```

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

 
                   H.R. 489, H.R. 818, AND H.R. 470

=======================================================================

                          LEGISLATIVE HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                         Thursday, May 12, 2011

                               __________

                           Serial No. 112-29

                               __________

       Printed for the use of the Committee on Natural Resources

         Available via the World Wide Web: http://www.fdsys.gov
                                   or
          Committee address: http://naturalresources.house.gov

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                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
             EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Scott R. Tipton, CO                  Betty Sutton, OH
Paul A. Gosar, AZ                    Niki Tsongas, MA
Raul R. Labrador, ID                 Pedro R. Pierluisi, PR
Kristi L. Noem, SD                   John Garamendi, CA
Steve Southerland II, FL             Colleen W. Hanabusa, HI
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann, 
    TN
Jon Runyan, NJ
Bill Johnson, OH

                       Todd Young, Chief of Staff
                      Lisa Pittman, Chief Counsel
                Jeffrey Duncan, Democrat Staff Director
                 David Watkins, Democrat Chief Counsel
                                 ------                                

                    SUBCOMMITTEE ON WATER AND POWER

                      TOM McCLINTOCK, CA, Chairman
            GRACE F. NAPOLITANO, CA, Ranking Democrat Member

Louie Gohmert, TX                    Raul M. Grijalva, AZ
Jeff Denham, CA                      Jim Costa, CA
Scott R. Tipton, CO                  Ben Ray Lujan, NM
Paul A. Gosar, AZ                    John Garamendi, CA
Raul R. Labrador, ID                 Edward J. Markey, MA, ex officio
Kristi L. Noem, SD
Doc Hastings, WA, ex officio

                                 ------                                
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, May 12, 2011...........................     1

Statement of Members:
    Gosar, Hon. Paul A., a Representative in Congress from the 
      State of Arizona...........................................     5
        Prepared statement of....................................     7
    McClintock, Hon. Tom, a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     3
    Napolitano, Hon. Grace F., a Representative in Congress from 
      the State of California....................................     4
        Prepared statement of....................................     5

Statement of Witnesses:
    Currie, Phyllis E., General Manager, Pasadena Water and 
      Power, Pasadena, California................................    25
        Prepared statement on H.R. 470...........................    26
    Evans, Hon. Kenny, Mayor, Town of Payson, Arizona............    11
        Prepared statement on H.R. 489...........................    13
    Heck, Hon. Joseph J., a Representative in Congress from the 
      State of Nevada............................................    10
        Prepared statement of....................................    11
    Matheson, Hon. Jim, a Representative in Congress from the 
      State of Utah..............................................     8
        Prepared statement of....................................     9
    Moe, Darrick, Regional Manager, Desert Southwest Region, 
      Western Area Power Administration, U.S. Department of 
      Energy, Phoenix, Arizona...................................    21
        Prepared statement on H.R. 470...........................    22
    Murillo, David, Deputy Commissioner for Operations, Bureau of 
      Reclamation, U.S. Department of the Interior, Washington, 
      D.C........................................................    17
        Prepared statement on H.R. 489...........................    19
        Prepared statement on H.R. 818...........................    19
    Pongracz, Ann C., Senior Deputy Attorney General, Colorado 
      River Commission of Nevada, Las Vegas, Nevada..............    30
        Prepared statement on H.R. 470...........................    31
    Snow, Gawain, General Manager, Uintah Water Conservancy 
      District, Vernal, Utah.....................................    15
        Prepared statement on H.R. 818...........................    16
    Sullivan, John F., Associate General Manager, Salt River 
      Project, Phoenix, Arizona..................................    28
        Prepared statement on H.R. 470...........................    29

Additional materials supplied:
    Mohave Electric Cooperative, Navopache Electric Cooperative, 
      Sulphur Springs Valley Electric Cooperative, Trico Electric 
      Cooperative, and Arizona Electric Power Cooperative, 
      Statement submitted for the record on H.R. 470.............    44

  LEGISLATIVE HEARING ON H.R. 489, TO CLARIFY THE JURISDICTION OF THE 
   SECRETARY OF THE INTERIOR WITH RESPECT TO THE C.C. CRAGIN DAM AND 
RESERVOIR, AND FOR OTHER PURPOSES; H.R. 818, TO DIRECT THE SECRETARY OF 
THE INTERIOR TO ALLOW FOR PREPAYMENT OF REPAYMENT CONTRACTS BETWEEN THE 
UNITED STATES AND THE UINTAH WATER CONSERVANCY DISTRICT; AND H.R. 470, 
TO FURTHER ALLOCATE AND EXPAND THE AVAILABILITY OF HYDROELECTRIC POWER 
            GENERATED AT HOOVER DAM, AND FOR OTHER PURPOSES.

                              ----------                              

                         Thursday, May 12, 2011

                     U.S. House of Representatives

                    Subcommittee on Water and Power

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1334, Longworth House Office Building, Hon. Tom 
McClintock, Chairman of the Subcommittee, presiding.
    Present: Representatives McClintock, Gosar, Napolitano, 
Grijalva, and Garamendi.
    Also Present: Representatives Heck and Matheson.

STATEMENT OF HON. TOM McCLINTOCK, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. McClintock. The hour of 10:00 has arrived. The quorum 
of the Committee is present. All of our witnesses are here. And 
so, the meeting of the Subcommittee on Water and Power will 
come to order.
    This Committee meets today to hear testimony on H.R. 489, 
sponsored by Congressman Gosar; H.R. 818, sponsored by 
Congressman Matheson; and H.R. 470, sponsored by Congressman 
Heck and Congresswoman Napolitano. I would ask unanimous 
consent of the Committee that the gentleman from Nevada, Mr. 
Heck, and the gentleman from Utah, Mr. Matheson, be allowed to 
sit with the Subcommittee and participate in the hearing. If 
there is no objection, so ordered.
    We will begin with five-minute opening statements by myself 
and the Ranking Member, followed by members of the Committee on 
the order of their arrival. So, we will start the clock and I 
will yield myself five minutes.
    The bills before us today make minor adjustments to current 
water projects, but they also open up larger issues that I hope 
to address during the coming session. We have, again, before us 
the Hoover Power Allocation Act, H.R. 470, authored by Dr. Heck 
of Nevada and Mrs. Napolitano of California. The Hoover Dam is 
an ideal model to which we must return. It produced a 
cornucopia of water storage, hydroelectricity, recreational 
resources, and flood control, financed not by general 
taxpayers, but by the users of these benefits. The Federal 
Government helped front the money for the construction. The 
project participants paid back that money with interest from 
the proceeds of their water and electricity sales. The original 
project was paid off long ago and continues to store up to 28 
million acre-feet of water and to generate 2,000 megawatts of 
electricity, while providing one of the great recreational gems 
of the West and shielding the Colorado River Basin from the 
devastating cycle of floods and droughts which once ravaged it.
    We have drifted far, far from this model of abundance in 
previous Congresses and we need to get back to it. In the 
meantime, the question arises of how to allocate these power 
benefits when current contracts expire in 2017. One approach is 
before us today. It allocates power at cost rates for the 
project participants with a five percent set-aside for 
latecomers to the vineyard. With the exception of this set-
aside, it follows existing precedent.
    A second approach was rejected by Congress in the 1980s, to 
put the power out for bid at market rates. This would reap a 
windfall for the Treasury, but at enormous expense to 29 
million existing ratepayers. This approach would also 
discourage future partnerships by denying participants the full 
fruit of their investments.
    A third approach is to default this decision to the Western 
Area Power Administration that is pursuing an administrative 
process. This has the advantage of engaging in far more 
detailed discussions and negotiations than can be addressed by 
Congress, but with the drawback of unaccountability to 
taxpayers and ratepayers, not to mention potential lawsuits and 
the reigniting of conflicts between the affected States.
    Our next bill, H.R. 498, authored by Congressman Paul Gosar 
of northern Arizona, addressees a growing problem that we are 
having with the U.S. Forest Service. This bill arises from the 
bureaucratic intransigence, megalomania, and abuse that has 
become the new hallmark of this rogue agency. In this case, 
there is a small water system called the Cragin Project, 
serving several small rural communities in Arizona that was 
transferred from private ownership, ultimately to the Bureau of 
Reclamation. The water system is nearly 50 years old and it 
needs repairs. Simple enough, you just go and fix it. Except in 
this case, the Forest Service bureaucrats have claimed 
jurisdiction and have actively impeded, obstructed, delayed, 
and disrupted efforts to repair this vital water system. Having 
watched the Forest Service's abusive behavior in my own 
district, I have no doubt that it is deliberately attempting to 
create conditions that would ultimately expel these long-
established communities from the national forests. This is a 
pattern of abuse that we are watching across the western United 
States and is particularly ironic considering that the original 
mission of the Forest Service was to open the forests for the 
benefit of the people.
    This bill restates and reenforces existing law, that the 
Bureau of Reclamation alone has jurisdiction over the 
maintenance and operation of the Cragin Project and it tells 
the King's foresters to go pound sand. And the only thing I can 
add to this bill is Amen.
    The Subcommittee will also review H.R. 818, a bill 
sponsored by Congressman Jim Matheson of Utah. This legislation 
allows a local water district to prepay its loan obligations to 
the Federal Treasury in the same way a family has the option to 
prepay its home loan to save compounded interest costs. This is 
a principle that we should replicate uniformly, and I hope that 
this Committee will produce a more comprehensive bill during 
this session.
    With that, I yield back my time and yield to the Ranking 
Member, Congresswoman Napolitano, for five minutes.
    [The prepared statement of Mr. McClintock follows:]

         Statement of The Honorable Tom McClintock, Chairman, 
  Subcommittee on Water and Power, on H.R. 470, H.R. 489, and H.R. 818

    The Water and Power Subcommittee meets today to review three bills 
that make minor adjustments to current water projects, but that open 
larger issues I hope to address in coming months.
    We have again before us the Hoover Power Allocation Act, H.R. 470 
authored by Dr. Heck of Nevada and Mrs. Napolitano of California.
    The Hoover Dam is an ideal model to which we must return. It 
produces a cornucopia of water storage, hydroelectricity, recreational 
resources and flood control--financed not by general taxpayers but by 
the users of these benefits. The federal government helped front the 
money for construction, the project participants paid back that money 
with interest from the proceeds of their water and electricity sales. 
The original project was paid off long ago and continues to store up to 
28 million acre-feet of water and generate 2,000 megawatts of 
electricity, while providing one of the great recreational gems of the 
West and shielding the Colorado River Basin from the devastating cycle 
of floods and droughts which once ravaged it.
    We have drifted far from this model of abundance in previous 
congresses and we need to get back to it.
    In the meantime, the question arises of how to allocate these power 
benefits when current contracts expire in 2017.
    One approach is before us today. It allocates power at at-cost 
rates for the project participants, with a five percent set-aside for 
latecomers to the vineyard. With the exception of this set-aside, it 
follows existing precedent.
    A second approach was rejected by Congress in the 1980's: to put 
the power out for bid at market rates. This would reap a windfall for 
the Treasury, but at enormous expense to 29 million existing 
ratepayers. This approach would also discourage future partnerships by 
denying participants the fruit of their investments.
    A third approach is to default this decision to the Western Area 
Power Administration that is pursuing an administrative process. This 
has the advantage of engaging in far more detailed discussions and 
negotiations than can be addressed by Congress, but with the drawback 
of unaccountability to taxpayers and ratepayers, potential lawsuits and 
re-igniting conflicts between the affected states.
    The Subcommittee will also review H.R. 818, a bill sponsored by 
Congressman Jim Matheson of Utah. This legislation allows a local water 
district to pre-pay its loan obligations to the Federal Treasury, in 
the same way a family has the option to pre-pay its home loan to save 
compounded interest costs. This is a principle that should be 
replicated uniformly, and I hope that this committee will produce a 
more comprehensive bill during this session.
                                 ______
                                 

  STATEMENT OF HON. GRACE F. NAPOLITANO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Napolitano. Thank you, Mr. Chair. As you stated, 
today's legislative hearing focuses on these three pieces of 
legislation that were already considered in the 111th Congress. 
And I will not go into them, other than that I am glad that we 
are finally getting to the Hoover bill. We expected it to get 
passed last year and, unfortunately, it did not.
    To all of our witnesses, thank you for making the journey 
to be here with us and to share your information with us. My 
focus will be on the H.R. 470 legislation, to allocate the 
power for 50 years from Hoover Dam to power customers in the 
local and other river basin states--Arizona, Nevada, and my 
home state of California.
    Power from Hoover was first allocated in 1928, as part of 
the Boulder Canyon Project Act. It is the only hydropower in 
Western's service territory that has always been allocated by 
Congress. The legislation would also create a new pool of 
Schedule-D power, over 100 megawatts of power given up by the 
existing customers that will make available to WAPA, to 
reallocate to, thankfully, the tribes and other entities who 
also want to benefit from the resource.
    I am also pleased to see that Western is here today Mr. 
Moe. I want to ensure that Western is committed to implementing 
a full and transparent process in the allocation of this 
resource. We also expect that the state regulatory agencies of 
Arizona and Nevada will follow the same process, procedures, 
and commitment to an impartial and unbiased allocation 
determination for all parties, and I speak especially to the 
tribes that have been left out for eons and also the 
municipalities who might be able to qualify.
    Mr. Chair, I would like to introduce into the record three 
letters, dated in 2009 from the tribal leadership. It is the 
Gila River Indian Authority, Indian Community Utility 
Authority, dated December 8; Ak-Chin Indian Community, December 
9; and the Intertribal Council of Arizona. They were unable to 
get something real quickly when I called and asked if they 
wanted to put their two cents into this hearing. It is 
important for us to understand that they also are going to be 
needing assistance. This is the copy for you and this is for 
the record.
    Mr. McClintock. And without objection, it will be entered 
into the record.
    Mrs. Napolitano. Also, I have since the legislation has 33 
bipartisan cosponsors from the lower basin, I would like to 
submit for the record 101 letters of support the Committee has 
received from a wide array of interested parties, and there you 
are, sir, from a wide variety of groups----
    Mr. McClintock. Letter by letter or we will just----
    Mrs. Napolitano. I could. I have the list.
    Mr. McClintock. ----accept them all at once.
    Mrs. Napolitano. Accept them all at once, if you would, 
please.
    Mr. McClintock. Without objection.
    [NOTE: The letters submitted for the record have been 
retained in the Committee's official files.]
    Mrs. Napolitano. Thank you, sir. And I do look forward to 
working with my cosponsor, Rick Heck--he has done a good job on 
getting this through--and the members of this Committee for 
enacting this really critical piece of legislation for the 
western states of which I happen to represent one of them. And 
with that, I yield back my time.
    [The prepared statement of Mrs. Napolitano follows:]

    Statement of The Honorable Grace F. Napolitano, Ranking Member, 
              Subcommittee on Water and Power, on H.R. 470

    Today's legislative hearing focuses on three pieces of legislation 
that were also considered by the Committee in the 111th Congress:
      H.R. 470, The Hoover Dam Power Allocation Act of 2011, 
introduced by my colleague Representative Heck;
      H.R. 489, a bill that would clarify the jurisdiction of 
the Secretary of the Interior with respect to the C.C. Cragin Dam and 
Reservoir, introduced by Congressman Gosar, and
      H.R. 818, legislation that would direct the Secretary of 
the Interior to allow for prepayment of repayment contracts between the 
United States and the Uintah Water Conservancy District, introduced by 
Congressman Matheson.
    Thank you to our witnesses for making the journey to be with us 
today.
    I would like to focus on H.R. 470--legislation that would allocate 
power for 50-years from the Hoover Dam to power customers in the Lower 
Colorado River Basin States of Arizona, Nevada, and my home state of 
California.
    Power from Hoover Dam was first allocated in 1928 as part of the 
Boulder Canyon Project Act. It is the only hydropower in Western's 
service territory that always has been allocated by Congress.
    The legislation would also create a new pool of Schedule-D Power, 
over 100 megawatts of power given up by existing customers that will 
made available to WAPA to reallocate to tribes and other entities who 
also want to benefit for this resource.
    I am also pleased to see that the Western is here today--Welcome 
Mr. Moe. Mr. Moe we want to ensure that Western is committed to 
implementing a full and transparent process in the allocation of this 
resource.
    We also expect that the State regulatory agencies of Arizona and 
Nevada will follow the same procedures and commitment to an impartial 
and unbiased allocation determination for all parties, including tribes 
and municipalities.
    The legislation has 33 bipartisan cosponsors from the Lower Basin 
states. I would like to submit into the Record the 101 letters of 
support the Committee has received from a wide variety of groups.
    I look forward to working with Representative Heck and members of 
this Committee in enacting this important legislation.
                                 ______
                                 
    Mr. McClintock. Mr. Gosar.

 STATEMENT OF HON. PAUL A. GOSAR, A REPRESENTATIVE IN CONGRESS 
             FROM THE STATE OF ARIZONA, ON H.R. 489

    Dr. Gosar. Thank you. First, I would like to take this 
opportunity to thank Chairman McClintock and Ranking Member 
Napolitano for holding a legislative hearing on H.R. 489, a 
bill aiming to clarify the jurisdiction of the Secretary of the 
Interior with respect to the C.C. Cragin Dam and Reservoir. It 
is not often Congress gets the opportunity to focus on details 
of infrastructure, but it is dams like this which provide power 
and water that form the backbone of our communities. This 
legislation is a commonsense solution to the bureaucratic 
wrangling that has occurred between the Departments of the 
Interior and Agriculture that has compromised the routine 
maintenance of this critical water infrastructure in my 
district.
    The C.C. Cragin Project, formerly known as the Blue Ridge, 
consists of a number of facilities, including a dam and 
reservoir, diversion tunnel and pump shaft, pumping plant, 
priming reservoir, pipeline, electrical transmission line, and 
a generating plant. The majority of the project is located on 
Federal lands on both the Coconino and Tonto National Forests. 
This critical water infrastructure project is an important 
aspect of the Salt River Reclamation Project. It is integral to 
providing a water supply for Phoenix, the fifth largest city in 
the country, and is instrumental in making 3,500 acre-feet of 
water available to Gila County. The Town of Payson and the 
neighboring communities in the county rely on this pipeline to 
supply municipal drinking water to their residents, my 
constituents.
    In 2004, at the request of SRP and with the support of 
Reclamation and the former owner of the project, the Arizona 
Water Settlement Act authorized a title transfer of the C.C. 
Cragin Project from SRP to the Bureau of Reclamation. Under 
this language, the Federal Government would own the project, 
but SRP would still operate and maintain it. Once that 
legislation was implemented, it became clear there was a 
disagreement between the U.S. Forest Service and the Bureau of 
Reclamation over who had the responsibility for approving 
requested operation, maintenance, and the responsibility for 
repairs related to the C.C. Cragin Project. Specifically, the 
Bureau of Reclamation argued that it should approve SRP's work 
plans, environmental compliance, and other regulatory 
permitting requirements associated with the project. The U.S. 
Forest Service asserted that Reclamation was required to obtain 
a special use permit to operate, maintain, and repair the water 
project. This simply isn't a tenable situation for the short-
term or long-term management of the C.C. Cragin Project. The 
bureaucratic wrangling that delayed much-needed repairs to the 
Cragin facilities increased repair costs and placed the 
development project of the Town of Payson at risk.
    On January 26 of this year, I introduced H.R. 489 to settle 
this jurisdictional issue once and for all. I appreciate the 
Committee moving forward with this important legislation in an 
expeditious manner. This is not the first time this Congress 
and this Committee has been forced to address this type of 
bureaucratic dispute and I hope that future situations can be 
resolved in a more timely and efficient manner.
    The language in this legislation reflects a compromise 
reached by the relevant parties in thorough negotiations, and 
grants the Department of the Interior exclusive jurisdiction to 
manage the Cragin Dam Project and grants the Department of 
Agriculture administrative jurisdiction over land management 
activities that do not conflict or adversely affect the 
operational maintenance or replacement repair of the project. 
The bill meets the needs of SRP and Reclamation, to ensure the 
infrastructure can be maintained, while accommodating the 
Forest Service, ensuring they continue to manage the lands 
underlying the utility corridor with respect to recreation, 
wildfire, law enforcement, and other activities consistent with 
its authorities, responsibilities, and expertise.
    It is important to note, this legislation does not relieve 
the Bureau of Reclamation or SRP from compliance with all 
requirements under Federal law, including the National 
Environmental Policy Act or NEPA. In addition, the 
implementation of this legislation has no cost to the taxpayer.
    I look forward to hearing today's testimonies and 
ultimately moving this bill forward through the legislative 
process. It is critical to my community that a solution is met 
that ensures the future management of the C.C. Cragin Project. 
And I yield back the balance of my time.
    [The prepared statement of Dr. Gosar follows:]

      Statement of The Honorable Paul A. Gosar, a Representative 
           in Congress from the State of Arizona, on H.R. 489

    Good morning:
    First, I would like to take this opportunity to thank Chairman 
McClintock and Ranking Member Napolitano for holding a legislative 
hearing on H.R. 489, a bill aimed clarifying the jurisdiction of the 
Secretary of the Interior with respect to the C.C. Cragin Dam and 
Reservoir. It is not often Congress gets the opportunity to focus on 
the details of infrastructure, but it is dams like this, which provide 
power and water, that form the backbone of our communities. This 
legislation is a common-sense solution to the bureaucratic wrangling 
that has occurred between the Department of Interior and Agriculture 
that compromises routine maintenance of critical water infrastructure 
in my district.
    The C.C. Cragin project, formerly known as Blue Ridge, consists of 
a number of facilities, including a dam and reservoir, diversion tunnel 
and pump shaft, pumping plant, priming reservoir, pipeline, electrical 
transmission line, and a generating plant. The majority of the project 
is located on federal lands in the Coconino and Tonto National Forests.
    This critical water infrastructure project is an important aspect 
of Salt River Project Federal Reclamation Project. It is integral to 
providing a water supply for Phoenix, the fifth largest city in the 
country, and is instrumental in making 3,500 acre-feet of water a year 
available to the Gila County. The Town of Payson and the neighboring 
communities in the county rely on the pipeline to supply municipal 
drinking water to their residents, my constituents.
    In 2004, at the request of the SRP and with the support of 
Reclamation and the former owner of the project, the Arizona Water 
Settlements Act authorized the title transfer of the C.C. Cragin 
Project from SRP to the Bureau of Reclamation. Under this language, the 
federal government would own the Project, but SRP would still operate 
and maintain it.
    Once that legislation was implemented, it became clear that there 
was a disagreement between the U.S. Forest Service and the Bureau of 
Reclamation over who had the responsibility for approving requested 
operation, maintenance and repairs related to the C.C. Cragin Project. 
Specifically, the Bureau of Reclamation argued that it should approve 
SRP's work plans, environmental compliance, and other regulatory 
permitting requirements associated with the project. The U.S. Forest 
Service asserted that Reclamation was required to obtain a special use 
permit to operate, maintain, and repair the water project.
    This simply isn't a tenable situation for short-term or long-term 
management of the C.C. Cragin project. The bureaucratic wrangling has 
delayed much-needed repairs to the Cragin facilities, increased repair 
costs, and placed the economic development project of the Town of 
Payson at-risk.
    On January 26th of this year, I introduced H.R. 489 to settle this 
jurisdiction issue once and for all. I appreciate the committee moving 
this important legislation forward in an expeditious manner. This is 
not the first time this Congress, and this Committee, has been forced 
to address this type of bureaucratic dispute and I hope that future 
situations can be resolves in a more timely and efficient manner.
    The language in this legislation reflects a compromise reached by 
the relevant parties in thorough negotiations. It grants the Department 
of Interior exclusive jurisdiction to manage the Cragin Dam Project and 
grants the Department of Agriculture administrative jurisdiction over 
land management activities that do not conflict or adversely affect the 
operation, maintenance, or replacement/repair of the project.
    The bill meets the needs of SRP and Reclamation to ensure the 
infrastructure can be maintained, while accommodating the Forest 
Service, ensuring they continue to manage the lands underlying the 
utility corridor with respect to recreation, wildfire, law enforcement, 
and other activities consistent with its authorities, responsibilities, 
and expertise.
    It is important to note, this legislation does not relieve the 
Bureau of Reclamation or SRP from compliance with all requirements 
under federal law including the National Environmental Policy Act 
(NEPA). In addition, the implementation of this legislation has no cost 
to the taxpayer.
    I look forward to hearing today's testimonies, and ultimately 
moving this bill forward through the legislative process. It is 
critical to my community that a solution is met that ensures the future 
management of the C.C. Cragin project.
                                 ______
                                 
    Mr. McClintock. Mr. Matheson.

 STATEMENT OF HON. JIM MATHESON, A REPRESENTATIVE IN CONGRESS 
              FROM THE STATE OF UTAH, ON H.R. 818

    Mr. Matheson. Well, thank you, Mr. Chairman for giving me 
the opportunity to participate. I am not a member of this 
committee, but I have to say, coming here and seeing everyone 
seated before 10:00 and you started the hearing right at 10:00 
makes me interested, maybe this is a good committee because I 
am very impressed. That is not standard operating procedure in 
Congress, I must say. So, I compliment you on that. And I do 
want to thank the Chairman and Ranking Member Napolitano for 
holding this hearing on the bill I have introduced, H.R. 818. 
It is a bill that directs the Secretary of the Interior to 
allow for prepayment of repayment contracts between the United 
States and Uintah Water Conservancy District I would also like 
to thank my constituent, Mr. Snow, who is the General Manager 
of the Uintah Water Conservancy District for his testimony and 
participation today. And I also thank the Bureau of Reclamation 
for its support of this legislation.
    A lot of times we use this phrase around here, but this is 
a commonsense bill. It is a bipartisan bill. It encourages and 
promotes fiscal responsibility at all levels of government and 
it passed the House of Representatives in the 111th Congress 
unanimously and it has been reintroduce by my Senate 
counterparts in the Utah delegation, Senators Hatch and Lee, 
during this Congress.
    Allowing the Water Conservancy District to pay their debt 
obligations back early and in a timely manner is a win-win. It 
is financially beneficial to both local government and the 
Federal Government alike. It provides local government the 
ability to responsibly self-govern, giving them the flexibility 
to pay off their loan early and save hundreds of thousands of 
dollars in future interest payments. The savings will result in 
lower cost to the water users, which is very important as we 
continue to grow out of the current economic recession and look 
for additional ways to support much-needed economic development 
in rural communities. And likewise, allowing for the prepayment 
results in a significant payment to the Federal Treasury. It is 
estimated roughly between $4- and $5 million. How often do we 
have legislation come forward that actually provides a little 
help in reducing the deficit. If Congress continues to look for 
ways to trim the Federal budget and encourage best practices 
and good government policies, allowing for prepayment is a good 
model to follow. In addition, I believe this legislation 
provides a good opportunity to help rural communities 
prioritize and implement best practices to utilize scarce 
resources, in an effort to meet fewer water demands in a cost-
effective and fiscally responsible manner.
    Last, I want to point out that there is a precedence for 
allowing prepayment of these repayment contracts. H.R. 818 is 
similar to legislation used by the Central Utah Water 
Conservancy District, which allows for prepayment of the 
repayment contracts for the Bonneville Unit. This effort saved 
hundreds of thousands of dollars in taxpayer dollars and 
allowed for project managers to consider and implement cost 
savings through a balanced approach to managing an important 
resource in my State.
    I support the testimony of Mr. Snow and the proposed 
technical amendment he will discuss. Essentially, this 
amendment would provide greater flexibility to the District 
should future amendments to the prepayment contracts occur. 
Under similar prepayment legislation for the Central Utah Water 
Conservancy District, Congress had authorized prepayment on 
several different occasions. This technical amendment seeks to 
avoid a similar circumstance for Uintah by allowing all future 
amendments to the contract with the Bureau of Reclamation to be 
considered eligible for prepayment.
    So, Mr. Chairman, again, I really appreciate the 
opportunity to speak before the Committee on H.R. 818. I want 
to thank the Committee for once again holding a hearing on this 
important topic. I certainly look forward to working with you 
to advance this bill once again. And I yield back the balance 
of my time.
    [The prepared statement of Mr. Matheson follows:]

       Statement of The Honorable Jim Matheson, a Representative 
            in Congress from the State of Utah, on H.R. 818

    Thank you, Chairman McClintock and Ranking Member Napolitano for 
holding a hearing on my bill, H.R. 818, to direct the Secretary of the 
Interior to allow for prepayment of repayment contracts between the 
United States and the Uintah Water Conservancy District. I'd also like 
to thank my constituent, Mr. Gawain Snow, General Manager of the Uintah 
Water Conservancy District for his testimony today. I also thank the 
Bureau of Reclamation for its support.
    This is a common sense, bipartisan bill that encourages and 
promotes fiscal responsibility at all levels of government. It passed 
the House unanimously in the 111th Congress and has also been 
reintroduced by my Senate counterparts in the Utah delegation Sens. 
Hatch and Lee. Allowing the Uintah Water Conservancy District to pay 
their debt obligations back early and in a timely manner is a win-win: 
it's financially beneficial to local and Federal government alike. It 
provides local government the ability to responsibly self-govern, 
giving them the flexibility to pay off their loan early and save 
hundreds of thousands of dollars in future interest payments. This 
savings will result in lower costs to the water users--very important 
as we continue to grow out of the current economic recession and look 
for additional ways to support much-needed economic development in 
rural communities. Likewise, allowing for prepayment results in a 
significant payment to the Federal Treasury, from $4-5 million.
    As Congress continues to look for ways to trim the federal budget 
and encourage best practices and good government policies, allowing for 
prepayment is a good model to follow. In addition, I believe this 
legislation provides a good opportunity to help rural communities 
prioritize and implement best practices to utilize scarce resources in 
an effort to meet rural water demands in a cost effective and fiscally 
responsible manner. Lastly, I want to point out that there is 
precedence for allowing for prepayment of repayment contracts. H.R. 818 
is similar to legislation used by the Central Utah Water Conservancy 
District, which allowed for prepayment of the repayment contracts for 
the Bonneville Unit. This effort saved hundreds of thousands in tax 
payer dollars, allowed for project managers to consider time and cost 
savings through a balanced approach to managing an important resource 
in my state.
    I support the testimony of Mr. Snow and the proposed technical 
amendment he will discuss. Essentially this amendment would provide 
greater flexibility to the District should future amendments to the 
prepayment contracts occur. Under similar prepayment legislation for 
the Central Utah Water Conservancy District, Congress had to authorize 
prepayment on several different occasions. This technical amendment 
seeks to avoid a similar circumstance for Uintah by allowing all future 
amendments to the contract with the Bureau of Reclamation to be 
considered eligible for prepayment.
    Mr. Chairman, I appreciate the opportunity to speak before the 
Committee on H.R. 818 and thank the Committee once again for holding a 
hearing on this important topic. I look forward to working with you to 
advance this bill once again. I yield back the balance of my time.
                                 ______
                                 
    Mr. McClintock. Dr. Heck.

STATEMENT OF HON. JOSEPH J. HECK, A REPRESENTATIVE IN CONGRESS 
             FROM THE STATE OF NEVADA, ON H.R. 470

    Dr. Heck. Thank you, Chairman McClintock, Ranking Member 
Napolitano. I thank you for allowing me to sit with the Water 
and Power Subcommittee today to discuss H.R. 470, the Hoover 
Power Allocation Act. As you know, this issue is very important 
to my home state of Nevada and to more than 29 million 
residents across Nevada, Arizona, and California that benefit 
from Hoover power. Hoover Dam is located in my district and 
Hoover power is critical to southern Nevada's economy, 
businesses, and consumers. The power is clean and affordable 
and today, we are taking an important step toward making it 
stable.
    The Hoover power contracts are due to expire in 2017. H.R. 
470 would authorize the distribution of electricity from Hoover 
Dam over the next 50 years and create a new resource pool to 
make Hoover power available to Indian tribes and other 
customers who could not access this power in the past. 
Extending Nevada's access to low-cost, clean hydroelectric 
power through the enactment of H.R. 470 is key to Nevada's 
economic recovery because it will create certainty over future 
electricity prices. This is exactly what our economy needs 
right now in order to get people back to work.
    H.R. 470 was developed as a consensus bipartisan plan to 
ensure the continued availability and reliability of Hoover 
power to the citizens of Nevada, California, and Arizona. 
Hoover contractors, who participated in developing this plan, 
have invested more than $1.3 billion to construct, operate, and 
maintain Hoover Dam in the past. They agreed to contribute five 
percent of their post-2017 allocation to form a 100 megawatt 
resource pool that would be made available to customers, such 
as tribes, irrigation districts, and rural cooperatives that 
were not eligible to apply for allocations under prior laws.
    H.R. 470 provides that this resource pool be allocated by a 
Federal-state partnership involving the Western Area Power 
Administration and the States of Nevada, California, and 
Arizona. Again, this legislation is essential to the millions 
of consumers who have invested in this renewable source of 
energy over the past 75 years, because it will continue to 
provide them with Hoover power for the next 50 years, as well 
as allows new customers to benefit from the clean, low-cost 
energy.
    Again, Mr. Chairman, I thank you for the opportunity to sit 
here with you today. I thank the Ranking Member for all of the 
hard work she has put into this bill and I urge the 
Subcommittee's favorable recommendation. And I yield back the 
balance of my time.
    [The prepared statement of Mr. Heck follows:]

      Statement of The Honorable Joseph J. Heck, a Representative 
           in Congress from the State of Nevada, on H.R. 470

    Chairman McClintock and Ranking Member Napolitano: thank you for 
allowing me to sit with the Water and Power Subcommittee today to 
discuss H.R. 470, the Hoover Power Allocation Act. As you know, this 
issue is very important to my home state of Nevada and the more than 29 
million residents across Nevada, Arizona, and California that benefit 
from Hoover power.
    Hoover Dam is located in my district, and Hoover power has been 
critical to Southern Nevada's economy, businesses, and consumers. The 
power is clean and affordable, but today we are taking an important 
step toward making it stable. That is why the Hoover Power Allocation 
Act, H.R. 470, is the first piece of legislation I introduced when I 
came to Congress in January, 2011.
    The Hoover power contracts are due to expire in 2017. H.R. 470 
would authorize the distribution of electricity from Hoover Dam for the 
next 50 years, and create a new resource pool to make Hoover power 
available to Indian tribes and other customers who could not access 
this power in the past.
    Extending Nevada's access to low-cost, clean hydropower though the 
enactment of H.R. 470 is key to Nevada's economic recovery, because it 
will help create certainty over future electricity prices. This is 
exactly what our economy needs right now in order to get people back to 
work.
    H.R. 470 was developed as a consensus bi-partisan plan to ensure 
the continued availability of and reliability of Hoover power to the 
citizens of Nevada, California and Arizona.
    Hoover contractors who participated in developing this plan have 
invested more than $1.3 billion to construct, operate and maintain 
Hoover Dam in the past. They agreed to contribute five percent of their 
post-2017 Hoover power allocations to form a 100 megawatt resource pool 
that will be made available to customers such as tribes, irrigation 
districts and rural cooperatives that were not eligible to apply for 
allocations under prior laws.
    H.R. 470 provides that this resource pool will be allocated by a 
federal-state partnership involving the Western Area Power 
Administration, and the States of Nevada, California and Arizona. 
Additionally, it requires the current and new Hoover contractors to pay 
Hoover Dam's future costs.
    Again, this legislation is essential to the millions of consumers 
who have invested in this renewable source of energy over the past 75 
years because it will continue to provide them with Hoover power for 
the next 50 years, as well as allows new customers to benefit from this 
clean, low-cost energy.
                                 ______
                                 
    Mr. McClintock. Thank you, very much. We will now hear from 
our panel of witnesses. Each witness' written testimony will 
appear in full in the hearing record. So, I would ask that each 
of you keep your oral statements to five minutes, as outlined 
in your invitation letter and under Committee Rule 4[a].
    I also want to explain how our timing lights work. When you 
began to speak, the clerk will start the timer, and a green 
light will appear. After four minutes, a yellow light will 
appear. And at that time, you should begin to conclude your 
statement. At five minutes, a red light will come on and that 
means that you need to stop talking and be quiet. And if there 
is any consolation, we hold our Members to the same standard.
    Our first witness is The Honorable Kenny Evans, Mayor of 
Payson, Arizona.

             STATEMENT OF HON. KENNY EVANS, MAYOR, 
                        PAYSON, ARIZONA

    Mr. Evans. Thank you, Mr. Chairman, Chairman McClintock, 
Ranking Member Napolitano. It is a privilege to be able to come 
back here and to be able to address this group today concerning 
Representative Gosar's House bill, H.R. 489. My name is Kenny 
Evans, as you mentioned, and I am just an old farm boy, cowboy, 
who has had the privilege of growing up in the shadow of those 
Rocky Mountains--southern Rockies in central Arizona. 
Interestingly enough, I am now currently the Mayor. I find 
myself as the Mayor of a beautiful small mountain town called 
Payson. I have served as the President of the Northern Arizona 
Municipal Water Users Association, as well. It represents the 
nine major communities in northern Arizona. I am also the 
immediate past president of the Arizona Farm Bureau, where I 
served as either the President or Vice President for 27 years 
and the current President, who succeeded me, is in the room 
today, Kevin Rogers.
    Over the last 40 years, I have had the privilege of riding 
horseback and sleeping under the stars, under those Ponderosa 
trees that are part of the magical, mystical mountains that we 
call Rim Country of Arizona. And additionally, I have had the 
privilege of dragging three generations, as a grandpa, a 
father, and a son, as Boy Scouts up to camp to enjoy the 
wonders of Blue Ridge Reservoir. So, I come to you today and 
you have my written testimony before you. I appreciate 
Representative Gosar's statement and your statement at the 
beginning, Chairman McClintock. You have said much of what 
needs to be said about this bill; but I think from a very 
personal standpoint, as somebody who has lived there and who 
understands how critical water is in the Southwest, I would 
plead with this Committee to use whatever influence you have to 
expedite action on this issue.
    Payson is an island in the middle of the national forest. 
From my deck, I have the privilege of being able to look out 
and see parts of four different national forests, two national 
wilderness areas, two national monuments. That is how encircled 
we are. And so, I speak from experience when I say we have 
learned, as a community, we have had to learn how to deal with 
bureaucrats from multiple agencies. We cannot survive without 
doing that.
    As you mentioned, the challenge that we face today is that 
we have been trying to put it into perspective, so the members 
of the Committee can understand it, those who are not from 
Arizona, the Mogollon Rim is an escarpment that runs from the 
northwest part of the State of Arizona to the southeast, 
bisecting the State for almost 200 miles. It is a 2,500 foot 
cliff, so to speak, that runs that entire distance, with the 
higher elevation to the north and east, the lower elevations to 
the south and west. To give you a relative visualization of 
what we are doing, it would be like having the Blue Ridge 
Reservoir on the north rim of the Grand Canyon and be trying to 
bring the water form that north rim down to the bottom of the 
canyon. That is what we are attempting to do.
    And the Blue Ridge Reservoir, the C.C. Cragin Project, is 
not a new project. It was built in 1963, so it is almost 60 
years old now. The pipeline that brought the water about a 
third of the way to our community is part of that old 
established project that was done by a private mining company 
called Phelps Dodge in 1963. About a decade ago, they found 
that they no longer needed that water and pursuant to the 
agreement that allowed them to build that facility, they 
transferred ownership to SRP. And in 2004, as part of the 
Indian Settlement Act, as part of the Arizona Indian Settlement 
Act, SRP transferred ownership to the Bureau of Reclamation.
    Enter the little Town of Payson. We are a small town. We 
have a population of just over 15,000 people. But, we were able 
to negotiate with the consent of all the participants--and in 
Arizona getting everybody to agree to anything is a major, 
major coup, but we were able to get them to agree to transfer 
about a third of the water that comes out of Cragin or about 
3,500 acre-feet a year to the Town of Payson. We have gone 
through all the regulatory issues. We have gotten it done so 
that we can have that water transferred to us. It is solely the 
Forest Service that has held this up and it has held us up to 
date to the tune of about six or seven months.
    I would take any questions and, again, thank you, Mr. 
Chairman, Ranking Member Napolitano.
    [The prepared statement of The Honorable Kenny Evans 
follows:]

           Statement of The Honorable Kenny J. Evans, Mayor, 
                  Town of Payson, Arizona, on H.R. 489

    Chairman McClintock, Ranking Member Napolitano and Members of the 
Subcommittee, thank you for the opportunity to submit testimony in 
support of H.R. 489, a bill to clarify the jurisdiction of the 
Secretary of the Interior with respect to the C.C. Cragin Dam and 
Reservoir.
    My name is Kenny J. Evans; I'm an old farm boy who has had the 
wonderful privilege of growing up in the shadow of the Rocky Mountains. 
I am currently the Mayor of the beautiful mountain community of Payson, 
Arizona. I also serve as President of the Northern Arizona Municipal 
Water Users Association and on the Executive Committee of the Arizona 
League of Cities and Towns. I am the immediate past President of the 
Arizona Farm Bureau where I served as state President or Vice-President 
for over 27 years.
    Over the past 40 plus years I have been privileged to bring three 
generations of Boy Scouts to camp and fish at Blue Ridge Reservoir (now 
CC Cragin). I have a great love for Blue Ridge and am intimately aware 
of its history and management. I am also keenly aware of the damage 
that the current bureaucratic turf battle is causing. What H.R. 489 
does not do is relieve either the Bureau or SRP from compliance with 
all requirements of federal law.
    Payson is an island in the middle of National Forests and National 
Monuments. From the deck of my home I can see four National Forests, 
two National Monuments and two National Wilderness Areas. The Town of 
Payson truly understands the complexity of working with Federal 
Agencies on a daily basis. After much study, we fully support H.R. 489 
which will clarify that since the Project is now being operated as a 
component of the Salt River Federal Reclamation Project (SRP), the 
Bureau of Reclamation (Bureau) is responsible for approval of all 
operation, maintenance and repair activities just like more than a 
dozen other reservoirs and dams and other federal reclamation projects 
in Arizona, including the other Salt River Project facilities located 
on lands within the boundaries of the other National Forests.
    H.R. 489 only applies to the C.C. Cragin Project, which is located 
within the Coconino and Tonto National Forests in northern Arizona 
approximately 25 miles north of my community. The C.C. Cragin Project 
consists of a number of facilities including a 147-foot high dam, 
15,000 acre-foot reservoir, diversion tunnel and pump shaft, pumping 
plant, priming reservoir, a 10 mile long pipeline, electrical 
transmission line, and small generating plant which supplies power to 
the Project's pumping plant. Originally known as the Blue Ridge 
Project, the dam, reservoir, and associated facilities were constructed 
by Phelps Dodge in the 1960's as part of a water exchange with SRP. In 
the last ten years, Phelps Dodge found that it no longer needed the 
Blue Ridge Project for water exchange and pursuant to the terms of 
their agreement, Phelps Dodge transferred ownership of all of the Blue 
Ridge Project facilities to SRP.
    Enter the small rural mountain Town of Payson. Payson sits at the 
base of the Mogollon Rim, a 200 mile long escarpment that bisects 
Arizona west to east and is home to the largest Ponderosa Forest in the 
country. Currently, all domestic water for the Town and surrounding 
communities comes from groundwater. Through the years Payson has become 
the most water conserving community in the State using less than 80 
gallons of water per capita per day. However, severe drought and slow 
but steady growth have stressed future assured water supplies that were 
based on groundwater alone.
    In 2004, with support from all participants, including the U.S. 
Bureau of Reclamation, language was included as part of the Gila River 
Indian Community Water Rights settlement in Section 213(i) of the 
Arizona Water Settlements Act, Public Law 108-451, 118 Stat. 3478, 
3532, authorizing title transfer of the Blue Ridge Project from SRP to 
the Bureau and renaming it C.C. Cragin. Up to 3,500 acre-feet per year 
were to be made available to Payson and surrounding communities with 
the facilities operated and managed by SRP pursuant to its September 6, 
1917 contract with the Bureau of Reclamation. Subsequently, SRP 
officially transferred title to the C.C. Cragin Dam and Reservoir 
together with all of its associated facilities, including 77 acres of 
fee land to the Bureau and concluded the surface water right title 
transfer and agreement with the Town of Payson. In accordance with the 
1917 contract with the Bureau and as directed by Section 213 (i)(5) of 
the Arizona Water Settlement Act, SRP began operating and maintaining 
the C.C. Cragin Project.
    As part of its maintenance efforts, SRP identified numerous serious 
leaks present in the existing pipeline needing immediate repair. Not 
only is the pipeline's integrity important to the general operation of 
C.C. Cragin Project and SRP's water supply for the Phoenix metropolitan 
area, but it also has special significance to the Town of Payson and 
neighboring communities in Northern Gila County who will rely heavily 
on the Project to supply municipal drinking water in the future. As a 
part of this effort, the Town of Payson received an allocation of $10.6 
million from the American Recovery and Reinvestment Act (ARRA) stimulus 
money to assist in paying for the repairs to the pipeline and extending 
the pipeline and other municipal water-related improvements needed to 
make the water available to residents.
    Once SRP began working with the Bureau on repairs of the C.C. 
Cragin Project, it became evident that the Bureau (U.S. Department of 
Interior [Bureau of Reclamation)]) and the Forest Service (U.S. 
Department of Agriculture [USDA--FS]) disagreed as to who had 
responsibility for approving the requested operation, maintenance and 
repair functions associated with this Reclamation Project. Please note 
that this had nothing to do with compliance with State and Federal 
rules, laws and regulations. It had everything to do with who gave the 
approval to proceed (Bureau or USDA-FS). The Forest Service asserted 
that the Bureau needed to obtain a special use permit from them prior 
to Project operation by SRP and that all maintenance and repairs needed 
prior approval by them. The Bureau and SRP maintain that under the 
terms of the Arizona Water Settlements Act, the C.C. Cragin Project is 
just like all of the other Salt River Federal Reclamation Project 
facilities located on Forest Service land. On those facilities, 
jurisdiction over approvals of work plans, maintenance, repairs, 
environmental compliance, and other permitting associated with Project 
operation and maintenance belongs to the Bureau, while jurisdiction 
over recreation, fire suppression, etc. lies with the Forest Service. 
This approach is consistent with Reclamation Projects across the 
western United States pursuant to a 1987 Memorandum of Understanding 
between the Departments of Agriculture and Interior.
    For the past five years SRP and the Bureau have unsuccessfully 
attempted to resolve this jurisdictional dispute with the Forest 
Service. The Forest Service has insisted on having ultimate approval 
authority for the Project even though these facilities are components 
of the Salt River Federal Reclamation Project. Meanwhile, the resulting 
bureaucratic wrangling over approval requirements between the two 
Departments has delayed and created uncertainty in planning much-needed 
repairs to the Cragin facilities, increased repair costs, and has 
placed a portion of the Town of Payson's $10.6 million stimulus grant 
at risk. The bill before you, H.R. 489, clarifies the jurisdiction over 
the C.C. Cragin Project. It is consistent: (1) with the 1987 Memorandum 
of Understanding between the Departments of Agriculture and Interior; 
(2) with Section 213(i) of the Arizona Water Settlements Act, Public 
Law 108-451, 118 Stat. 3478, 3532; (3) with the September 6, 1917 
contract with the Bureau of Reclamation pursuant to the 1902 
Reclamation Act; and, (4) with the process used with other Reclamation 
projects located on Forest Service lands within the State of Arizona 
and throughout the west.
    The bill before you, H.R. 489, would resolve this jurisdiction 
conflict by withdrawing the approximately 512 acres that comprise the 
Cragin Project for Bureau of Reclamation purposes. Under this 
arrangement, the underlying lands would remain part of the National 
Forest, while clarifying that the Secretary of Interior has exclusive 
jurisdiction to manage the Cragin Project on these lands in accordance 
with the terms of section 213(i) of the Arizona Water Settlements Act. 
This change will make the administrative structure of the Cragin 
Project consistent with the six additional dams and reservoirs owned by 
the Bureau and operated by SRP within the Tonto National Forest.
    In managing the Cragin Project, the Secretary of Interior and SRP 
are required to ensure the compliance of their activities with all 
applicable federal laws, including regulations. The Secretary of 
Interior is authorized to enter into a contract with the Secretary of 
Agriculture to undertake the management of recreation, wild land fire 
activities, public conduct and law enforcement, cultural and other 
resources, and any other appropriate management activity. The Forest 
Service requested several changes to the original language on this 
issue to further clarifying their management activities, as well as 
several other technical changes to other portions of the bill language. 
These changes are incorporated into H.R. 489 and fully supported by the 
Town of Payson.
    The Town of Payson's ARRA grant will be at risk if there are 
continuing delays. I sincerely ask that you approve H.R. 489 so that 
this much-needed project can proceed under the Bureau of Reclamation's 
oversight and in compliance with all applicable laws, rules and 
regulations.
    Chairman McClintock, Ranking Member Napolitano and Members of the 
Subcommittee,, thank you once again for the opportunity to testify 
before you today. I would be willing to answer any questions you might 
have.
                                 ______
                                 
    Mr. McClintock. Thank you, very much, for your testimony. 
Our next witness is Mr. Gawain Snow, General Manager of the 
Uintah Water Conservancy District in Vernal, Utah. Thank you 
for joining us.

          STATEMENT OF GAWAIN SNOW, GENERAL MANAGER, 
        UINTAH WATER CONSERVANCY DISTRICT, VERNAL, UTAH

    Mr. Snow. Thank you, Mr. Chairman, Congresswoman 
Napolitano, and members of the Subcommittee. I appreciate being 
here today to testify in support of H.R. 818. I also wanted to 
thank Representative Jim Matheson for introducing this bill on 
behalf of Uintah Water Conservancy District, which was formed 
in 1956, as part of the Colorado River Storage Act. The 
District encompasses almost all of Uintah County, Utah, and 
Uintah County is adjacent to Colorado and Wyoming.
    At the time when the Jensen Unit was constructed, there was 
18,000 acre-feet of municipal and industrial (M&I) water that 
was to be developed along with that project. That amount of 
water was developed in anticipation of and predicated upon 
Project Independence, a 1974 Federal initiative to aid the 
United States in becoming independent of foreign nations in the 
production of energy, particularly that of oil and gas and oil 
shale development. The project, however, failed to materialize. 
The need for all of that water was not then necessary at that 
time. Due to that, we entered into a mandatory contract with 
the Bureau of Reclamation, which allowed us to take 2,000 acre-
feet of that for the M&I water, which we are under contract. 
And looking to the future, we anticipate that we will use some 
other blocks of water, as becomes necessary.
    In that mandatory contract, there was not a prepayment 
clause included. And so at this time, H.R. 818 would direct the 
Secretary of the Interior to allow for prepayment of the 
specified repayment contracts between the United States and the 
Uintah Water Conservancy District under the terms and 
conditions similar to those used in implementing the provisions 
of the Central Utah Completion Act. It would provide for 
prepayment and maybe provide it in several installments, to 
provide a substantial completion of the delivery facilities 
being prepaid, would adjust to confirm to a final cost 
allocation, and may not be adjusted on a basis of the type of 
prepayment financing utilized by the District. What this would 
allow us to do then was to go out and find some money that 
would be of less interest than what we are presently paying, 
returning to the U.S. Government $4- to $5 million. And 
finally, we would ask the Subcommittee to entertain a technical 
amendment to the bill, which would expand the references of our 
contracts with the Reclamation to include all subsequent 
amendments made under subsection 9[c] of the Reclamation Act of 
1939.
    Again, we feel that this is a good bill. It allows us some 
flexibility. Our working relationship with the Bureau of 
Reclamation has been excellent in the past and we desire to 
continue to do that. I would like to thank you for the 
opportunity to testify here today and be happy to respond to 
any questions that the Committee might have. Thank you.
    [The prepared statement of Gawain Snow follows:]

              Statement of Gawain Snow, General Manager, 
       Uintah Water Conservancy District, in Support of H.R. 818

    Chairman McClintock, Congresswoman Napolitano and members of the 
Subcommittee, I am grateful to be able to appear here today and testify 
in support of H.R. 818. I want to also thank Rep. Jim Matheson for 
introducing this bill on behalf of the Uintah Water Conservancy 
District (District). The District was formed in 1956 for the purpose of 
``conserving, developing and stabilizing supplies of water for 
domestic, irrigation, power, manufacturing, municipal and other 
beneficial uses, and for the purpose of constructing drainage works.'' 
The District operates and maintains the Vernal and Jensen Units of the 
Central Utah Project, which was authorized by Congress as part of the 
Colorado River Storage Project Act of 1956. The District encompasses 
almost all of Uintah County, Utah in eastern Utah adjacent to the 
border of Colorado.
    At the time of its construction (1984-1987), the Jensen Unit was to 
provide 18,000 Acre-Feet (AF) of municipal and industrial (M&I) water 
to the residents of Uintah County. This amount of water was based on an 
anticipated accelerated population growth within the District's service 
area predicated on Project Independence, a 1974 Federal initiative to 
aid the United States in becoming independent of foreign nations in the 
production of energy, particularly the production of oil and gas, 
including oil shale development. Project Independence failed to 
materialize, however, resulting in the curtailment of energy 
development and a corresponding decrease in population, rather than the 
anticipated population growth. Of the total 18,000 AF of M&I water to 
be developed, 6,000 AF were to be developed with the construction of 
Red Fleet dam (which was built) and another 12,000 AF were to be 
developed at a later date with the construction of the Burns Bench Pump 
station on the Green River in Jensen, Utah. Due to the economic bust 
described above, the demand for water that had been foreseen was no 
longer there. As a result, an amendatory contract was signed in 1989 
with the Bureau of Reclamation (Reclamation) reducing the amount of 
water subscribed to by water providers to 2,000 AF and reserving to the 
United States the remaining 4,000 AF of developed M&I water and the 
12,000 AF of undeveloped M&I water for marketing by the United States, 
provided among other things, that the water would not be marketed 
within the District's boundary and that the District would have the 
right of first refusal to acquire such M&I water. The amendatory 
contract also provided for the delay in construction of the Burns Bench 
Pump station until such time as the demand develops for the additional 
12,000 AF of water.
    Reclamation desires to do a final cost allocation on the Jensen 
Unit. Such action would be premature without developing the remaining 
12,000 AF on the Green River, because the cost per acre-foot would be 
approximately 2.5 times as much as if the 12,000 AF were developed. 
Also, at this time, not all of the remaining 4,000 AF of water in Red 
Fleet Reservoir has been subscribed. Reclamation took 700 AF of the 
4,000 AF to increase the conservation pool in the reservoir leaving 
3,300 AF of available water in Red Fleet Reservoir. The Burns Bench 
pump station will not be constructed until all of the M&I water 
available in Red Fleet is subscribed. In the past year, the District 
has received several inquiries for the remaining M&I water in Red Fleet 
but no contracts have been signed. The price of the water is set by the 
amendatory contract. The amount per acre-foot is based on the cost of 
the Jensen Unit (including an estimated cost of the pump station) 
divided by 18,000 AF. The resulting cost is $5,555.21 per acre-foot and 
is payable by dividing that amount by the number of years remaining 
until 2037 with the last payment being made in 2037. Based on this 
formula, water purchased in 2006 would be paid for at a rate of $179.07 
per acre-foot per year for 31 years. The District approached 
Reclamation about the possibility of discounting those payments at the 
rate set by the Office of Management and Budget for such prepayments. 
However, according to Reclamation, the amendatory contract does not 
allow for prepayment. The District then determined that it would seek 
legislation similar to a bill that was used by the Central Utah Water 
Conservancy District, which allowed for prepayment of the repayment 
contracts for the Bonneville Unit. Prepayment of our contract with 
Reclamation, as proposed in H.R. 818, would substantially reduce the 
cost of water to the District and result in a substantial payment to 
the federal treasury, estimated to be between $4-5 million.
    H.R. 818 directs the Secretary of the Interior to allow for 
prepayment of the specified repayment contracts between the United 
States and the Uintah Water Conservancy District under terms and 
conditions similar to those used in implementing provisions of the 
Central Utah Project Completion Act. It also provides that the 
prepayment: (1) may be provided in several installments to reflect 
substantial completion of the delivery facilities being prepaid; (2) 
shall be adjusted to conform to a final cost allocation; and (3) may 
not be adjusted on the basis of the type of prepayment financing 
utilized by the District.
    Finally, we ask the Subcommittee to entertain a technical amendment 
to the bill which expands the references to our contracts with 
Reclamation to include all subsequent amendments made under Section 
9(c) of the Reclamation Act of 1939. This is needed to cover a letter 
agreement signed by the District and Reclamation in 2005 and a Board 
Resolution which affected the terms of the previous agreements and 
provide flexibility for further contract amendments. Again I want to 
thank you for the opportunity to testify today and will be happy to 
respond to any questions.
                                 ______
                                 
    Mr. McClintock. Thank you for your testimony and your 
brevity. Our next witness is Mr. David Murillo. He is the 
Deputy Commissioner for Operations, Bureau of Reclamation, here 
in Washington, D.C.

STATEMENT OF DAVID MURILLO, DEPUTY COMMISSIONER FOR OPERATIONS, 
          U.S. BUREAU OF RECLAMATION, WASHINGTON, D.C.

    Mr. Murillo. Thank you. Thank you, Chairman McClintock, 
Ranking Member Napolitano, and members of the Subcommittee. I 
am David Murillo, Deputy Commissioner for Operations at the 
Bureau of Reclamation. I am pleased to provide the views of the 
Department of the Interior on H.R. 498 and H.R. 818. With me 
today is Robert Cunningham, Assistant Director of Lands of the 
U.S. Forest Service, who is prepared to respond to any 
technical questions the Subcommittee may have on H.R. 489. My 
written statement has been submitted for the record.
    H.R. 489 seeks to clarify Federal jurisdiction with respect 
to the C.C. Cragin Project, which includes a dam, reservoir, 
and 11.5-mile utility corridor containing the transmission line 
and high-pressure pipeline. The project is located nearly 
entirely within the Coconino National Forest in north central 
Arizona. Language included in the Arizona Water Settlement Act 
created questions about the respective jurisdictions of the 
Forest Service and the Bureau of Reclamation related to the 
C.C. Cragin Project. We have come to an agreement that we think 
can resolve this issue and this legislation is consistent with 
that arrangement.
    Reclamation and the Forest Service work closely with the 
Salt River Project Agriculture Improvement and Power District, 
the entity that operates and maintains the C.C. Cragin Project 
and reached agreement in mid-2010 on the terms of managing the 
project and associated legislation to clarify jurisdiction of 
the Federal agencies. This legislation accommodates the needs 
of Reclamation and SRP by ceding exclusive administrative 
jurisdiction over that land underlying the dam and reservoir to 
Reclamation and by expressly acknowledging SRP's responsibility 
for operating and maintaining the dam, reservoir, and utility 
corridor, pursuant to the Settlement Act of the 1917 agreement 
between the Department of the Interior and SRP. In addition, 
this approach accommodates the Forest Service by allowing the 
agency to manage the land underlying the utility corridor for 
recreation, wildfire, law enforcement, and other activities.
    The Administration believes that this legislation provides 
a sound approach for future management of the project. Both 
Departments are committed to working diligently with SRP to 
ensure needed work for the project can be accomplished 
expeditiously. Reclamation's longstanding experience with SRP 
over nearly a century has been very productive. SRP has proven 
to be a responsible and reliable operator and caretaker of U.S. 
interests and resources. It is our hope that combining that 
history with the Forest Service land management authority and 
expertise would result in even more effective stewardship.
    H.R. 818, as introduced on February 18, 2011, allows for 
prepayment of the current and future repayment contract 
obligation to the Uintah Water Conservancy District of the cost 
allocated to their municipal and industrial water supply on the 
Jensen Unit of the Central Utah Project and provides that the 
prepayment must result in the United States recovering the net 
present value of all repayment streams that would have been 
payable to the United States if H.R. 818 were not enacted. The 
Department supports H.R. 818. The District entered into a 
repayment contract, dated June 3, 1976, in which they agreed to 
repay all reimbursable costs associated with the Jensen Unit of 
the CUP. The Jensen Unit's total water supply was envisioned at 
that time to be roughly 18,000 acre-feet because plans 
envisioned completion of another pumping plant at a location on 
a green river known as Burns Bench. However, for a variety of 
reasons, the Burns Bench feature was never built and this is 
described in my written statement.
    Under Reclamation law, water districts are not authorized 
to prepay their M&I repayment obligation based upon a 
discounted value of the remaining annual payments. However, 
this legislation would authorize early repayment by the Uintah 
Water Conservancy District to the Federal Government because 
there is an interest component to the M&I repayment streams to 
be repaid early. Early repayment without an adjustment for 
interest would result in lower overall repayment to the United 
States. To keep the United States whole, the Bureau of 
Reclamation would elect that the net present value of the whole 
amount that would be due without early repayment.
    The language in H.R. 818 has been amended from the language 
contained in an earlier version of this legislation. The 
amendment language clarifies that this legislation requires 
that the Federal Government be paid what it is owed by the 
Conservancy District because the United States supports the 
goal of providing for early repayment under this contract and 
H.R. 818 clearly establishes that the Department supports this 
legislation. Thank you, again, for this opportunity to testify 
and I would happy to answer any questions the Subcommittee may 
have.
    [The prepared statement of David Murillo follows:]

     Statement of David Murillo, Deputy Commissioner, Operations, 
  Bureau of Reclamation, U.S. Department of the Interior, on H.R. 489

    Chairman McClintock and Members of the Subcommittee, I am David 
Murillo, Deputy Commissioner of Operations of the Bureau of Reclamation 
(Reclamation). Thank you for the opportunity to provide the views of 
the U.S. Department of the Interior (Department) on H.R. 489, 
legislation specific to lands underlying the C.C. Cragin Dam, Reservoir 
and utility corridor (C.C. Cragin project) in Arizona. The legislation 
seeks to clarify federal jurisdiction with respect to the C.C. Cragin 
project, which includes a dam, reservoir, and 11.5-mile utility 
corridor containing a transmission line and high-pressure pipeline. The 
project is located nearly entirely within the Coconino National Forest 
in north-central Arizona.
    Language included in the Arizona Water Settlements Act (AWSA, 
Public Law 108-451) created questions about the respective jurisdiction 
of the U.S. Forest Service (Forest Service) and Reclamation related to 
the C.C. Cragin project. We have come to an agreement that we think can 
resolve this issue. This legislation is consistent with that 
arrangement. We look forward to continue working with the Committee on 
reaching a resolution.
    Reclamation and the Forest Service worked closely with the Salt 
River Project Agricultural Improvement and Power District (SRP), the 
entity that operates and maintains the C.C. Cragin project under the 
AWSA, and reached agreement in mid-2010 on legislation to clarify 
jurisdiction of the Federal agencies. The legislation, S. 1080, was 
considered during the 2nd session of the 111th Congress. The bill was 
not enacted during the last Congress, but both H.R. 489 and its 
companion bill, S. 201, contain the same provisions as S. 1080, as 
reported.
    This legislation accommodates the needs of Reclamation and SRP by 
ceding exclusive administrative jurisdiction over the lands underlying 
the C.C. Cragin project to Reclamation and by expressly acknowledging 
SRP's responsibility for operating and maintaining the C.C. Cragin 
project pursuant to the AWSA and the 1917 agreement between the 
Department and SRP. This is a unique situation due to the AWSA. In 
addition, this approach accommodates the Forest Service by allowing the 
agency to manage the lands underlying the utility corridor with respect 
to recreation, wildfire, law enforcement, and other activities 
consistent with the Forest Service's authorities, responsibilities, and 
expertise; the AWSA; the 1917 agreement; and the existing right-of-way 
over the utility corridor held by another party. This approach would 
allow for integrated management of tens of thousands of acres of 
ecosystems across National Forest System lands underlying and adjacent 
to the C.C. Cragin project, including watershed, wildlife habitat, 
range, and vegetation management. H.R. 489 allows for a workable 
agreement for both day-to-day activities and other activities that will 
improve the management and safety of the covered land. The 
Administration believes that this legislation provides a sound approach 
for future management of the C.C. Cragin project. Both Reclamation and 
the Forest Service are committed to working diligently with SRP to 
ensure needed work for the C.C. Cragin project can be accomplished 
expeditiously, including any necessary emergency and non-emergency 
repairs and replacement of improvements, in full compliance with 
applicable law, including the National Environmental Policy Act and the 
Endangered Species Act, as provided in the AWSA.
    Reclamation's long-standing experience working with SRP over nearly 
a century has been very productive. SRP has proven to be a responsible 
and reliable operator and caretaker of U.S. interests and resources. 
Reclamation and SRP have nearly a century of responsible stewardship in 
regard to both the technical operation of dams and reservoirs and 
protection of natural resources. It is our hope that combining that 
history with the Forest Service's land management authorities and 
expertise would result in even more effective stewardship.
    This concludes my testimony. I will be pleased to answer any 
questions.
                                 ______
                                 

     Statement of David Murillo, Deputy Commissioner, Operations, 
  Bureau of Reclamation, U.S. Department of the Interior, on H.R. 818

    Chairman McClintock and Members of the Subcommittee, I am David 
Murillo, Deputy Commissioner of Operations of the Bureau of Reclamation 
(Reclamation). Thank you for the opportunity to provide the views of 
the Department of the Interior (Department) on H.R. 818, as introduced 
on February 18, 2011. This legislation allows for prepayment of the 
current and future repayment contract obligations of the Uintah Water 
Conservancy District (District) of the costs allocated to their 
municipal and industrial water (M&I) supply on the Jensen Unit of the 
Central Utah Project (CUP) and provides that the prepayment must result 
in the United States recovering the net present value of all repayment 
streams that would have been payable to the United States if H.R. 818 
were not enacted. H.R. 818 would amend current law to change the date 
of repayment to 2022 from 2037. The legislation would also allow 
repayment to be provided in several installments and requires that the 
repayment be adjusted to conform to a final cost allocation. The 
Department supports H.R. 818.
    The District entered into a repayment contract dated June 3, 1976, 
in which they agreed to repay all reimbursable costs associated with 
the Jensen Unit of the CUP. The Jensen Unit's total water supply was 
envisioned at this time to be roughly 18,000 acre-feet because plans 
anticipated completion of another pumping plant at a location on the 
Green River known as Burns Bench.
    However, for a variety of reasons, the Burns Bench feature was 
never built. And with the enactment of language in Section 203(g) of 
the Central Utah Project Completion Act of 1992 (P.L. 102-575), the 
District's contract was amended in 1992 to reduce the project M&I 
supply subject to repayment to 2,000 acre-feet annually, and 
temporarily fix repayment for this supply based upon a reduced interim 
cost allocation developed for the still-uncompleted project. The 
amended 1992 contract required the District to repay about $5.545 
million through the year 2037 at the project interest rate of 3.222% 
with annual payments of $226,585. The current balance due, without 
discounting, is $3,949,058 as of 2011.
    It is important to note that this $3,949,058 figure reflects a 
repayment amount that is statutorily lowered by the 1992 legislation, 
and does not reflect the true repayment costs of the Jensen Unit. The 
costs allocated to the 2,000 acre-feet of contracted M&I supply, and 
the M&I supply available through additional incomplete project 
features, may be significantly revised upward in the future upon 
project completion or enactment of this bill, both of which would 
require a Final Cost Allocation. An additional currently unallocated 
cost of $7,419,513 is expected to be allocated to the contracted 2,000 
acre-feet in order to achieve a full and final project repayment.\1\ 
These are the costs that paragraph 3 of H.R. 818 requires to be 
included in the prepayment. .The 2011 balance on the 1992 M&I repayment 
contract is $3,949,058 and the adjustment amount when factoring in the 
total project cost including interest on that debt is $7,419,513. 
Therefore, in total non-discounted dollars, the Conservancy District 
owes the Federal government $11,368,571.
---------------------------------------------------------------------------
    \1\ This allocation will be subject to revision should there be 
additions to the project.
---------------------------------------------------------------------------
    Under Reclamation law, water districts are not authorized to prepay 
their M&I repayment obligation based upon a discounted value of their 
remaining annual payments.
    This legislation would authorize early repayment by the Uintah 
Conservancy District to the Federal government. Because there is an 
interest component to the M&I repayment streams to be repaid early, 
early repayment without an adjustment for interest would result in 
lower overall repayment to the United States. To keep the United States 
whole, the Bureau of Reclamation would collect the present value of the 
whole amount that would be due without early repayment.
    The language in H.R. 818 has been amended from the language 
contained in an earlier version of this legislation, H.R. 2950. The 
amended language clarifies that this legislation requires that the 
Federal government be paid what it is owed by the Conservancy District. 
Because the United States supports the goals of providing for early 
repayment under this contract so long as the United States is kept 
whole, and H.R. 818 clearly establishes that early repayment under this 
legislation must be of an amount equal to the net present value of the 
foregone revenue stream, the Department supports this legislation.
    This concludes my testimony. I will be pleased to answer any 
questions.
                                 ______
                                 
    Mr. McClintock. Thank you, very much, for your testimony. 
Our next witness is Mr. Darrick Moe. He is the Desert Southwest 
Regional Manager for the Western Area Power Administration in 
Phoenix, Arizona, and sitting behind Mr. Moe is an accompanying 
witness from the U.S. Forest Service. Mr. Moe for five minutes.

 STATEMENT OF DARRICK MOE, DESERT SOUTHWEST REGIONAL MANAGER, 
      WESTERN AREA POWER ADMINISTRATION, PHOENIX, ARIZONA

    Mr. Moe. Chairman McClintock, Ranking Member Napolitano, 
members of the Subcommittee, I appreciate having the chance to 
be here today to discuss Hoover Power Plant allocations. My 
name is Darrick Moe. I am the Regional Manager for Western Area 
Power Administration in the Desert Southwest Region. Western's 
mission is to market and deliver reliable, cost-based Federal 
hydropower from facilities such as Hoover Dam, which is within 
the geographic area of Western's Desert Southwest Region. As 
you have already stated, Chairman McClintock, Ranking Member 
Napolitano, Congressman Heck, Hoover Power Plant is a very 
important and vital resource to the Desert Southwest Region. 
With the maximum capacity of over 2,000 megawatts, Hoover 
supplies clean power to millions of homes in Arizona, 
California, and Nevada.
    In accordance with existing policy and Federal law, 
Western's post-2017 power allocation effort is composed of a 
series of proposals introduced to the public through Federal 
Register notices and public forums. Western makes policy 
decisions only after all interested parties have had an 
opportunity to provide input, as you mentioned in your opening 
statement, Mr. Chairman. We consider that input and develop new 
Hoover Dam allocations in the public's interest.
    Western initiated the public process to allocate Hoover Dam 
electricity in November of 2009. This Federal notice proposed 
the extension of 95 percent of the energy and capacity 
available to market from Hoover to the existing Hoover 
contractors, while making five percent available to new 
customers. It proposed 30-year contract terms and invited 
comments on other items. Based on the comments received, 
Western extended the comment period under this notice through 
the end of last September. After considering comments from that 
notice, Western issued its latest Federal Register notice for 
this effort on April 27, 2011.
    Western therein decided it is appropriate to apply the 
Power Marketing Initiative, or PMI, to the Hoover allocation 
process. The PMI has been applied to all of Western's 
remarketing effort since it was announced as a final rule in 
1995, following a four-year public process. Through the 
application of PMI, Western balances the public interest of 
maintaining resource stability for existing customers and the 
regional power grid against the public interest of providing 
for widespread use of Federal hydropower resources by new 
customers, such as tribal governments and other eligible 
customers. Western also decided with that Federal Register 
notice on a 30-year term to achieve a balance between resource 
certainty and providing for an allocation opportunity for 
future customers at an appropriate time. Finally, Western made 
numerous proposals, included the amount of energy and capacity 
to market the size of the resource pool for new customers and 
provisions for marketing excess energy. The current comment 
period is open through June 16, 2011.
    There are numerous steps ahead yet in the administrative 
process. We currently project that we should have this process 
completed and be able to issue new contracts for Hoover power 
by the summer of 2014, based on the current schedule. It is 
important that the process be finalized, of course, well ahead 
of 2017, to provide customers time to balance their energy 
portfolios, to make transmission arrangements, and allow 
related state agencies time to carry out their own allocation 
process.
    Western has reviewed H.R. 470. We appreciate the work this 
Subcommittee has done over the last year to address concerns 
that Western had with the prior version of this bill, such as 
allowing for 36 months for Western to complete its 
administrative process under H.R. 470. Western's written 
testimony notes areas of departure between current 
administrative process and H.R. 470 and provides additional 
background. However, the broad outlines of H.R. 470 are similar 
in many respects to the proposal Western recently has made in 
our process. Both would result in a resource pool for new 
customers. Western's current proposal would result in a similar 
size resource pool being allocated to existing contractors and 
new customers, as compared to H.R. 470.
    It is Western's mission to market Federal hydropower. We 
are using due diligence in moving this process forward, to 
allocate the vitally important Hoover resource in the public's 
interest and in a timely manner. We also stand ready to 
implement H.R. 470 and will apply ourselves accordingly should 
Congress decide to enact. I would be pleased to answer any 
questions.
    [The prepared statement of Darrick Moe follows:]

  Statement of Darrick Moe, Regional Manager of the Desert Southwest 
 Region, Western Area Power Administration, U.S. Department of Energy, 
                              on H.R. 470

    Mr. Chairman and members of the Subcommittee, I am Darrick Moe, 
Regional Manager of the Desert Southwest Region, speaking on behalf of 
Timothy J. Meeks, the Administrator of the United States Department of 
Energy's Western Area Power Administration (Western). I am pleased to 
be here today to discuss H.R. 470, the Hoover Power Allocation Act of 
2011. This legislation seeks to amend the Hoover Power Plant Act of 
1984. The legislation proposes revised allocations of the generation 
capacity and energy from the Hoover Dam power plant, a feature of the 
Boulder Canyon Project (BCP), after the existing contracts expire on 
September 30, 2017.
    Western's mission is to market and deliver reliable, renewable, 
cost-based hydroelectric power from facilities such as Hoover Dam. 
Hoover Dam was authorized and constructed in accordance with the 
Boulder Canyon Project Act of 1928. Pursuant to this Act, the Secretary 
of the Interior was authorized to contract for the sale of generation 
based upon general regulations as he may prescribe. Subsequent power 
sales contracts were executed that committed Hoover power through May 
31, 1987. With the passage of the Hoover Power Plant Act of 1984, 
Congress authorized the Secretary of the Interior to implement an 
uprating program, which increased the generation capacity of the Hoover 
Dam facilities, to make additional facility modifications, and to 
resolve issues over the disposition of Hoover power, post-1987. Western 
proceeded to market Hoover Dam power and entered into 30-year term 
contracts with the current Hoover contractors in accordance with the 
Hoover Power Plant Act of 1984, and Western's Conformed General 
Consolidated Power Marketing Criteria. This process resulted in the 
allocation of 1,951 megawatts of contingent capacity with an associated 
4,527,001 megawatt-hours of firm energy. (Contingent capacity is 
capacity that is available on an as-available basis, while the firm 
energy entails Western's assurance to deliver.)
    The Hoover power plant is a significant hydroelectric power 
resource in the desert Southwest with a maximum rated capacity of 2,074 
megawatts. Under existing Federal law and policy, Western markets 
Hoover power at cost. Hoover power is hydropower and is considered 
``clean energy'' with a minimal carbon footprint. The Hoover Dam power 
plant is able to ramp up and down rapidly and is used by contractors 
for various power-related ancillary services. For these reasons, Hoover 
power is an extremely valuable resource for power contractors in the 
southwestern United States.
    The existing power sales contracts between Western and the 
contractors will expire on September 30, 2017. As this expiration date 
becomes more prominent on the planning horizon, efforts have progressed 
among both Federal and non-Federal sectors to determine the allocation 
of Hoover Dam power after 2017.
    In accordance with policy and existing Federal law, Western's post-
2017 power allocation effort comprises a series of proposals introduced 
to the public through public information forums and public comment 
forums. Western makes policy decisions only after all interested 
parties have been provided ample opportunity to be engaged in the 
process and public input has been carefully considered to develop new 
Hoover Dam allocations that are in the public's best interest and 
provide widespread use of this Federal resource.
    Western's public process to allocate Hoover Dam electricity was 
initiated on November 20, 2009, in a Federal Register notice that 
proposed several key aspects of the allocating effort. Among other 
things, this Federal Register notice proposed the application of 
Western's Power Marketing Initiative (PMI) developed under the Energy 
Planning and Management Program (EPAMP), the extension of a major 
percentage of the marketable resource to existing contractors, 
reservation of an approximate 5% resource pool to be allocated to 
eligible contractors, and provision of 30-year contract terms. Western 
conducted three public information forums from December 1-3, 2009. 
These public information forums were well attended by current customers 
and interested parties and engaged the attendees through question and 
answer sessions. Public comment forums were held from January 19-21, 
2010. Interested parties were provided an opportunity to submit 
comments related to Western's proposals contained in the November 20, 
2009 Federal Register notice. In an April 16, 2010 Federal Register 
notice, Western extended the comment period from January 29, 2010, to 
September 30, 2010. This extension provided interested parties 
additional time to submit comments and allowed Western to consult with 
Tribes to inform them of the remarketing process.
    After considering comments received, Western announced in an April 
27, 2011 Federal Register notice its decision to apply its EPAMP PMI to 
the Boulder Canyon Project remarketing effort. The PMI has been applied 
to all of Western's remarketing efforts since it was announced as a 
final rule in 1995 following a four-year public process. Application of 
the PMI to the Boulder Canyon Project expressly protects and reserves a 
major portion of the existing customers' allocations while also 
providing potential customers, such as Tribal governments and other 
eligible customers, an opportunity to acquire an allocation. The PMI 
has historically provided a balancing of the needs of the existing 
customers with those of prospective customers. Western also decided on 
a 30-year contract term to achieve a balance between resource certainty 
and providing for an allocation opportunity for future customers at an 
appropriate time. Finally, Western also made additional proposals and 
is seeking further comments on the amount of marketable contingent 
capacity and firm energy, the size of the resource pool to be created 
for new customers, and excess energy provisions. As described in the 
Federal Register notice, a public information and comment forum has 
been established for all interested parties to provide written and oral 
comments on these proposals. The comment period for these proposals 
closes June 16, 2011.
    There are numerous steps ahead in the Administrative process. 
Western currently projects that this process will be completed with 
finalized contracts in the summer of 2014. It is important that the 
process be finalized well in advance of 2017 to provide customers the 
time to balance their energy portfolios and make required transmission 
arrangements, and to allow related state Agencies time to carry out 
their allocations process.
    Western has reviewed H.R. 470. There are several similarities 
between the draft legislation and Western's initial proposals brought 
forward in the November 20, 2009 Federal Register notice, and there are 
some departures. To provide background that may be useful to the 
Subcommittee members as this bill is considered, I'll address some of 
these differences in my comments.
    All of Western's allocation efforts are open to public 
participation and conducted in accordance with the Administrative 
Procedures Act. At each stage of the process, Western proposes actions 
and/or policy to be considered and is open for public comment and 
input. Western believes soliciting and integrating public input into 
policy decisions allows Western to develop results that are in the 
public's best interest and lead to the most widespread use of this 
resource.
    Western has 15 current contractors who receive an allocation of 
Hoover power. Two of those existing contractors are the Colorado River 
Commission (CRC) and the Arizona Power Authority (APA). CRC and APA 
sub-allocate their Hoover power to customers under prescribed 
guidelines and regulations. Both H.R. 470 and Western's administrative 
effort propose an amount of resource to be allocated to new customers. 
H.R. 470 proposes certain quantities to be allocated to APA and CRC for 
their disposition to new customers. While it is anticipated that new 
customers to APA and CRC could result from this effort, Western's 
process affords the opportunity to fully seek public input and assures 
all interested parties are considered in the power's disposition.
    Western has received numerous written comments and statements from 
Native American Tribes expressing concern that their interests have not 
yet been fully vetted and considered. In recent history, Tribes have 
been active in Western's remarketing efforts, and one goal of Western's 
Strategic Plan is to seek partnerships with Tribes on numerous 
initiatives. I believe that soliciting input from Tribes and other 
entities that do not already have an allocation of Hoover power is in 
the public interest.
    H.R. 470 would direct that Hoover's full maximum rating of 2,074 
megawatts of capacity be allocated to Hoover customers in a multi-
faceted approach. As described in Western's November 20, 2009 Federal 
Register notice, we propose to market 2,044 megawatts of contingent 
capacity; 30 megawatts below the maximum rating. The retention of 30 
megawatts of contingent Hoover Dam capacity for use by Western for 
project integration purposes should provide the tools we need to meet 
our mission and statutory requirement of delivering reliable Federal 
hydro-generation. Western manages multiple federally owned generation 
and transmission projects in the Desert Southwest on a minute-by-minute 
basis. While these projects are financially segregated, they are 
operated as an integrated system. This 30-megawatt capacity to be held 
by the Federal Government would provide significant benefit to the 
operation of the integrated projects and the Western Area Lower 
Colorado balancing authority that Western operates. Retaining 30 
megawatts would also likely allow our Hoover Dam power customers to 
experience cost-neutral conditions. Should Western be unable to retain 
approximately 30 megawatts, we would expect to procure replacement 
power from the market at a higher cost, if it is available. These 
higher costs would in turn need to be passed through to Western 
customers in the form of higher rates.
    H.R. 470 expressly requires that each contract offered to a new 
allottee for Hoover Dam power should require the new allottee to 
execute the Boulder Canyon Project Implementation Agreement. Western 
finds significant value in the provisions and results of the 
Implementation Agreement. However, this agreement was jointly 
constructed between Western and our customers for unique circumstances 
that existed in 1994. Should this requirement be retained, the current 
Implementation Agreement would need to be evaluated and potentially 
revised to accommodate current conditions. We support the universal 
benefits achieved by the Implementation Agreement and will work with 
our customers to determine the appropriate documentation to meet all of 
our customers' needs; both current and future.
    H.R. 470 expressly requires that each contract offered to a new 
allottee for Hoover Dam power includes a provision requiring the new 
allottee to pay a proportional share of its State's funding 
contribution for the Lower Colorado River Multi-Species Conservation 
Program, known as the LCR MSCP. The LCR MSCP is a 50-year, multi-
stakeholder, Federal and non-Federal partnership, responding to the 
need to balance the use of lower Colorado River water resources and the 
conservation of native species and their habitats in compliance with 
the Endangered Species Act (ESA). The LCR MSCP is a comprehensive 
approach to species protection developed after nearly a decade of work. 
This program is funded on a cost-share basis comprised of 50-percent 
Federal and 50-percent non-Federal. The States of Arizona, California 
and Nevada have worked internally with water and power customers to 
fund each State's respective share. H.R. 470 recognizes these funding 
requirements and obligates new power customers to contribute to this 
funding in a proportional manner. Supporters of H.R. 470 note that the 
50-year obligation of the LCR MSCP is, in part, reason to proceed with 
50-year Hoover power supply contracts. Western continues to review the 
LCR MSCP requirements in our administrative process. However, Western's 
position is that the 50-year LCR MSCP term need not coincide with the 
Hoover Dam power sales contracts' term. The adoption of a 50-year 
contract term, as opposed to Western's decision to apply 30-year 
contract terms, could potentially exclude evolving classes of customers 
in decades to come. The modern day electrical industry is dynamic in 
its regulations, technologies, operations and participants. The 
landscape of potential customers in decades to come has the capability 
to yield new Hoover customers, as we strive to meet the needs of all 
our customers; existing and future.
    As drafted, H.R. 470 states that Subdivision E of the General 
Consolidated Power Marketing Criteria or Regulations for Boulder City 
Area Projects published in the Federal Register on December 28, 1984, 
(Criteria) shall be deemed to have been modified to conform to this 
legislation. Western would like to refine this statement as Western's 
December 28, 1984, Federal Register notice is more precisely titled 
Conformed General Consolidated Power Marketing Criteria or Regulations 
for Boulder City Area Projects (Conformed Criteria). Western published 
the Criteria on May 9, 1983, which was in need of conformance per the 
Hoover Power Plant Act of 1984. Pursuant to the Hoover Power Plant Act 
of 1984, Western conformed the 1983 Criteria in its December 28, 1984, 
Federal Register notice. In doing so, the pertinent section is now 
Subdivision C of the Conformed Criteria. If H.R. 470 is to move 
forward, edits would be needed to refer to Subdivision C Western's 
Conformed Criteria and not Subdivision E of the Criteria.
    Western respectfully recognizes that our administrative process is 
not the exclusive means of allocating Hoover power. I would welcome the 
opportunity to work with this Subcommittee to address the technical 
concerns I have raised and to ensure the widespread use of this 
valuable resource as work continues on this legislation. In the absence 
of congressional action, Western will uphold our authority and 
responsibility to market Hoover power consistent with historical 
statutes and in concert with the rules and regulations as the Secretary 
of Energy prescribes.
    This concludes my prepared remarks and I would be pleased to answer 
any questions you or members of the Subcommittee might have.
                                 ______
                                 
    Mr. McClintock. Thank you for your testimony. Our next 
witness is Ms. Phyllis Currie. She is the General Manager, 
Pasadena Water and Power Department, Pasadena, California. 
Welcome to Washington.

STATEMENT OF PHYLLIS E. CURRIE, GENERAL MANAGER, PASADENA WATER 
           AND POWER DEPARTMENT, PASADENA, CALIFORNIA

    Ms. Currie. Thank you. Chairman, McClintock and Ranking 
Member Napolitano, I am pleased to testify today on behalf of 
the Southern California Public Power Authority and the City of 
Pasadena, as well as the other member agencies of the Southern 
California Public Power Authority. As a joint power authority 
consisting of 11 municipal utilities and 1 irrigation district, 
SCPPA members deliver electricity to approximately 4.8 million 
consumers over an area of 7,000 square miles. The SCPPA members 
that are Hoover participants include the municipal utilities of 
the Cities of Anaheim, Azusa, Banning, Burbank, Colton, 
Glendale, Los Angeles, Pasadena, Riverside, and Vernon.
    The City of Pasadena was one of the original contractors 
for power from Hoover Dam. In 1931, Pasadena, along with the 
Cities of Glendale, Burbank, and Los Angeles, the Metropolitan 
Water District of Southern California, Southern California 
Edison, and the States of Arizona and Nevada, all agreed to pay 
rates sufficient to guarantee the Federal Government that 
construction costs of the Hoover Dam would be repaid in 50 
years. Hoover Dam and the Power Plant were paid for entirely by 
the original power users, not by the Federal taxpayers. All the 
benefits of this dam, which have been spoken by other speakers 
this morning, were made possible by the financial commitment of 
these original power users. Millions of citizens in Arizona, 
California, and Nevada have enjoyed these benefits since the 
dam's inception.
    Pasadena was also one of the parties that agreed in 1984 to 
advance fund the cost of up-rating the turbines at Hoover, 
which resulted in another 500 megawatts of generation. Pasadena 
joined the SCPPA Cities of Glendale, Anaheim, Riverside, Azusa, 
Banning, Colton, Vernon, and the States of Arizona and Nevada 
in that up-rating effort, which, again, used no taxpayer money.
    Power from Hoover Dam has always been allocated by act of 
Congress, rather than through an administrative proceeding, 
through the Boulder Canyon Project Act of 1928, which 
authorized the original construction, and the Hoover Power 
Plant Act of 1984, which authorized the up-rating. The 
contractors have guaranteed that funds required would be paid 
by the participants.
    In anticipation of the expiration of the current contracts 
in 2017, the power users in Arizona, California, and Nevada got 
together more than three years ago to begin the negotiations 
that have led to the legislation before you today. This 
legislation authorizes the Secretary of Energy to enter into 
50-year contracts with the existing contractors for 95 percent 
of the capacity and energy they now receive. It gives power 
users a contract term that matches the financial commitment 
that has been made by those contractors in the 2009 Lower 
Colorado River Multi Species Conservation Plan legislation. The 
funds under that bill will be used for 50 years of 
environmental mitigation on the lower Colorado River.
    H.R. 470 also creates a set-aside pool for new entrants, 
including Indian tribes, municipalities, rural electric 
cooperatives, irrigation districts that do not now receive 
Hoover power. From Pasadena's point of view, passage of this 
legislation will enable us to plan effectively for long-term 
power supplies to meet customer demand. It will also offset the 
higher cost of renewable resources that we will have to acquire 
to meet a 40 percent by 2020 renewable target that Pasadena has 
adopted. All of the other SCPPA Hoover contractors have adopted 
targets in a similar range. Additionally, the State of 
California has enacted legislation that would require all 
utilities, including SCPPA members, to meet a 33 percent 
renewable standard and a 30 percent reduction in greenhouse 
gases by 2020.
    Pasadena is proud to have been one of the original Hoover 
participants and an original participant in the up-rating 
project. This unique facility has provided many benefits, but 
has not been paid for by the Federal Government. We are proud 
that the legislation we are discussing today was unanimously 
agreed to by Hoover contractors in the three states and we are 
especially gratified for the support, bipartisan support that 
we have, as represented by the Chairman and the Ranking Member. 
Thank you for the opportunity to present this statement and I 
would be happy to answer any questions you may have.
    [The prepared statement of Phyllis E. Currie follows:]

             Statement of Phyllis Currie, General Manager, 
                 Pasadena Water and Power, on H.R. 470

    Chairman McClintock and Ranking Member Napolitano, thank you for 
inviting me to participate in today's hearing on H.R. 470 the Hoover 
Power Allocation Act of 2011.
    I am Phyllis Currie, the General Manager of the Pasadena Water and 
Power. I am testifying today on behalf of the City of Pasadena and the 
other nine Hoover contractors who are members of SCPPA, the Southern 
California Public Power Authority.
    The SCPPA is a joint powers authority consisting of 11 municipal 
utilities and one irrigation district. Our members deliver electricity 
to approximately 2 million customers over an area of 7,000 square 
miles, with a total population of 4.8 million consumers. SCPPA members 
that are Hoover participants include the municipal utilities of the 
Cities of Anaheim, Azusa, Banning, Burbank, Colton, Glendale, Los 
Angeles, Pasadena, Riverside and Vernon.
    Pasadena was one of the original contractors for power from Hoover 
Dam. In 1931, Pasadena, along with Glendale, Burbank, Los Angeles, 
Metropolitan Water District of Southern California, Southern California 
Edison and the States of Arizona and Nevada agreed to pay rates 
sufficient to guarantee the federal government that construction costs 
of the multi-purpose, almost 1,500 megawatt dam would be repaid in 50 
years.
    Hoover Dam and power plant were entirely paid for by the original 
power users--not by the federal taxpayers. All the benefits of this 
multi-purpose dam, including flood control, municipal and industrial 
water supply, irrigation and recreation were made possible by the 
commitment of these original power users to pay for the dam. Since its 
inception, Hoover Dam has provided these multiple benefits to millions 
of citizens in Arizona, California and Nevada.
    Pasadena was also one of the parties that agreed, in 1984, to 
advance fund the costs of uprating the turbines at Hoover, which 
resulted in another 500 MW of generation from the dam. Pasadena joined 
SCPPA cities Glendale, Anaheim, Riverside, Azusa, Banning, Colton, 
Vernon and the States of Arizona and Nevada in that uprating effort 
which, again, used no taxpayer money.
    Power from Hoover Dam has always been allocated by Act of Congress, 
rather than through an administrative proceeding. The Boulder Canyon 
Project Act of 1928 authorized construction of the dam and related 
facilities and allocated power to the original contractors, including 
Pasadena. The Hoover Power Plant Act of 1984 authorized the Hoover 
uprating project, re-allocated power to the original contractors and 
allocated the new capacity and energy to the uprating participants.
    In anticipation of the expiration of current contracts for Hoover, 
in 2017, power users in Arizona, California and Nevada got together 
more than three years ago to begin negotiations that led to the H.R. 
4349. These negotiations led to the legislation before you today.
    The key features of this legislation are as follows:
          Authorizes the Secretary of Energy to enter into 50-
        year contracts with existing contractors for 95% of the 
        capacity and energy they now receive;
          Gives power users a contract term that matches the 
        financial commitment made by water and power contractors in the 
        Lower Colorado River Multi-Species Conservation Plan 
        legislation signed into law in 2009. The MSCP funds will be 
        used for 50 years of environmental mitigation on the Lower 
        Colorado River;
          Creates a 5% ``set aside'' of capacity and energy for 
        new entrants, including Indian tribes, municipalities, rural 
        electric cooperatives and irrigation districts that do not now 
        receive Hoover power;
    From Pasadena's point of view, passage of this legislation will 
enable us to plan effectively for long-term power supplies to meet 
customer demand. It will also offset the higher cost of renewable 
resources we will acquire to meet the 40 by 2020 target Pasadena has 
adopted. All of the other SCPPA Hoover contractors have adopted 
similar, or higher, renewable energy targets. Additionally, California 
has enacted state legislation that would require all utilities, 
including SCPPA members, to meet a 33% renewable energy standard and 
30% reduction in greenhouse gas reduction by 2020.
    And, passage of this bill will match the commitment water and power 
users made to fund the MSCP with contracts that ensure the benefits of 
the power generated at Hoover.
    Pasadena is proud that it was one of the original Hoover 
participants and that we were participants in the uprating authorized 
in 1984. This unique facility, paid for by power users, not by the 
federal government, provides immeasurable benefits to citizens Southern 
California, Arizona and Nevada.
    We are also proud that the legislation we are discussing today was 
agreed-to unanimously by Hoover contractors in the three states. And, 
we are gratified to have strong bi-partisan support for the bill from 
the Chairwoman and many other Members of Congress from Arizona, 
California and Nevada. Thank you for the opportunity to present this 
statement and I would be happy to answer any questions you may have.
                                 ______
                                 
    Mr. McClintock. Thank you for your testimony. Our next 
witness is Mr. John Sullivan, Associate General Manager of the 
Salt River Project in Phoenix, Arizona.

 STATEMENT OF JOHN F. SULLIVAN, ASSOCIATE GENERAL MANAGER, THE 
              SALT RIVER PROJECT, PHOENIX, ARIZONA

    Mr. Sullivan. Chairman McClintock, Ranking Member 
Napolitano, and members of the Subcommittee, thank you for the 
opportunity to testify in support of House Bill 470. I would 
like to begin by thanking Representative Heck and Ranking 
Member Napolitano for introducing this bill and to 
Representatives Flake, Franks, Gosar, a fellow Tucsonan, 
Grijalva, Quayle, and Schweikhart for recognizing the 
importance of this legislation to Arizona and signing on as 
cosponsors. My name is John Sullivan. I am the Associate 
General Manager of the Water Group of the Salt River Project in 
Phoenix.
    Arizona currently receives 377 megawatts of Hoover power 
through a contract between the United States and the Arizona 
Power Authority, the APA, as authorized by Federal law. The APA 
has subsequently allocated Hoover power to 30 eligible 
entities, including SRP, within the State under provisions of 
Arizona law. Hoover power allocations allow those cost-based 
entities, including municipal utilities, irrigation districts, 
and electrical districts, to supply power to their customers at 
rates that help support Arizona agriculture and local 
economies. Hoover power also plays a critical role in supplying 
Colorado River water to central and southern Arizona through an 
APA contract with the Central Arizona Water Conservation 
District. Passage of H.R. 470 is necessary to secure power 
allocations for those entities that have invested in and rely 
on Hoover power, but is also important so that Indian tribes, 
electric cooperatives, and other eligible entities not 
currently benefitting from Hoover power can receive 
allocations. The bill sets aside five percent of the total 
capacity specifically for those new entrants. SRP is committed 
publicly and privately to work with APA and entities seeking 
new allocations in the state allocation process.
    In addition, we recognize the importance of certainty for 
existing contractors and new entrants alike and that is why SRP 
has offered to sell a backstop product with the same 
operational and price characteristics as Hoover to certain 
entities within the State of Arizona, in the event they do not 
receive an allocation through the state process. We feel the 
five percent set aside in the legislation for new entrants and 
our written offer is a fair solution that provides certainty to 
all parties in Arizona. However, securing Arizona's allocation 
through the passage of this bill, as introduced, is a critical 
first step, and I urge support and passage of H.R. 470.
    I would also like to take a moment to express SRP's support 
for H.R. 489, which Mayor Evans testified on just a little bit 
earlier. SRP operates and maintains the C.C. Cragin Project 
under a contract with the Bureau of Reclamation. As you have 
heard, this bill would simply clarify that Reclamation is 
responsible for approval of operation, maintenance, and repair 
activities at the project, as is the case for all other Federal 
Reclamation projects located on national forest lands in the 
State of Arizona. It would not relieve either the Bureau of SRP 
from full compliance with environmental laws. I have submitted 
a written statement for the record on that bill and appreciate 
the opportunity to address that briefly.
    Chairman McClintock, members of the Subcommittee, thank you 
again for the opportunity to testify before you today. I would 
be happy to answer any questions.
    [The prepared statement of John Sullivan follows:]

       Statement of John F. Sullivan, Associate General Manager, 
                    Salt River Project, on H.R. 470

    Chairman McClintock, Ranking Member Napolitano and Members of the 
Subcommittee, thank you for the opportunity to submit testimony in 
support of H.R. 470, a bill to allocate Hoover Dam power to existing 
customers and also to establish allocations to new customers. My name 
is John F. Sullivan. I am the Associate General Manager of the Water 
Group at the Salt River Project (``SRP''), a large multi-purpose 
federal reclamation project providing water and power service in the 
Phoenix, Arizona metropolitan area.
    SRP fully supports H.R. 470, which will both allocate and expand 
the availability of hydroelectric power generated at Hoover Dam. 
Hydropower from Hoover Dam is an important, emission-free, renewable 
resource to SRP and to the State of Arizona, as well as the States of 
California and Nevada. H.R. 470 will ensure that this clean, affordable 
and reliable source of electricity will continue to be available to our 
region, and will set aside a portion of the available electricity to 
benefit Indian Tribes and other eligible entities which do not 
currently receive Hoover power.
    Hoover power allocations were initially authorized for 50 years 
under the Boulder Canyon Project Act of 1928. The Hoover Power Plant 
Act of 1984 extended those allocations and authorized customer funding 
to upgrade the turbines at Hoover, creating an additional 500 MW of 
capacity. Hoover Dam power has been critical to the development of the 
region and continues to be a vital source of low-cost, renewable power 
for 29 million people in Arizona, California and Nevada, helping to 
keep our energy costs to consumers as low as possible. Substantial 
investments have been made by the Hoover contractors to improve and 
utilize the Hoover resource, including a commitment to fund a portion 
of the Lower Colorado River Multi-Species Conservation Program for 50 
years.
    Arizona currently receives 377 MW of Hoover power through a 
contract between the United States and the Arizona Power Authority 
(``APA'') as authorized by federal law. The APA has subsequently 
allocated Hoover power to 30 eligible entities, including SRP, within 
the State under provisions of Arizona law. Hoover power allocations 
help these cost-based entities, including municipal utilities, 
irrigation districts and electrical districts, supply power to their 
customers at rates that help support Arizona agriculture and local 
economies. Hoover power also plays a critical role in supplying 
Colorado River water to central and southern Arizona through an APA 
contract with the Central Arizona Water Conservation District, the 
operator of the Central Arizona Project.
    Passage of H.R. 470 is necessary to secure power allocations for 
those entities that have invested in and rely on Hoover power, but is 
also important so that Indian Tribes, electric cooperatives and other 
eligible entities not currently benefiting from Hoover power can 
receive allocations. SRP looks forward to working with the APA and 
these new entrants in the State allocation process. In an effort to 
promote certainty, SRP has offered to sell a ``backstop'' product with 
the same operational and price characteristics as Hoover to certain 
entities within Arizona, in the event they do not receive an allocation 
through the State process.
    H.R. 470 is supported by existing customers in all three states, 
who worked for two years to negotiate and come to agreement on the 
legislation. In the 111th Congress, an identical bill (H.R. 4349) 
passed the House of Representatives as well as the Senate Energy and 
Natural Resources Committee with strong bipartisan support and without 
opposition. The current contracts for Hoover power expire in 2017; and, 
given the need for certainty and the time required to develop alternate 
power supply plans if necessary, along with the time required to 
develop federal power contracts and administer the State allocation and 
contract process, early passage of this bill is essential.
    The clean, renewable energy generated at Hoover Dam is vital to SRP 
and the other customers in the region and passage of H.R. 470 is 
necessary to secure continued access to the power and to provide the 
opportunity for access by new customers. We urge your support and 
prompt passage of this important bill.
    Chairman McClintock and Members of the subcommittee, thank you 
again for the opportunity to testify before you today. I would be happy 
to answer any questions.
                                 ______
                                 
    Mr. McClintock. Thank you, Mr. Sullivan, for your 
testimony. Our final witness is Ms. Ann Pongracz, Senior Deputy 
Attorney General of Colorado River Commission of Nevada, 
stationed in Los Vegas, Nevada. Welcome.

 STATEMENT OF ANN C. PONGRACZ, SENIOR DEPUTY ATTORNEY GENERAL, 
     COLORADO RIVER COMMISSION OF NEVADA, LAS VEGAS, NEVADA

    Ms. Pongracz. Thank you, very much, Mr. Chairman, Ranking 
Member Napolitano, members of the Committee, for this 
opportunity to testify today in favor of H.R. 470. We would 
like to begin by expressing our thanks to Congressman Heck, 
Congresswoman Berkeley, our Nevada senators, and Congresswoman 
Napolitano, and other cosponsors of the legislation.
    Hoover power, as Congressman Heck pointed out earlier 
today, is a critically important resource for the Nevada 
economy and for our citizens and prior to coming to Washington, 
we had prepared written comments in favor of H.R. 470, in order 
to support the bill. I have submitted these written comments 
for the record and will focus my limited amount of time 
available on issues presented by the testimony of the Western 
Area Power Administration.
    The Colorado River Commission of Nevada and other Hoover 
contractors are quite concerned about certain aspects of the 
testimony Western has presented today--and particularly aspects 
of the testimony that relate to Western's plans for remarketing 
post-2017 Hoover power that are set forth in its April 27th 
Federal Register notice. While the Hoover contractors certainly 
recognize that Western has a very important role to play in 
allocating Hoover power, we object to several aspects of the 
approach taken in the April 27th Federal Register notice. 
Western makes major decisions in that notice, which it proposes 
to become effective upon May 27th of this year, barely two 
weeks from the date of today's hearing. And on these points, 
Western is proposing to take an approach that varies 
dramatically from the approach advocated in H.R. 470, in terms 
of Western has decided to apply its PMI to Hoover power, which 
has not been done in the past; Western is proposing that the 
resource pool would be marketed only by Western, in contrast to 
the Federal-state sharing of allocation authority that is 
included in H.R. 470; and Western proposes a contract term of 
30 years, as opposed to the 50-year contract term that is set 
forth in H.R. 470.
    Application of the PMI to Hoover power would ignore the 
substantial historic differences between Hoover Dam and other 
Federal hydropower projects in Western's region. Congress has 
in the past recognized that it is appropriate to market Hoover 
hydropower differently. This distinction is rooted in the 
historical fact that Ms. Currie referred to, that contractors 
have funded the construction and ongoing operation of Hoover 
Dam, whereas other projects have had billions of dollars of 
funding by the U.S. Treasury. Western is attempting to erase 
this distinction without demonstrating that such change is 
necessary.
    The Hoover contractors further object to Western's decision 
to reduce the relationship between the funding mechanism for 
the Lower Colorado River Multi Species Conservation Program or 
MSCP and Hoover contracts. There is a very close relationship 
created in H.R. 470 between MSCP funding and receipt of the 
Hoover power and H.R. 470 makes a provision that all future 
Hoover power allottees will have to, in their contracts for 
Hoover power, make the same commitment to funding the MSCP 
program, that existing Hoover contractors have made. We think 
that maintaining that strong relationship through the 50-year 
contracts is crucial to the future success of the MSCP.
    Now, Hoover contractors believe that Western does not, 
absent H.R. 470, have the legal authority to allocate Hoover 
power to tribes. We support the inclusion of tribes in the 
allocation process for the resource pool, but note that there 
is a problem with doing so without the enactment of H.R. 470. 
Hoover contractors also believe that Western lacks the legal 
authority to apply its PMI to Western. Both of these issues 
will lead to litigation if Western continues down this road. 
This would upset the delicate balance of responsibility that 
has worked so well in the past between the Federal and state 
government and between Western and the various parties, the 
existing Hoover contractors who have worked together with 
Western and with each other so well in the past.
    Now there is a potential solution here that we would like 
to bring to the attention of the Committee, which would be, if 
Western would issue a notice in the Federal Register 
clarifying, perhaps clarifying that they did not intend to 
actually make these decisions effective May 27th and that those 
decisions would be included as proposals, as would all the 
other issues that are set forth in the Federal Register notice 
and go through the comment process that Western lays out in the 
notice that would go a long way to addressing the problem that 
has been created by the phrasing of the notice that was 
published.
    We urge Congress to send Western a strong signal regarding 
the proper approach for allocating Hoover power and enact H.R. 
470 as soon as possible. Thank you, very much. I stand ready to 
respond to questions.
    [The prepared statement of Ann C. Pongracz follows:]

 Statement of Ann C. Pongracz, Senior Deputy Attorney General, Counsel 
 to the Colorado River Commission of Nevada, on H.R. 470, H.R. 489 and 
                    H.R. 818, in Support of H.R. 470

    Good morning Chairman McClintock, Congresswoman Napolitano and 
Members of the Subcommittee. My name is Ann C. Pongracz, Senior Deputy 
Attorney General, and I serve as Counsel to the Colorado River 
Commission of Nevada. I appreciate your invitation to speak to you 
today regarding H.R. 470, and I want to especially thank Congressman 
Heck and Congresswoman Napolitano for your efforts and leadership on 
this bill. I speak today on behalf of the State of Nevada, one of the 
three lower basin states directly affected by the Hoover power 
contracts. The Colorado River Commission of Nevada strongly supports 
H.R. 470. I also submit for the record support letters from the Nevada 
customers who benefit from Hoover power including the Southern Nevada 
Water Authority and NV Energy.
    The Colorado River Commission is the state agency charged with, 
among other duties, receiving and allocating federal hydropower from 
the Colorado River that is provided to the State of Nevada. This 
legislation is crucial to my state. On behalf of the State in its 
sovereign capacity and also as principal on its own behalf, the 
Colorado River Commission receives electric power generated by Hoover 
Dam through delivery contracts with the Western Area Power 
Administration of the U.S. Department of Energy. The Commission, in 
turn, contracts to deliver Hoover power to retail and wholesale 
customers in Southern Nevada. We also operate a power delivery system 
to deliver this critical resource to our customers.
    The Colorado River Commission of Nevada has worked for three years 
with representatives of Arizona and California to develop this 
consensus approach to ensuring that the benefits of Hoover power will 
continue to be delivered to the citizens of our three states after 
current contracts expire in 2017.
    H.R. 470 extends current Hoover power contracts for fifty years to 
2067. It re-directs five percent of Hoover capacity and associated 
energy from current contractors to a resource pool that will be made 
available to new allottees in Nevada, Arizona and California who do not 
receive any Hoover power today. This bill will allow federally-
recognized Indian tribes to apply to access the dam's power for the 
first time, as well as entities eligible under section 5 of the Boulder 
Canyon Project Act such as states, municipal corporations and political 
subdivisions.
    H.R. 470 provides coordinated federal/state management of the new 
allottees' resource pool. The Western Area Power Administration will 
allocate two-thirds of the pool, and the remaining one-third of the 
pool will be distributed in equal shares through the Arizona Power 
Authority (for new allottees in Arizona), the Colorado River Commission 
of Nevada (for new allottees in Nevada), and Western (for new allottees 
in California). H.R. 470 requires new allottees to pay a proportionate 
share of the costs borne today by current contractors for operational 
and environmental purposes.
    We urge the Congress to approve H.R. 470. We believe that Congress 
should allocate post-2017 Hoover power as it has done since Hoover Dam 
was constructed in 1935. Congressional approval is needed to ensure the 
continued availability and reliability of Hoover power to the citizens 
of Nevada, Arizona and California. The State of Nevada supports H.R. 
470 in its entirety and urges the Committee to approve the bill. Thank 
you again for the opportunity to speak with you today. I'd be happy to 
answer any questions you may have.
                                 ______
                                 
    Mr. McClintock. Great. Thank you all, very much, for your 
testimony today and for many of you who have traveled so far to 
be here. At this point, we will begin questions by the Members. 
To allow all of our Members to participate and to ensure that 
we can hear from all of our witnesses today, we will be 
limiting questioning to five minutes. After the Ranking Member 
and I pose our questions, I will then recognize Members on 
alternating sides of the aisle, in order of their arrival and 
seniority. And I will begin with my five minutes.
    Mr. Murillo, regarding H.R. 818, that allows local water 
utility to repay its loan balance to the Federal Government. I 
have supported the concept of prepayment. I just want to 
clarify why this bill is necessary. Does the Bureau of 
Reclamation have the ability to allow for loan prepayment 
without specific congressional authorization?
    Mr. Murillo. Without this legislation, we do not have that 
ability to have them prepay.
    Mr. McClintock. Are you aware of how many similar loans in 
the western United States need congressional approval for 
prepayment?
    Mr. Murillo. No, I am not.
    Mr. McClintock. Could you provide that number to the 
Subcommittee? As I said----
    Mr. Murillo. I can provide that information for the record.
    Mr. McClintock. I think this is a matter that we, at some 
point, need to discharge with a uniform policy on the subject. 
I think it is sound public policy and ought to apply in all 
cases.
    Mr. Murillo. Yes, I can provide that information for the 
record.
    Mr. McClintock. Great. Thank you. Also, to correct the 
record, the representative from the Forest Service is here 
backstopping your testimony, not Mr. Moe's. But on that 
subject, to your knowledge, has the Forest Service attempted to 
interfere or obstruct the maintenance of any other water 
systems?
    Mr. Murillo. I am not aware where they have tried to 
interfere with the maintenance or operations of other 
facilities. This is a unique situation and I think that is why 
we are in the situation we are with this one, with Cragin.
    Mr. McClintock. The situation may be unique as to their 
interference with the maintenance of this vital water project, 
but it is not unique with respect to their behavior in a wide 
range of areas involving the management of the national forest. 
As I said, I believe this evinces an overall design ultimately 
to expel the people from the people's forests. And I certainly 
appreciate the Bureau of Reclamation looking into that and 
getting back to this Committee, if there are other examples of 
this kind of behavior throughout the areas where the Forest 
Service claims jurisdiction over Bureau of Reclamation 
projects.
    Mr. Murillo. Yes, we will look into that and provide that 
information for the record.
    Mr. McClintock. Thank you. Next, regarding the Hoover power 
issue, and I will ask any of the Hoover power witnesses to 
respond. In the event that Congress does not follow legislative 
precedent by passing this Hoover power bill and the Western 
Area Power Administration then steps in to allocate the 
hydropower that is generated at Hoover Dam--obviously, the 
agencies started that process. I have heard a lot of rumblings 
from Hoover power customers that the effort will be subject to 
controversy and potential litigation. I wonder if any of the 
witnesses can elaborate on those concerns.
    Ms. Pongracz. Yes, Mr. Chairman. Ann Pongracz for the 
record. We do believe that it is quite likely that litigation 
would ensue in the event that this legislation is not enacted. 
While we are quite willing to participate in a Western 
remarketing processing, we have participated in the process 
thus far. We intend to continue to participate in the process 
as it goes forward. However, Western's decision to make certain 
decisions effective May 27th virtually guarantees that certain 
parties will feel a need to sue as soon as later this month, in 
order to prevent these provisions from going into effect. This 
is because of the application of the Administrative Procedures 
Act and under the terms of the Federal Administrative 
Procedures Act, some of our Hoover contractor participants are 
extremely concerned that once those decisions go into effect, 
the courts would be required to apply a very different standard 
of review to Western's proposed approach than they would if the 
procedures were not yet in effect.
    Mr. McClintock. Thank you. Perhaps I could direct this 
question to Ms. Currie, as one of the project participants. The 
Federal Government fronts much of the money for these projects 
and then it is paid back by the users of the water. What 
benefits does the Federal Government derive once the project is 
paid for?
    Ms. Currie. Well, the Federal Government continues to have 
the price stability that this project represents and the fact 
that the consumers have price stability leads to overall 
economic benefit that the Federal Government certainly shares 
in. So, we believe that the success of this project has been 
demonstrated in terms of the leveling of energy costs that it 
has brought to our region.
    Mr. McClintock. Mr. Moe, why should parties that have had 
no part in the financing of these facilities be given a five 
percent slice of the project, I am sorry, in three seconds or 
less. I will save that for the second round of questions. My 
time is up. I recognize the Ranking Member, Ms. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair. And to Mr. Moe, why 
is Western proposing something so different in the 
administrative allocation process that was negotiated by the 
three states, the contract, 30 years versus the 50, and the 30 
megawatt set aside for WAPA and what would it be used for if 
this bill does not pass?
    Mr. Moe. A couple of areas where our current proposals are 
different are the 30 year versus 50 year. For example, we asked 
for comments for that and had a comment period open for about a 
year and believe, based on reviewing those comments, that 30 
years is a proper balance between providing long-term costs and 
economic certainty and allowing for new customers. For example, 
30 years ago, prior to the 1984 allocation, the Western's 
regulatory process did not make it very easy for tribes to 
become customers. In the meantime, we have 87 tribes as 
customers. So----
    Mrs. Napolitano. OK.
    Mr. Moe. So, it allows us to look for widespread use and 
balance that against economic----
    Mrs. Napolitano. My time is running, so let me cut it short 
because of the comment you made about tribes and I noticed that 
you first outreached to the tribes in January--well, actually, 
you started a process in January of 2010 and then you start 
reaching out to the tribes in September. Why the time lapse and 
have you reached out to them before? And have you negotiated 
with them before and for how long?
    Mr. Moe. Yes. We initiated our process on November 2009 and 
sent it, you know, to all interested parties.
    Mrs. Napolitano. Including tribes?
    Mr. Moe. They would have been included. One of the reasons 
we extended it----
    Mrs. Napolitano. Would have been included, sir? Were they 
included?
    Mr. Moe. Yes. One of the reasons we extended the process is 
to send particular notice to all 59 tribes in the marketing 
area, to make sure individually that they all got notice of the 
process and so that is one of the reasons we extended the 
process until the end of September of last year.
    Mrs. Napolitano. Thank you. And your Federal notice 
proposing to allocate less for new entrants than the bill 
would, 93 megawatts versus 103 megawatts, this means the 
entities would have less opportunity under the Federal Register 
notice. Can you justify that?
    Mr. Moe. Yes. The 30 megawatts is another difference that 
you mentioned. We believe the 30 megawatts is important to 
integration of the project and operating the balancing 
authority reliably. It is a proposal at this time. We have not 
made a decision on it, so it is something we are still seeking 
comments on before we make a final decision.
    Mrs. Napolitano. OK. How many tribes are in the Desert 
Southwest marketing area and how many of those are eligible to 
apply for the 103 megawatt Schedule D?
    Mr. Moe. There are 59 tribes in the Boulder Canyon 
marketing area and the Hoover marketing area. And we haven't 
moved the process to asking for allocations yet. That is one of 
the future steps in our process. But, those tribes have all 
been notified that the process is going on.
    Mrs. Napolitano. OK. If these tribes are successful in 
being able to get allocations, Federally recognized tribes, 
what are you going to do to be able to help them be successful 
in being able to get into the allocation properly?
    Mr. Moe. One of the things that we have done with the 
issuance of the Power Marketing Initiative and in that same 
time frame is change the regulations on how tribes could 
participate in our allocation pools. A major example is they do 
not need to be utility status in order to participate. And, 
again, in the last 20 to 30 years, we have had 87 new tribal 
customers because of that. Again, in the Hoover process, we are 
not that far along yet for me to speak to any decisions that 
have been made in the process. But, that is an example of 
something we have done in recent history to----
    Mrs. Napolitano. Would you be asking some of the tribes 
that are currently receiving how to outreach to the tribes that 
you have not, would be new entrants, possibly new entrants?
    Mr. Moe. Well, two entities, in addition to tribal, 
directly sending notice to the tribes. We work with the Arizona 
Tribal Energy Association and the ITCA, the Intertribal Council 
of Arizona, to try to help us in our outreach efforts and we 
would intend to continue those kinds of activities.
    Mrs. Napolitano. Thank you. Mr. Snow, in your testimony, 
you mentioned a need for a technical amendment to H.R. 818, as 
introduced is identical to language that passed last Congress. 
What does it do and why is the language necessary?
    Mr. Snow. I have been told what the technical amendment 
would do.
    Mrs. Napolitano. I cannot hear you, sir.
    Mr. Snow. I have been told what the technical amendment 
would to. I have not seen the technical amendment. But, I 
understand that it might extend to other forum, water service 
contract, possibly repayment on water service contract.
    Mrs. Napolitano. Would you submit it for the record, 
please, sir?
    Mr. Snow. Submit the technical----
    Mrs. Napolitano. Any information you may have.
    Mr. Snow. OK. Thank you.
    Mrs. Napolitano. Thank you. Thank you, Mr. Chair.
    Mr. McClintock. Mr. Gosar.
    Dr. Gosar. Well, first of all, Mr. Murillo, thank you for 
your testimony on H.R. 489. As you mentioned, it is consistent 
with what we have put in the bill, your background and your 
support. And on behalf of the Administration in support of 
this, maybe we can look at it as a good approach to the future 
of future projects. But my first question is for you, Mr. 
Sullivan. Tell me why Congress needs to step into a 
jurisdictional dispute between the agencies?
    Mr. Sullivan. Chairman McClintock, Representative Gosar, I 
have been involved personally in negotiations now between the 
Bureau of Reclamation and the U.S. Forest Service over the 
dispute between those two agencies over who would actually have 
control. It is tough enough dealing with one master; but 
dealing with two masters, two bureaucracies is unbelievably 
complicated. We had a number of instances of delays just to 
make sure that paperwork was in a form satisfactory to the U.S. 
Forest Service. These are environmental issues where we 
addressed it. We got the approval of the Bureau of Reclamation. 
So, it went through their process. And then the Forest Service 
said, no, we have to put in a form that is acceptable to us. 
And it is strictly a form issue. It is not an issue of 
substance.
    So, we tried for a good four-and-a-half years to deal with 
this administratively. We really got no traction. In fact, we 
got to a point in the last Congress where we decided we just 
were not going to be able to move forward. That is when we 
asked that a bill be introduced. It was introduced in both the 
House and Senate. Unfortunately, it did not pass in the last 
Congress, so we are back again. But, we believe that at this 
point, Congress needs to send a signal to the agencies that one 
should be sufficient, not two.
    Dr. Gosar. And can you tell me the estimate cost? Because, 
these are basic services. These aren't extravagant aspects. 
This is water delivery to the constituents within the area. 
Tell me what kind of cost was actually passed along to you?
    Mr. Sullivan. Chairman McClintock, Representative Gosar, I 
cannot give you specific costs, although I can provide those to 
the Subcommittee at a later date. But, I can tell you that, you 
know, 60-day, 90-day delays when you have a schedule and when 
you are operating in an area where there are some endangered 
species and so the period of time within which you can do 
maintenance is limited, caused delays in having contractors 
come in and not be able to do that work or not being able to 
schedule contractors in during the period where we can do the 
maintenance because spotted owl nesting issues.
    Also, probably on a much larger scale is the Town of Payson 
and the impacts of not having a reliable water supply to Mayor 
Evans' 15,000 constituents. I am not sure we can put a price 
tag on that. The Town of Payson's other water supply is a very 
limited groundwater supply. And they have already experienced 
several periods in this last decade where they have had to 
limit groundwater supply to the citizens of Payson because of 
drought. Cragin provides another reliable supply and they can 
co-manage groundwater and surface water, to be able to supply 
water to their citizens. If that water is not available, they 
face a future of increasing curtailments in water supply to 
their citizens.
    Dr. Gosar. And, Kenny, thank you, very much, Mayor, for 
coming over here. It is great to see you. You know, you have 
had a very progressive town and trying to take care of itself 
getting economics and one of those facilities to provide 
economics is to have sound water basis. Tell me what kind of 
implications that was for Payson for the City Council and for 
your directives in trying to keep Payson sound?
    Mr. Evans. Interestingly enough, we are the most water 
conserving community in the State of Arizona, probably in the 
West. Our conservation measures have kept water usage below 80 
gallons per person per day versus the 360 gallons per person in 
southern California. So, we really do and are concerned about 
water. One of the huge challenges we face is the cost of 
bringing this project down and the fact that we are in an era 
when interest rates are going up for projects dramatically. We 
are about to lose a significant part of our era grant because 
we cannot get this job because of the Forest Service's 
intervention.
    Dr. Gosar. Thank you.
    Mr. McClintock. Thank you. Mr. Grijalva.
    Mr. Grijalva. Thank you, Mr. Chairman. And Mr. Murillo and 
also I think it is Mr. Cunningham from the Forest Service, just 
a quick response, and the Cragin Dam bill, 489, that Mr. Gosar 
has introduced, its previous form that came through the House 
and we went through those hearings, there were some questions 
that came up, and let me just bring those back up again because 
I think this version is more reflective of the Senate version 
than it was the House version that came out of here. The 
precedent, and maybe you can address the precedent question, 
both agencies, since most of the discussions were between you 
and the conflict that we hear about is that there is a 
precedent being set, because that was one of the concerns that 
came up about usurping Forest Service ability to manage its 
land by making the transfer to the Bureau?
    Mr. Murillo. Thank you, very much, for the question. I 
think this is more or less a unique situation. What we have 
here is we have part of the project features that are on 
Reclamation fee title and then you have other part of the 
features that are on Forest Service lands. If you look at the 
other projects that are in place, those projects are entirely 
on withdrawn lands through Reclamation.
    Mr. Grijalva. Right.
    Mr. Murillo. So, it is more unique. So, I think what we are 
looking at here is just trying to provide the legislation so we 
get that consistent with the structure that was with the other 
projects.
    Mr. Grijalva. The other units, the other SRP units that 
they have the management that are on public land, they carry 
the same unique characteristics as the one we are talking about 
now?
    Mr. Murillo. No. Those are on withdrawn lands through 
Reclamation, those feature are.
    Mr. Grijalva. OK. Mr. Cunningham? I think specifically, Mr. 
Cunningham, the concern was on the land management side, some 
of the issues that Mr. Sullivan brought up in his testimony, 
issues dealing whether with Endangered Species Act, other kinds 
of environmental issues that are particular to Forest Service 
jurisdiction, how does that manage in the transfer?
    Mr. Cunningham. I think this bill takes care of a lot of 
those points. It does a very good job of it.
    Mr. Grijalva. I appreciate it, sir. Thank you. Mr. 
Sullivan, if I may, one of the points in the last discussion we 
had on this and, again, I am assuming it is a point again, is 
the arrangements with the electric coops in relationship to Mr. 
Heck's legislation. The coop situation, they are on Schedule D. 
They were guaranteed allocation. Can you describe the 
arrangement that is in the present legislation, why you feel 
that it is a comfortable one to go forward with?
    Mr. Sullivan. Representative Grijalva, Chairman McClintock, 
the arrangement for coops, and currently coops are all 
categorized, as you mentioned, in the last category for Hoover 
power, is that this set aside, the portion that goes to the 
State of Arizona would then be part of the process that the 
Arizona Power Authority will go through under state law for 
allocation.
    Mr. Grijalva. That request, I think, is specific to a 
special preference under Schedule that is not part of the 
arrangement, as I understand it, and maybe you can respond 
specifically to that.
    Mr. Sullivan. I believe you are correct. I was not in any 
of the meetings with the coops. But, I believe you are correct, 
they are asking for a special preference and that, what I 
believe, would bring up a conflict within the State of Arizona 
between state law and Federal law. Frankly, this issue is, once 
the power is allocated to the State of Arizona, which is the 
state agency, the Arizona Power Authority, then Arizona state 
law covers how that power would be allocated. And the Arizona 
Power Authority would allocate the additional power, that five 
percent set aside, the coops would be in that pool of eligible 
entities, along with the tribes.
    Mr. Grijalva. The delicate balance is preeminent right 
here. That has already been arrived at, right?
    Mr. Sullivan. Right.
    Mr. Grijalva. And let me just in closing, Mr. Chairman, all 
the stakeholders and the people that went through this probably 
wonderful negotiations that went on for ever, the inclusion of 
native lands and tribes, I think, is a very, very important 
addition to it and I want to commend you for making sure that 
occurred. Thank you.
    Mr. McClintock. Thank you. Mr. Heck.
    Dr. Heck. Thank you, Mr. Chairman, again. I appreciate the 
opportunity to participate today as a guest of the Committee. 
Mr. Moe, a question first is on the 35 megawatt set aside for 
project integration. Has there been a set aside in the previous 
years for you to use in project integration?
    Mr. Moe. Well, the current proposal that Western has would 
actually increase the marketed capacity from what it has been 
in previous years, but that increase is still 30 megawatts 
different than what the legislation proposes. The legislation 
would be 30 megawatts higher. And, again, the reason that we 
are currently proposing the 30 megawatts is to allow us to 
reliable integrate the----
    Dr. Heck. That is not answering the question. The question 
was, did you have the set aside or the ability to utilize the 
power previously for your project integration?
    Mr. Moe. It hasn't been as critical in the past because the 
marketed capacity has been lower in the past.
    Dr. Heck. This is a yes or no question.
    Mr. Moe. So, no, as set aside was not required.
    Dr. Heck. OK. But have you used power from the Hoover Dam 
in your project integration in the past?
    Mr. Moe. Hoover Dam is currently part of the BA and we make 
sure that the right people are paying the right cost.
    Dr. Heck. Can you explain to me what the benefit would be 
of having your agency be the sole marketing source of power?
    Mr. Moe. We do not have a position either way in terms of a 
benefit. I mean, I think, you know, we are moving forward, our 
process, because it is our responsibility to make sure it is 
marketed. If the legislation is passed, you know, we appreciate 
the chance we have had to work on technical issues with that 
and believe we can also accommodate that.
    Dr. Heck. And that brings me to my last question. This bill 
was dropped on January 26th. Three months later, your agency 
published the Federal Register notice on April 27th with the 
intent to move forward with certain changes in how the system 
operates. I would ask why, as the sponsor of this bill, no one 
took the time to come and discuss what was going to be put 
forth, with either myself or the Ranking Member, who had this 
bill previously and who is the cosponsor?
    Mr. Moe. Well, certainly, it was not our intention to not 
have discussion. We had been in a public process since November 
of 2009 on the issue predominantly of the Power Marketing 
Initiative, as well as term and some other issues we proposed. 
Because of comments from current contractors, as well as tribes 
and others, we extended that comment period all the way until 
September of last year and spent quite a lot of time reviewing 
comments from that period. And we had been telling, you know, 
interested parties that we actually hope to move another step 
forward earlier than we were able to. So, it was not a strategy 
to time when we finally got the point of being able to issue 
our next Federal Register notice with respect to the 
legislation at all. And, certainly, we would be pleased to 
continue dialogue, if that is----
    Dr. Heck. I am not trying to suggest there was some 
subversive attempt here, but I would think with three months 
from the time a bill was dropped that has significant impact on 
your agency, you would be able to find a time to come and talk 
to the primary sponsors of that bill about where you thought 
the agency would be heading. And I think this leads to the 
greater issue that we are addressing in this Congress is the 
systematic overreach of executive agencies without legislative 
direction. With that, Mr. Chairman, I thank you and yield back 
my time.
    Mr. McClintock. That concludes our first round of 
questioning. We will now move to our lightening round. I just 
have a few questions left. I wanted to pick up on my point, Mr. 
Moe, of why should parties that had no part in financing this 
project initially given a five percent slice of the project 
now?
    Mr. Moe. Well, as many people have said, Hoover power is 
very valuable for those that have it and valuable for those 
that would like to be able to use it in the future. Again, as I 
just discussed with Congressman Heck, we had a comment period 
of over a year for whether we should open a new resource pool. 
We had----
    Mr. McClintock. But, again, this is a project that was 
financed by the participation and by the resources of various 
entities. As I see it, they own it. They paid for it; they own 
it. Why should we now be parceling out additional slices to 
those who had no participation in the project?
    Mr. Moe. Whoever the contractors are would pay the rates, 
in the past they have, to repay the project in the----
    Mr. McClintock. Ms. Currie, you are a contractor. What are 
you thoughts on the subject?
    Ms. Currie. My thoughts are we have been paying the freight 
on this project since its inception and we should be able to 
continue to have the benefits. All of our customers 
collectively in the three states----
    Mr. McClintock. Why the five percent slice off then?
    Ms. Currie. The five percent does recognize that people who 
have not been able to benefit need an opportunity. And so this 
was part of the give and take
    Mr. McClintock. Oh, I see.
    Ms. Currie.--that the existing contractors came up with.
    Mr. McClintock. Why are we locking in these contracts for 
50 years? One thing that is being done at the administrator 
level, which I think makes a little more sense, is to keep it 
to 20 or 30 years. Fifty years was initially required to pay 
off the capital cost of construction. Beyond that, aren't we 
hamstringing future generation to respond to changing 
conditions or policies?
    Ms. Currie. Well, we are telling the existing contractors 
that the commitment they have made in 2009 to fund 
environmental mitigation over 50 years will be matched by the 
term going forward on this.
    Mr. McClintock. But those policies may change a lot sooner 
than 50 years. Why would we want to hamstring the next 
generation to keep them from responding to those changes in 
policy, in science, in necessity?
    Ms. Currie. Well, the obligation to pay, as set forth in 
that 2009 environmental mitigation legislation, that is not 
going to change. That 50 years is a contract between the 
participants in Hoover and the Federal Government to pay for 
mitigation. And so, we believe that that should be honored by 
the 50-year commitment that is in H.R. 470.
    Mr. McClintock. One thing I would like to hear from all of 
the witnesses here that are on the Hoover issue, and you do not 
have to answer it right now, but just if you could offer 
thoughts, if you have them, in writing while the hearing record 
is open, I am interested in how we can provide a uniform 
standard for all future power contract extensions, so that it 
is not done a piecemeal basis. It may be to be. There may be 
unique circumstances with each of these issues that need 
specific attention. But, to the extent that we can provide a 
uniform standard that everybody knows, everybody can rely upon, 
it seems to me to be a better way to approach the issue and any 
thoughts you have on that subject for future legislation would 
be much appreciated. And with that, I will yield back the 
balance of my time and recognize the Ranking Member.
    Mrs. Napolitano. Thank you, Mr. Chair, and to Mr. Sullivan, 
I have read your testimony with quite a bit of interest because 
you apparently have learned to conserve water in your Payson 
area, am I correct?
    Mr. Sullivan. Actually, you need to direct that to the 
Mayor.
    Mrs. Napolitano. To the Mayor, I am sorry; the Mayor, I am 
sorry, yes.
    Mr. Sullivan. He is the conserver.
    Mrs. Napolitano. He is the conserver, good. Are you using 
any of the solar to be able to reduce some of the electricity 
that does require it?
    Mr. Evans. Yes, and I have wish I had time to explain to 
you some of the forward-looking things we are doing.
    Mrs. Napolitano. Send me a note, please.
    Mr. Evans. Yes. We have currently the largest solar field 
in the State on educational facilities. We have 2.8 megawatts 
that are being generated, which make them nearly energy 
neutral. Additionally, we are in the process of constructing 
another 10 megawatts to provide the energy for a new four-year 
college. UAS campus is coming to our town.
    Mrs. Napolitano. Well, thank you, so much. I am impressed. 
And just as a matter of a comment to any of you who might want 
to respond real quickly, because my time will go through, in 
local level, and I am sure you understand we, sometimes, have 
to retrain employees. Would there be any comment about having 
the agencies retrained or be able to work with each other and 
to work with you? Any comment? You are laughing now.
    Mr. Evans. I have to continue to work with the Forest 
Service people back home on a daily basis, so I think you 
noticed I have tempered my thoughts considerably compared to 
some of you, who are in the position above it.
    Mrs. Napolitano. Understood and acknowledged. Anybody else?
    Mr. Evans. I would think that training and cross training 
would be very valuable. One of the real tough challenges we 
face at the doing level. I mean, the old adage about the rubber 
meets the road, we are the ones who are facing the citizens who 
expect, you know, the quality of life to improve and----
    Mrs. Napolitano. Thank you. I am running out of time.
    Mr. Evans. Yeah, when that gets held up by a bureaucrat, 
who simply wants the form filled out on his piece of paper, 
that is tragic.
    Mrs. Napolitano. Thank you. Anybody else? OK, your lips are 
sealed. Ms. Currie, what role does the Multi Species Habitat 
Plan play in allowing for the water and power deliveries?
    Ms. Currie. Fifty percent of the cost of that program is 
paid for by water and power contractors. So, that is an 
essential part of this issue of 50 years versus 30 years. When 
the up-rating was done in 1984 with the 30-year time frame, we 
did not have this environmental cleanup obligation as part of 
it. So that is a key difference that we are facing now and we 
believe that that 50-year term is fair and appropriate.
    Mrs. Napolitano. Thank you. Mr. Chair, I yield back.
    Mr. McClintock. Thank you. Mr. Gosar?
    Dr. Gosar. Well, first of all, I want to thank my 
colleague, Congressman Grijalva, for clarifying the Forest 
Service and Reclamations from the past House bill, so that we 
had better clarity on that aspect. So, thank you, so very, very 
much. Mayor Evans, I know there are lots of this going on and 
particularly being an island out there in the Federal land 
area. This is not the only aspect that has caused problems with 
you, has it?
    Mr. Evans. It has not. As I mentioned, we have to deal with 
five or six agencies, Federal agencies and the challenge we 
face is the bureaucratic wrangling between those agencies. We 
get along better with them than they get along with one another 
oftentimes.
    Dr. Gosar. And then that really does have an impact, 
particularly to the economics.
    Mr. Evans. In my little town, and it is a small town, but 
it is measured--I believe someone asked that to be quantified. 
In our terms, it is measured in millions. We have a project 
that the delays have cost us or will cost future generations in 
our community $200 million, as a result of delays associated 
with somebody saying I don't have the information I need on the 
form that I have and so I can't understand it. It wasn't that 
it was violating some rule, regulation, law; it was simply a 
delay associated with their inability to make a decision.
    Dr. Gosar. And I know that you have been very innovative in 
regard to trying--I mean, you are surrounded by forests and in 
Arizona, we have been in drought. We have dry spells. We have 
high volumes of lightening strikes and stuff. So, we are at 
risk for a lot of fires. And so, I know that you have been on 
the aspect of trying to be on the forward aspect of prevention. 
This would just be another place that we could definitely ask 
the agencies to get along, to help us out, and start working 
with us.
    Mr. Evans. Absolutely. We have located bladders in the 
forest, so that we have water close to those ignition sources 
that may--you know, they are out disbursed in areas over which 
we have no control. But, we have used our own local resources 
to get money and to put bladders out there, so water is 
disbursed into the forest, so we can protect those forest 
resources.
    Dr. Gosar. And I know we have seen the Forest Service 
really start to come to the table, to start really looking at 
this cooperatively with us.
    Mr. Evans. Exactly. And as I said, and it sounded funny, 
but we do work well with the Forest Service. Our challenge is 
trying to get them to be able to work with other sister 
agencies, U.S. Fish and Wildlife, Department of Ag, other 
agencies within the Department of Ag, other agencies within the 
Department of the Interior, the Army Corps, et cetera.
    Dr. Gosar. Thank you. Mr. Moe, the Hoover Dam depends on a 
lot of its water from water release from upstream and the Glen 
Canyon Dam and I know there are a number of people that have 
wanted to take out and to remove the Glen Canyon Dam. Can you 
give me some ideas in regards to what kind of allocation or 
problems that may facilitate or be problematic with?
    Mr. Moe. Well, the removal of Glen Canyon Dam would 
definitely be a major change in the way water is operated on 
the Colorado River. It is a centerpiece for balancing 
allocations between the upper and lower basins on the Colorado 
River, for example. It would also impact hydropower. So, there 
would be major impacts. But, you know, it is not something that 
Western Area Power Administration has been doing any work on 
for sure and I do not know how to give you any more specifics 
than that.
    Dr. Gosar. Well, along with the Hoover project, we also 
have the Parker-Davis Project, as well, that you have 
allocations. So, the rural coops get electricity from both, 
right?
    Mr. Moe. Arizona Electric Power Cooperative does have a 
Parker-Davis power allocation. I believe they also have a 
Colorado River Storage Project allocation.
    Dr. Gosar. And Native Americans do get some of that power, 
I mean, from the Navajo Nation to the White Mount Apaches and 
the San Carlos Apaches. We get that and they can still apply 
through that process, can they not?
    Mr. Moe. Those two projects I mentioned, both also have 
Native American customers, yes.
    Dr. Gosar. Thank you, very much.
    Mr. McClintock. Thank you. Mr. Grijalva?
    Mr. Grijalva. Thank you, Mr. Chairman, again. For Ms. 
Currie and Ms. Pongracz, and Mr. Sullivan, probably the same 
question, the Chairman brought up the timing issue in terms of 
the Multi Species Act and the restoration commitment and 
environmental commitment that is made with that Act, which I 
think is very significant to put the long-term water 
availability and the restoration obligation that is being made 
there and the legislation that we are talking about today. Talk 
about not only the timing issue and why the 50 year is critical 
for both the function and also why they are not only from a 
policy perspective, but from a water usage perspective tied 
together, if you would?
    Mr. Sullivan. I will take a shot, since I am the water guy 
sitting on this panel. From a water supply perspective and from 
a power supply perspective, directly addressing the issue of 
the multiple different species that are impacted by the 
operation of the Colorado River and doing it for a long period 
of time assures that the power supply and the water supply 
provided by Hoover to the lower Colorado region is there. And 
so having made the commitment to protect endangered species on 
the lower Colorado, we also protect the ability to deliver 
water to the three states and to the country of Mexico under 
the Treaty. We also then----
    Mr. Grijalva. That is a certainty issue, right? There is a 
certainty issue.
    Mr. Sullivan. There is a certainty issue.
    Mr. Grijalva. Yeah.
    Mr. Sullivan. And there is certainty to the Federal 
Government that the three states will continue in their 
commitment for 50 years to help fund that.
    Mr. Grijalva. Any response?
    Ms. Currie. I would just echo those comments in terms of he 
is a water guy; I came out of the finance area. When you are 
making investments over long terms, you put money forward with 
the expectation that you will have certain outcomes. And 
matching these terms with the legislation before you, with the 
2009 environmental cleanup legislation just makes it that much 
better for long-term planning.
    Mr. Grijalva. Thank you.
    Ms. Pongracz. I agree with the comments of the prior two 
speakers, Congressman Grijalva, and have nothing to add.
    Mr. Grijalva. Thank you. And, Mayor, it just reminds me, 
there is--it will remain nameless--a community that is located 
inside of a reservation, tribal lands, and like you said, I 
have to be careful where--and I explained to them, you know, 
you are renting here. You have to be really careful how you 
deal with the tribe that is in control of the land. And I 
understand that. I think that the legislation that we are 
dealing with today provides also some certainty to your 
community, which I think is a good step forward. And I yield 
back, Mr. Chairman.
    Mr. McClintock. Well, thank you, very much, folks. Thank 
you for joining us today and for your valuable testimony. I 
know members of the Subcommittee may have additional questions 
for witnesses. We will ask that you respond to those in 
writing. The hearing record will be kept open for 10 days to 
receive responses. And if there is no further business and 
without objection, the Subcommittee stands adjourned.
    [Whereupon, at 11:34 a.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

    [A statement submitted for the record by the Mohave 
Electric Cooperative, Navopache Electric Cooperative, Sulphur 
Springs Valley Electric Cooperative, Trico Electric 
Cooperative, and Arizona Electric Power Cooperative on H.R. 470 
follows:]

     STATEMENT OF MOHAVE ELECTRIC COOPERATIVE, NAVOPACHE ELECTRIC 
    COOPERATIVE, SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE, TRICO 
ELECTRIC COOPERATIVE AND THE ARIZONA ELECTRIC POWER COOPERATIVE ON H.R. 
                  470 THE HOOVER POWER ALLOCATION ACT

                              MAY 12, 2011

    ``And one should bear In mind that there is nothing more difficult 
to execute, nor more dubious of success, nor more dangerous to 
administer than to introduce a new order to things; for he who 
introduces it has all those who profit from the old order as his 
enemies; and he has only lukewarm allies in all those who might profit 
from the new. This lukewarmness partly stems from fear of their 
adversaries, who have the law on their side, and partly from the 
skepticism of men, who do not truly believe In new things unless they 
have personal experience in them.''--Niccolo Machiavelli

    Over the past two years, several rural electric cooperatives in 
Arizona have banded together in an effort to secure an allocation of 
power from Hoover Dam. This endeavor has not been easy, and as Niccolo 
Machiavelli noted in his preceding comment, bringing about a new order 
of things is hampered by many impediments. Nevertheless, we continue 
the pursuit of this valuable National resource (Hoover Power), not only 
for those we serve, but for the countless future residents that the 
State of Arizona will undoubtedly attract.
    The provisions incorporated into H.R. 470 are expected to provide 
guidance to the Federal Government and the States of California, 
Nevada, and Arizona until the year 2067. However, these guidelines--for 
the most part--consist of the perpetuation of the status quo. In other 
words, the vast majority of those that currently receive power from 
Hoover Dam will continue to do so--in fact, many entities will see an 
increase in their allocations. Although changes have been proposed to 
existing policy--and rightly so--to allow Native American tribes and 
the ``have-nots'' (the Schedule D pool) the opportunity to acquire 
Hoover power, it has always been our contention that, in Arizona, the 
Schedule D pool is insufficient to address the needs of all those who 
will seek to obtain it.
    We, collectively known as the Arizona Cooperatives, have no quarrel 
with the manner in which the States of California and Nevada will 
govern and remarket their respective allocations of power from Hoover. 
Our concerns lie in the 70-year old exclusionary practices that prevent 
Arizona's Electric Cooperatives from receiving an apportionment of 
Arizona's allocation of Hoover power.
    Federal statutes and Congressional intent are replete with 
references as to the legitimacy of electric cooperatives entitlement to 
clean, efficient, inexpensive hydropower ``...[to] encourage the 
development of rural areas...'' In fact, the Reclamation Act of 1906 
provided the Federal Government's entry into the electric power field, 
and the Federal Power Act of 1920 codified preference to a 
``...particular class of users, such as public bodies and 
cooperatives.'' According to a 2001 Government and Accounting Office 
(GAO) report on FEDERAL POWER requested by then Chairman of the 
Committee on Resources--The Honorable James V. Hansen -
        ``one primary benefit that the Congress sought in giving 
        priority to public utilities and cooperatives, which distribute 
        directly to customers without a profit incentive, was to obtain 
        lower electricity rates for consumers''
    The report went on to further reiterate 95 years of Congressional 
intent by indicating that
        ``the notion of providing public bodies and cooperatives with 
        preference for federal hydropower rests on the general 
        philosophy that public resources belong to the nation and their 
        benefits should be distributed directly to the public whenever 
        possible. In many cases, the preference provisions of federal 
        statutes give the electric cooperatives... priority in seeking 
        to purchase federally produced and federally marketed power.''
    We make note of the statements contained in the report because we 
believe--and as the report points out--that electric cooperatives are 
entitled to fair and equitable consideration in the marketing of our 
Nation's hydropower. It is this ``preference'' that we want this 
Congress to acknowledge and reiterate, and provide safeguards to its 
compliance.
    We believe Congress can ensure the protection of this noteworthy 
policy by adopting a simple amendment to H.R. 470. Fairness in the 
application of Federal preference laws is needed. In Arizona, existing 
discriminatory practices which cloud and often repudiate Congressional 
intent must be addressed. To clarify any misconceptions, we believe 
H.R. 470 should be amended to include a provision that states 
unequivocally that any remarketing of Arizona's allocation of Hoover 
power should be contingent upon extending a fair and equitable 
consideration to cooperatives within the state.
    Fair and equitable access to Federal resources is a law of the 
Land. We, the Arizona-based Electric Cooperatives, believe its 
application can be accomplished without any violation of the State of 
Arizona's rights or laws.
    Many of our opponents have promoted the perception that the 
amendment we seek usurps Arizona state law. But we do not believe that 
Congress's assurance of fair and equitable consideration is an 
infringement upon the State of Arizona's discretion in the remarketing 
of their allocation of Hoover power. In fact, we view it as one more 
policy to consider in fairly redistributing Hoover power,
    The discretion to distribute Arizona's allocation of Hoover power 
would still be allowed to proceed under State Statute. Nothing in the 
proposed amendment would prevent the State of Arizona, or its agent the 
Arizona Power Authority, from utilizing Arizona's Statutes to 
significantly advantage the District class of customer--as is currently 
the case. It is our contention that our amendment would only require 
that there be some fair and equitable consideration of the other 
classes of customers as well. The discretion of implementing the ``fair 
and equitable'' aspects is up to the State and the APA.
    Another myth we'd like to dispel is that the Cooperatives do not 
have Hoover power because we have not submitted the necessary data. We 
have not provided the APA with data because it is our understanding 
that the APA's actual post-2017 Hoover marketing process Isn't 
presently active, and In fact, is not expected to commence until 2016-
17. We have been given examples of the type of data that are expected 
and will gladly submit this information, along with the other entities 
in Arizona that are currently receiving Hoover power or seeking Hoover 
power, when the time is appropriate and the APA is actively remarketing 
Hoover.
    We would also like to clarify a misconception that has been allowed 
to flourish regarding the Arizona Power Authority's ``costs'' for 
Hoover power. Many of our opponents have indicated to congressional 
staff that they ``paid'' for Hoover and it's upgrades and that the 
Arizona Cooperatives ``can have Hoover power'' if they ``buy In''. We 
assume this statement infers that those that currently receive Hoover 
power are equity partners in Hoover Dam. We view these comments as 
inaccurate and the ``buy in'' statement as ludicrous. Hoover Dam is a 
national public resource owned by the people of the United States, not 
any single or collective entity that may be the recipient of the power 
generated at the Dam.
    Factually, the Hoover facility and its uprates and the costs 
associated with the facility are all paid by the allottees through the 
cost of the power remarketed, and in Arizona, the cost of Hoover to the 
Arizona Power Authority is recovered through its rates to its 
customers. Beginning in 2017, as it is today, the Arizona Power 
Authority will recover any Hoover related costs through the rates that 
it charges its customers for the Hoover power and energy resold to 
them,
    There is also some rendition of history that the cooperatives did 
have an allocation of Hoover power in the early 1960's. That particular 
portion of history provides the example of why an amendment is needed. 
Prior to 1963, the State of Arizona--through the Arizona Power 
Authority (APA)--did market a blended product of Hoover power, Parker-
Davis Project power, and purchased steam power as Colorado River Power. 
The APA had excess surplus of this blended power and some of the 
cooperatives in Arizona did purchase this power along with entities 
such as investor-owned utilities. Those of us that purchased this 
excess power from the APA did not have allocations.
    It is important to note that the Parker-Davis Project power was 
required by law to be marketed in accordance with federal preference 
rules. In 1963, the federal government decided that Arizona's ``super 
preference'' laws were not consistent with the Federal Preference laws 
and took the Parker-Davis Project power away from the State and 
marketed it directly to preference entities in accordance with 
preference power provisions. It was then that the cooperatives received 
Parker-Davis power in 1963. Since 1963, the cooperatives have not 
received an allocation of Hoover power, and the power they received 
prior to 1963 was actually a blend of Parker-Davis Project power, 
Hoover power, and purchased steam power and, again, not an allocation.
    In closing, we want to thank the Members of this Committee, and 
staff for providing us with the opportunity to share our concerns and 
to propose a solution to our dilemma. We firmly believe our amendment 
can correct the 70 years of discrimination and exclusion the Arizona 
Cooperatives have experienced in their quest to obtain Hoover power. We 
wish to reiterate that our amendment does not impact the States of 
California or Nevada or the manner in which they allocate their 
apportionment of Hoover power.
    We are grateful to the Salt River Project for working with us and 
for proposing to provide Mohave Electric Cooperative, Navopache 
Electric Cooperative, and the Sulphur Springs Valley Electric 
Cooperative with up to three [3] mw (collectively) of Hoover power. 
This offer isn't effective until 2017 (at the earliest) and is 
contingent upon the APA's refusal to provide the Arizona Cooperatives 
with Hoover power once the new contracts are executed in 2017. 
Nevertheless, we view this gesture by SRP as honorable, and in the 
spirit of fairness and cooperation.
    We also want to express our sincerest gratitude to Congressman Ed 
Pastor. His willingness to listen to our concerns, and advocate that 
the Arizona Cooperatives be given an equal opportunity to obtain Hoover 
power, has been invaluable. We are deeply appreciative of Congressman 
Pastor's efforts and for pursuing what he believes is in Arizona's best 
interests.
    Lastly, over the last two and one-half years we have had the 
courage to speak the truth, and fight for our customers and rural 
Arizona. It is our hope that this Congress will not allow the 
perpetuation of the outdated practices of the past, at the expense of 
the needs of millions of rural Arizonans. Eighty-three year old 
policies must be reviewed and amended to ensure their relevancy for 
future generations. The enactment of H.R. 470 will codify in public law 
provisions which will govern the allocation of Hoover power until 2067. 
In its current form,
    H.R. 470 allows for the continuation of a policy that is 
detrimental to Arizona's Electric Cooperatives. We ask that you not 
allow this injustice to continue for the sake of political expediency. 
We ask that you adopt the amendment we have proposed, or work with us 
in arriving at a mutually beneficial solution.

                                 
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