstein. 

Senator FEINSTEIN. Could I ask a favor, Mr. Robinson. When you 

mention the bill number, because there are so many of them, would 

you mention the subject as well. 

Mr. ROBINSON. Oh, okay. 

Senator FEINSTEIN. Thank you. 

Mr. ROBINSON. S. 2070 is the bill that would allow the Commission to review a license application from Cohoes Falls or from 

Green Island Power actually for the Cohoes Falls Project on the 

Mohawk River in New York. 

As I was saying, we have been precluded from issuing a license 

to this project because we do not have the 401 from the State of 

New York. However, the New York DEC in 2005 signed a settlement agreement with the School Street licensee on how that project 

would operate, and so they have reached agreement on everything 

from flows over the falls to fishery protection to recreational development, protection of archaeological and historic resources. All of 

those things have been reached in an agreement with the New 

York DEC. 

27

In 2004, Green Island Power came in for a preliminary permit 

on the same site as the existing School Street Project and the Commission rejected that filing for a preliminary permit pursuant to 

section 15(c)(1) of the Federal Power Act. It is not a regulation of 

the Commission. It is not a policy of the Commission. It is the law 

in the Federal Power Act that competition for a particular site at 

relicensing can only be accomplished at a period in time set by the 

Federal Power Act, which is 2 years prior to the license expiration. 

That means anyone who wanted to compete for that site had to file 

by 1991, now 15 years ago. That is just the law, and the Commission has repeatedly made that clear to the applicant for the Cohoes 

Falls Project. 

If this bill would pass, it would provide a special advantage to 

a proponent of a proposal of a project that does not exist in the act 

and it would act in this way. The existing licensee filed their application in 1991, has pursued it during that entire period, passed the 

competition period when they would have had an opportunity to 

make a decision whether or not to pursue this project or not back 

in 1991 if in fact there had been competition and they had seen 

what that competition entailed. They have spent that money. They 

have pursued it. They have reached agreement and are moving forward with the project and it is ready to be relicensed once we get 

the 401 from the State. So that would be, I think, sort of an injustice in the way the act is set up, if in fact this bill would pass as 

is. 

I want to just spend one more minute on this project and compare the two. There have been assertions about the Cohoes Falls 

Project, like the pictures that you saw here. Those are assertions. 

They have not been tested by the licensing procedure. The School 

Street Project has not only been tested, it has been redefined. It 

is now proposed under the settlement agreement to be expanded by 

11 additional megawatts. Under this proposal it will use, on the 

flow duration curve, up to about 20 percent of all the water that 

passes that site, except for perhaps the last 20 percent, which are 

the high flow periods. Typically rule of thumb, hydro projects are 

sited or sized in the 20 to 30 percent range, with 20 being the high 

end. As you go on the flow duration curve, it is sort of reverse logic. 

So this is a well sized by rule of thumb project to capture economically about as much of the water and the power as you can 

produce out of that site. 

There are assertions about what the Cohoes Falls Project would 

do. But those assertions have not been tested. We have not reviewed them because we have no application. The agencies have 

not reviewed them because it has not been before them. It is just, 

here is what we could do. That is the difference between what you 

are hearing right now. We have a project that has gone through 

the licensing process and we have assertions about another project, 

some of which I think would—well, I will just leave it at that. 

Turning to S. 3851, this would provide for license extension—or, 

I am sorry, for preliminary permit extensions in Alaska for three 

projects known as the Thomas Bay Project. Currently the preliminary—not currently. Preliminary permits are provided to ensure 

that someone can maintain priority over a site during the period 

when they would study the feasibility of it. They offer no opporVerDate 0ct 09 2002 09:26 Jan 31, 2007 Jkt 109781 PO 32736 Frm 00031 Fmt 6633 Sfmt 6602 H:\DOCS\32736.TXT SENERGY1 PsN: RSMIT
28

tunity to construct or get on the lands or anything like that. It is 

just a place in time that is held through the preliminary permit so 

that they can spend their money and study the site. 

Should somebody do that with all due diligence and 3 years turns 

out to be not enough, which is the term of a preliminary permit, 

then that permittee can come back in and ask for a successive permit, and the Commission has a history of granting successive permits where somebody has pursued a project and not completed 

those studies. 

Since the Commission has a mechanism for handling that type 

of scenario, I would not support S. 3851, which would give legislatively mandated extensions for those preliminary permits. 

Thank you very much. I appreciate the opportunity. 

[The prepared statement of Mr. Robinson follows:]

PREPARED STATEMENT OF J. MARK ROBINSON, DIRECTOR, OFFICE OF ENERGY

PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION

Madam Chairman and members of the subcommittee, my name is J. Mark Robinson and I am the director of the Office of Energy Projects at the Federal Energy 

Regulatory Commission. Our office is responsible for the licensing, administration, 

and safety of non-federal hydropower projects; the certification of interstate natural 

gas pipelines and storage facilities; and the authorization, safety, and security of liquefied natural gas (LNG) terminals. I appreciate the opportunity to appear before 

you to comment on two bills: (1) S. 2070, a bill to provide certain requirements for 

hydroelectric projects on the Mohawk River in the State of New York; and (2) S. 

3851, a bill that would allow extension of preliminary permit periods by the Federal 

Energy Regulatory Commission for the Thomas Bay projects in Alaska, defined as 

FERC Project Nos. 12495, 12619 and 12621. 

I appear today as a Commission staff witness speaking with the approval of the 

Chairman of the Commission. The views I express are my own and not necessarily 

those of the Commission or of any individual Commissioner. 

Under Part I of the Federal Power Act (FPA), the Commission issues licenses to 

non-federal interests authorizing the construction, operation and maintenance of 

water power projects on navigable waters of the United States, on federal lands and 

on streams, over which the Congress has jurisdiction. Licenses are also required to 

utilize surplus water or waterpower from government dams. 

Licenses are issued under the FPA for terms up to 50 years and contain conditions that reflect consideration of all environmental and developmental aspects of 

the project, including such factors as the effect of project construction and operation 

on fish and wildlife resources, irrigation, flood control, water supply, recreation, and 

the safety of the public. Section 15 of the FPA, authorizes the Commission, at the 

expiration of an existing license and where the United States does not exercise its 

right to take over the licensed project, to issue a new license to the existing licensee 

or to a new licensee. Where there is no federal takeover and where the Commission 

does not issue a new license before the existing license expires, the Commission 

must issue from year to year an annual license to the current licensee under the 

terms and conditions of the current license until the project is taken over or a new 

license is issued. Section 15(c)(1) provides that ‘‘[e]ach application for a new license 

pursuant to this section shall be filed with the Commission at least 24 months before the expiration of the term of the existing license.’’

S. 2070

S. 2070 would require the Commission to accept other valid license applications, 

if submitted not later than July 31, 2006, to develop the project works or water resources of a hydroelectric project located on the Mohawk River in the State of New 

York that has been operating under annual licenses for 10 or more years. S. 2070 

would require that the Commission expeditiously process any pending valid license 

applications and issue a license only if the Commission determines that the project 

will best develop the affected water resources. S. 2070 further requires that any 

such new license issued shall include the same license conditions relating to the use 

of affected waters provided in articles 32 and 33 of the license for Potomac Light 

& Power Company’s Millville Project, FERC No. 2343. The Commission included Article 32 in the Millville license to reserve its authority to issue a license for a project 

29

that was recommended in a comprehensive plan by the Department of the Army, 

Corps of Engineers to be constructed downstream of the Millville Project and would 

more completely utilize the water resources of the Shenandoah River. Article 33 requires the Millville Project licensee to surrender its license if its project becomes inoperative by reason of inundation by a more complete hydroelectric project. 

S. 2070 would affect one project licensing proceeding currently pending before the 

Commission. On December 23, 1991, Niagara Mohawk Power Corporation filed an 

application to relicense the 38.8-megawatt School Street Project, FERC No. 2539. 

The project is located at river mile 2.5 on the Mohawk River in Albany and Saratoga counties, New York. 

Since the application was filed, the license was transferred to Erie Boulevard, LP 

(Erie). The School Street Project was among a group of 10 projects filed in 1991 by 

Erie’s predecessor for which the New York Department of Environmental Conservation (New York DEC) denied Clean Water Act water quality certification, the grant 

or waiver of which is a prerequisite to the Commission issuing a hydropower license. 

Following these denials, the state, along with Erie’s predecessor and other interested parties, entered into settlement negotiations for each project. Settlement negotiations have been concluded for each of the 10 projects. The New York DEC has 

issued water quality certifications and the Commission has issued licenses for nine 

of the projects. The School Street Settlement Agreement, dated March 7, 2005, was 

signed by Erie and seven other parties including the New York DEC, although New 

York DEC has not yet issued water quality certification for the project. The School 

Street Project, the last of the 10 projects, has been operating under annual licenses 

since 1993. 

In response to the draft water quality certification notice issued by New York 

DEC on March 7, 2005, Green Island Power Authority (GIPA) and the Town and 

Village of Green Island sought party status in the certification proceeding and challenged various aspects of the project. The water quality certification process before 

the New York DEC is currently undergoing adjudication proceedings. Because the 

New York DEC has not yet issued water quality certification for the project, the 

Commission has been unable to act on the School Street license application. 

On July 19, 2004, GIPA filed an application for a preliminary permit to study the 

potential development of the 100-megawatt Cohoes Falls Project and asked the 

Commission to waive its regulations to the extent necessary to consider GIPA’s application. As described in its application, the project would be located at the site of 

the existing School Street Project. GIPA proposes to construct, slightly downstream 

of the School Street Project’s dam, a new dam, remove part of the existing School 

Street dam, and decommission various other facilities of the School Street Project. 

On January 21, 2005, the Commission dismissed GIPA’s application for preliminary permit for the proposed Cohoes Falls Project, stating that the statutory deadline established by FPA section 15(c)(1) for filing relicense applications for the Cohoes Falls Project (including competing applications) fell in 1991, 2 years before the 

School Street license would have expired, and that any development application 

GIPA might file would be more than 13 years late. Because such applications are 

not permitted by section 15(c)(1), the Commission found that there was no reason 

to process a preliminary permit to study a project for which an application cannot 

lawfully be filed. 

On February 22, 2005, GIPA filed a timely request for rehearing which was denied by the Commission on March 24, 2005. Subsequently, GIPA filed an appeal of 

the Commission’s orders with the U.S. Circuit Court of the District of Columbia. 

The appeal was voluntarily dismissed in December 2005. 

On May 15, 2006, GIPA filed its offer of settlement in the proceeding to relicense 

Erie’s School Street Project. GIPA’s offer proposed two alternatives: (1) terminate 

Erie’s license and dismiss its relicense application; or (2) issue a relicense to Erie 

that would terminate upon the licensing and construction by GIPA of its Cohoes 

Falls Project. GIPA attached to its offer of settlement an application for licensing 

the Cohoes Falls Project. By notice issued May 24, 2006, the Commission rejected 

GIPA’s offer of settlement on the previously stated grounds that its competitive proposal was not filed within the time frame established by section 15(c)(1) of the FPA. 

On June 5, 2006, GIPA and Adirondack Hydro Development filed a motion to 

present evidence or, in the alternative, offer of proof and if necessary, motion to reopen the record in the proceeding to relicense the School Street Project. The motion 

sought to put into the record GIPA’s previously rejected pleading. As before, the 

Commission rejected the motion by notice issued June 28, 2006. Rehearings of both 

Commission notices are currently pending. 

The FPA provides a complete and well-reasoned method for the orderly development of the nation’s non-federal hydropower resources. It also provides hydropower 

licensees certainty regarding the period when competitive license applications may 

30

be filed. This bill would negate that certainty in the case of the School Street 

Project. 

In addition, this bill would provide a special advantage to an entity which did not 

meet the requirements of the FPA to the disadvantage of an entity which met the 

statutory deadline. Approval of this bill could encourage applicants in other cases 

and locations to petition Congress for similar relief in order to promote their interests at the expense of the FPA’s well-established procedures and of other existing 

licensees and could introduce further uncertainty into the licensing process. 

As a result of these concerns, I do not support S. 2070. 

S. 3851

This legislation provides that notwithstanding section 5 of the FPA or any other 

provision of law (including regulations), on receipt of a request from the preliminary 

permit holder of a Thomas Bay project and after providing reasonable notice, the 

Commission may extend the period for the Thomas Bay project for not more than 

two consecutive three-year periods following the expiration of the initial preliminary 

permit for the Thomas Bay project, in accordance with applicable procedures of the 

Commission. S. 3 851 defines the term ‘‘Thomas Bay project’’ as including: (1) the 

hydroelectric project of the Commission at Cascade Creek, Alaska, preliminary permit number 12495; (2) the hydroelectric project of the Commission at Ruth Lake, 

Alaska, preliminary permit number 12619; and (3) the hydroelectric project of the 

Commission at Scenery Lake, Alaska, preliminary permit number 12621. 

Section 5 of the FPA allows for the filing of applications for preliminary permit 

by a potential hydroelectric project developer before the filing of a license application. The Commission issues preliminary permits for three years for the following 

purpose. The purpose of a preliminary permit is to maintain priority of application 

for a license during the term of the permit while the permittee conducts investigations and secures data necessary to determine the feasibility of the proposed project, 

and if the project is found to be feasible, prepares an acceptable license application. 

Cascade Creek LLC filed applications for preliminary permits for the proposed 80-

megawatt (MW) Cascade Creek Project, FERC No. 12495, on May 4, 2004; 20-MW 

Ruth Lake Project FERC No. 12619, on October 12, 2005; and 80-MW Scenery 

Creek Project, FERC No. 12621, on October 11, 2005. 

The Cascade Creek permit was issued on October 8, 2004, and will expire September 30, 2007. The Ruth Lake and Scenery Creek permits were issued on February 23, 2006, and will expire January 31, 2009. Standard Article 4 of all issued 

preliminary permits requires a permittee to file six-month progress reports. If the 

permittee fails to comply with these conditions, the permit is subject to cancellation. 

As required by Article 4 of the issued permits, Cascade Creek LLC, the permittee, 

filed six-month progress reports for Project No. 12495 on May 25, 2005, September 

29, 2005, and March 31, 2006, generally describing for that report period, the nature 

and timing of what it has done under the pre-filing requirements, and other applicable Commission regulations and what studies it was planning on conducting the following six months. The first report shows that the permittee obtained information 

from previous studies, from the British Columbia Transmission Corporation, and 

from British Columbia, Canada; on transmission line routing, characteristics, and 

permitting requirements. The second report indicates the permittee provided drawings and consulted with U.S. and Canadian government agencies and private companies. The third report shows the permittee persuaded the State of Alaska and 

British Columbia Transmission Corporation to conduct feasibility studies for an 

interconnection, which found the interconnection to be feasible. 

Likewise, Cascade Creek, LLC filed timely progress reports for Project No. 12619 

and Project No. 12621 on July 31, 2006. The initial progress reports for these two 

projects indicate the permittee has developed stream flow data and did reconnaissance inspections of the sites. 

In general, if a permittee has not completed the studies and consultation at the 

expiration of a permit necessary to file an application for license, it may file an application for a new preliminary permit. The Commission may grant another permit 

if it concludes that the applicant has diligently and in good faith pursued the requirements of its prior permit. Because there is already a mechanism whereby a 

permittee can apply for a new three-year permit to pursue development of a proposed hydroelectric project, I do not support the proposed legislation. 

I appreciate the opportunity to present my views to the Subcommittee. Thank 

you.

Senator MURKOWSKI. Thank you, Mr. Robinson. 

31

I will turn to my colleagues here before I ask my series of questions. Senator Feinstein, would you like to propound some questions? 

Senator FEINSTEIN. I would if I might. Mr. Rinne, if I might. My 

understanding is that, while the Folsom South Canal capacity is 

2.5 million acre-feet of water per year, it is used for a maximum 

of 20,000 acre-feet a year. This means California water payers are 

paying a bill that is 1,200 percent or 12 times greater than the 

amount of water they are actually getting. 

I think you think that this is a fine arrangement, and I think 

that it is not a fine arrangement. I think government ought to 

charge people fees that are reasonably related to the benefits they 

are receiving and that is the point. If you would respond to that 

I would appreciate it. 

Mr. RINNE. Senator Feinstein, I appreciate your point, and I 

would just say that it is a challenging issue. It is one that we have 

been trying to work with some of the contractors on. I know that 

you are real familiar with the area and the arrangement there. But 

the fact that it is part of what is called the CVP pool for the repayment there, that is where that gets picked up. 

Senator FEINSTEIN. Wait a minute. You are saying that money 

is used to pay the capital costs of the CVP, is that right? 

Mr. RINNE. What I am saying is for the M&I, the CVP ratepayers have pooled costs for the capacity that they are helping to 

repay the CVP features that are paid back, that is correct. The end 

use capacity there, as I started to say, was not—while it is an unfortunate thing, it is the type of thing—and I know you are aware 

of it—only the first two sections, the first two reaches of the Folsom South Canal were completed. So you have a situation where 

that is part of the reason for the capacity not being used. Auburn 

Dam was not completed. 

But the repayment of that project on the CVP on the M&I repayment, I think you have somewhere in the neighborhood of 58 entities that would share in the capital cost repayment along with the 

interest. So it is a hard thing just to separate that out, so it is 

when I say pooled costs. 

Senator FEINSTEIN. Madam Chairman, I think what happened 

was this canal was built with the predicate that the Auburn Dam 

would be built and then a fracture zone was located under the dam 

and a lot of conflict with the area. In any event, it has not been 

built. But the water coming into this canal is drastically reduced, 

but the contractors are paying fees as if it were full. That is a 

shorthand version of what I understand in any event. 

So I would like to talk to you a little bit more about it and see 

if there cannot be some way fairness can be worked into this situation. 

I also wanted to ask: You oppose the Madera Water Bank bill because it authorizes the project without formal completion of a feasibility study. Now, here is a draft appraisal study and it seems to 

me the Bureau has already conducted extensive feasibility investigations in the late 1990’s. In 1998 the Bureau finalized plans to 

fund a water bank on the property. The Bureau did not go ahead 

then. 

32

Another private property, private party, subsequently analyzed 

the feasibility. So have not enough reports been done? 

Mr. RINNE. I guess the best way I can respond to that—and I am 

aware of the earlier studies that you are speaking of and were 

mentioned in some of the earlier testimony. At the current time, 

Senator Feinstein, that we are talking about, I believe it is probably the draft report that shows there the appraisal level. I think 

that is the one that was authorized to get done at the end of 2006. 

Senator FEINSTEIN. That is correct, September 2006. 

Mr. RINNE. So underneath our process that would be the appraisal level study, and it would be my sense—and I have not 

looked at it in detail, but it would be my sense that much of the 

information you talk about in they early studies, we would try to 

draw from it. As I understand this proposed legislation, we would 

be talking about authorizing a feasibility study. I will just call that 

the next step. Then that feasibility study—it would also authorize 

construction. 

What our concern is is that the draft appraisal report you have 

there would be finalized at the end of the year. We technically 

would finish——

Senator FEINSTEIN. The second week of October is my understanding. 

Mr. RINNE. Is the final report? 

Senator FEINSTEIN. Yes. 

Mr. RINNE. Due at the end of calendar 2006, and you may have 

more updated information than I do. 

Senator FEINSTEIN. I can show this to you. This is rebuttal to the 

Bureau’s testimony, so I would be happy to share it with you. 

Mr. RINNE. Okay. We would want to have the appraisal level 

study completed and it is always on that basis, then we would 

move to the feasibility study that is in fact proposed in here. So 

what we are saying is that you would authorize the feasibility 

study before we have the results of the appraisal study, which is 

what you typically do to identify are there feasible things here and 

do you move forward. 

So it is sort of like there——

Senator FEINSTEIN. Well, is it possible then to give a conditional 

opinion based on a draft, which is September? The final will come 

out in October. Now, this is our one shot to move something. It has 

passed the House. We are ready. It is on the priority list. It will 

be signed by the President. Is there a possibility of putting a condition on it that if the final report reflects the findings of the draft? 

Mr. RINNE. Well, I am not sure if I am being real responsive 

here, but let me try anyway. The appraisal level study that you 

have there, the draft, when that gets—it will move to be finalized, 

and if your dates on the October, let us just talk about that. Then 

based on what is there in that appraisal level study, it will talk 

about the next step and is there something there feasible to move 

forward. 

Obviously, if this legislation is passed we will do exactly what we 

are directed and move into a feasibility study. But our preference 

would be, as in the process—it is sort of, it is like we start out now, 

we call some things an assessment level. Then we move to an appraisal level. The whole idea is to scrunch down and throw off alVerDate 0ct 09 2002 09:26 Jan 31, 2007 Jkt 109781 PO 32736 Frm 00036 Fmt 6633 Sfmt 6602 H:\DOCS\32736.TXT SENERGY1 PsN: RSMIT
33

ternatives that really do not have feasibility, and I know you would 

be aware of that. 

That is what I am saying, is we are sort of at that step. It is sort 

of like jumping into a feasibility before you get an appraisal done. 

Senator FEINSTEIN. It is just that for many of us when there is 

a pressure of so much that needs to be done, all of the money that 

is spent by study after study after study just wastes it. This is the 

frustration. I do not understand why the two cannot be combined 

in one or why—this seems to me to be a rather thorough study—

why another one is necessary. 

Mr. RINNE. If I had just one last thing——

Senator FEINSTEIN. Sure. 

Mr. RINNE. One of the things—this probably will not relieve all 

your frustration on this, but I would just like to say that what we 

have experienced on some other projects is sometimes when they 

move to—the feasibility of course will lead to authorization or can 

lead to authorization of a project for construction. We have actually 

experienced one and one example I give would be where we probably did not do our homework well enough in Reclamation and 

moved on the Animas-La Plata Project, for example. It ended up 

with a cost that we missed the boat. I mean, it was not fair to people. 

So the problem with costs is they are only as good as the data 

behind them, and if we are not quite there and we put something 

out for being authorized and we have missed it by quite a few factors, that is the difficulty. That is sort of the rationale for why we 

are doing it. I appreciate your concern and I understand about 

studies and studies and studies. 

Senator FEINSTEIN. Since this has passed the House, I would just 

ask that you take another look at it and see if there cannot be 

some accommodation made. 

Mr. RINNE. We will definitely work with you. I think that is fair, 

yes. 

Senator FEINSTEIN. I would appreciate that very much. Thank 

you. 

Senator MURKOWSKI. Let us go on to Senator Salazar. 

Senator SALAZAR. Thank you. Thank you very much. 

Commissioner Rinne, I have a question concerning S. 1106. 

Reading your testimony, it is very clear that the administration 

has taken a position in opposition to the legislation that Senator 

Allard and I have proposed, and my sense of the opposition is that 

you do not like the proposed Federal-State cost share that we have 

included in there and that is the centerpiece of your opposition for 

it. 

If I look back at the testimony that you provided in front of this 

committee a few months ago, you said that since the 1980’s there 

had been 13 separate single purpose reclamation projects for municipal and industrial water supply in rural communities in the 

reclamation States. So is it not true that we have had these Federal-State cost share proposals that have been in fact authorized 

for other rural communities in the reclamation States? 

Mr. RINNE. Certainly, Senator, we certainly have had in the 

rural water type projects I am speaking of, we definitely have had 

individual, individually authorized rural water projects. And they 

34

all had their own uniqueness, I might say, in the Federal/non-Federal arrangement, that is correct. 

Senator SALAZAR. Now, knowing, Mr. Rinne, how well you know 

my State of Colorado and knowing how you also are familiar with 

the Fryingpan-Arkansas Project and the communities downstream 

of Pueblo, I would imagine that you would reach the same conclusion that I have reached for many years, and that is that those 

rural communities are very poor, struggling on the vine just to 

keep alive. 

So if this Congress were to pass some kind of a legislation that 

would have a Federal-State cost sharing proposal, do you think it 

would be beneficial to those rural communities in the same way 

that these previously 13 authorized projects that have helped rural 

communities, I am sure have been helpful to those 13 communities. 

Mr. RINNE. Yes, and I do want to say—and I understand—and 

this is not about need. I certainly concur with you on needs, that 

we see this throughout. The thing that I would want to say, and 

you did get right on the main point or the main concern, is this. 

Typically on a municipal or industrial type project, generally I 

would say in policy and law that we would look for 100 percent of 

the capital repayment with interest. 

So when this one is proposed as 80 percent Federal and 20 percent non-Federal, then, as you would recognize, that is a departure 

from what we would desire to see. It is not saying that there have 

not been other ones because sometimes they are authorized in that 

manner. So that is really where a lot of the opposition. We do appreciate that there was a lot of work done by people on the O&M 

cost, which is now I understand would be, under this bill, would 

be all non-Federal. In other words, Southeastern in this case would 

pick that up, and I think that is an improvement. We would like 

to work with people on this. 

Senator SALAZAR. Well, I appreciate that very much. I note that, 

for example, one of the rural reclamation projects in South Dakota 

actually had a zero local cost share. I know there are others that 

have had 10 percent cost shares, 15 percent cost shares, and the 

like. The fact of the matter is that Mr. Long, who is here to testify 

in the succeeding panel, who is the president of the Southeast 

Water Conservancy District and who comes from Bent County, will 

tell you that getting those very poor, very poor communities together to agree to come up with a 20 percent Federal cost share 

has been a monumental undertaking and achievement, and I am 

very proud of his work and the work of the Southeast Water Conservancy District. And I am hopeful, very hopeful, that we will be 

able to work with the Bureau and with the members of this committee in making this legislation a reality, because it is very essential to the future of those communities. 

Madam Chairman, I know I have just 50 seconds. I am going to 

have to leave because I am not going to be able to stay for the next 

panel, but I do want to recognize Bill Long, who is the president 

of the Southeast Colorado Water Conservancy District. I will not be 

here for his testimony. Next to him is former Congressman Ray 

Cagosic, also from Pueblo, Colorado—two champions of rural and 

forgotten America. Thank you for being here. 

Thank you, Madam Chairwoman. 

35

Senator MURKOWSKI. Thank you, Senator Salazar. 

Senator Smith, if you would like to ask any questions of our administration witnesses. 

STATEMENT OF HON. GORDON H. SMITH, U.S. SENATOR

FROM OREGON 

Senator SMITH. I do not have any questions for them, Madam 

Chairman, but I am grateful for this hearing. I know you have got 

a number of bills that you are considering, one of which is S. 3522, 

the Fisheries Restoration and Irrigation Mitigation Act of 2004, of 

which I am a cosponsor. It will reauthorize an important partnership program in the Pacific Northwest that has provided Federal 

funding for screening of water diversions and other facilities to protect the fish in our region. It is supported by the Oregon Water Resources Congress, the Idaho Water Users, and the Washington 

State Water Resources Association. 

It goes without saying, madam, in our dry part of the country 

that this is very important, both to keeping the livelihoods of our 

farm community up as well as the life of the fish in our region 

going as well. So it is very important that we continue this. 

I wanted to welcome and recognize Mark Thalacker, who is here 

from Oregon. He is the manager of the Three Sisters Irrigation 

District, a member of the Oregon Water Resources Congress, who 

is here to testify about this very bill. 

Other than that, I have no questions, Madam Chair. 

Senator MURKOWSKI. Thank you for your comments on behalf of 

that legislation. 

Mr. Rinne, I want to follow up with the question that Senator 

Salazar had asked, and this is in regards to S. 1106, the Arkansas 

Valley Conduit. You are discussing the non-Federal cost share. In 

your written testimony you mention the rural water legislation 

that the administration had submitted to Congress in 2004 sets a 

35 percent non-Federal cost share. Would you be willing to support, 

would the administration support, this legislation if it contained a 

35 percent non-Federal share, cost share? 

Mr. RINNE. I think if the legislation had a 35 percent cost share 

that would certainly help, it would help lots. I mean, that would 

be there. Now, I do not know. There may be other issues that the 

administration wanted to address. Not like there is another one 

pulled out of the hat, but I think that would help a lot. 

Senator MURKOWSKI. All right. 

On S. 1811, this is the Arthur Watkins Dam enlargement. Again 

referring to your written testimony, you state that raising the Arthur Watkins Dam would postpone the need for Utah to begin development of the Bear River. Do you think that by raising the Arthur Watkins Dam, this would be cheaper than developing the 

Bear River? 

Mr. RINNE. It could be. I am not 100 percent sure. Let me say 

why. I do not think the Bear River development, looking at that, 

has been extensively studied. So I suppose it is a question of what 

kind of things come with it. But it could help. 

Senator MURKOWSKI. You think it could make a difference? 

Mr. RINNE. We think it would, yes. 

36

Senator MURKOWSKI. In response to Senator Feinstein’s question 

on the Folsom South Canal deferment, S. 3798, she brought up the 

issue of the inequities that are at issue there. It is my understanding that the Central Valley Project contractors are paying for 

canal capacity that they are not using and this is the point here. 

Do you have any specific suggestions as to how the current arrangement could be made more equitable? 

Mr. RINNE. You know, that is the real challenge. You have got 

your finger right on it. Very challenging. I do not have a specific. 

I think the answer probably lies in trying to continue to work with 

the contractors and talk this through. The things Senator Feinstein 

raises, they are concerns to us too. But it is the way the repayment 

structure is set up on capital costs. 

I think the best way through it is to probably sit down and continue to work with the contractors. 

Senator MURKOWSKI. And that effort is ongoing, then? 

Mr. RINNE. There are discussions back and forth, but at the current time, just so that I am real clear, that repayment arrangement 

remains in place. So I mean, we need to try to figure out a way 

to get through this. But it sort of—it is there right now and they 

will continue to be paying for this in their rates unless there is 

some change made. 

Senator MURKOWSKI. Well, we would certainly encourage the ongoing dialogue there. 

The legislation relating to the Snake, Boise, and the Payette 

River System study was addressed by several of my colleagues here 

this afternoon. You have stated in your testimony that Reclamation 

completed a water supply study for these basins in July. What did 

you identify as perhaps the most promising opportunities to increase the water supplies in these basins? 

Mr. RINNE. I think there were, Madam Chairman, I think there 

were like eight kind of—it kind of goes back to this assessment 

level and now an appraisal. There are about eight out of a whole 

suite of ones studied that we were looking at. I am trying to remember. We had—well, we had eight, yes, eight sites, two possible—excuse me. Eight sites for new surface storage. Two were 

sort of retrofits of existing facilities. In other words, that would be 

maybe you enlarge and can get more storage through some modification. The others would all be new projects, new surface storage 

projects. 

So there were many. I think there was actually several hundred 

that were looked at in those systems, and so you just sort of weed 

that down and now these we would think could move from appraisal, from assessment level forward. 

Senator MURKOWSKI. Mr. Robinson, the Mohawk River hydroelectric project. You had indicated that the one reason you are not 

able to go forward right now is the Clean Water Act, the certification requirement. You have got that procedural hurdle in place. 

Has that been requested? 

Mr. ROBINSON. Oh, yes, repeatedly. The licensee has been pursuing a 401 certification with the State for over 10 years. I believe 

the status of it right now is that it is under some appeal process 

within the State, reviewing a concern raised by Green Island Power 

about the actual authorization. So the agency that would issue the 

37

401 has reached settlement with the licensee for the existing 

School Street project. They are just now going through their final 

procedural steps to issue or to take action on the 401. 

Senator MURKOWSKI. But if that certificate were then issued, 

what then is the next step? 

Mr. ROBINSON. The Commission’s licensing step. 

Senator MURKOWSKI. And the Commission—but you are saying 

that the Commission could not license because of the FPA relicensing requirements? 

Mr. ROBINSON. The Clean Water Act requires that anybody that 

is authorizing a project, like the Commission under the Federal 

Power Act, have a clean water certificate or a waiver of that certificate in hand prior to issuance of their action. So we are precluded 

from acting under the Federal Power Act by the Clean Water Act. 

And the State controls the Clean Water Act process. 

Senator MURKOWSKI. Are you aware of any other instances 

where the Congress has modified the relicensing requirements in 

order to benefit a competitor that did not meet the deadlines for 

the relicense applications? Does this happen? 

Mr. ROBINSON. I have been in hydropower licensing for almost 29 

years now and I can say with pretty good confidence it has never 

happened. 

Senator MURKOWSKI. I just want to make sure I understand the 

situation with the Thomas Bay hydroelectric and just how this 

process works. As you know, with the Thomas Bay project we have 

got three different projects there. We have got an applicant who 

has spent several million dollars during this preliminary permit period, and there is a time limit on those preliminary permits. My 

understanding is that, what they are telling me is, this money is 

basically going to go down the drain if those preliminary permits 

expire and the money is gone. 

Now, it is my understanding that FERC has the authority to 

grant a new preliminary permit once the old one has expired, provided that the applicant has acted in good faith. So you have got 

the authority to go ahead and do it. But if the applicant who is—

if a municipal entity is the applicant and they come seeking a new 

preliminary permit, that FERC is obligated to give the preference 

to the municipal entity? Am I understanding this right? 

Mr. ROBINSON. You are correct. Under section 7 of the Federal 

Power Act there is a municipal preference for the preliminary permit. 

Senator MURKOWSKI. But if it were a private entity that were to 

come in, then you would be required to give—to reissue an extension to the entity that had sunk the initial investment in. But if 

it is a municipal entity you are required to give it to them regardless of the fact that they have invested no dollars? 

Mr. ROBINSON. The second is correct. The first part—if there are 

two privates that come in and one is the previous permit holder, 

there is no legislative, statutory or regulatory preference in place 

for either of those parties. Further, I cannot recall where the Commission has had to address that, where you had competing preliminary permits, one being successive where there has been due diligence and one being new. So it would be a new condition for the 

commission. 

38

Senator MURKOWSKI. But really what it comes down to is whether or not you have a municipal entity that might be eyeing the 

same project, and as long as they come in, make that application, 

they can bump the private entity regardless of the dollars that 

have been spent to further that project? 

Mr. ROBINSON. That is correct. 

Senator MURKOWSKI. Regardless of the due diligence? 

Mr. ROBINSON. That is correct. 

Senator MURKOWSKI. Okay, I thought I understood it right and 

I did. I do not like it, but at least I understand what your regulations provide for at this point and why it is important that we figure out a way to address this for Thomas Bay. 

Thank you. If there are no further questions, we will excuse you 

gentlemen, appreciate your testimony this afternoon, and we will 

call up the second panel. Thank you. 

At this time we will bring up panel two. We have Mr. Bill Long, 

who is the president of the Southeastern Colorado Water Conservancy District, based out of Pueblo, Colorado. We also have Mr. 

Marc Thalacker, manager for the Three Sisters Irrigation District, 

on behalf of the Oregon Water Resources Congress, based out of 

Salem, Oregon; and Mr. Thomas Donnelly, the executive vice president of National Water Resources Association here in Virginia. 

Gentlemen, good afternoon. 

Mr. LONG. Good afternoon. 

Mr. DONNELLY. Good afternoon. 

Senator MURKOWSKI. Let us start, for no particular reason, with 

you, Mr. Long, and move right down the line. Welcome and we appreciate the distances you have traveled to join us here this afternoon. 

STATEMENT OF BILL LONG, PRESIDENT, SOUTHEASTERN 

COLORADO WATER CONSERVANCY DISTRICT 

Mr. LONG. Thank you. Madam Chair, I am Bill Long, president 

of the Southeastern Colorado Water Conservancy District. I would 

like to thank you and the committee for the opportunity to present 

testimony in support of S. 1106. I would also like to take this opportunity to thank both Senator Allard and Senator Salazar for 

their leadership in sponsoring this legislation. 

The Fryingpan-Arkansas legislation enacted in 1962 created a 

multi-purpose project that includes a water collection system on 

the west slope of Colorado that collects and delivers water to the 

east slope of Colorado. The project also includes three storage facilities to assist in the delivery of clean water to both municipal 

and agricultural users in the Arkansas River Basin of southeast 

Colorado. 

Poor water quality and quantity concerns in the Arkansas River 

identified by the Bureau of Reclamation as early as 1950 were the 

reasons why the Arkansas Valley Conduit was included in the 

original Fry-Ark legislation. Although construction of the conduit 

was not funded, the problems it would have addressed have only 

gotten worse, much worse. In addition, utilizing the current raw 

water supply it is extremely difficult to meet the Safe Drinking 

Water Act standards. 

39

In the year 2000, over 40 communities and water providers 

joined together to evaluate solutions to water quality and supply 

problems they faced. During the past 5 years, two project design 

engineering studies have been completed. Most recently, a third 

study to reconfirm the results and answer questions raised by the 

previous studies. 

Two other questions that were a part of this most recent study 

were at the request of Senator Allard and Senator Salazar, and 

those two questions were: one, is there enough water for this 

project; and two, can the participants afford their share of the 

project? 

Some of the relevant conclusions reached include: First, the cost 

of the project compares favorably with any no-action alternative, 

which would still require the communities involved to make substantial financial investments to address current water quality and 

safe drinking water standards. A single water plant as proposed in 

this project would be 60 percent less expensive than each community trying to build their own. 

Second, the financial capabilities of the participating agencies 

are inadequate to fund the construction of the proposed Arkansas 

Valley Conduit under the 100 percent funding requirement. But 

the conduit participants could afford to pay back the 20 percent 

cost share as provided in S. 1106. 

Third, there is more than an adequate supply of water to make 

the Arkansas Valley Conduit feasible. With all due respect to the 

Bureau’s written statements, our last study did in fact indicate 

there was a great deal of water available for the project proposed. 

The Bureau study, look-back study, looked at the original GEI 

study—that was our first study—and in fact I believe the Bureau 

drew the correct conclusions based on that study. 

But our most recent study, that was again at the request of Senator Salazar, there is in fact more than enough water. Although it 

may not be project water, we have other water and water rights 

in the Arkansas River available for the project. 

The conduit project and this legislation are needed today to assist the communities of the Lower Arkansas River Basin. Water 

quality concerns are only increasing. Many of our water providers 

do not satisfy or only marginally satisfy current drinking water 

standards. In fact, one-third of the providers are currently under 

active enforcement orders from the State of Colorado to improve 

water quality. 

Other providers who have previously received enforcement orders 

have made improvements that provide temporary compliance, but 

now cannot meet discharge regulations. In addition to the difficulty 

in meeting water quality standards, the current raw water supply 

also has very high concentrations of unregulated water quality constituents such as iron, manganese, and hardness. These constituents cause accelerated infrastructure decay, loss of tax base, and 

economic impacts associated with businesses locating elsewhere. 

The Federal funding authorized in S. 1106 is necessary to make 

this project a reality and to provide the means necessary to address 

water quality concerns of the Lower Arkansas Valley. 

Southeastern and other project proponents are prepared for the 

hard work ahead and ask for your help. Madam Chair, in closing 

40

I would request that my oral presentation be included in the permanent record and I once again thank you and the committee and 

would be happy to answer any questions you may have. 

[The prepared statement of Mr. Long follows:]

PREPARED STATEMENT OF BILL LONG, PRESIDENT, SOUTHEASTERN COLORADO

WATER CONSERVANCY DISTRICT@

Madam Chair, my name is Bill Long, president of the Southeastern Colorado 

Water Conservancy District, and I am testifying today in support of S. 1106, a bill 

to provide a cost-sharing requirement for the construction of the Arkansas Valley 

Conduit in the State of Colorado. I would like to thank the Subcommittee for the 

opportunity to testify today. I also thank Senators Allard and Salazar for their leadership in introducing this legislation and the Subcommittee for holding this hearing 

today. 

The Southeastern Colorado Water Conservancy District (Southeastern) is the local 

sponsor of the Fryingpan-Arkansas Project (the Fry-Ark Project), a multipurpose 

project constructed by the Bureau of Reclamation (Reclamation) that stores and delivers water for municipal and agricultural use within the nine-county service area 

of the District, Arkansas River basin, Colorado. Southeastern, through its Water Activity Enterprise, has agreed to manage and organize the efforts necessary to make 

this project a reality. 

The Fry-Ark Project was originally authorized by Congress in 1962 and that authorization was amended in 1978. The goal of the legislation was to provide a supplemental supply of water, and storage for native agricultural and municipal water 

supplies. Both the 1962 and 1978 Acts contemplated the construction of the Arkansas Valley Conduit. 

Like many other regions in the western United States, southeastern Colorado is 

growing. The need for the Arkansas Valley Conduit is driven by projected population growth, the economically-disadvantaged nature of the lower Arkansas Valley, 

and increasingly costly water treatment requirements being experienced by certain 

water providers in the basin. In addition to population growth pressures, the District’s smaller communities, especially those east of Pueblo, Colorado, who rely on 

groundwater for their main water supply, need to develop a higher quality drinking 

water supply for their residents. As early as 1953, the Secretary of the Interior acknowledged that additional quantity and better quality of domestic and municipal 

was critically needed for the Arkansas Valley, and in particular for those towns and 

cities east of Pueblo. House Document 187, 83d Congress, 1st Session, and the 

Fryingpan-Arkansas Final Environmental Statement dated April 16, 1975 (‘‘1975 

FES’’), both of which have been incorporated by reference into the Fry-Ark Project 

Act, recognized that the Arkansas Valley Conduit would be an effective way to address this need. The local water available from the Arkansas River alluvium has 

historically been high in Total Dissolved Solids (TDS), sulfates, and calcium, and 

has objectionable concentrations of iron and manganese. Additionally, various water 

suppliers have recently reported measurable concentrations of radionuclides in their 

water. This extremely poor groundwater quality, combined with increasingly stringent water quality regulations of the Safe Drinking Water Act, has caused several 

local water suppliers to invest in expensive water treatment facilities to assure a 

reliable water supply for their customers. 

Generally, all drinking water systems in the Lower Arkansas River Basin, from 

St. Charles Mesa in eastern Pueblo County to Lamar in Prowers County, are concerned with the poor water quality in this region. Many of the water providers do 

not satisfy, or only marginally satisfy, current drinking water standards. More than 

40 water providers in the Lower Arkansas River Basin could benefit from this 

project, if implemented. 

All communities must meet the state and federal primary drinking water standards through treatment or source replacement. Less documented, however, is the potential burden placed upon communities by high raw water concentrations of various unregulated water quality constituents such as iron, manganese and hardness. 

These constituents can cause accelerated infrastructure decay and loss of tax base 

and economic impacts associated with factories and businesses locating elsewhere. 

To address these issues, representatives of local and county governments, water 

districts and other interested citizens of the Lower Arkansas River Basin formed a 

committee in 2000 to consider a feasibility study of the Arkansas Valley Pipeline. 

These interested parties formed the Water Works! Committee and, along with 

Southeastern, began to review the feasibility of developing the Arkansas Valley 

Pipeline. Some of the relevant conclusions reached are as follows:

41

• The cost of the project compares favorably with any ‘‘no action alternative,’’ 

which would still require the communities involved to make substantial financial investments to address current water quality and safe drinking standards. • The financial capabilities of the participating agencies are estimated to be inadequate to fund the construction of the proposed Arkansas Valley Conduit, under 

a 100 percent funding requirement, but Conduit participants could afford to pay 

the 20 percent cost-share provided in S. 1106. • There is an adequate water supply to make the Arkansas Valley Conduit feasible.

As mentioned above, the Arkansas Valley Conduit was included in the originally 

Fry-Ark reports integrated into the Fry-Ark Act. The project was not built because 

communities in the Lower Arkansas River Basin could not fully fund the Conduit 

project. A study of the Arkansas Valley Conduit was prepared for Southeastern, the 

Four Corners Regional Commission and the Bureau of Reclamation in 1972. The report’s recommendations for construction of a water treatment plant, pumping station and conduit to serve 16 communities and 25 water associations east of Pueblo 

were not implemented at that time due to the lack of federal funding. Evaluations 

on the quantity of water needed to satisfy long-range objectives for water users in 

the Southeastern District area were prepared in 1998. Additionally, an update of 

the estimated construction costs presented in the 1972 report was prepared in 1998. 

The citizens and communities of the Lower Arkansas River Basin have waited 30 

to 50 years for this project that will improve their water quality and supply. The 

need for this project has been well established for more than 50 years. S. 1106 fulfills the promise of the Arkansas Valley Conduit nearly 45 years ago with the passage of the Fry-Ark Act by providing the one thing that has been missing for all 

of these years: a realistic acknowledgement of these communities’ ability to pay and 

a partnership to allow this much-needed project to move forward. 

I understand that there are some who have concerns with this legislation as it 

is currently written. Southeastern and the other project proponents are prepared to 

work with anyone who has realistic concerns and suggestions for improving this legislation. It is my hope that, to the extent there are issues regarding conflicts of 

funding and priorities between and among federal agencies, the Administration, 

with the help of our fine Senators, would quickly bring these agencies together to 

resolve these interagency issues. 

I urge this Subcommittee to act quickly to move this legislation towards enactment. I would be happy to answer any questions the Chair or Committee members 

may have on this legislation.

Senator MURKOWSKI. Thank you, Mr. Long, and your full statement will be included as part of the record, as will the comments 

of all of our individuals giving testimony. 

I have been asked as a courtesy to move next to Mr. Thalacker, 

if we can skip you for a second, Mr. Donnelly. Senator Smith has 

got to excuse himself and he wanted to make sure he was here for 

the testimony from Mr. Thalacker. 

STATEMENT OF MARC THALACKER, MANAGER, THREE SISTERS IRRIGATION DISTRICT, ON BEHALF OF THE OREGON 

WATER RESOURCES CONGRESS 

Mr. THALACKER. Thank you very much. Madam Chairman and 

members of the subcommittee: My name is Marc Thalacker and I 

am manager of the Three Sisters Irrigation District in Oregon, and 

I am here on behalf of the Oregon Water Resources Congress. 

OWRC is a statewide association founded in 1912 to represent local 

governments that supply water for irrigation, primarily irrigation 

districts, drainage and water control districts. These entities operate water management systems, including water supply reservoirs, 

canals, pipelines, and hydropower production. 

OWRC strongly supports the reauthorization of the Fisheries 

Restoration and Irrigation Mitigation Act, along with the amendments embodied in S. 3522. We greatly appreciate the leadership 

efforts of Senators Wyden, Senator Smith, Senator Craig, and SenVerDate 0ct 09 2002 09:26 Jan 31, 2007 Jkt 109781 PO 32736 Frm 00045 Fmt 6633 Sfmt 6602 H:\DOCS\32736.TXT SENERGY1 PsN: RSMIT
42

ator Murray to continue this vital program for fish screening and 

passage in the Pacific Northwest. We are joined in this support by 

our sister organizations in Idaho and Washington, the Idaho Water 

Users Association and the Washington State Water Resources Association. 

OWRC strongly believes this has been one of the most successful 

programs for our members. Fish passage and fish screens have become critical to fishery protection. There are over 200 irrigation 

and water control districts in Oregon that provide water supplies 

to over one million acres of cropland in the State. Almost all of 

these districts are affected by either State or Federal Endangered 

Species Act lists of salmon, steelhead, bull trout, and other sensitive, threatened, or endangered species. This program, which is 

cost-shared on a 65 percent Federal and 35 percent non-Federal 

basis, has been overwhelmingly supported by all involved. 

From a water user’s standpoint it has been a success because it 

keeps protected fish species out of the water canals and delivery 

systems and power generation facilities, allows fish to be safely bypassed around reservoirs and facility structures, and provides local 

funding to local governments for construction of facilities to protect 

fish. 

The FRIMA program was authorized to receive $25 million a 

year divided among four States. We have been disappointed that 

the administration through the U.S. Fish and Wildlife Service has 

not requested funding for the FRIMA program in any of the 5 years 

since it was authorized. Our members appreciate the limited funding Congress has written into the annual Interior appropriations 

bills these several past years for the program. 

FRIMA was intended for local governmental entities to carry out 

the work to mitigate the impacts of irrigation diversions on fish, 

rather than face loss of their water if their facilities were not 

screened. We greatly appreciate codifying what is already in practice with respect to the use of Bonneville Power Administration 

funding in the Pacific Northwest. This legislation makes clear that 

BPA funds coming from ratepayers should be considered nonfederal 

share money. 

One of the strengths of the FRIMA program is the return on the 

Federal investment. The States do a tremendous amount of work 

as their part of the partnership, including project review, ranking, 

and selection. Turning against the history—again to the history behind this legislation, there was a strong feeling that, rather than 

have the U.S. Fish and Wildlife Service incur administrative activity, funding would pass through to the individual States, who had 

a stronger understanding and responsibility for the inventories on 

the need and priority for projects. 

Dividing the funding evenly with the States helps ensure the collective effort is never put to risk because of unforeseen circumstances at the State level and recognizes the role the States 

play in the FRIMA partnership. 

While the report prepared by the U.S. Fish and Wildlife Service 

is not the report called for in the authorizing legislation, it does 

nevertheless provide an excellent overview to the projects built 

using FRIMA funding. We encourage the committee members to 

look at this report with regard to the accomplishments of the proVerDate 0ct 09 2002 09:26 Jan 31, 2007 Jkt 109781 PO 32736 Frm 00046 Fmt 6633 Sfmt 6602 H:\DOCS\32736.TXT SENERGY1 PsN: RSMIT
43

* The report has been retained in subcommittee files. 

gram in the four respective States. I would like to submit this report for the record.* 

Senator MURKOWSKI. We will include it. 

Mr. LONG. Thank you very much. 

A lot has been accomplished with little funding, but greater good 

could occur if the Service requested the funding authorized. We 

strongly believe that the success of the FRIMA program as evidenced by the projects that have been built and the partnerships 

that have been developed provide the justification for a continuation of this program through the year 2012. The report and the 

last page of my testimony provide a number of good examples. 

We strongly support the improvements to the program as contained in S. 3522. We would also ask that, even though this is the 

authorizing committee, that you would let the Appropriation Committee know the importance of this program and how noncontroversial and successful the effort has been with the limited resources 

that have been provided. 

FRIMA is an excellent example of cooperative conservation and 

FRIMA now and in the future will play a key role in complying 

with the Columbia Basin 2004 buyup remand. 

I want to thank the committee for hearing my testimony and I 

am happy to answer any questions. Thank you. 

[The prepared statement of Mr. Thalacker follows:]

PREPARED STATEMENT OF MARC THALACKER, MANAGER, THREE SISTERS IRRIGATION

DISTRICT, ON BEHALF OF OREGON WATER RESOURCES CONGRESS

Madam Chairman and members of the subcommittee, my name is Marc Thalacker 

and I am the manager of the Three Sisters Irrigation District in Oregon and am 

here on behalf of the Oregon Water Resources Congress (OWRC). The OWRC is a 

statewide association founded in 1912 to represent local governments that supply 

water for irrigation, primarily irrigation districts and water control districts, and including member ports, other special districts and local governments. The association 

represents the entities that operate water management systems, including water 

supply reservoirs, canals, pipeline, and hydropower production. 

OWRC strongly supports the reauthorization of the Fisheries Restoration and Irrigation Mitigation Act along with the amendments embodied in S. 3522. We greatly 

appreciate the leadership efforts of Senators Wyden, Smith, Craig and Murray to 

continue this vital program for fish screening and passage in the Pacific Northwest. 

We are joined in this support by our sister organizations in Idaho and Washington: 

the Idaho Water Users Association and the Washington State Water Resources Association. 

As one of the lead organizations with Congress to help create the Fish Restoration 

Irrigation Mitigation Act (FRIMA) in 2000, and with five years of experience of active involvement in the implementation of the program, OWRC strongly believes 

this has been one of the most successful programs for our members and for similar 

water supply entities in Idaho, Washington and Montana. 

FRIMA created a new Federal partnership fish screening and passage program 

in the Pacific Ocean Drainage areas of Oregon, Idaho, Washington and western 

Montana. The U.S. Fish and Wildlife Service administers the program in partnership with state fishery agencies. 

Fish passage and fish screens have become critical to fishery protection. There are 

over 200 irrigation and water control districts in Oregon that provide water supplies 

to over one million acres of cropland in the state. Almost all of these districts are 

affected by either state or Federal Endangered Species Act lists of salmon and 

steelhead, bull trout, or other sensitive threatened or endangered species. This program, which is cost-shared on a 65% Federal/35% non-Federal basis, has been overwhelmingly supported by all involved. From a water user standpoint, it has been 

a success because: 1) it keeps protected fish species out of water canals and delivery 

systems and power generation facilities; 2) allows fish to be safely bypassed around 

44

reservoirs and facility structures; and 3) provides funding to local governments for 

construction of facilities to protect fish. 

The FRIMA program was authorized to receive $25 million a year, divided among 

the four states. We have been disappointed that the Administration, through the 

U.S. Fish and Wildlife Service, has not requested funding for the FRIMA program 

in any of the five years since it was authorized. Our members appreciate the limited 

funding Congress has written into the annual Interior Appropriations bills these 

several past years for the program. As you can see from the attachment to my testimony, projects in Oregon have provided a much larger non-federal match than required and as a result have been able to maximize the limited FRIMA resources. 

Further, much FRIMA’s success comes from the large proportion of the federal appropriations that is used for projects rather than for federal or state administrative 

costs. 

SPECIFIC COMMENTS ON S. 3522

We are disappointed that the U.S. Fish and Wildlife Service, the partner in this 

effort, never produced the report called for in section 9 of P.L. 106-502 that would 

have recommended changes to the program based on experience in constructing 

projects under the Act. In lieu of that report, OWRC surveyed its membership and 

talked with our fellow partners and recommended changes that are incorporated in 

S. 3522. 

Project Eligibility 

Our members’ experience in defining the type of projects that provide the most 

cost-effective solution to needs has demonstrated that we no longer need to be concerned with the likelihood of very expensive solutions to problems. Reducing the cap 

on the size of the project, from $5 million to $2.5 million, is appropriate at this time. 

As we understand the history of the original authorizing legislation, this program 

was intended for local governmental entities to carry out the work to mitigate the 

impacts of irrigation diversions on fish rather than face loss of their water if their 

facilities were not screened. With that in mind, we also believe the original intent 

was to have the funding passed through to the states that would, in turn, provide 

the funding to the local governments. It was never envisioned that the Federal government or the Tribes were to get part of the $25 million authorized per year, other 

than for the up to 6% of the funding to cover administrative expenses. 

If it was determined that a project on Federal land or land in the Native American community is the most effective approach to addressing a fish-screening or fish 

passage problem in a system, the costs for those projects should be non-reimbursable. This was to provide the flexibility to use a common sense approach that would 

be environmentally, economically sound with regard to the facility that needed to 

be addressed in a watershed. 

We do not believe Congress intended FRIMA be used by municipal, Federal or 

Tribal governments to fund their facilities. While they may all have needs for this 

type of funding, the need for fish protection at irrigation diversions remains high 

and exceeds divertors’ ability to pay. 

Cost Sharing 

We greatly appreciate codifying what is already in practice with respect to the use 

of Bonneville Power Administration (BPA) funding in the Pacific Northwest part, 

but not all, of the time. There is a lack of consistency among federal programs with 

some allowing the use of BPA funding as local share to address fish and wildlife 

recovery, but not for FRIMA. This legislation makes clear that BPA funds, coming 

from ratepayers, should be considered non-federal share money. 

Federal Administrative Expenses 

We believe that S. 3522 takes an appropriate step in addressing administrative 

expenses at the Federal and state level. One of the strengths of the FRIMA program 

is the return on the Federal investment. Part of this success can be attributed to 

the limited draw of the funding for administrative costs in order to ensure that most 

of the funding is used to build projects to protect fish. 

The states do a tremendous amount of work as their part of the partnership including project review, ranking, and selection. Turning again to the history behind 

this legislation, there was a strong feeling that rather than have the U.S. Fish and 

Wildlife Service incur an administrative activity, funding would pass through to the 

individual states who had a stronger understanding and responsibility for the inventories on the need and priority for projects. Dividing the funding evenly with the 

states helps ensure the collective effort is never put at risk because of unforeseen 

45

circumstances at the state level and recognizes the role the states play in the 

FRIMA partnership. 

We think the graduated levels that determine administrative costs based on Federal appropriation levels is the type of incentive-based approach that sends a signal 

for all to understand. This graduated administrative allocation reflects the fact that 

as more money is appropriated, the time required for Federal and state program administration will expand. 

Technical assistance requested by a project sponsor after receiving a grant is one 

thing; technical assistance designed to recruit and assist potential project sponsors 

is quite different. That kind of recruitment and assistance is part of the administration of the program and should fall under the administrative expense provisions, not 

be handled outside that limitation. To do otherwise limits the funding available for 

actual projects. 

We do agree that technical assistance provided by the U.S. Fish and Wildlife 

Service at the request of the local government grantee should not be part of the administrative expenses for the agency. Such technical assistance should be part of the 

overall project costs and be subject all the other requirements under FRIMA including local match. 

Given the critical need for on-the-ground work under this program, and the history of limited funding, there is an important need for the U.S. Fish and Wildlife 

Service to understand the intent of the program to provide for projects that protect 

fish rather than cover federal administrative and staff costs. 

Expansion of the FRIMA Program 

While the report prepared by the U.S. Fish and Wildlife Service is not the report 

called for in the authorizing legislation, it does, nevertheless, provide an excellent 

overview to the projects built using FRIMA funding. We encourage the Committee 

Members to look at this report with regard to the accomplishments of the program 

in the four respective states. 

A lot has been accomplished with little funding, but a greater good could occur 

if the Service requested the funding authorized. Before any thought is given of expanding the program beyond its originally authorized purpose, the total work program as identified by the state inventories needs to be completed. Those inventories 

indicate a need for irrigation diversion mitigation that continues to exceed the available funding. 

We strongly believe that the success of the FRIMA program as evidenced by 

projects that have been built and the partnerships that have developed provide the 

justification for the continuation of this program through year 2012. 

CONCLUSION

OWRC is asking Congress to continue to improve conditions for threatened and 

endangered fish species in Oregon and the rest of the Pacific Northwest by passing 

this legislation into law and reauthorizing the FRIMA program. We strongly support 

the improvements to the program as contained in S. 3522. We would also ask that 

even though this is the authorizing committee, you let the Appropriation Committees know of the importance of this program and how non-controversial and successful the effort has been with the limited resources that have been provided. 

OREGON’S FRIMA PROJECT BENEFITS

The following are examples of how Oregon has used some of its FRIMA money:

Santiam Water Control District Project: fishscreen project on a large 1050 cfs 

multipurpose water diversion project on the Santiam River (Willamette Basin) 

near Stayton, Oregon. Partners are the Santiam Water Control District, Oregon 

Department of Fish and Wildlife, Marion Soil and Water Conservation District, 

and the City of Stayton. Approved FRIMA funding of $400,000 leverages a $1,200,000 project. 

Species benefited include winter steelhead, spring Chinook, rainbow trout, 

and cutthroat trout. 

South Fork Little Butte Creek: fishscreen and fish passage project on a 65 

cfs irrigation water diversion in the Rogue River Basin near Medford, Oregon. 

Partners are the Medford Irrigation District and Oregon Department of Fish 

and Wildlife. 

Approved FRIMA funding is $372,000 and leverages a $580,000 total project 

cost. 

Species benefited include listed summer and winter steelhead, Coho salmon, 

and cutthroat trout. 

46

Running Y (Geary Diversion) Project: fishscreen project on a 60 cfs irrigation 

water diversion in the upper Klamath Basin near Klamath Falls, Oregon. Partners are the Wocus Drainage District, Oregon Department of Fish and Wildlife, 

and Jeld-Wen Ranches. 

Approved FRIMA funding of $44,727 leveraged a total project cost of $149,000. 

Species benefited included listed red-band trout and short-nosed sucker. 

Lakeshore Gardens Project: fishscreen project on a 2 cfs irrigation water diversion in the upper Klamath Basin near Klamath Falls, Oregon. Partners are 

the Lakeshore Gardens Drainage District and Oregon Department of Fish and 

Wildlife. 

Approved FRIMA funding is $5,691, leveraging a total project cost of $18,970. 

Species benefited include red-band trout, short-nosed sucker and Lost River 

sucker. 

Oregon Department of Fish and Wildlife Inventory Project: an inventory to 

be conducted by Oregon Department of Fish and Wildlife to identify FRIMAeligible passage and screening projects within the Rogue and Klamath basins 

of southwestern Oregon. Approved FRIMA funding is $76,000. Estimated total project cost is $125,000. 

WHY FUND NOW

Dollar-for-dollar, providing screening and fish passage at diversions is one of the 

most cost—effective uses of restoration dollars, creating fishery protection at low 

cost, with low risk and significant benefits. That is why it is important that this 

program be funded now. 

We urge the full authorization funding for FY 2007 and urge Congress’ oversight 

in encouraging the Service to budget for this successful program in the future.

Senator MURKOWSKI. Thank you, Mr. Thalacker. 

Now, Mr. Donnelly, we will turn to you. 

STATEMENT OF THOMAS F. DONNELLY, EXECUTIVE VICE 

PRESIDENT, NATIONAL WATER RESOURCES ASSOCIATION 

Mr. DONNELLY. Thank you, Madam Chairwoman. Our association has worked hand in hand with the Bureau of Reclamation 

since it first raised the prospect of transferring title of facilities to 

project beneficiaries in August 1995. The first several years were 

difficult and a learning exercise for both Reclamation and its customers. Project beneficiaries harbored some unrealistic expectations. For example, some districts wanted title to their facilities, 

but expected the Federal Government to retain all liability for failure and the resulting loss of property and life. Others expected the 

transfer of project operations would exempt them from the provisions of national environmental law. Costs were also a huge impediment for some districts. Some of Reclamation’s managers were 

slow to embrace the concept of title transfer. In addition, many unanticipated issues and concerns developed which were difficult to 

resolve. 

Combined, these factors contributed to bringing the whole process of title transfer to an abrupt halt. Both Reclamation and its 

customers persevered through these difficult efforts and ultimately 

we developed a framework for negotiations and a checklist for districts to follow in preparation for their initial meetings with Reclamation and the subsequent title transfer process. 

In 1996 the first title transfer bills were signed into law. Since 

then title to 18 projects or parts thereof have been transferred to 

project beneficiaries. Five are authorized pending transfer and several more are currently before Congress. 

Through these difficult early years we learned some valuable lessons. It is important for districts pursuing transfer of title to enVerDate 0ct 09 2002 09:26 Jan 31, 2007 Jkt 109781 PO 32736 Frm 00050 Fmt 6633 Sfmt 6602 H:\DOCS\32736.TXT SENERGY1 PsN: RSMIT
47

gage Reclamation early in the process and work through the various issues and circumstances unique to each individual project. 

There is no such thing as a simple transfer. Even single-purpose 

projects present unique challenges for Reclamation and its customers. 

We are in agreement that it is impractical and in some cases not 

in the public interest to transfer large multi-purpose projects. It is 

also important that Reclamation and Congress is satisfied that title 

transfer applicants have the financial and technical resources to 

adequately and efficiently operate and maintain transferred works 

into the future. 

While we have struggled over the past 10 years to get where we 

are today, a process and procedures are in place that provide 

project beneficiaries the opportunity to accomplish the transfer of 

title to their facilities. It is not a perfect process. It is still too expensive for most and in many cases unnecessarily time-consuming. 

Regardless, we are satisfied that Reclamation is attempting to 

make the process more user-friendly. 

I returned last night from the public meeting on Reclamation’s 

Managing for Excellence process and if it is helpful to the committee I would provide for you an overview of their title transfer 

work so far. 

Senator MURKOWSKI. Great. Thank you. 

Mr. DONNELLY. In closing, Madam Chairman, we support S. 3832 

and believe it is complementary to efforts being undertaken by the 

Bureau of Reclamation in their Managing for Excellence process. 

This legislation will codify the process and procedures of an important management tool. Thank you very much. 

[The prepared statement of Mr. Donnelly follows:]

PREPARED STATEMENT OF THOMAS F. DONNELLY, EXECUTIVE VICE PRESIDENT, 

NATIONAL WATER RESOURCES ASSOCIATION

The National Water Resources Association (NWRA) is a nonprofit federation of 

state associations and individuals dedicated to the conservation, enhancement, and 

efficient management of our Nation’s most precious natural resource—WATER. The 

NWRA is the oldest and most active national association concerned with water resources policy and development. Its strength is a reflection of the tremendous 

‘‘grassroots’’ participation it has generated on virtually every national issue affecting 

western water conservation, management, and development. 

BACKGROUND

The U.S. Bureau of Reclamation (Reclamation) first raised the prospect of transferring title of facilities to project beneficiaries in August of 1995. Given the contentious debate and subsequent legislation over the rules and regulations implementing 

the 1982 Reclamation Reform Act in the late 80’s and early 90’s, many of our members were looking for an opportunity to get out from under the onerous reporting 

requirements and resulting rules and regulations. Title transfer appeared to provide 

that opportunity for many irrigation districts. To give the Committee an idea of the 

interest that the prospect of title transfer raised in the West, NWRA held a two day 

conference on the subject of title transfer in June 1996 expecting approximately 50-

60 project managers to attend. Over 250 project managers from throughout the 

West attended. 

Early on project beneficiaries harbored several unrealistic expectations. Many districts wanted title to their facilities, but expected the federal government to retain 

all liability for failure and the resulting loss of property and life. Some expected the 

transfer of title project operations would exempt them from the provisions of the Endangered Species Act, the Clean Water Act and other environmental laws. Others 

expected the Bureau of Reclamation to bear all costs associated with the transfer 

including the costly requirements of the National Environmental Policy Act. Within 

48

the agency, some of Reclamation’s managers were slow to embrace the concept of 

title transfer. Also, many unanticipated issues and concerns developed which were 

difficult to resolve. Combined these factors contributed to bring the whole process 

of title transfer to an abrupt halt. 

Frustrated with the lack of progress in working through Reclamation, some districts chose to bypass the agency altogether and appeal directly to Congress. For the 

most part, this resulted in a stalemate where Reclamation was forced to testify in 

opposition to proposed project transfer legislation. 

After months of frustrating delay, then Commissioner Eluid Martinez facilitated 

a working session of NWRA’s leadership and Reclamation’s managers. We analyzed 

the problems associated with the existing process and procedures from both perspectives. This meeting led to the development of a framework and ‘‘road map’’ for districts to follow in preparation for their initial meetings with Reclamation and the 

subsequent title transfer process. 

In 1996 the first title transfer bills were signed into law. Since then, title to eighteen projects or parts thereof have been transferred to project beneficiaries, five are 

authorized pending transfer and several more are currently before Congress. 

LESSONS LEARNED

In the past ten years, the Bureau of Reclamation and project beneficiaries have 

learned several lessons related to the transfer of title to Reclamation facilities. 

We have learned that little is gained by attempting to circumvent the process. It 

is important for districts pursuing the transfer of title to engage Reclamation early 

in the process and work through the various issue and circumstances unique to each 

individual project. It has become clear to us that there is no such thing as ‘‘low 

hanging fruit’’ when it comes to title transfer. The simplest projects present unique 

challenges for Reclamation and the districts. 

We acknowledge that it is impractical and, in some cases, not in the public interest to transfer large multi-purpose regional projects. It is also important that Reclamation and Congress is satisfied that title transfer applicants have the financial 

and technical resources to adequately and efficiently operate and maintain transferred works into the future. 

SUMMARY

While we have struggled over the past ten years to get where we are today, a 

process and procedures are in place at Reclamation that provide project beneficiaries 

the opportunity to accomplish the transfer of title to their facilities. It’s not a perfect 

process. It’s still too expensive for most districts and in some cases unnecessarily 

time consuming. Regardless, we are satisfied that Reclamation is attempting to 

make the process more user-friendly. Also, they are cooperatively pursuing those 

projects that are in the best interest of the American taxpayer to transfer to the 

project beneficiaries under reasonable terms and conditions. 

In closing, Mr. Chairman and Senator Bingaman, we support S. 3832 and believe 

it is complementary to the efforts being undertaken by the Bureau of Reclamation 

in their ‘‘Managing for Excellence’’ process. Therefore it should be quite easy for the 

Bureau to implement the provisions of S. 3832 in a timely manner. More important, 

this legislation will codify the process and procedures of an important management 

tool.

Senator MURKOWSKI. Thank you, Mr. Donnelly. 

Senator Wyden, would you care to ask some questions first? 

Senator WYDEN. Madam Chair, thank you very much, and thank 

you on behalf of Senator Smith and myself for scheduling our witness. We appreciate your courtesy. 

I think I just wanted to ask Mark Thalacker one question. We 

are going to try to secure the funds. That has been a priority for 

Senator Smith and I. I think it would be helpful if you could lay 

out the consequences of not having this kind of program. It seems 

to me in plain simple English a lot of fish are going to die. Is that 

pretty much it? If that is the case, why do you not lay this out in 

something resembling English that people can really see as being 

the consequences of an important Federal program. 

Mr. THALACKER. Well, one of the things that makes FRIMA so 

important is—currently I personally serve on the Mid-Columbia 

49

Steelhead Recovery Team, and one of the things that I have seen 

through this process is that screening projects tend to come to the 

various granting agencies one by one. What FRIMA has allowed is 

it has allowed basically the Columbia Basin States to target key 

screens that help comply with the Endangered Species Act. 

I think that when we eventually get final decision on the remand 

from Judge Reddon, FRIMA is going to be a key tool. So if it was 

authorized and funded going forward—it is something that the 

Power Planning Council has made a specific request that it be authorized and funded because, as you can see from the list of all the 

projects that have been done, it has been a very successful program. And yes, if we leave all these diversions unscreened a lot of 

fish will perish and there will be litigation and regulation. 

Senator WYDEN. Well, thank you for making the journey eastward and we appreciate all your good work. Suffice it to say, after 

what has happened in the Klamath, we have had one instance 

after another of Federal policies not being built around cost-effective ways to both balance the needs of fish and the needs of people. 

I think you found one. I think that is why Senator Smith and I 

have been such strong supporters of it. 

So you continue to do the advocacy work that you are doing. We 

will try to back you up. 

Thank you very much, Madam Chair, for your courtesy. 

Mr. THALACKER. Thank you, Senator. 

Senator MURKOWSKI. Absolutely. 

Mr. Thalacker, let me continue with some questions for you. In 

your written testimony you state that you do not believe that Congress intended FRIMA to be used by municipal, Federal, or tribal 

governments to fund their facilities. Is this happening? Are there 

any cases that you are aware of where there has been an effort to 

use the FRIMA funding to fund facilities? 

Mr. THALACKER. Not that I was aware of. There are a number 

of other programs, screening programs, that are available through 

the Corps and also BPA works with the tribes quite a bit on their 

screens. So this is a program that basically reached out to literally 

thousands of diversions, large and small, all over the Columbia 

Basin, as well as other States, where there were Endangered Species Act problems. 

Senator MURKOWSKI. But so far as you know we do not have an 

issue with municipal or Federal entities? 

Mr. THALACKER. We have not had a problem that I am aware of. 

Senator MURKOWSKI. The other question that I have for you, the 

legislation would give priority to projects costing less than $2.5 million and this is down then from the current threshold of $5 million. 

Why do you support the decrease? 

Mr. THALACKER. The decrease is, one, a lot of the larger screens, 

the more expensive ones, have been completed. So what this does 

is this spreads the resource even farther and gets more screens accomplished. Large screens tend to be on Federal projects and so, 

once again, there are other funding sources available for those bigger projects. 

Senator MURKOWSKI. Thank you for clarifying that. 

Mr. Donnelly, you mentioned the Reclamation’s Managing for Excellence process. I do appreciate you bringing the Powerpoint there 

50

and we will include that as part of the record. But it sounds from 

your testimony that you are optimistic that there is a process that 

is being set forward, that initially when it came to title transfer 

things were slow, you mentioned that they were expensive, but it 

sounds from your testimony that there is an increasing satisfaction 

with the process and that the efforts to improve the title transfer 

process is really proceeding in a positive vein. 

Mr. DONNELLY. I believe that is accurate. I think what the Bureau is now doing under Managing for Excellence is very much in 

keeping with the legislation that has been introduced. 

Senator MURKOWSKI. Good. Well, we will look forward to reading 

that that you will submit in the written record. 

Mr. Long, in talking about the Arkansas Valley Conduit project, 

what progress have you made toward securing a water right for 

that project? 

Mr. LONG. There currently exists project water that is allocated 

to the lower valley. That water is adequate to meet the current request that we now have. So we actually have the water necessary 

to meet today’s need. 

Senator MURKOWSKI. What about tomorrow’s need? 

Mr. LONG. Tomorrow’s need. There is more than adequate supply. Many of our cities and communities actually own water rights 

in the Arkansas River Basin. To meet the first initial need we will 

use the project water that has been allocated to the valley. 

Senator MURKOWSKI. All right. 

I have got a piece of legislation. I am a cosponsor on a Rural 

Water Supply Act which would authorize a loan guarantee program 

within the Reclamation loans. It allows that the loans be repaid 

over a 40-year period. Do you think that the communities in your 

region could benefit from this type of a loan guarantee program? 

This is something that would work out there? 

Mr. DONNELLY. Absolutely. We are actually working too with the 

State of Colorado with a similar program that they have. We still 

could not afford the full 100 percent funding of the project. But we 

can handle the 20 percent. And yes, a program like that would be 

beneficial. 

Senator MURKOWSKI. Good. You also mentioned in your comments here this afternoon, you spoke to some of the water quality 

issues. Would the water then that is to be supplied under the Arkansas Valley Conduit—is this going to require treatment? 

Mr. DONNELLY. Minimal treatment. Currently the city of Pueblo, 

Colorado, is using basically the same water that we would use. 

They just filter it and treat it with disinfectant. 

Senator MURKOWSKI. So even though you have got some solids 

and some other things in there that you would rather not have, it 

is a pretty minimal treatment? 

Mr. DONNELLY. Absolutely. In relation to that, in the lower valley to meet water standards today we need to build reverse osmosis 

plants, which are very expensive to build, very expensive to operate, and cause a secondary problem in what to do with the reject 

from reverse osmosis plants. So we are faced with a new problem 

when we do build reverse osmosis plants. 

So providing a better quality raw water is absolutely by far the 

best way for us to proceed to meet our needs. 

51

Senator MURKOWSKI. Good. 

Well, that is all the questions I have. I appreciate again the opportunity to have you all in front of us, appreciate your willingness 

to come this far and help us out with this legislation. I appreciate 

it. 

With that, we stand adjourned. 

[Whereupon, at 4:02 p.m., the hearing was adjourned.] 

(53)

APPENDIXES 

APPENDIX I 

Responses to Additional Questions 

RESPONSES OF MARC THALACKER TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. In your written testimony you state that you ‘‘do not believe Congress 

intended FRIMA be used by municipal, Federal or Tribal governments to fund their 

facilities.’’

Are you aware of any cases where this has been occurred? 

Answer. As OWRC has reviewed the respective Congressional Committee reports 

that accompanied the legislation that became Public Law 106-502 and as we have 

spoken with the parties involved who developed the ideas and concepts and worked 

on the language that became that Public Law, and further as we participated in the 

process that implemented the program once funding was provided, it is clear to our 

members that the intent of the program was to mitigate the diversions of irrigation 

systems of local governmental entities, of which water districts are defined as stipulated in the preface of the Act 

Furthermore, municipal governments do not irrigate agricultural lands; Tribal 

governments are sovereign governments and thus not local government entities; and 

the Federal government is not a local governmental entity. There was to be a ‘‘commonsense’’ approach to these facilities if it made sense to have a fish screen, fish 

passage device or related feature placed on a water diversion that passed through 

Federal, Tribal, or municipal lands. The intent was to allow for such placement and 

provide authorization so someone couldn’t say ‘‘the law doesn’t allow that’. The 

whole idea was to do what made the most sense for the fish resource that was in 

need of mitigation assistance. Examples of this appear in the USFWS Fisheries Restoration and Irrigation Mitigation Program FY 2002-2004 report 

Question 2. Why do you believe it is necessary to specify that BPA funds be considered non-federal share money? Has any entity been prohibited from accepting 

BPA funds as part of the non-federal share? 

Answer. It is OWRC’s understanding that the Bonneville Power Administration 

(BPA) believes that its funds can be used as the non-Federal match for Federal 

grants. We would like to submit along with this answer, two letters from BPA stating its position the ratepayer funds are non-federal funds and a guidance statement 

from USFWS concerning FRIMA/BPA funds. Unfortunately USFWS has taken the 

position that BPA funds are not allowed to be used for non-federal cost sharing purposes. This provision would make it clear that BPA funds may be used for non-Federal cost share purposes. 

RESPONSES OF MARC THALACKER TO QUESTIONS FROM SENATOR JOHNSON

Question 1. According to the Fish & Wildlife Service’s 2002-2004 Report, $8.8 million was appropriated to support the Fisheries Restoration and Irrigation Mitigation 

Program. Of that, $675,000 was used for Administrative purposes—about 7.8%. 

Have the Administrative costs been excessive in your view? 

Answer. It is our understanding that when discussions were taking place for the 

concepts resulting in Public Law 106-502 that 3 percent was seriously considered 

as an administrative cap figure. The six percent figure was arrived at in recognition 

of the need to ramp up for a new Federal program with the expectation that this 

was to be a pass through program of funding to the local governments to carry out 

the work. Further, it was expected that the states, not the Federal government, 

would play a strong role in this program because they had the best understanding 

of the work that needed to take place and were to do the inventories. 

54

It was also expected that the full $25 million a year would be appropriated and 

6 percent of that funding for ‘‘administration’’ was a significant amount of money. 

Unfortunately the Administration has never requested any money in the Budget 

submission to Congress. 

Question 2. Do you know how much was appropriated for the program in fiscal 

years 2005, and 2006? 

Answer. $2.0 in funding was provided in FY05. The FY 06 appropriation of $2.0 

million was subject to budget rescissions. We do not have information about rescissions for other years’ appropriations. Because USFWS has never requested funding 

for the program, it is difficult to understand their budgeting/accounting for the 

money since it is to be allocated among the four states and not more than 6% is 

available for administrative costs. 

We are concerned that the funding that Congress has provided in FY07 is at risk 

because of the authorization lapse. 

Question 3. Your testimony seems to indicate that you would like to exclude tribal 

irrigation projects from participating in the FRIMA program. Is that the case, and 

if so, why? 

Answer. It is not a question of exclusion, but more of clarification as we stated 

in our response to question 1 from Senator Murkowski. There are other Federal programs available to the tribes for this work. Currently the tribes seek funding for 

screening projects through BPA’s capital fund and BPA’s fish and wildlife program. 

Further, it is unclear what work needs to be done, if any, because the inventories 

conducted by the states do not cover Federal and Tribal lands. 

As an example of the partnerships using FRIMA funding, tribes have provided 

funding to Soil and Water Conservation Districts and Watershed Councils who in 

turn work on smaller screening projects that use FRIMA funds.

R1 FRIMA Program Policy Guidance: 

Use of BPA funds as the Non-federal Cost-share of a FRIMA Project. 

The DOI Regional Solicitor’s Office was consulted on this issue and has indicated 

the following. 

BPA dollars cannot be used as non-federal match. The letter from the BPA legal 

advisor clearly states that BPA funds are federal funds. BPA has no specific legislation regarding this issue. FRIMA has specific legislation regarding this issue, hence 

the FRIMA legislation takes precedence. The FRIMA language is prohibitive, not 

permissive, regarding the use of federal funds as non-federal matching funds. 

Hence, BPA dollars cannot be used as the non-federal cost-share of a project. The 

BPA legal advisor agreed with the Solicitor’s view.

J. Van Meter 

Fish Passage Program Manager 

September 17, 2004

RESPONSES OF BILL LONG TO QUESTIONS FROM SENATOR JOHNSON

Question 1. What do you expect to be the source of water that will supply the communities participating in the Arkansas Valley Conduit? 

Answer. Initially, an allocation of Fryingpan-Arkansas Project water, including reuse of return flows, will adequately address water needs for the participating communities. Over the longer life of the Conduit, additional non-Project water supplies 

may be necessary to fully address water needs. These additional supplies may be 

acquired by interruptible supply agreements, rotational crop management leasing 

programs, adaptive management of existing community water supplies or by purchasing water from willing sellers. 

Question 2. Is Reclamation’s suggested minimum 35% cost-share for construction 

costs beyond the ability-to-pay of the participating communities? 

Answer. We have not made an analysis of a 35% cost-share, since S. 1106 proposes to use a 20% cost-share. Prior to the hearing, Reclamation consistently stated 

its position that the participating communities must repay 100% of construction 

costs. Because the average household incomes in the counties served by the conduit 

are significantly lower than the state average (approximately 55% of the state average), we are concerned that a cost-share significantly higher than the one provided 

in S. 1106 may be beyond the ability-to-pay of the participating communities. 

Question 3. What are the estimated OM&R costs for the Conduit project? Have 

the participating communities worked out a cost-allocation arrangement to ensure 

that they can pay those annual costs? 

Answer. Based on project cost estimates, annual debt service and O&M costs 

range between $2.5 and $4.8 million. The estimated annual O&M cost alone ranges 

55

from $775,000 to $1.9 million. To assist the participating communities in working 

out a cost-allocation arrangement, consultants to the Southeastern Colorado Water 

Activity Enterprise, a water enterprise created by the Southeastern Colorado Water 

Conservancy District, developed two approaches to establish cost allocations: a cost 

of service approach and an all-equal approach. The participating communities are 

still discussing these approaches, with assistance from state funding agencies. 

RESPONSES OF BILL LONG TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. How much water would be conveyed by the Conduit? 

Answer. The Arkansas Valley Conduit is designed to convey about 22,100 acrefeet of water in one year. The flow rate will be 30.94 cfs or about 20 million gallons 

per day. 

Question 2. Do you believe the communities that would receive water from the 

proposed project could use this loan guarantee program [contained in the Rural 

Water Supply Act of 2005]? 

Answer. The participating communities intend to use all of the financial resources 

available for which they appropriately qualify. Because the Rural Water Supply Act 

of 2005 loan guarantee program requires the Secretary of the Interior to develop eligibility criteria following passage of the Act, it is unclear whether the participating 

communities will be able to effectively utilize this program. 

Question 3. Is there also a concern that the aquifer on which the lower Arkansas 

Valley currently relies is being depleted at an unsustainable rate? 

Answer. No, the primary water supplies utilized by the communities that would 

benefit from the Arkansas Valley Conduit are surface water supplies or tributary 

ground water. As discussed in my testimony, water quality of those surface and tributary ground water supplies, is the primary concern. Other communities in Colorado, not proposed to be served by the Arkansas Valley Conduit, including some in 

other areas of southeastern Colorado, may face problems with aquifer over-draft.

[Responses to the following questions were not received at the 

time the hearing went to press:]

QUESTIONS FOR J. MARK ROBINSON FROM SENATOR MURKOWSKI

S. 2070, MOHAWK RIVER HYDROELECTRIC PROJECTS LICENSING ACT

I understand that the licensee, the federal and state resource agencies, and other 

significant stakeholders in the School Street Project relicensing proceeding have 

reached a settlement. 

Question 1. Is it correct that the only procedural hurdle to FERC issuing the license is a delay caused by the green Island Power Authority’s appeal of New York’s 

water quality certification for the Project? 

Question 2. Are you aware of any other case in which Congress has required 

FERC to issue a license that contemplates the destruction of the licensed project in 

the foreseeable future? 

S. 3851, THOMAS BAY HYDROELECTRIC PROJECT

Question 1. It is my understanding that all three of these proposed hydropower 

projects depend upon the applicant securing a power purchase agreement. The applicant will likely spend several millions of dollars during the preliminary permit 

period but is concerned that the money will ‘‘go down the drain’’ when those preliminary permits expire. One permit expires about a year from now. 

Pursuant to the Federal Power Act, FERC has the authority to grant a new preliminary permit once the original permit expires—as long as the applicant has acted 

in good faith. However, if a municipal entity also applies for that new preliminary 

permit, FERC is obligated to give preference to that municipal entity—regardless 

of how much work and money the original permit holder invested. Is that correct? 

QUESTIONS FOR J. MARK ROBINSON FROM SENATOR JOHNSON

S. 2070, MOHAWK RIVER HYDROELECTRIC PROJECTS LICENSING ACT

Question 1. It sounds like the only thing holding up the issuance of a license for 

the School Street project is the water quality certification by New York. 

Do you have any estimate on when the certification might be issued? Once that 

occurs, has the applicant met all the other licensing requirements pursuant to 

FERC’s regulations? 

56

Question 2. There is a provision in S. 2070 that would require in any license the 

inclusion of Articles 32 & 33 of the Millville Project license issued by FERC. 

What applicability would these articles have in this situation? Has the Corps of 

Engineers developed a comprehensive water resource plan for the Mohawk River? 

QUESTIONS FOR SECRETARY KEMPTHORNE FROM SENATOR MURKOWSKI

S. 1106, ARKANSAS VALLEY CONDUIT

Question 1. In your testimony, you mention that the re-evaluation statement of 

the Conduit included an assessment of the sponsor’s ability to pay. 

In that study, what was Reclamation’s determination? 

S. 1811, ARTHUR V. WATKINS DAM ENLARGEMENT

Question 1. It is my understanding that the dam was raised in 1990. 

Based on this experience, do you believe that raising the Dam an additional one 

to two feet is technically feasible? 

S. 3798, FOLSOM SOUTH CANAL DEFERMENT

You state in your testimony that you have concerns with deferring the repayment 

of the costs associated with a Reclamation facility based on the amount of capacity 

in use. 

Question 1. Please explain more fully to the Subcommittee your concerns with the 

precedent this would establish. 

Question 2. Are there any other parties who could benefit from the unused Canal 

capacity? 

S. 3832, RECLAMATION FACILITY TITLE TRANSFER

Question 1. What types of Reclamation projects do you believe should not be 

transferred? 

Question 2. What changes, if any, would you make to S. 3832? 

Question 3. As you mention in your testimony, Reclamation is currently investigating opportunities for the transfer of title to Reclamation facilities as part of its 

Managing for Excellence Plan. 

How is this progressing? When do you anticipate it will be completed? 

H.R. 2563, SNAKE, BOISE, PAYETTE RIVER SYSTEMS STUDY

Question 1. If H.R. 2563 is enacted, does Reclamation plan to solicit stakeholder 

comment as it did for the Boise and Payette Basin studies? 

Question 2. H.R. 2563 authorized $3 million to be appropriated for the feasibility 

studies. 

Do you believe that this amount is adequate? 

H.R. 3897, MADERA WATER SUPPLY ENHANCEMENT PROJECT

Question 1. What do you believe the total cost of a feasibility study would be for 

the proposed project? 

Question 2. How long would the feasibility study take to complete? 

Question 3. You state in your testimony that Reclamation is undertaking an appraisal level study of the proposed project. 

What involvement have the stakeholders had in this process? 

QUESTIONS FOR SECRETARY KEMPTHORNE FROM SENATOR JOHNSON

S. 1106, ARKANSAS VALLEY CONDUIT

Your testimony indicates that the water supply for the Arkansas Valley Conduit 

is not identified. 

Question 1. How much water is needed for the project on an annual basis? 

Question 2. Won’t the water come from the existing Fry-Ark project? If not, what 

are the potential sources for the water rights needed for the project? 

The Re-evaluation statement mentioned in your testimony contains updated construction and annual O&M costs as well as an assessment of the sponsors’ ability 

to pay. 

Question 3. Will you please provide a copy of the Re-evaluation statement for the 

Subcommittee? 

57

Question 4. What additional work is necessary to go beyond the Statement to provide Reclamation with the information necessary to determine whether or not the 

Project should go forward? 

S. 1811, ARTHUR V. WATKINS DAM ENLARGEMENT

You mention that the feasibility study for raising the height of the Arthur V. Watkins Dam would cost approximately $2.0 million. 

Question 1. How long would the study take? 

Question 2. Does the Project have sufficient water rights under state law to store 

additional water if the Dam height is raised? 

S. 3798, FOLSOM SOUTH CANAL DEFERMENT

The construction of the Folsom-South Canal sounds like it was a significant error 

in judgment based on its under-utilization. 

Question 1. Why does Reclamation think it’s fair that the CVP contractors pay for 

the construction of a canal that benefits hardly anyone? 

Question 2. What are the overall construction costs of the Folsom-South Canal? 

How much has been repaid to date? 

Question 3. Is there any potential use for this canal in the future? Will it simply 

go on with only 2% of its capacity used? 

S. 3832, RECLAMATION FACILITY TITLE TRANSFER

Your testimony indicates that Reclamation has an existing framework for title 

transfer, and is currently working on improving that framework. 

Question 1. Does the existing framework address the transfer of complex multipurpose projects? 

Question 2. Does Reclamation think that Congress should hold off on considering 

S. 3832 until it has completed its Managing for Excellence review? 

H.R. 3897, MADERA WATER SUPPLY ENHANCEMENT PROJECT

Question 1. Is the appraisal-level work for the Madera water supply enhancement 

project sufficiently far along to provide some type of cost estimate for the project 

as currently configured? 

Question 2. What are the type of project features being looked at in the appraisalreport? 

Question 3. What is your estimate of the cost to complete a feasibility study of 

the project? 

QUESTIONS FOR SECRETARY KEMPTHORNE FROM SENATOR SALAZAR

I have a list of 13 community public water systems in Southeastern Colorado that 

are under an active enforcement order from the Colorado Department of Public 

Health and Environment for failure to comply with drinking water standards. These 

are all small towns and rural water associations that simply cannot cover the costs 

of upgrading their water treatment facilities on their own. They, along with many 

other communities in the region, will need to seek federal assistance to upgrade 

their water treatment systems, at an estimated cost of $640 million, most of which 

will be born by the federal government. 

Question 1. Given that the Conduit is estimated to cost approximately $300 million, of which 20% will be provided by the local communities, and upgrading individual water systems in southeastern Colorado is estimated to cost $640 million, 

most of which would be born by the federal government through grants and other 

funding mechanisms, isn’t it true that, from a financial standpoint, the Conduit will 

end up costing the federal government less than it would spend if it had to help 

upgrade all of these water treatment systems? 

In your testimony you raise a concern with the 80-20 cost share provision in this 

bill. But as you noted in your testimony before the House Resources Committee in 

July, since the early 1980s, Congress has authorized thirteen separate single purpose Reclamation projects for municipal and industrial water supply in rural communities in Reclamation States, at a total federal budget authorization for of over 

$2.3 billion. 

Question 2. Isn’t it true that the non-Federal cost shares for each of the currently 

authorized rural water projects range from zero for the Indian portion of the Mni 

Wiconi Project in South Dakota to 25 percent for the non-Indian Dry Prairie Rural 

Water System connected to the Fort Peck Reservation Rural Water System in Montana.? 

58

Question 3. Do you stand by your statement that these types of water supply 

projects, like the Arkansas Valley Conduit, should be based on a community’s ‘‘capability to pay?’’

QUESTIONS FOR THOMAS F. DONNELLY FROM SENATOR MURKOWSKI

Question 1. From your perspective, what are greatest problems with Reclamation’s 

existing title transfer process and what improvements would you make? 

Question 2. What are some of the benefits to project beneficiaries associated with 

receiving title to Reclamation projects? 

QUESTION FOR THOMAS F. DONNELLY FROM SENATOR JOHNSON

Question 1. In your view, is Reclamation’s process to review its title transfer procedures sufficient to warrant holding off on any legislation until that process is complete? 

(59)

APPENDIX II 

Additional Material Submitted for the Record 

STATEMENT OF HON. MICHAEL R. MCNULTY, U.S. REPRESENTATIVE FROM NEW YORK

Madam Chairwoman, thank you for this opportunity to address an issue that has 

been a cause of concern for many of my constituents: the relicensing of a hydro 

project known as the School Street Project (FERC Project No. 2539). 

The license for this project, which is located on the Mohawk River near Albany, 

New York, expired in 1993 and only the Federal Energy Regulatory Commission 

(FERC) can issue a new license. 

The School Street Project, in place since the early 1930’s, is an antiquated, suboptimal hydro facility that has robbed my community of a wonderful, natural waterfall, the Cohoes Falls. The School Street Project also diverts water from amile of 

the Mohawk River so that this mile of the river is mostly dry during the summer, 

is fish unfriendly, and produces less than half the power that could be generated 

by a modern hydroelectric power plant. 

The Green Island Power Authority (GIPA), a publicly owned municipal power authority created under the laws of the State of New York, would like to file an alternative proposal with FERC for consideration prior to the Commission issuing another 30 to 50 year exclusive license to an existing hydroelectric project. 

GIPA’s proposal would address four important generation, environmental, and 

community concerns. It would:

• replace the antiquated existing hydro project with a state of the art facility that 

will produce more hydropower; 

• restore what the School Street project took away, the visual beauty of a continuously flowing waterfall; 

• save fish, which have been dying due to the setbacks of the current hydroelectric project; 

• give a real boost to the economic health of the community.

Under current Federal law, competing applications must be submitted two years 

prior to the School Street Project’s license expiring. The School Street project license 

expired 14 years ago. As a result, despite the existence of a more energy efficient 

project that would better serve the public interest, FERC has mandated that GIPA’s 

Cohoes Falls Project cannot even be considered. 

I support S. 2070, one of the bills being reviewed today. This legislation, proposed 

by Senator Schumer, is simple but effective. It requires FERC to allow the introduction of new evidence about a better project into the record in the School Street case. 

It does not disturb the right of FERC to make the final decision, but it does require 

FERC to make a fair record. It makes FERC accountable to the courts if they don’t 

apply the law the way Congress intended. 

This legislation is badly needed now in a community that is losing confidence in 

the ability of its national government to understand or even permit fair play when 

it comes to giving out exclusive licenses to private entities for the valuable natural 

resources belonging to the public. 

For the people in my district and the region, the restoration of the Cohoes Falls, 

the rewatering of the Mohawk River, and the beauty and value they could bring to 

our local communities in the future are profound issues. It is not simply another 

case to be dealt with in the large pile of casework. 

Because of my community’s great interest in the new license, I have been personally involved in this effort since 2001. To date, I have failed to persuade FERC to 

make even the most simple changes:

• Update a stale record to accept current information; 

• consider a superior alternative project to the status quo; 

• permit participation by local community organizations; 

60

* The letters have been retained in subcommittee files. 

• actively protect the public interest.

Thus far, I have been unable to persuade this federal agency to allow my constituents and local organizations and communities to participate in any meaningful way 

in the School Street relicensing process. Instead, the community has been excluded 

from the hearing process and denied party status, so they cannot appeal any decision issued by FERC in court. 

When the public is prevented from making its case before a federal agency, citizens and local officials alike have wonder what’s going on. For whom was this agency created and what did Congress intend it to do? 

The applicable law is clear: Congress intended in 1920 when it enacted the Federal Power Act, that the agency it created, now the Federal Energy Regulatory Commission, should pick the ‘‘best project’’ to comprehensively develop our Nation’s rivers, in the public interest. 

When the Commission strayed from its original mission, the courts stepped in to 

remind the Commission that its duty was to see that ‘‘the record is complete. The 

Commission has an affirmative duty to inquire into and consider all relevant facts.’’ 

Scenic Hudson Preservation Conference v. FPC, 354 F. 2d 508 (1965), at 620. The 

Court said this in a case involving the location of a huge pumped storage project 

on the Hudson River, proposed by Consolidated Edison Company, just south of the 

Capital Region of New York. Moreover, the Court noted that the agency’s refusal 

to receive the testimony about alternative sources of power and information about 

fish protection devices and underground transmission facilities, even in some cases 

offered by a non-party to the case, was inappropriate and ‘‘exhibits a disregard of 

the statute and of judicial mandates instructing the Commission to probe all feasible alternatives.’’ That quote comes from the same case and the same page. 

In Scenic Hudson, the Court noted that the agency had denied participation to 

some of the interests, thereby depriving the record of their evidence; in other words, 

the same kind of activity that has been occurring in the present School Street case. Quoting from another case, the Scenic Hudson Court found persuasive a holding 

that ‘‘it is not fair play for it (i. e., the agency) to create an injustice, instead of remedying one, by omitting to inform itself and by acting ignorantly when intelligent 

action is possible . . .’’ Scenic Hudson at 621. I note that Scenic Hudson occurred 

in the mid-1960s and it seems as if the current FERC is suffering the same problems that afflicted the agency back then. 

Unlike the existing School Street Project, the new Cohoes Falls Project would double the renewable energy available from the waters of the Mohawk. It would restore 

the historic Cohoes Falls to the way they used to be. It would rewater a mile of 

the Mohawk River where it now runs dry. GIPA proposes to dedicate a portion of 

the additional power input to create jobs in the community, and we could use those 

jobs. Another portion of the hydro power would be earmarked for public institutions, 

to help those communities with their budgets and maintain our local institutions. 

Recreation and public access to the river and to the falls would be enhanced, after 

consulting with the Tribal groups that have a special religious interest in preserving 

certain aspects of the falls and site. How to meet these objectives is the information 

being excluded by FERC. 

This is why my community needs S. 2070. I thought the Federal Power Act was 

clear, as did the courts. In 1965 however, the courts had to remind the agency administering the Federal Power Act of its duty, despite the clarity of the law. It 

seems that the time is here again. But rather than burdening the court system with 

this case and delaying the resolution for another three to five years, Congress 

should act to pass S. 2070. Otherwise, the bottom line is that delay only benefits 

the current Licensee, who has taken an old Project that should be costing the consumers less than a penny per kwh and instead is selling it to them at 5-10 cents/

kwh, under the new rules of the electricity market. That’s taking a lot of money out 

of the community and the pockets of my constituents, and preventing us from using 

our own region’s resources to ensure our own future. 

Delay also means that the current Licensee, a Canadian corporation, will be able 

to take those profits and invest them elsewhere and not in the surrounding community. I submit this testimony today because my community has been waiting for 15 

years for FERC to take an affirmative step to improve the conditions at the School 

Street site, and FERC is choosing to ignore an opportunity to do just that. 

I am attaching two letters I have written to the Commission in the past, including 

one signed by Senators Schumer and Clinton.* The results are the same: FERC continues to reject the community’s efforts and gives every intention of closing down 

the case and issuing a license for pretty much the same antiquated project that proVerDate 0ct 09 2002 09:26 Jan 31, 2007 Jkt 109781 PO 32736 Frm 00064 Fmt 6601 Sfmt 6621 H:\DOCS\32736.TXT SENERGY1 PsN: RSMIT
61

vides little benefit to the surrounding community. And this is at a time when 

prompt development of an alternative would give us double the energy! 

The development of a new Project and the restoration of the Cohoes Falls and the 

Mohawk River flows will do much to restore pride and beauty to my community and 

it will bring economic benefits to a community that has already been abandoned by 

the large corporations who found it more efficient to move than to invest money for 

modernization and new industries in the same communities. 

Madame Chairwoman, thank you for including S. 2070 within the scope of today’s 

hearing. I look forward to further discussions on how we might proceed in enacting 

legislation that would level the playing field so that the people in my district might 

have a fair chance to obtain and develop their own natural resources. 

STATEMENT OF BROOKFIELD POWER

Clarification on Matters Raised at the 9/21 Hearing on S. 2070

It was suggested at the hearing that the existing owner (Brookfield Power) does not 

want to do anything to improve the (School Street) facility, the environment, or its 

surrounding community and that the surrounding community supports the GIPA 

proposal over the Brookfield proposal. 

In fact, Brookfield has negotiated an extensive settlement agreement—years in 

the making and supported by hydropower experts, resource agencies, environmental 

advocates and the surrounding community—to make facility improvements benefiting the community and the environment. Brookfield’s settlement agreement for 

School Street provides for continuous flows over historic Cohoes Falls; new recreational amenities including two viewing areas and a new footbridge; new foot 

trails; new fish protection and passage systems that have been approved by the U.S. 

Fish and Wildlife Service; an Historic Properties Management Plan; and ongoing 

work with indigenous peoples to ensure they have continued access to the falls for 

cultural purposes. This agreement is supported by the New York State Department 

of Environmental Conservation (NYS DEC), the NY Power Authority, NOAA Fisheries, U.S. Fish and Wildlife Service, the Mayor of the City of Cohoes NY, the NYS 

Conservation Council, and NY Rivers United. 

School Street is also seeking to become one of only two locations in the nation 

to install and test cutting edge fish-friendly turbine technology developed with the 

United States Department of Energy. Brookfield will enhance School Street to 50 

MW capacity which should generate more than 200,000 MWh of energy annually. 

FERC Director of the Office of Energy, Mark Robinson, called this capacity addition 

‘‘well-sized’’ for the area. 

It was suggested that GIPA’s proposal would enhance the environment and give 

New Yorkers better access to clean energy than would the Brookfield School Street 

proposal. 

GIPA’s claims have not been tested or verified by the major resource agencies, environmental advocates, or a range of hydropower experts as Brookfield’s proposal 

has. In order to achieve its claimed energy output, GIPA will have to build a new, 

larger dam on top of the falls and blast a section of the face to insert a massive 

powerhouse. This new dam would mean the certain inundation of one of the last 

stretches of natural flow and habitat left on the Mohawk River, but it is uncertain 

whether GIPA’s energy claims can ever be realized. 

It was suggested that the amount of time Brookfield has been operating on an annual license is unduly long. 

Brookfield’s School Street facility was one of nine of its project licenses in NY that 

expired in 1993. Through an agreement with FERC and stakeholders, those licenses 

were settled one at a time, with School Street designated as last in that settlement 

agreement process. Therefore, while waiting its turn, the School Street facility was 

given annual licenses. Additionally, once the licensing process began at School 

Street, time was put into negotiating a thorough settlement agreement, one which 

would ensure proper upgrades and the benefit of the surrounding community. The 

fact is, that but for GIPA’s intervention and repeated appeals, the licensing process 

would be over. 

It was suggested that FERC has rejected GIPA’s request to apply for a license at 

School Street because of technicalities. 

In fact, FERC has refused to permit GIPA to apply for a license at the School 

Street facility because the Federal Power Act and its rules prohibit a new license 

application from being filed on an ‘‘untimely’’ basis—in this case, more than thirteen 

years after the deadline for such applications. It is the law that FERC follow clear 

timelines for licensing set forth in the Federal Power Act. It is important not only 

62

for Brookfield, but for licensees across the nation, that the law governing relicensing 

has certainty and integrity and is not subject to undue political interference. 

It was suggested that GIPA was somehow precluded from competing for the School 

Street license when the window of opportunity lawfully existed in the early 1990’s. 

GIPA, like any other prospective applicant, was free to file a competing application for the School Street project during the window of opportunity that existed in 

the early 1990’s. The fact that Niagara Mohawk, the owner at that time, operated 

as a regulated monopoly in New York has no bearing, and that business structure 

in no way precluded GIPA from competing. GIPA simply chose not to compete when 

the lawful opportunity existed. 

SOUTHEASTERN COLORADO WATER ACTIVITY ENTERPRISE, 

Pueblo, CO, June 13, 2006. 

Senator KEN SALAZAR, 

U.S. Senate, Hart Senate Office Building, Washington, DC. 

DEAR SENATOR SALAZAR: At last summer’s July 16 Arkansas Valley Conduit 

Forum in La Junta, Colorado, Senator Wayne Allard, Representative Marilyn 

Musgrave, and yourself agreed that key information was needed before legislation 

would be moved through Congress. Additionally, Representative John Salazar 

agreed with the request from the Forum. Specifically, it was requested the District 

verify that enough water is available for the conduit, and the participants can afford 

their portion of the cost of the conduit. 

In November of 2005, Black & Veatch Engineering was hired to perform an Investigation Study to obtain answers to these questions. As part of this Investigation, 

all the water-providing entities were contacted and information was gathered. Black 

& Veatch has completed that Investigation and we are excited to provide you with 

the Investigation results. Enclosed is a copy of the Executive Summary for your perusal, and the complete study can be made available should you wish to see more 

detail. 

The Investigation found that there is an adequate water supply for the conduit. 

Project water is available to meet the current demands of the participants. Regarding the funding question, cost ranges were determined by the minimal size of the 

conduit as the lower bookend, and the largest size with some water filtration included in the upper bookend. To assure that each entity was on board and understood the costs, Letters of Intent were obtained from each entity. Attached is the 

list of the Letters of Intent in hand to date, representing all but a few very small 

providers who have not yet completed the letter process. 

Additionally, the District will be submitting a loan application in August to the 

Colorado Water Conservation Board. In discussions with them, we have learned that 

they have money available to loan for this project at rates between 3.0% and 3.5%. 

The final rate would be determined by the per capita income of the participating 

entities versus the state average. 

Now that the Investigation has been completed and the findings enclosed, it is 

the hope of the participants that our congressional delegation will undertake the effort necessary for Congress to act upon the authorizing legislation for this critical 

project, and seek the subsequent funding needed to build it. The District’s staff, 

legal counsel, and consulting firm Kogovsek & Associates, look forward to meeting 

with you at your earliest convenience in an effort to finalize the language in the 

legislation. 

Thank you for your support. 

Respectfully, 

BILL LONG, President, 

Chairman, Conduit Committee. 

AMERICAN RIVERS, 

Washington, DC, September 21, 2006. 

Senator PETE DOMENICI, Chairman, 

Senator JEFF BINGAMAN, Ranking Member 

Senate Energy and Natural Resources Committee, Washington, DC. 

DEAR MR. CHAIRMAN AND SENATOR BINGAMAN: American Rivers is a national nonprofit conservation organization dedicated to protecting and restoring healthy natural rivers and the variety of life they sustain for people, fish, and wildlife. American Rivers has a membership of more than 45,000, with members in each of the 

fifty states. 

63

We have significant concerns about S. 2070. Our concerns are not based on the 

relative merits of the competing hydropower projects that are the subject of this legislation, but rather a policy principle: Congress should not legislate the results of individual hydropower licensing proceedings or the terms of a hydropower license. Instead, Congress should allow FERC and appropriate state and federal agencies to 

implement the Federal Power Act and other applicable laws. The hydropower licensing process must operate in a consistent, pre-defined manner in every hydropower 

project. Any legislation that creates case-by-case exceptions to these rules sets a 

dangerous precedent that creates uncertainty and could severely undermine the confidence of participants in this lengthy and complex process. 

Because we only just became aware of the September 21st hearing and consideration of S. 2070, we have not yet had time to discuss our concerns with Senator 

Schumer or his staff. We look forward to discussing our concerns with them in the 

near future. 

BACKGROUND

Erie Boulevard Hydropower (Erie) owns the School Street hydropower project on 

the Mohawk River in New York. When its license for the project expired in 1993, 

Erie engaged in settlement talks with state and federal agencies, environmental and 

recreation groups, and other stakeholders to negotiate a new license. Based upon 

those settlement talks, Erie has a license application pending before FERC. In January 2005, Green Island Power Authority (GIPA) filed a preliminary application 

with FERC to construct the Cohoes Falls hydropower project, which would require 

usurpation of the site of the School Street Project. In rejecting GIPA’s application, 

the Commission concluded that the Federal Power Act barred it from considering 

a competing license application filed more than 13 years after the statutorily-defined 

deadline for such applications. FERC also determined that it could not issue a license that would require that another existing licensed project be decommissioned 

over the objection of its licensee (in this case, by issuing a license that would allow 

a new, larger dam to bury an older dam under water). 

We do not wish to take sides in the debate over which project would be a better 

use of the Mohawk River. GIPA claims that its proposed hydropower project will 

offer even more significant improvements that would benefit the environment and 

other public values than the negotiated deal arrived in the School Street settlement. 

If they are right, then it is unfortunate that they did not act at the appropriate time 

during the licensing process. Many stakeholders come in late to hydropower licensing proceedings with ideas or proposals that they believe to better represent the 

public interest, but they are not considered because to do so would invite a process 

with no end. And before anyone can accept GIPA’s assertion that its application is 

more in the public interest than Erie’s, the project would have to undergo the same 

level of scrutiny and evaluation as the School Street Project settlement agreement. 

But allowing this process to drag on any further would set a very dangerous precedent and throw licenses and settlement agreements into an environment of great 

uncertainty. 

CONGRESS SHOULD NOT ENGAGE IN HYDROPOWER LICENSING BY LEGISLATION

When Congress created the Federal Power Commission with the passage of the 

Federal Power Act in 1920, it delegated the responsibility for making decisions 

about individual projects to an independent regulatory agency with the high level 

of expertise necessary to make informed decisions about how best to allocate the nation’s limited number of sites with hydropower potential. As a result, federal hydropower licensing is governed by a set of rules that are generally consistent. These 

rules provide utilities and other stakeholders with a process that guarantees a reasonable amount of stability and certainty. 

We are worried by the idea of direct Congressional involvement in licensing decisions. When a piece of legislation attempts to circumvent FERC’s rules and delegated authority—especially to benefit a single utility on a single hydropower 

project—the very stability of the licensing process is threatened. Once individual license applicants or other licensing stakeholders with political connections believe 

that they can skirt this process by asking Congress to legislate the terms of a hydropower license, we will be on a very slippery slope. Each exception further erodes 

the underlying stability and fairness of the regulatory environment. 

In order to maintain the integrity of the licensing process, American Rivers must 

object just as strongly where Congress is intervening in a case that may result in 

greater environmental protection as we must in a case where Congress is allowing 

a licensee to avoid those protections. As a matter of principle, American Rivers has 

opposed even minor attempts by Congress to bend or make exceptions to the rules 

64

1For example, see S. 3851, a bill which is also currently pending before this Committee (and 

to which we are opposed for the reasons described here). 

of hydropower licensing. One fairly common exception takes the form of a preliminary permit extension,1 which requires that FERC grant a licensee additional time 

to commence construction of a project when it has missed the deadlines specified 

in its license. Our opposition is based on a simple principle: If Congress begins to 

arbitrarily extend license terms, then it might go further, requiring the Commission 

to issue a license in a case where issuing a license may not be justified. Or it might 

choose to dictate specific conditions in a license, even if the Commission has determined that those conditions are not in the public interest. Neither situation is acceptable. 

American Rivers has had many quarrels with both the hydropower industry and 

FERC and we remain strong advocates for reforms of both, but we cannot support 

the kind of piecemeal approach suggested in S. 2070. While extraordinary circumstances may some day arise when American Rivers may believe that Congressional involvement at this level is necessary, this case does not meet that threshold. 

EXTRAORDINARY CIRCUMSTANCES DO NOT EXIST

Proponents of this legislation have argued that extraordinary circumstances do 

exist that warrant Congressional involvement in the Mohawk River cases. They 

claim that much has happened between the deadline for filing a license application 

(which was in 1991)—an alternative use of the hydropower site has been conceived, 

community attitudes have changed, and economic and other conditions warrant a 

reexamination of what is in the public interest. While we can empathize with their 

perception of the situation, it does not represent an extraordinary circumstance worthy of Congressional intervention. 

When the Commission is unable to issue a new license for an existing project before its license expires, FERC issues an ‘‘annual license,’’ that allows the utility to 

operate the project under the terms of its original license. In many cases, an annual 

license gives utilities an opportunity to delay. If the status quo conditions are cheaper than the terms of a new license, then some utilities will do what they can to 

delay and maintain those original, cheaper conditions. This behavior is a clear abuse 

of the provisions of the Federal Power Act that guide hydropower licensing, and we 

encourage Congress to consider ways in which it might curb this practice. However, 

there are instances when annual licenses are valuable tools that give stakeholders 

the necessary time and freedom to work out differences and settle disputes outside 

of the traditional FERC licensing process that can then feed back into the establishment of a new license. It is this very set of circumstances that we find on the Mohawk River. 

The School Street project is one of dozens of licenses in New York that all expired 

in 1993. To deal with the glut of licensings, stakeholders reached an agreement in 

which the New York State Department of Environmental Conservation would address each of the relicensing applications sequentially. The School Street project was 

at the bottom of this list, and has therefore been issued annual licenses for the past 

13 years. However, we believe that the owners of the School Street Project acted 

in good faith during those 13 years to work towards obtaining a license from FERC 

and other necessary permits from other federal and state agencies. If FERC had 

issued Erie a license for the School Street Project back in 1993, GIPA would find 

itself in almost the same position as it is today—unable to develop the site until 

the current license expires. They can and perhaps should argue to FERC that within its legal discretion, it issue a shorter license term since Erie benefited from 13 

years of annual licenses. This would at least give GIPA the opportunity to compete 

for the contested site sooner. 

If Congress intends to do something about the abuse of annual licenses, it should 

look to a broader and more equitable solution. 

S. 2070 DICTATES UNREASONABLE LICENSE TERMS

The most troubling aspect of this bill is that it dictates specific conditions which 

FERC must include in any hydropower license issued on the Mohawk River. Subsection (d) of the bill requires that FERC ‘‘shall include the same license conditions 

relating to the use of affected waters provided in articles 32 and 33 of the license 

included in Potomac Light & Power Company, Project No. 2343, 32 F.P.C. 584, 588 

(1964).’’ Those articles read as follows:

Article 32. The right, power, and authority is reserved to the United 

States to construct or to the Commission to issue a license authorizing the 

65

1 NHA is a non-profit national association dedicated exclusively to advancing the interests of 

the U.S. hydropower industry. The association represents 61 percent of domestic, non-federal hydroelectric capacity. Its membership consists of more than 140 organizations including public 

utilities, investor-owned utilities, independent power producers, equipment manufacturers, environmental and engineering consultants, and attorneys. 

construction, operation and maintenance of hydroelectric project which will 

more completely utilize the water resources of the reach of the Shenandoah 

River in which the project is located. 

Article 33. The acceptance of this license by the Licensee shall constitute 

its stipulation, consent and agreement made upon its own behalf and upon 

the behalf of its successors and assigns for the benefit of the United States, 

or the person or persons hereinafter constructing, operating and maintaining such more complete water resource project or his or their successors 

and assigns that said Licensee, its successors or assigns, shall surrender its 

license at such time as the project becomes inoperative by reason of inundation by such more complete hydroelectric project; provided, that Licensee 

shall be paid the net investment in Project No. 2343 upon surrender of its 

license; and provided further that Licensee shall not be entitled to any compensation for severance damages sustained by reason of inundation or destruction of the project or project works of Project No. 2343.

By legislating the specific conditions of a license, this bill would set a very dangerous precedent. If Congress begins to insert line-item provisions into licenses, 

then a member of Congress could conceivably strip—or add—environmental protections from a license allowing a license to never expire or require it be decommissioned. The result would be undermine the public’s and the industry’s confidence in 

the integrity of the hydropower licensing process. 

S. 2070 WILL DISRUPT A SETTLED HYDROPOWER LICENSING AND CAUSE FURTHER DELAYS

Stakeholders (State and federal agencies, NGOs, and others) have already invested significant time and resources into the relicensing of the School Street 

project, and have reached a settlement. This bill would throw the licensing process 

and settlement into chaos, despite years of work. By requiring FERC to consider a 

competing application at the end of the process, it would extend the period that the 

School Street project may operate under an annual license, further delaying the implementation of environmental improvements. 

In conclusion, we thank you for considering our perspective, and strongly urge you 

to oppose this bill at this time. If you or your staff have any questions or concerns 

regarding this testimony, I would be happy to discuss them. 

Sincerely, 

ANDREW FAHLUND, 

Vice-President for Conservation. 

NATIONAL HYDROPOWER ASSOCIATION, 

Washington, DC, October 2, 2006. 

Senator PETE DOMENICI, Chairman, 

Senator JEFF BINGAMAN, Ranking Member, 

Senate Committee on Energy and Natural Resources, Dirksen Senate Office Building, 

Washington, DC. 

Re: Statement for the Record of the National Hydropower Association (NHA) on S. 

2070

Dear Senators Domenici and Bingaman: The National Hydropower Association 1

writes to express its concerns regarding S. 2070, the Mohawk River Hydroelectric 

Projects Licensing Act of 2005. On September 21st, the Committee’s Water and 

Power Subcommittee held a hearing on the bill. 

S. 2070 would prohibit the Federal Energy Regulatory Commission (FERC) from 

issuing a new license for a hydroelectric project on the Mohawk River in New York 

if the project has been operating under annual licenses for 10 or more years, unless 

FERC issues a public notice that it will accept other valid license applications to 

develop the project works or the water resource, and FERC approves a license application with terms consistent with the legislation. 

Under the Federal Power Act, FERC is given the authority over the licensing of 

hydropower projects. The FERC regulatory regime provides a comprehensive process 

to determine necessary license terms and includes procedures governing competing 

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ing the Congress into the middle of an ongoing licensing proceeding. Simply put, 

this is bad public policy. 

While NHA does not intervene in proceedings regarding individual licensees, the 

Association is concerned that S. 2070 sets a precedent for the licensing of hydropower projects that is disconcerting and should be carefully and deliberatively reviewed prior to Congress taking such a dramatic departure from practice. 

NHA believes it is inadvisable for the Congress to dictate by legislation hydropower licensing outcomes. FERC is the appropriate decision maker with the necessary expertise and experience to fully analyze and equitably resolve licensing 

issues. FERC should be allowed to conduct its work free from legislative intrusion. 

This arbitrary involvement would create instability and uncertainty in the licensing 

of hydropower projects. 

Over the years, NHA has advocated for regulatory and legislative improvements 

to the licensing process aimed to bring transparency, accountability, and equitable 

treatment for licensees and stakeholders. Responding to this call, FERC, in 2003, 

adopted the new integrated licensing process (ILP) and Congress enacted several licensing reform procedures in the Energy Policy Act of 2005. 

S. 2070 appears to be a step backward from these advancements and NHA encourages the Committee to consider the effects this intervention could cause. Also, 

American Rivers, a non-profit conservation organization that regularly participates 

in hydropower licensing proceedings has urged the Committee to oppose S. 2070. 

NBA agrees and respectfully urges the Committee to do the same. 

NHA appreciates this opportunity to share its views on S. 2070 and its potential 

effect on the hydropower licensing process. Please feel free to contact me if there 

are any additional questions regarding S. 2070 or NHA’s position on the bill. 

Sincerely, 

LINDA CHURCH CIOCCI, 

Executive Director. 

STATEMENT OF THOMAS P. GRAVES, EXECUTIVE DIRECTOR, MID-WEST ELECTRIC

CONSUMERS ASSOCIATION

The Mid-West Electric Consumers Association appreciates the opportunity to submit testimony on S. 3832, the ‘‘Reclamation Facility Title Transfer Act of 2006.’’

The Mid-West Electric Consumers Association was founded in 1958 as the regional coalition of consumer-owned utilities (rural electric cooperatives, public power 

districts, and municipal electric utilities) that purchase hydropower generated at 

federal multi-purpose projects in the Missouri River basin under the Pick-Sloan Missouri Basin Program. In Pick-Sloan, power generated at Bureau multi-purpose 

projects is marketed by the Western Area Power Administration and is under long 

term contracts. 

The legislation before the committee, S. 3832, the ‘‘Reclamation Title Transfer Act 

of 2006,’’ directs the Bureau of Reclamation to establish criteria for the title transfer 

to irrigation districts and to recommend facilities appropriate for such transfer. In 

his remarks introducing the legislation, Senator Domenici noted that he intended 

to broaden the Bureau’s current efforts, which have heretofore focused on singlepurpose projects, to address title transfer of Bureau of Reclamation multi-purpose 

facilities as well. 

Mid-West has supported title transfer of single-purpose Bureau facilities in the 

past and will continue to do so where the proposed transfer is fair to federal power 

users. Mid-West has concerns about the process outlined in the legislation as it 

might apply to the Bureau’s multi-purpose facilities. 

Title transfer of federal assets to the private sector is a complicated business. 

Mid-West has worked with the Bureau of Reclamation and irrigation projects in 

Pick-Sloan where there has been an interest in title transfer of these single-purpose 

projects. Single-purpose projects have dams and reservoir storage, along with all the 

appurtenant irrigation facilities to serve the project (canals, etc.). There are no existing hydropower generation facilities in the project nor are any authorized for federal development. Recreation may or may not have developed around a project’s reservoir. 

Nonetheless, federal power is still involved in those projects, at least those 

projects that are in the Pick-Sloan Missouri Basin Program (Pick-Sloan). Whatever 

power that may be needed to provide ‘‘first-lift’’ of irrigation water is sold to 

irrigators during the irrigation season at the ‘‘project use’’ rate, currently calculated 

at 10 mills/kWh. That rate is significantly below the firm power rate of 18.74 mills/

kWh, which is already scheduled to increase to 19. mills/kWh in January 2007. 

Where the Bureau project is not directly served by federal transmission, federal firm 

67

power customers also pay the transmission costs of the transmission to deliver that 

power. 

In addition, Pick-Sloan firm power customers subsidize the construction costs of 

the project through ‘‘aid-to-irrigation.’’ In practical terms, that means that PickSloan federal firm power customers are responsible for repayment to the U.S. Treasury of roughly 80% (on average) of an irrigation project’s construction costs. 

These can be thorny issues, but they are not insurmountable so long as all parties 

are treated equitably. 

Mid-West not only supported but also lobbied for the title transfer of the Middle 

Loup irrigation project in Nebraska. Mid-West supported transfer of that project because the terms of the legislation were fair to all parties—both water and power 

users. The terms of the settlement called for the irrigation district to repay the U.S. 

Treasury the net remaining present value of their federal debt. Power users repaid 

the aid-to-irrigation at the net present value of that debt as determined by the ratesetting Power Repayment Study of the Western Area Power Administration. Since 

the transfer of the project removed ownership from the federal government, the irrigation district gave up the project-use power rate. The irrigation district was 

deemed eligible to receive seasonal Pick-Sloan power at the firm power rate. MidWest supported that allocation. For Pick-Sloan firm power customers the critical elements to the settlement were:

• proper application of net present value to the remaining federal obligations of 

water and power users; and 

• title transfer to the irrigation project beneficiaries without continued federal 

subsidies, including withdrawal of subsidized federal power rates and transmission costs.

Negotiations have failed in other instances where Bureau project beneficiaries in 

Pick-Sloan were attempting to transfer title while retaining federal benefits of the 

project use power rate and power delivery. 

Transfer of multi-purpose Bureau projects is far more complicated. 

The legislation before the committee (S. 3832) directs the Bureau to include four 

criteria that require: (1) project beneficiaries or an entity that the project beneficiaries approve of be willing to take title to the project; (2) project beneficiaries be 

capable of assuming operation, maintenance and rehabilitation of the facility if they 

have not already done so; (3) where there are multiple project beneficiaries they be 

in agreement on taking title; and (4) project beneficiaries be willing to assume any 

liability associated with the reclamation facility. § 3(b)(A)(B)(C)(D). These are the 

only directions given to the Bureau. 

The rest of the legislation calls for:

• assessments of a variety of issues associated with a title transfer, including an 

assessment whether stakeholders would be adversely affected. § 3(b)(2)(E); and 

an assessment of any legal considerations associated with title transfer 

§ 3(b)(2)(G); 

• procedures for ‘‘soliciting stakeholder involvement in the transfer of title to a 

reclamation facility’’ § 3(b)(3)(A), and ‘‘involving appropriate Federal, State, and 

local entities in evaluating and carrying out the transfer of title to a reclamation facility’’ § 3(b)(3)(B); and 

• a comprehensive list of actions that must be accomplished prior to transfer and 

procedures to allow the Secretary to address real property, cultural and historic 

preservation issues ‘‘in a more efficient manner’’ § 3(b)(4)(5).

Mid-West believes that the legislation does not provide sufficient direction to the 

Bureau on issues relating to federal hydropower facilities. Assessments and procedures are certainly needed and important, but the legislation does not provide Congressional guidance on what to do with the results of those assessments. 

For example, the legislation is silent as to the treatment of federal power facilities, requiring no criteria and providing no guidance to the Bureau relating to treatment of power generation at Bureau facilities. 

Neither the Western Area Power Administration nor its federal power customers—who are, in large part, the financial engine of these projects—is included 

in the process. Instead, power interests are relegated to stakeholder status, where 

the only requirement is that stakeholders have been involved in the ‘‘transfer of title 

to a reclamation facility.’’ (Project beneficiaries are also included as stakeholders, in 

addition to their status as project beneficiaries.) 

The hydropower generation at the Bureau’s multi-purpose projects is an important part of the resource mix of Pick-Sloan firm power customers. The rural electric 

cooperatives, municipal electric utilities, and public power districts in the region 

68

chose not to develop electric generation development but rather joined with the federal government in a partnership under the Flood Control Act of 1944. 

Transfer of the Bureau’s hydropower generation could seriously threaten the financial and operational viability of the federal power program. Federal firm power 

customers would be stunned to find that, after paying for 100% of the hydropower 

costs of a project (construction and operations and maintenance), and after paying 

hydropower’s allocated share of joint costs, and after paying roughly 80% of the construction costs of Bureau irrigation projects, and after subsidizing power rates to 

Bureau irrigation projects that the hydropower generation is to be transferred to a 

third party. In fact, under the terms of the legislation, federal firm power customers 

would not even be eligible to purchase those assets, unless the project beneficiaries, 

i.e. the irrigation project, agreed. 

Mid-West believes that Congress should provide specific direction to the Bureau 

to involve the Power Marketing Administration and their affected power customers 

as fully participating parties in any negotiations relating to federal hydropower facilities and operations at Bureau multi-purpose projects. Further, Mid-West suggests that the Power Marketing Administrations and their customers should be consulted while criteria that provide a clear road map on how to treat an enormously 

complicated and sensitive issue are developed. 

Thank you for the opportunity to provide written testimony to the Committee on 

these important issues. We stand ready to respond to any questions. 

STATEMENT OF WALTER J. BISHOP, GENERAL MANAGER, CONTRA COSTA

WATER DISTRICT

The Contra Costa Water District (CCWD) appreciates the opportunity to submit 

testimony in support of S. 3798 introduced by Senator Dianne Feinstein with a request that it be amended to include an additional provision to address an issue associated with O&M costs for the Folsom South Canal, the Freeport Project and related 

Central Valley Project (CVP) facilities. The language of S. 3798 regarding the deferral of capital costs on the Folsom South Canal addresses only part of the inequitable 

allocation of costs associated with the operation of this facility. While the bill appropriately deals with relieving East Bay Municipal Utility District (EBMUD), Sacramento Municipal Utility District (SMUD) and Santa Clara Valley Water District 

(SCVWD) of capital costs for the Folsom South Canal, it does not deal with the allocation of annual Operations and Maintenance (O&M) costs for EBMUD, which are 

now being paid by other Central Valley Project Municipal & Industrial (M&I) contractors. 

This was an important issue in the CCWD/EBMUD Freeport Settlement Agreement. Specifically, the settlement agreement between the Freeport partners and 

CCWD in Paragraph 18 states the following:

‘‘18. The parties will work together immediately after execution of this 

Settlement Agreement on Federal Legislation to: 

A. Increase Folsom South Canal Deferred Use to reflect actual municipal 

and industrial (M&I) use and capacity needs (similar to Sly Park and Sugar 

Pine). Revise M&I conveyance cost pool to realign cost to reflect repayment 

obligation for contractors on the basis of percentage of individual facility 

use. B. Revise M&I conveyance cost pool to realign cost to reflect repayment 

obligation for contractors on the basis of percentage of individual facility 

use. 

C. Include the concept of a ‘‘stand-by’’ charge in the current evaluation 

and update of the Interim M&I Rate Policy.’’

We are disappointed that all three of the agreed to cost allocation issues associated with the Freeport Agreement are not addressed by this legislation. It has been 

estimated that without the implementation of an O&M stand-by charge assessed to 

the sponsors of the Freeport Project, over the term of the current contract other 

CVP M&I contractors will be unfairly assessed over $25 million in Folsom South 

Canal and related CVP facilities O&M charges. 

In an effort to constructively address CCWD’s concerns consistent with the settlement agreement and enable our District to actively support the bill, we respectfully 

provide the following specific amendment language and request that it be considered 

for inclusion in the bill at markup:

The Secretary of the Interior shall establish a ‘‘stand-by’’ charge for the 

East Bay Municipal Utility District consistent with the Settlement and 

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port Regional Water Authority, East Bay Municipal Utility District, Sacramento County Water Agency executed in January 2004. The ‘‘stand-by’’ 

charge shall contribute toward the annual operations and maintenance expenditures of the Central Valley Project allocated to the Central Valley 

Project municipal and industrial water contractors for repayment. The 

‘‘stand-by’’ charge shall be implemented in the 2008 Central Valley Project 

rate year beginning March 1, 2008.

We believe that the inclusion of this language in federal legislation will bring to 

a conclusion the successful implementation of the Freeport settlement agreement. 

We have reviewed the Freeport settlement agreement and have been unable to identify any term or condition that is either not already completed, or near completed, 

except for the assurances described in Paragraph 18 (A-C). In fact, after the history 

of more than six years of conflict on negotiating resolution to the litigation on the 

water supply and water quality impacts of the Freeport Project, implementing the 

settlement agreement to date has been a model of interagency cooperation. Our respective Districts have completed the design of the Mokelumne pipeline and Los 

Vaqueros Pipeline Intertie Project and awarded the construction contract to complete that connection. The property rights necessary for the Intertie Project have 

been exchanged, the operations and maintenance agreement has been developed and 

is near completion. With the passage of legislation which addresses all three of the 

outstanding cost allocation issues raised in the Freeport Settlement Agreement, all 

components of the agreement will have been successfully accomplished. 

Thank you. 

STATEMENT OF TAGE I. FLINT, GENERAL MANAGER AND CEO, WEBER BASIN

WATER CONSERVANCY DISTRICT

The Weber Basin Water Conservancy District (District) appreciates this opportunity to present written testimony in support of S. 1811 to authorize a feasibility 

study to enlarge the Arthur V. Watkins dam. The District was created in 1950 to 

serve as the local sponsor to operate, maintain and repay the U.S. Bureau of Reclamation’s (USBR) Weber Basin Project (Project). The District is a regional watersupply agency, which develops and supplies both urban and agriculture water to 

lands and municipalities within Weber Davis, Morgan, Summit and part of Box 

Elder Counties. These areas are experiencing explosive growth rates. Utah as a 

whole grew nearly 30 percent in the last decade. Some urban areas are growing at 

a rate of double digits per year. Utah, being the second driest state in the nation, 

with an average annual precipitation of only 13 inches per year, faces unique challenges with inadequate existing water supplies compounded with high growth rates 

and widely varying annual precipitation. 

The USBR has prepared an assessment of where existing water supplies are likely to be inadequate to meet water demands for farms, ranches, cities, recreation and 

the environment over the next 25 years. The greater Wasatch Front areas (including 

Davis, Summit and Weber Counties) were identified by the USBR as to where the 

next crisis over water may occur. This conflict potential was identified as ‘‘highly 

likely’’, the highest potential on the scale. 

The Arthur V. Watkins Dam, Willard Bay Reservoir, (Willard Bay) a major 

Project feature, was constructed in four planned phases. The first three phases were 

constructed between 1957 and 1964 and the fourth phase occurred between 1989 

and 1990. Willard Bay is a vital water source for the Project. It stores and regulates 

winter power releases, surplus high flows originating below the upstream reservoirs, 

upstream spills, fish releases, and return flow from higher diversions. These flows 

are diverted at the Slaterville Diversion Dam built on the Weber River, and travel 

through the Willard gravity canal to Willard Bay. 

Willard Bay is a multiple use reservoir providing water for: a) irrigation of approximately 190,000 acres of project lands, b) municipal and industrial water for a 

growing population of over 500,000 people, c) recreation; Willard Bay has one of the 

very highest use rates for recreation in the state of Utah, and d) fish and wildlife 

including the Harold S. Crane and Ogden Bay Water Fowl Management Areas. 

Currently, the Willard Bay water rights (Utah Water Right Number 35-831) are 

approved at 250,000 Acre Feet per year. However, Willard Bay was constructed to 

capture and store only 215,000 Acre Feet. The difference of 35,000 Acre Feet could 

be stored and utilized in an enlarged Willard Bay. Additional storage capacity is 

needed to utilize the full Willard Bay water right. In addition, since the Weber 

Basin Project has already received Warren Act Authority to store non project water 

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eries. Because of the large surface area of the reservoir, the additional storage capacity can be achieved by adding just a few feet to the height of the dam. 

The most recent drought cycle demonstrated the absolute reliance the District has 

on Willard Bay water to bridge between prolonged drought cycles. In each of the 

last five drought years, Willard Bay levels were lowered and used. In 2004, the 

water level was so low that extensive dredging was required to access and pump 

practically all the stored water. The reservoir was drawn down to only 10 percent 

of its capacity. 

In order to continue serving water to the growing population of the District and 

to help bridge the certain reality of future droughts, additional stored water in Willard Bay is vital. A study is recommended to investigate the feasibility of enlarging 

Willard Bay, Utah to provide additional water for the Project to fulfill the purposes 

for which the Project was authorized.

Æ