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[Senate Report 110-373]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 805
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-373

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

 
        EASTERN NEW MEXICO RURAL WATER SYSTEM AUTHORIZATION ACT

                                _______
                                

                 June 16, 2008.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2814]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 2814) to authorize the Secretary of the 
Interior to provide financial assistance to the Eastern New 
Mexico Rural Water Authority for the planning, design, and 
construction of the Eastern New Mexico Rural Water System, and 
for other purposes, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                         PURPOSE OF THE MEASURE

    The purpose of S. 2814 is to authorize the Secretary of the 
Interior to provide financial assistance to the Eastern New 
Mexico Rural Water Authority for the planning, design, and 
construction of the Eastern New Mexico Rural Water System 
(ENMRWS), and for other purposes.

                          BACKGROUND AND NEED

    A number of communities in eastern New Mexico, including 
Cannon Air Force Base, are predominantly reliant on water from 
the Ogallala and Entrada Aquifers for municipal, industrial, 
and agricultural uses. Despite voluntary conservation efforts 
and improvements in agricultural water use efficiencies, 
current estimates indicate that present levels of groundwater 
use in some areas of eastern New Mexico are only sustainable 
for an additional 12 to 25 years.
    Ute Reservoir was constructed in 1959 by the State of New 
Mexico with the intention of providing a long-term sustainable 
water supply for the region. Located approximately 100 miles 
north of Clovis, New Mexico, the reservoir is believed to be 
the most viable source of water available to supply the water 
needed to sustain long-term needs in eastern New Mexico. In 
1966, Congress authorized the Bureau of Reclamation to study 
the feasibility of a project that would utilize Ute Reservoir 
to supply water to communities in eastern New Mexico (P.L. 89-
561). Numerous studies have been completed, but it was not 
until recently that several communities, concerned about their 
reliance on declining and degraded groundwater supplies in the 
area, began to plan seriously for the development of a regional 
water system that would make use of the renewable supply 
available from Ute Reservoir. As part of that process, the 
Eastern New Mexico Rural Water Authority (Authority) was formed 
to carry out the development of the ENMRWS. The Authority 
consists of 6 communities and two counties in eastern New 
Mexico, and has been very effective in securing local funds and 
State funding to support the studies and planning necessary to 
move the project forward. To date, the State of New Mexico has 
provided approximately $7.5 million to develop the ENMRWS. The 
water supply provided by the Project will help provide long-
term stability to the regional economy in eastern New Mexico.

                          LEGISLATIVE HISTORY

    S. 2814 was introduced by Senator Bingaman for himself and 
Senator Domenici on April 3, 2008, and referred to the 
Committee on Energy and Natural Resources. The Water and Power 
Subcommittee held a hearing on S. 2814 on April 24, 2008. At 
its business meeting on May 7, 2008, the Committee on Energy 
and Natural Resources ordered S. 2814 favorably reported.

                        COMMITTEE RECOMMENDATION

    The Committee on Energy and Natural Resources, in open 
business session on January 30, 2008, by voice vote of a quorum 
present, recommends that the Senate pass S. 2814.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides the short title of the Act.
    Section 2 defines a number of terms used in the Act.
    Section 3(a) authorizes the Secretary to provide financial 
and technical assistance to the Authority to plan, design, and 
construct the rural water system, and directs that any 
financial assistance be provided pursuant to a cooperative 
agreement and specified criteria.
    Section 3(b) specifies that the Federal cost-share for the 
system shall not exceed 75 percent of its total cost, and 
defines a time-frame for determining the total cost.
    Section 3(c) limits the use of Federal money for 
construction of the system until an operation, maintenance, and 
replacement plan is developed and there has been compliance 
with the National Environmental Policy Act.
    Section 4(a) declares that the Authority shall be 
responsible for system operation, maintenance, and replacement 
costs.
    Section 4(b) requires the Authority to develop an 
operation, maintenance, and replacement plan with the 
Secretary.
    Section 5(a) provides general authorizations for the 
Secretary to carry out the Act, and directs the Secretary to 
enter into a cooperative agreement with the Authority to 
provide financial assistance and address certain requirements 
in developing the system.
    Section 5(b) authorizes the Secretary to provide technical 
assistance.
    Section 5(c) directs the Secretary to consult with the New 
Mexico Interstate Stream Commission and Authority in preparing 
a biological assessment of the system under the Endangered 
Species Act.
    Section 5(d) disclaims specified effects of the Act.
    Section 6(a) authorizes appropriations to carry out the 
Act.
    Section 6(b) provides for an adjustment to the authorized 
appropriations to account for changes in construction costs 
over time.
    Section 6(c) declares that funding provided to the 
Authority under the cost-sharing requirement shall be 
nonreimbursable.
    Section 6(d) declares that unexpended funds may be retained 
for use in subsequent years.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

S. 2814--Eastern New Mexico Rural Water System Authorization Act

    Summary: S. 2814 would authorize the Secretary of the 
Interior to provide financial and technical assistance to the 
Eastern New Mexico Rural Water Authority to help plan, design, 
and construct a water delivery project.
    Based on information from the Bureau of Reclamation and 
assuming appropriation of the necessary amounts, CBO estimates 
that implementing S. 2814 would cost $348 million over the 
2009-2013 period. Enacting the legislation would not affect 
direct spending or revenues.
    S. 2814 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 2814 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                              ------------------------------------------------------------------
                                                  2009       2010       2011       2012       2013     2009-2013
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level................         80        100        100         80          0         360
Estimated Outlays............................         48         80         97         88         35         348
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that the 
legislation will be enacted near the start of fiscal year 2009 
and that the necessary amounts will be appropriated for each 
year.
    S. 2814 would authorize the appropriation of $327 million, 
plus additional amounts to reflect changes in construction 
costs after January, 2007. Under the bill, the Secretary would 
not be able to provide federal funds for operation and 
maintenance costs of the project. The maximum federal share of 
any activity related to the project would be limited to 75 
percent. Any federal funds contributed to construct the project 
would be nonreimbursable.
    Based on information from the Bureau of Reclamation and 
assuming appropriation of the necessary amounts, CBO estimates 
that implementing the legislation would cost $348 million over 
the 2009-2013 period, and an additional $12 million thereafter.
    Intergovernmental and private-sector impact: S. 2814 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. Funds authorized in the bill to design, 
plan, and construct a system for delivering water would benefit 
the Eastern New Mexico Rural Water Authority. Any costs the 
authority might incur would result from complying with 
conditions for receiving federal assistance.
    Estimate prepared by: Federal Costs: Tyler Kruzich; Impact 
on State, Local, and Tribal Governments: Melissa Merrell; and 
Impact on the Private Sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 2814. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 2814, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    In accordance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides the 
following identification of congressionally directed spending 
items contained in the bill, as reported:
    Section: 6, Provision: Authorization of appropriations, 
Member: Senator Bingaman.

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Bureau of Reclamation at the 
Subcommittee hearing on April 24, 2008, on S. 2814 follows:

 Statement of Robert W. Johnson, Commissioner, Bureau of Reclamation, 
                       Department of the Interior

    Mr. Chairman and Members of the Subcommittee, I am Robert 
W. Johnson, and I am Commissioner of the Bureau of Reclamation. 
I am pleased to be here to provide the Department of the 
Interior's views on S. 2814, the Eastern New Mexico Rural Water 
Project Act. The Department cannot support S. 2814.
    Reclamation has been working with the state of New Mexico 
and local parties on developing concepts for the Eastern New 
Mexico Rural Water Project since Congress authorized 
feasibility studies in 1966. Reclamation has participated in a 
number of studies on this evolving project over the years. 
Since 1998, Congress has provided $1,763,000 for planning and 
technical assistance, of which more than $1.2 million has been 
transferred directly to the City of Clovis, acting as the 
fiscal agent for the local communities, for work on the 
project. The FY 2008 omnibus appropriation includes $246,000 
for the Project.
    The proposed Eastern New Mexico Rural Water Project would 
provide a sustainable water supply for the eastern New Mexico 
municipalities of Clovis, Elida, Grady, Melrose, Portales, and 
Texico, as well as Curry and Roosevelt counties and Cannon Air 
Force Base. The area currently depends entirely on a 
groundwater source that is diminishing in both quantity and 
quality. The currently envisioned project would supply 16,400 
acre-feet per year. The water would be delivered through a 
pipeline from Ute Reservoir, which was built by the State of 
New Mexico in 1963 as a water supply source for eastern New 
Mexico, and would cost approximately $436 million to construct, 
with $8.2 million in annual operations and maintenance costs.
    In 2004, Reclamation testified on legislation (HR 4623) to 
authorize construction of the Eastern New Mexico Rural Water 
Supply Project. During that hearing, Reclamation cited concerns 
with the adequacy of the Conceptual Design Report to support 
authorization and identified some critical questions that 
needed to be answered before construction should proceed, such 
as whether all economically viable alternatives had been 
considered, whether design and construction costs were 
consistent with comparable projects, and whether the 
communities that would be sharing project costs had an accurate 
estimate of how much those costs might be. Reclamation also 
expressed concerns with the proposed cost sharing formula, 
which assumed an 80% federal share for construction of the 
project. The federal cost share in the new legislation (S. 
2814) is 75%.
    In the intervening years, a Reclamation ``Oversight 
Committee'' has been assisting the Eastern New Mexico Rural 
Water Authority (Authority) and their consultants in developing 
a more complete and thorough feasibility report.
    A ``Preliminary Engineering Report'' prepared for the 
Authority by their consultant that was submitted in December 
2006 represents significant progress toward a feasibility-level 
analysis. Reclamation is continuing to work with the Authority 
as they further develop the proposed project's design, cost 
estimates, financing plan, and environmental analysis.
    The Authority is working with their consultant to take the 
design and associated cost estimate to the feasibility level. 
Feasibility-level cost estimates are based on information and 
data which is sufficient to permit the preparation of 
preliminary layouts and designs used to estimate each kind, 
type, or class of material, equipment, and labor necessary to 
complete a project. A second consultant has been selected by 
the Authority to work on National Environmental Policy Act 
compliance. A third consultant for the Authority is working on 
a detailed plan for financing the project.
    As stated above, the most recent cost estimate for 
construction, as prepared last year by the Authority's 
consultant, is $436 million, with an estimated annual operation 
and maintenance cost of $8.2 million. The local communities 
would pay 100% of the operation, maintenance, and replacement 
costs.
    Reclamation is committed to working with its customers, 
States, Tribes, and other stakeholders to find ways to balance 
and provide for the mix of water resource needs in the future. 
The Administration is concerned, however, about becoming the 
primary source of funds for these types of projects. Because of 
this project's high cost, with a federal cost share of $327 
million, and because this project would compete with ongoing 
work by Reclamation in New Mexico and across the West, the 
Department cannot support S. 2814. However, we are working with 
the Authority and the State to bring the project to a point 
where a feasibility determination is possible.
    This concludes my statement, and I am happy to answer any 
questions the Subcommittee may have.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 2814, as 
ordered reported.

                                  
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