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[Senate Report 110-400]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 838
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-400

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

 
              SAN JOAQUIN RIVER RESTORATION SETTLEMENT ACT

                                _______
                                

                 June 25, 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. 27]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 27) to authorize the implementation of 
the San Joaquin River Restoration Settlement, having considered 
the same, reports favorably thereon with an amendment and 
recommends that the bill, as amended, do pass.
    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. TABLE OF CONTENTS.

  The table of contents for this Act is as follows:

Sec. 1. Table of contents.

         TITLE I--SAN JOAQUIN RIVER RESTORATION SETTLEMENT ACT

Sec. 101. Short title.
Sec. 102. Purpose.
Sec. 103. Definitions.
Sec. 104. Implementation of settlement.
Sec. 105. Acquisition and Disposal of Property; Title to Facilities.
Sec. 106. Compliance with Applicable Law.
Sec. 107. Compliance with Central Valley Project Improvement Act.
Sec. 108. No Private Right of Action.
Sec. 109. Appropriations; Settlement Fund.
Sec. 110. Repayment contracts and acceleration of repayment of 
construction costs.
Sec. 111. California Central Valley Spring Run Chinook salmon.

             TITLE II--STUDY TO DEVELOP WATER PLAN; REPORT

Sec. 201. Study to develop water plan; report.

                TITLE III--FRIANT DIVISION IMPROVEMENTS

Sec. 301. Federal facility improvements.
Sec. 302. Financial assistance for local projects.
Sec. 303. Authorization of appropriations.

         TITLE I--SAN JOAQUIN RIVER RESTORATION SETTLEMENT ACT

SEC. 101. SHORT TITLE.

  This title may be cited as the ``San Joaquin River Restoration 
Settlement Act''.

SEC. 102. PURPOSE.

  The purpose of this title is to authorize implementation of the 
Settlement.

SEC. 103. DEFINITIONS.

  In this title:
          (1) The terms ``Friant Division long-term contractors'', 
        ``Interim Flows'', ``Restoration Flows'', ``Recovered Water 
        Account'', ``Restoration Goal'', and ``Water Management Goal'' 
        have the meanings given the terms in the Settlement.
          (2) The term ``Secretary'' means the Secretary of the 
        Interior.
          (3) The term ``Settlement'' means the Stipulation of 
        Settlement dated September 13, 2006, in the litigation entitled 
        Natural Resources Defense Council, et al. v. Kirk Rodgers, et 
        al., United States District Court, Eastern District of 
        California, No. CIV. S-88-1658-LKK/GGH.

SEC. 104. IMPLEMENTATION OF SETTLEMENT.

  (a) In General.--The Secretary of the Interior is hereby authorized 
and directed to implement the terms and conditions of the Settlement in 
cooperation with the State of California, including the following 
measures as these measures are prescribed in the Settlement:
          (1) Design and construct channel and structural improvements 
        as described in paragraph 11 of the Settlement, provided, 
        however, that the Secretary shall not make or fund any such 
        improvements to facilities or property of the State of 
        California without the approval of the State of California and 
        the State's agreement in 1 or more memoranda of understanding 
        to participate where appropriate.
          (2) Modify Friant Dam operations so as to provide Restoration 
        Flows and Interim Flows.
          (3) Acquire water, water rights, or options to acquire water 
        as described in paragraph 13 of the Settlement, provided, 
        however, such acquisitions shall only be made from willing 
        sellers and not through eminent domain.
          (4) Implement the terms and conditions of paragraph 16 of the 
        Settlement related to recirculation, recapture, reuse, 
        exchange, or transfer of water released for Restoration Flows 
        or Interim Flows, for the purpose of accomplishing the Water 
        Management Goal of the Settlement, subject to--
                  (A) applicable provisions of California water law;
                  (B) the Secretary's use of Central Valley Project 
                facilities to make Project water (other than water 
                released from Friant Dam pursuant to the Settlement) 
                and water acquired through transfers available to 
                existing south-of-Delta Central Valley Project 
                contractors; and
                  (C) the Secretary's performance of the Agreement of 
                November 24, 1986, between the United States of America 
                and the Department of Water Resources of the State of 
                California for the coordinated operation of the Central 
                Valley Project and the State Water Project as 
                authorized by Congress in section 2(d) of the Act of 
                August 26, 1937 (50 Stat. 850, 100 Stat. 3051), 
                including any agreement to resolve conflicts arising 
                from said Agreement.
          (5) Develop and implement the Recovered Water Account as 
        specified in paragraph 16(b) of the Settlement, including the 
        pricing and payment crediting provisions described in paragraph 
        16(b)(3) of the Settlement, provided that all other provisions 
        of Federal reclamation law shall remain applicable.
  (b) Agreements.--
          (1) Agreements with the state.--In order to facilitate or 
        expedite implementation of the Settlement, the Secretary is 
        authorized and directed to enter into appropriate agreements, 
        including cost-sharing agreements, with the State of 
        California.
          (2) Other agreements.--The Secretary is authorized to enter 
        into contracts, memoranda of understanding, financial 
        assistance agreements, cost sharing agreements, and other 
        appropriate agreements with State, tribal, and local 
        governmental agencies, and with private parties, including 
        agreements related to construction, improvement, and operation 
        and maintenance of facilities, subject to any terms and 
        conditions that the Secretary deems necessary to achieve the 
        purposes of the Settlement.
  (c) Acceptance and Expenditure of Non-Federal Funds.--The Secretary 
is authorized to accept and expend non-Federal funds in order to 
facilitate implementation of the Settlement.
  (d) Mitigation of Impacts.--Prior to the implementation of decisions 
or agreements to construct, improve, operate, or maintain facilities 
that the Secretary determines are needed to implement the Settlement, 
the Secretary shall identify--
          (1) the impacts associated with such actions; and
          (2) the measures which shall be implemented to mitigate 
        impacts on adjacent and downstream water users and landowners.
  (e) Design and Engineering Studies.--The Secretary is authorized to 
conduct any design or engineering studies that are necessary to 
implement the Settlement.
  (f) Effect on Contract Water Allocations.--Except as otherwise 
provided in this section, the implementation of the Settlement and the 
reintroduction of California Central Valley Spring Run Chinook salmon 
pursuant to the Settlement and section 111, shall not result in the 
involuntary reduction in contract water allocations to Central Valley 
Project long-term contractors, other than Friant Division long-term 
contractors.
  (g) Effect on Existing Water Contracts.--Except as provided in the 
Settlement and this title, nothing in this title shall modify or amend 
the rights and obligations of the parties to any existing water 
service, repayment, purchase, or exchange contract.

SEC. 105. ACQUISITION AND DISPOSAL OF PROPERTY; TITLE TO FACILITIES.

  (a) Title to Facilities.--Unless acquired pursuant to subsection (b), 
title to any facility or facilities, stream channel, levees, or other 
real property modified or improved in the course of implementing the 
Settlement authorized by this title, and title to any modifications or 
improvements of such facility or facilities, stream channel, levees, or 
other real property--
          (1) shall remain in the owner of the property; and
          (2) shall not be transferred to the United States on account 
        of such modifications or improvements.
  (b) Acquisition of Property.--
          (1) In general.--The Secretary is authorized to acquire 
        through purchase from willing sellers any property, interests 
        in property, or options to acquire real property needed to 
        implement the Settlement authorized by this title.
          (2) Applicable law.--The Secretary is authorized, but not 
        required, to exercise all of the authorities provided in 
        section 2 of the Act of August 26, 1937 (50 Stat. 844, chapter 
        832), to carry out the measures authorized in this section and 
        section 104.
  (c) Disposal of Property.--
          (1) In general.--Upon the Secretary's determination that 
        retention of title to property or interests in property 
        acquired pursuant to this title is no longer needed to be held 
        by the United States for the furtherance of the Settlement, the 
        Secretary is authorized to dispose of such property or interest 
        in property on such terms and conditions as the Secretary deems 
        appropriate and in the best interest of the United States, 
        including possible transfer of such property to the State of 
        California.
          (2) Right of first refusal.--In the event the Secretary 
        determines that property acquired pursuant to this title 
        through the exercise of its eminent domain authority is no 
        longer necessary for implementation of the Settlement, the 
        Secretary shall provide a right of first refusal to the 
        property owner from whom the property was initially acquired, 
        or his or her successor in interest, on the same terms and 
        conditions as the property is being offered to other parties.
          (3) Disposition of proceeds.--Proceeds from the disposal by 
        sale or transfer of any such property or interests in such 
        property shall be deposited in the fund established by section 
        109(c).
  (d) Groundwater Bank.--Nothing in this title authorizes the Secretary 
to operate a groundwater bank along or adjacent to the San Joaquin 
River upstream of the confluence with the Merced River, and any such 
groundwater bank shall be operated by a non-Federal entity.

SEC. 106. COMPLIANCE WITH APPLICABLE LAW.

  (a) Applicable Law.--
          (1) In general.--In undertaking the measures authorized by 
        this title, the Secretary and the Secretary of Commerce shall 
        comply with all applicable Federal and State laws, rules, and 
        regulations, including the National Environmental Policy Act of 
        1969 (42 U.S.C. 4321 et seq.) and the Endangered Species Act of 
        1973 (16 U.S.C. 1531 et seq.), as necessary.
          (2) Environmental reviews.--The Secretary and the Secretary 
        of Commerce are authorized and directed to initiate and 
        expeditiously complete applicable environmental reviews and 
        consultations as may be necessary to effectuate the purposes of 
        the Settlement.
  (b) Effect on State Law.--Nothing in this title shall preempt State 
law or modify any existing obligation of the United States under 
Federal reclamation law to operate the Central Valley Project in 
conformity with State law.
  (c) Use of Funds for Environmental Reviews.--
          (1) Definition of environmental review.--For purposes of this 
        subsection, the term ``environmental review'' includes any 
        consultation and planning necessary to comply with subsection 
        (a).
          (2) Participation in environmental review process.--In 
        undertaking the measures authorized by section 104, and for 
        which environmental review is required, the Secretary may 
        provide funds made available under this title to affected 
        Federal agencies, State agencies, local agencies, and Indian 
        tribes if the Secretary determines that such funds are 
        necessary to allow the Federal agencies, State agencies, local 
        agencies, or Indian tribes to effectively participate in the 
        environmental review process.
          (3) Limitation.--Funds may be provided under paragraph (2) 
        only to support activities that directly contribute to the 
        implementation of the terms and conditions of the Settlement.
  (d) Nonreimbursable Funds.--The United States' share of the costs of 
implementing this title shall be nonreimbursable under Federal 
reclamation law, provided that nothing in this subsection shall limit 
or be construed to limit the use of the funds assessed and collected 
pursuant to sections 3406(c)(1) and 3407(d)(2) of the Reclamation 
Projects Authorization and Adjustment Act of 1992 (Public Law 102-575; 
106 Stat. 4721, 4727), for implementation of the Settlement, nor shall 
it be construed to limit or modify existing or future Central Valley 
Project ratesetting policies.

SEC. 107. COMPLIANCE WITH CENTRAL VALLEY PROJECT IMPROVEMENT ACT.

  Congress hereby finds and declares that the Settlement satisfies and 
discharges all of the obligations of the Secretary contained in section 
3406(c)(1) of the Reclamation Projects Authorization and Adjustment Act 
of 1992 (Public Law 102-575; 106 Stat. 4721), provided, however, that--
          (1) the Secretary shall continue to assess and collect the 
        charges provided in section 3406(c)(1) of the Reclamation 
        Projects Authorization and Adjustment Act of 1992 (Public Law 
        102-575; 106 Stat. 4721), as provided in the Settlement; and
          (2) those assessments and collections shall continue to be 
        counted toward the requirements of the Secretary contained in 
        section 3407(c)(2) of the Reclamation Projects Authorization 
        and Adjustment Act of 1992 (Public Law 102-575; 106 Stat. 
        4726).

SEC. 108. NO PRIVATE RIGHT OF ACTION.

  (a) In General.--Nothing in this title confers upon any person or 
entity not a party to the Settlement a private right of action or claim 
for relief to interpret or enforce the provisions of this title or the 
Settlement.
  (b) Applicable Law.--This section shall not alter or curtail any 
right of action or claim for relief under any other applicable law.

SEC. 109. APPROPRIATIONS; SETTLEMENT FUND.

  (a) Implementation Costs.--
          (1) In general.--The costs of implementing the Settlement 
        shall be covered by payments or in-kind contributions made by 
        Friant Division contractors and other non-Federal parties, 
        including the funds provided in paragraphs (1) through (4) of 
        subsection (c), estimated to total $440,000,000, of which the 
        non-Federal payments are estimated to total $200,000,000 (at 
        October 2006 price levels) and the amount from repaid Central 
        Valley Project capital obligations is estimated to total 
        $240,000,000, the additional Federal appropriation of 
        $250,000,000 authorized pursuant to subsection (b)(1), and such 
        additional funds authorized pursuant to subsection (b)(2); 
        provided however, that the costs of implementing the provisions 
        of section 104(a)(1) shall be shared by the State of California 
        pursuant to the terms of a memorandum of understanding executed 
        by the State of California and the Parties to the Settlement on 
        September 13, 2006, which includes at least $110,000,000 of 
        State funds.
          (2) Additional agreements.--
                  (A) In general.--The Secretary shall enter into 1 or 
                more agreements to fund or implement improvements on a 
                project-by-project basis with the State of California.
                  (B) Requirements.--Any agreements entered into under 
                subparagraph (A) shall provide for recognition of 
                either monetary or in-kind contributions toward the 
                State of California's share of the cost of implementing 
                the provisions of section 104(a)(1).
          (3) Limitation.--Except as provided in the Settlement, to the 
        extent that costs incurred solely to implement this Settlement 
        would not otherwise have been incurred by any entity or public 
        or local agency or subdivision of the State of California, such 
        costs shall not be borne by any such entity, agency, or 
        subdivision of the State of California, unless such costs are 
        incurred on a voluntary basis.
  (b) Authorization of Appropriations.--
          (1) In general.--In addition to the funding provided in 
        subsection (c), there are also authorized to be appropriated 
        not to exceed $250,000,000 (at October 2006 price levels) to 
        implement this title and the Settlement, to be available until 
        expended; provided however, that the Secretary is authorized to 
        spend such additional appropriations only in amounts equal to 
        the amount of funds deposited in the Fund (not including 
        payments under subsection (c)(2) and proceeds under subsection 
        (c)(3)), the amount of in-kind contributions, and other non-
        Federal payments actually committed to the implementation of 
        this title or the Settlement.
          (2) Use of the central valley project restoration fund.--The 
        Secretary is authorized to use monies from the Central Valley 
        Project Restoration Fund created under section 3407 of the 
        Reclamation Projects Authorization and Adjustment Act of 1992 
        (Public Law 102-575; 106 Stat. 4727) for purposes of this title 
        in an amount not to exceed $2,000,000 (October 2006 price 
        levels) in any fiscal year.
  (c) Fund.--There is hereby established within the Treasury of the 
United States a fund, to be known as the San Joaquin River Restoration 
Fund, into which the following shall be deposited and used solely for 
the purpose of implementing the Settlement except as otherwise provided 
in subsections (a) and (b) of section 303, to be available for 
expenditure without further appropriation:
          (1) At the beginning of the fiscal year following enactment 
        of this title, all payments received pursuant to section 
        3406(c)(1) of the Reclamation Projects Authorization and 
        Adjustment Act of 1992 (Public Law 102-575; 106 Stat. 4721).
          (2) The construction cost component (not otherwise needed to 
        cover operation and maintenance costs) of payments made by 
        Friant Division, Hidden Unit, and Buchanan Unit long-term 
        contractors pursuant to long-term water service contracts or 
        pursuant to repayment contracts, including repayment contracts 
        executed pursuant to section 110. The construction cost 
        repayment obligation assigned such contractors under such 
        contracts shall be reduced by the amount paid pursuant to this 
        paragraph and the appropriate share of the existing Federal 
        investment in the Central Valley Project to be recovered by the 
        Secretary pursuant to Public Law 99-546 (100 Stat. 3050) shall 
        be reduced by an equivalent sum.
          (3) Proceeds from the sale of water pursuant to the 
        Settlement, or from the sale of property or interests in 
        property as provided in section 105.
          (4) Any non-Federal funds, including State cost-sharing 
        funds, contributed to the United States for implementation of 
        the Settlement, which the Secretary may expend without further 
        appropriation for the purposes for which contributed.
  (d) Limitation on Contributions.--Payments made by long-term 
contractors who receive water from the Friant Division and Hidden and 
Buchanan Units of the Central Valley Project pursuant to sections 
3406(c)(1) and 3407(d)(2) of the Reclamation Projects Authorization and 
Adjustment Act of 1992 (Public Law 102-575; 106 Stat. 4721, 4727) and 
payments made pursuant to paragraph 16(b)(3) of the Settlement and 
subsection (c)(2) shall be the limitation of such entities' direct 
financial contribution to the Settlement, subject to the terms and 
conditions of paragraph 21 of the Settlement.
  (e) No Additional Expenditures Required.--Nothing in this title shall 
be construed to require a Federal official to expend Federal funds not 
appropriated by Congress, or to seek the appropriation of additional 
funds by Congress, for the implementation of the Settlement.
  (f) Reach 4B.--
          (1) Study.--
                  (A) In general.--In accordance with the Settlement 
                and the memorandum of understanding executed pursuant 
                to paragraph 6 of the Settlement, the Secretary shall 
                conduct a study that specifies--
                          (i) the costs of undertaking any work 
                        required under paragraph 11(a)(3) of the 
                        Settlement to increase the capacity of reach 4B 
                        prior to reinitiation of Restoration Flows;
                          (ii) the impacts associated with reinitiation 
                        of such flows; and
                          (iii) measures that shall be implemented to 
                        mitigate impacts.
                  (B) Deadline.--The study under subparagraph (A) shall 
                be completed prior to restoration of any flows other 
                than Interim Flows.
          (2) Report.--
                  (A) In general.--The Secretary shall file a report 
                with Congress not later than 90 days after issuing a 
                determination, as required by the Settlement, on 
                whether to expand channel conveyance capacity to 4500 
                cubic feet per second in reach 4B of the San Joaquin 
                River, or use an alternative route for pulse flows, 
                that--
                          (i) explains whether the Secretary has 
                        decided to expand Reach 4B capacity to 4500 
                        cubic feet per second; and
                          (ii) addresses the following matters:
                                  (I) The basis for the Secretary's 
                                determination, whether set out in 
                                environmental review documents or 
                                otherwise, as to whether the expansion 
                                of Reach 4B would be the preferable 
                                means to achieve the Restoration Goal 
                                as provided in the Settlement, 
                                including how different factors were 
                                assessed such as comparative biological 
                                and habitat benefits, comparative 
                                costs, relative availability of State 
                                cost-sharing funds, and the comparative 
                                benefits and impacts on water 
                                temperature, water supply, private 
                                property, and local and downstream 
                                flood control.
                                  (II) The Secretary's final cost 
                                estimate for expanding Reach 4B 
                                capacity to 4500 cubic feet per second, 
                                or any alternative route selected, as 
                                well as the alternative cost estimates 
                                provided by the State, by the 
                                Restoration Administrator, and by the 
                                other parties to the Settlement.
                                  (III) The Secretary's plan for 
                                funding the costs of expanding Reach 4B 
                                or any alternative route selected, 
                                whether by existing Federal funds 
                                provided under this Act, by non-Federal 
                                funds, by future Federal 
                                appropriations, or some combination of 
                                such sources.
                  (B) Determination required.--The Secretary shall, to 
                the extent feasible, make the determination in 
                subparagraph (A) prior to undertaking any substantial 
                construction work to increase capacity in reach 4B.
          (3) Costs.--If the Secretary's estimated Federal cost for 
        expanding reach 4B in paragraph (2), in light of the 
        Secretary's funding plan set out in that paragraph, would 
        exceed the remaining Federal funding authorized by this title 
        (including all funds reallocated, all funds dedicated, and all 
        new funds authorized by this title and separate from all 
        commitments of State and other non-Federal funds and in-kind 
        commitments), then before the Secretary commences actual 
        construction work in reach 4B (other than planning, design, 
        feasibility, or other preliminary measures) to expand capacity 
        to 4500 cubic feet per second to implement this Settlement, 
        Congress must have increased the applicable authorization 
        ceiling provided by this title in an amount at least sufficient 
        to cover the higher estimated Federal costs.

SEC. 110. REPAYMENT CONTRACTS AND ACCELERATION OF REPAYMENT OF 
                    CONSTRUCTION COSTS.

  (a) Conversion of Contracts.--
          (1) The Secretary is authorized and directed to convert, 
        prior to December 31, 2010, all existing long-term contracts 
        with the following Friant Division, Hidden Unit, and Buchanan 
        Unit contractors, entered under subsection (e) of section 9 of 
        the Act of August 4, 1939 (53 Stat. 1196), to contracts under 
        subsection (d) of section 9 of said Act (53 Stat. 1195), under 
        mutually agreeable terms and conditions: Arvin-Edison Water 
        Storage District; Delano-Earlimart Irrigation District; Exeter 
        Irrigation District; Fresno Irrigation District; Ivanhoe 
        Irrigation District; Lindmore Irrigation District; Lindsay-
        Strathmore Irrigation District; Lower Tule River Irrigation 
        District; Orange Cove Irrigation District; Porterville 
        Irrigation District; Saucelito Irrigation District; Shafter-
        Wasco Irrigation District; Southern San Joaquin Municipal 
        Utility District; Stone Corral Irrigation District; Tea Pot 
        Dome Water District; Terra Bella Irrigation District; Tulare 
        Irrigation District; Madera Irrigation District; and Chowchilla 
        Water District. Upon request of the contractor, the Secretary 
        is authorized to convert, prior to December 31, 2010, other 
        existing long-term contracts with Friant Division contractors 
        entered under subsection (e) of section 9 of the Act of August 
        4, 1939 (53 Stat. 1196), to contracts under subsection (d) of 
        section 9 of said Act (53 Stat. 1195), under mutually agreeable 
        terms and conditions.
          (2) Upon request of the contractor, the Secretary is further 
        authorized to convert, prior to December 31, 2010, any existing 
        Friant Division long-term contract entered under subsection 
        (c)(2) of section 9 of the Act of August 4, 1939 (53 Stat. 
        1194), to a contract under subsection (c)(1) of section 9 of 
        said Act, under mutually agreeable terms and conditions.
          (3) All such contracts entered into pursuant to paragraph (1) 
        shall--
                  (A) require the repayment, either in lump sum or by 
                accelerated prepayment, of the remaining amount of 
                construction costs identified in the Central Valley 
                Project Schedule of Irrigation Capital Rates by 
                Contractor 2007 Irrigation Water Rates, dated January 
                25, 2007, as adjusted to reflect payments not reflected 
                in such schedule, and properly assignable for ultimate 
                return by the contractor, no later than January 31, 
                2011, or if made in approximately equal annual 
                installments, no later than January 31, 2014; such 
                amount to be discounted by \1/2\ the Treasury Rate. An 
                estimate of the remaining amount of construction costs 
                as of January 31, 2011, as adjusted, shall be provided 
                by the Secretary to each contractor no later than June 
                30, 2010;
                  (B) require that, notwithstanding subsection (c)(2), 
                construction costs or other capitalized costs incurred 
                after the effective date of the contract or not 
                reflected in the schedule referenced in subparagraph 
                (A), and properly assignable to such contractor, shall 
                be repaid in not more than 5 years after notification 
                of the allocation if such amount is a result of a 
                collective annual allocation of capital costs to the 
                contractors exercising contract conversions under this 
                subsection of less than $5,000,000. If such amount is 
                $5,000,000 or greater, such cost shall be repaid as 
                provided by applicable Reclamation law, provided that 
                the reference to the amount of $5,000,000 shall not be 
                a precedent in any other context;
                  (C) provide that power revenues will not be available 
                to aid in repayment of construction costs allocated to 
                irrigation under the contract; and
                  (D) conform to the Settlement and this title and 
                shall continue so long as the contractor pays 
                applicable charges, consistent with subsection (c)(2) 
                and applicable law.
          (4) All such contracts entered into pursuant to paragraph (2) 
        shall--
                  (A) require the repayment in lump sum of the 
                remaining amount of construction costs identified in 
                the most current version of the Central Valley Project 
                Schedule of Municipal and Industrial Water Rates, as 
                adjusted to reflect payments not reflected in such 
                schedule, and properly assignable for ultimate return 
                by the contractor, no later than January 31, 2014. An 
                estimate of the remaining amount of construction costs 
                as of January 31, 2014, as adjusted, shall be provided 
                by the Secretary to each contractor no later than June 
                30, 2013;
                  (B) require that, notwithstanding subsection (c)(2), 
                construction costs or other capitalized costs incurred 
                after the effective date of the contract or not 
                reflected in the schedule referenced in subparagraph 
                (A), and properly assignable to such contractor, shall 
                be repaid in not more than 5 years after notification 
                of the allocation if such amount is a result of a 
                collective annual allocation of capital costs to the 
                contractors exercising contract conversions under this 
                subsection of less than $5,000,000. If such amount is 
                $5,000,000 or greater, such cost shall be repaid as 
                provided by applicable Reclamation law, provided that 
                the reference to the amount of $5,000,000 shall not be 
                a precedent in any other context; and
                  (C) conform to the Settlement and this title and 
                shall continue so long as the contractor pays 
                applicable charges, consistent with subsection (c)(2) 
                and applicable law.
  (b) Final Adjustment.--The amounts paid pursuant to subsection (a) 
shall be subject to adjustment following a final cost allocation by the 
Secretary upon completion of the construction of the Central Valley 
Project. In the event that the final cost allocation indicates that the 
costs properly assignable to the contractor are greater than what has 
been paid by the contractor, the contractor shall be obligated to pay 
the remaining allocated costs. The term of such additional repayment 
contract shall be no less than 1 year and no more than 10 years, 
however, mutually agreeable provisions regarding the rate of repayment 
of such amount may be developed by the parties. In the event that the 
final cost allocation indicates that the costs properly assignable to 
the contractor are less than what the contractor has paid, the 
Secretary is authorized and directed to credit such overpayment as an 
offset against any outstanding or future obligation of the contractor.
  (c) Applicability of Certain Provisions.--
          (1) Notwithstanding any repayment obligation under subsection 
        (a)(3)(B) or subsection (b), upon a contractor's compliance 
        with and discharge of the obligation of repayment of the 
        construction costs as provided in subsection (a)(3)(A), the 
        provisions of section 213(a) and (b) of the Reclamation Reform 
        Act of 1982 (96 Stat. 1269) shall apply to lands in such 
        district.
          (2) Notwithstanding any repayment obligation under paragraph 
        (3)(B) or (4)(B) of subsection (a), or subsection (b), upon a 
        contractor's compliance with and discharge of the obligation of 
        repayment of the construction costs as provided in paragraphs 
        (3)(A) and (4)(A) of subsection (a), the Secretary shall waive 
        the pricing provisions of section 3405(d) of the Reclamation 
        Projects Authorization and Adjustment Act of 1992 (Public Law 
        102-575) for such contractor, provided that such contractor 
        shall continue to pay applicable operation and maintenance 
        costs and other charges applicable to such repayment contracts 
        pursuant to the then-current rate-setting policy and applicable 
        law.
          (3) Provisions of the Settlement applying to Friant Division, 
        Hidden Unit, and Buchanan Unit long-term water service 
        contracts shall also apply to contracts executed pursuant to 
        this section.
  (d) Reduction of Charge for Those Contracts Converted Pursuant to 
Subsection (a)(1).--
          (1) At the time all payments by the contractor required by 
        subsection (a)(3)(A) have been completed, the Secretary shall 
        reduce the charge mandated in section 107(1) of this title, 
        from 2020 through 2039, to offset the financing costs as 
        defined in section 110(d)(3). The reduction shall be calculated 
        at the time all payments by the contractor required by 
        subsection (a)(3)(A) have been completed. The calculation shall 
        remain fixed from 2020 through 2039 and shall be based upon 
        anticipated average annual water deliveries, as mutually agreed 
        upon by the Secretary and the contractor, for the period from 
        2020 through 2039, and the amounts of such reductions shall be 
        discounted using the Treasury Rate; provided, that such charge 
        shall not be reduced to less than $4.00 per acre foot of 
        project water delivered; provided further, that such reduction 
        shall be implemented annually unless the Secretary determines, 
        based on the availability of other monies, that the charges 
        mandated in section 107(1) are otherwise needed to cover 
        ongoing federal costs of the Settlement, including any federal 
        operation and maintenance costs of facilities that the 
        Secretary determines are needed to implement the Settlement. If 
        the Secretary determines that such charges are necessary to 
        cover such ongoing federal costs, the Secretary shall, instead 
        of making the reduction in such charges, reduce the 
        contractor's operation and maintenance obligation by an 
        equivalent amount, and such amount shall not be recovered by 
        the United States from any Central Valley Project contractor, 
        provided nothing herein shall affect the obligation of the 
        contractor to make payments pursuant to a transfer agreement 
        with a non-federal operating entity.
          (2) If the calculated reduction in paragraph (1), taking into 
        consideration the minimum amount required, does not result in 
        the contractor offsetting its financing costs, the Secretary is 
        authorized and directed to reduce, after 2019, any outstanding 
        or future obligations of the contractor to the Bureau of 
        Reclamation, other than the charge assessed and collected under 
        section 3407(d) of Public law 102-575, by the amount of such 
        deficiency, with such amount indexed to 2020 using the Treasury 
        Rate and such amount shall be not be recovered by the United 
        States from any Central Valley Project contractor, provided 
        nothing herein shall affect the obligation of the contractor to 
        make payments pursuant to a transfer agreement with a non-
        Federal operating entity.
          (3) Financing costs, for the purposes of this subsection, 
        shall be computed as the difference of the net present value of 
        the construction cost identified in subsection (a)(3)(A) using 
        the full Treasury Rate as compared to using one half of the 
        Treasury Rate and applying those rates against a calculated 
        average annual capital repayment through 2030.
          (4) Effective in 2040, the charge shall revert to the amount 
        called for in section 107(1) of this title.
          (5) For purposes of this section, ``Treasury Rate'' shall be 
        defined as the 20 year Constant Maturity Treasury (CMT) rate 
        published by the United States Department of the Treasury as of 
        October 1, 2010.
  (e) Satisfaction of Certain Provisions.--
          (1) In general.--Upon the first release of Interim Flows or 
        Restoration Flows, pursuant to paragraphs 13 or 15 of the 
        Settlement, any short- or long-term agreement, to which 1 or 
        more long-term Friant Division, Hidden Unit, or Buchanan Unit 
        contractor that converts its contract pursuant to subsection 
        (a) is a party, providing for the transfer or exchange of water 
        not released as Interim Flows or Restoration Flows shall be 
        deemed to satisfy the provisions of subsection 3405(a)(1)(A) 
        and (I) of the Reclamation Projects Authorization and 
        Adjustment Act of 1992 (Public Law 102-575) without the further 
        concurrence of the Secretary as to compliance with said 
        subsections if the contractor provides, not later than 90 days 
        before commencement of any such transfer or exchange for a 
        period in excess of 1 year, and not later than 30 days before 
        commencement of any proposed transfer or exchange with duration 
        of less than 1 year, written notice to the Secretary stating 
        how the proposed transfer or exchange is intended to reduce, 
        avoid, or mitigate impacts to water deliveries caused by the 
        Interim Flows or Restoration Flows or is intended to otherwise 
        facilitate the Water Management Goal, as described in the 
        Settlement. The Secretary shall promptly make such notice 
        publicly available.
          (2) Determination of reductions to water deliveries.--Water 
        transferred or exchanged under an agreement that meets the 
        terms of this subsection shall not be counted as a replacement 
        or an offset for purposes of determining reductions to water 
        deliveries to any Friant Division long-term contractor except 
        as provided in paragraph 16(b) of the Settlement. The Secretary 
        shall, at least annually, make publicly available a compilation 
        of the number of transfer or exchange agreements exercising the 
        provisions of this subsection to reduce, avoid, or mitigate 
        impacts to water deliveries caused by the Interim Flows or 
        Restoration Flows or to facilitate the Water Management Goal, 
        as well as the volume of water transferred or exchanged under 
        such agreements.
          (3) State law.--Nothing in this subsection alters State law 
        or permit conditions, including any applicable geographical 
        restrictions on the place of use of water transferred or 
        exchanged pursuant to this subsection.
  (f) Certain Repayment Obligations Not Altered.--Implementation of the 
provisions of this section shall not alter the repayment obligation of 
any other long-term water service or repayment contractor receiving 
water from the Central Valley Project, or shift any costs that would 
otherwise have been properly assignable to the Friant contractors 
absent this section, including operations and maintenance costs, 
construction costs, or other capitalized costs incurred after the date 
of enactment of this Act, to other such contractors.
  (g) Statutory Interpretation.--Nothing in this title shall be 
construed to affect the right of any Friant Division, Hidden Unit, or 
Buchanan Unit long-term contractor to use a particular type of 
financing to make the payments required in paragraph (3)(A) or (4)(A) 
of subsection (a).

SEC. 111. CALIFORNIA CENTRAL VALLEY SPRING RUN CHINOOK SALMON.

  (a) Finding.--Congress finds that the implementation of the 
Settlement to resolve 18 years of contentious litigation regarding 
restoration of the San Joaquin River and the reintroduction of the 
California Central Valley Spring Run Chinook salmon is a unique and 
unprecedented circumstance that requires clear expressions of 
Congressional intent regarding how the provisions of the Endangered 
Species Act of 1973 (16 U.S.C. 1531 et seq.) are utilized to achieve 
the goals of restoration of the San Joaquin River and the successful 
reintroduction of California Central Valley Spring Run Chinook salmon.
  (b) Reintroduction in the San Joaquin River.--California Central 
Valley Spring Run Chinook salmon shall be reintroduced in the San 
Joaquin River below Friant Dam pursuant to section 10(j) of the 
Endangered Species Act of 1973 (16 U.S.C. 1539(j)) and the Settlement, 
provided that the Secretary of Commerce finds that a permit for the 
reintroduction of California Central Valley Spring Run Chinook salmon 
may be issued pursuant to section 10(a)(1)(A) of the Endangered Species 
Act of 1973 (16 U.S.C. 1539(a)(1)(A)).
  (c) Final Rule.--
          (1) Definition of third party.--For the purpose of this 
        subsection, the term ``third party'' means persons or entities 
        diverting or receiving water pursuant to applicable State and 
        Federal laws and shall include Central Valley Project 
        contractors outside of the Friant Division of the Central 
        Valley Project and the State Water Project.
          (2) Issuance.--The Secretary of Commerce shall issue a final 
        rule pursuant to section 4(d) of the Endangered Species Act of 
        1973 (16 U.S.C. 1533(d)) governing the incidental take of 
        reintroduced California Central Valley Spring Run Chinook 
        salmon prior to the reintroduction.
          (3) Required components.--The rule issued under paragraph (2) 
        shall provide that the reintroduction will not impose more than 
        de minimus: water supply reductions, additional storage 
        releases, or bypass flows on unwilling third parties due to 
        such reintroduction.
          (4) Applicable law.--Nothing in this section--
                  (A) diminishes the statutory or regulatory 
                protections provided in the Endangered Species Act for 
                any species listed pursuant to section 4 of the 
                Endangered Species Act of 1973 (16 U.S.C. 1533) other 
                than the reintroduced population of California Central 
                Valley Spring Run Chinook salmon, including protections 
                pursuant to existing biological opinions or new 
                biological opinions issued by the Secretary or 
                Secretary of Commerce; or
                  (B) precludes the Secretary or Secretary of Commerce 
                from imposing protections under the Endangered Species 
                Act of 1973 (16 U.S.C. 1531 et seq.) for other species 
                listed pursuant to section 4 of that Act (16 U.S.C. 
                1533) because those protections provide incidental 
                benefits to such reintroduced California Central Valley 
                Spring Run Chinook salmon.
  (d) Report.--
          (1) In general.--Not later than December 31, 2024, the 
        Secretary of Commerce shall report to Congress on the progress 
        made on the reintroduction set forth in this section and the 
        Secretary's plans for future implementation of this section.
          (2) Inclusions.--The report under paragraph (1) shall 
        include--
                  (A) an assessment of the major challenges, if any, to 
                successful reintroduction;
                  (B) an evaluation of the effect, if any, of the 
                reintroduction on the existing population of California 
                Central Valley Spring Run Chinook salmon existing on 
                the Sacramento River or its tributaries; and
                  (C) an assessment regarding the future of the 
                reintroduction.
  (e) FERC Projects.--
          (1) In general.--With regard to California Central Valley 
        Spring Run Chinook salmon reintroduced pursuant to the 
        Settlement, the Secretary of Commerce shall exercise its 
        authority under section 18 of the Federal Power Act (16 U.S.C. 
        811) by reserving its right to file prescriptions in 
        proceedings for projects licensed by the Federal Energy 
        Regulatory Commission on the Calaveras, Stanislaus, Tuolumne, 
        Merced, and San Joaquin rivers and otherwise consistent with 
        subsection (c) until after the expiration of the term of the 
        Settlement, December 31, 2025, or the expiration of the 
        designation made pursuant to subsection (b), whichever ends 
        first.
          (2) Effect of subsection.--Nothing in this subsection shall 
        preclude the Secretary of Commerce from imposing prescriptions 
        pursuant to section 18 of the Federal Power Act (16 U.S.C. 811) 
        solely for other anadromous fish species because those 
        prescriptions provide incidental benefits to such reintroduced 
        California Central Valley Spring Run Chinook salmon.
  (f) Effect of Section.--Nothing in this section is intended or shall 
be construed--
          (1) to modify the Endangered Species Act of 1973 (16 U.S.C. 
        1531 et seq.) or the Federal Power Act (16 U.S.C. 791a et 
        seq.); or
          (2) to establish a precedent with respect to any other 
        application of the Endangered Species Act of 1973 (16 U.S.C. 
        1531 et seq.) or the Federal Power Act (16 U.S.C. 791a et 
        seq.).

             TITLE II--STUDY TO DEVELOP WATER PLAN; REPORT

SEC. 201. STUDY TO DEVELOP WATER PLAN; REPORT.

  (a) Plan.--
          (1) Grant.--To the extent that funds are made available in 
        advance for this purpose, the Secretary of the Interior, acting 
        through the Bureau of Reclamation, shall provide direct 
        financial assistance to the California Water Institute, located 
        at California State University, Fresno, California, to conduct 
        a study regarding the coordination and integration of sub-
        regional integrated regional water management plans into a 
        unified Integrated Regional Water Management Plan for the 
        subject counties in the hydrologic basins that would address 
        issues related to--
                  (A) water quality;
                  (B) water supply (both surface, ground water banking, 
                and brackish water desalination);
                  (C) water conveyance;
                  (D) water reliability;
                  (E) water conservation and efficient use (by 
                distribution systems and by end users);
                  (F) flood control;
                  (G) water resource-related environmental enhancement; 
                and
                  (H) population growth.
          (2) Study area.--The study area referred to in paragraph (1) 
        is the proposed study area of the San Joaquin River Hydrologic 
        Region and Tulare Lake Hydrologic Region, as defined by 
        California Department of Water Resources Bulletin 160-05, 
        volume 3, chapters 7 and 8, including Kern, Tulare, Kings, 
        Fresno, Madera, Merced, Stanislaus, and San Joaquin counties in 
        California.
  (b) Use of Plan.--The Integrated Regional Water Management Plan 
developed for the 2 hydrologic basins under subsection (a) shall serve 
as a guide for the counties in the study area described in subsection 
(a)(2) to use as a mechanism to address and solve long-term water needs 
in a sustainable and equitable manner.
  (c) Report.--The Secretary shall ensure that a report containing the 
results of the Integrated Regional Water Management Plan for the 
hydrologic regions is submitted to the Committee on Energy and Natural 
Resources of the Senate and the Committee on Natural Resources of the 
House of Representatives not later than 24 months after financial 
assistance is made available to the California Water Institute under 
subsection (a)(1).
  (d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $1,000,000 to remain available 
until expended.

                TITLE III--FRIANT DIVISION IMPROVEMENTS

SEC. 301. FEDERAL FACILITY IMPROVEMENTS.

  (a) The Secretary of the Interior (hereafter referred to as the 
``Secretary'') is authorized and directed to conduct feasibility 
studies in coordination with appropriate Federal, State, regional, and 
local authorities on the following improvements and facilities in the 
Friant Division, Central Valley Project, California:
          (1) Restoration of the capacity of the Friant-Kern Canal and 
        Madera Canal to such capacity as previously designed and 
        constructed by the Bureau of Reclamation.
          (2) Reverse flow pump-back facilities on the Friant-Kern 
        Canal, with reverse-flow capacity of approximately 500 cubic 
        feet per second at the Poso and Shafter Check Structures and 
        approximately 300 cubic feet per second at the Woollomes Check 
        Structure.
  (b) Upon completion of and consistent with the applicable feasibility 
studies, the Secretary is authorized to construct the improvements and 
facilities identified in subsection (a) in accordance with all 
applicable Federal and State laws.
  (c) The costs of implementing this section shall be in accordance 
with section 303, and shall be a nonreimbursable Federal expenditure.

SEC. 302. FINANCIAL ASSISTANCE FOR LOCAL PROJECTS.

  (a) Authorization.--The Secretary is authorized to provide financial 
assistance to local agencies within the Central Valley Project, 
California, for the planning, design, environmental compliance, and 
construction of local facilities to bank water underground or to 
recharge groundwater, and that recover such water, provided that the 
project meets the criteria in subsection (b). The Secretary is further 
authorized to require that any such local agency receiving financial 
assistance under the terms of this section submit progress reports and 
accountings to the Secretary, as the Secretary deems appropriate, which 
such reports shall be publicly available.
  (b) Criteria.--
          (1) A project shall be eligible for Federal financial 
        assistance under subsection (a) only if all or a portion of the 
        project is designed to reduce, avoid, or offset the quantity of 
        the expected water supply impacts to Friant Division long-term 
        contractors caused by the Interim or Restoration Flows 
        authorized in title I of this Act, and such quantities have not 
        already been reduced, avoided, or offset by other programs or 
        projects.
          (2) Federal financial assistance shall only apply to the 
        portion of a project that the local agency designates as 
        reducing, avoiding, or offsetting the expected water supply 
        impacts caused by the Interim or Restoration Flows authorized 
        in title I of this Act, consistent with the methodology 
        developed pursuant to paragraph (3)(C).
          (3) No Federal financial assistance shall be provided by the 
        Secretary under this title for construction of a project under 
        subsection (a) unless the Secretary--
                  (A) determines that appropriate planning, design, and 
                environmental compliance activities associated with 
                such a project have been completed, and that the 
                Secretary has been offered the opportunity to 
                participate in the project at a price that is no higher 
                than the local agency's own costs, in order to secure 
                necessary storage, extraction, and conveyance rights 
                for water that may be needed to meet the Restoration 
                Goal as described in title I of this Act, where such 
                project has capacity beyond that designated for the 
                purposes in paragraph (2) or where it is feasible to 
                expand such project to allow participation by the 
                Secretary;
                  (B) determines, based on information available at the 
                time, that the local agency has the financial 
                capability and willingness to fund its share of the 
                project's construction and all operation and 
                maintenance costs on an annual basis;
                  (C) determines that a method acceptable to the 
                Secretary has been developed for quantifying the 
                benefit, in terms of reduction, avoidance, or offset of 
                the water supply impacts expected to be caused by the 
                Interim or Restoration Flows authorized in title I of 
                this Act, that will result from the project, and for 
                ensuring appropriate adjustment in the recovered water 
                account pursuant to section 104(a)(5); and
                  (D) has entered into a cost-sharing agreement with 
                the local agency which commits the local agency to 
                funding its share of the project's construction costs 
                on an annual basis.
  (c) Guidelines.--Within 1 year from the date of enactment of this 
title, the Secretary shall develop, in consultation with the Friant 
Division long-term contractors, proposed guidelines for the application 
of the criteria defined in subsection (b), and will make the proposed 
guidelines available for public comment. Such guidelines may consider 
prioritizing the distribution of available funds to projects that 
provide the broadest benefit within the affected area and the equitable 
allocation of funds. Upon adoption of such guidelines, the Secretary 
shall implement such assistance program, subject to the availability of 
funds appropriated for such purpose.
  (d) Cost Sharing.--The Federal financial assistance provided to local 
agencies under subsection (a) shall not exceed--
          (1) 50 percent of the costs associated with planning, design, 
        and environmental compliance activities associated with such a 
        project; and
          (2) 50 percent of the costs associated with construction of 
        any such project.
  (e) Project Ownership.--
          (1) Title to, control over, and operation of, projects funded 
        under subsection (a) shall remain in one or more non-Federal 
        local agencies. Nothing in this title authorizes the Secretary 
        to operate a groundwater bank along or adjacent to the San 
        Joaquin River upstream of the confluence with the Merced River, 
        and any such groundwater bank shall be operated by a non-
        Federal entity. All projects funded pursuant to this subsection 
        shall comply with all applicable Federal and State laws, 
        including provisions of California water law.
          (2) All operation, maintenance, and replacement and 
        rehabilitation costs of such projects shall be the 
        responsibility of the local agency. The Secretary shall not 
        provide funding for any operation, maintenance, or replacement 
        and rehabilitation costs of projects funded under subsection 
        (a).

SEC. 303. AUTHORIZATION OF APPROPRIATIONS.

  (a) The Secretary is authorized and directed to use monies from the 
fund established under section 109 to carry out the provisions of 
section 301(a)(1), in an amount not to exceed $35,000,000.
  (b) In addition to the funds made available pursuant to subsection 
(a), the Secretary is also authorized to expend such additional funds 
from the fund established under section 109 to carry out the purposes 
of section 301(a)(2), if such facilities have not already been 
authorized and funded under the plan provided for pursuant to section 
104(a)(4), in an amount not to exceed $17,000,000, provided that the 
Secretary first determines that such expenditure will not conflict with 
or delay his implementation of actions required by title I of this Act. 
Notice of the Secretary's determination shall be published not later 
than his submission of the report to Congress required by section 
109(f)(2).
  (c) In addition to funds made available in subsections (a) and (b), 
there are authorized to be appropriated $50,000,000 (October 2008 price 
levels) to carry out the purposes of this title which shall be non-
reimbursable.

                         PURPOSE OF THE MEASURE

    The purpose of S. 27 is to authorize the implementation of 
the San Joaquin River Restoration Settlement.

                          BACKGROUND AND NEED

    S. 27 is intended to resolve a long-standing conflict on 
the San Joaquin River in central California. The conflict stems 
from the development of the Friant Division of the Bureau of 
Reclamation's Central Valley Project, and the impacts such 
development has had on the salmon fishery in the upper portion 
of the river.
    The Friant Division was constructed in the 1940s as a key 
part of the Central Valley Project. Its facilities deliver 
water to 28 entities (cities & water districts), with the 
primary infrastructure being Friant Dam and Millerton Lake. 
Other features include the Friant-Kern Canal which takes water 
from Friant Dam to the Kern River in Bakersfield, California, 
and the Madera Canal, which runs northwest to the Chowchilla 
River. The Division now serves approximately 15,000 farms, 
totaling about 1.04 million acres.
    Historically, Friant Dam has been operated to minimize 
downstream flows and maximize water deliveries through the 
Canals. As a result, approximately 60 miles of the 153 river 
miles between Friant Dam and the confluence of the Merced River 
have been dried up in most years, except during flood control 
releases. Prior to construction of Friant Dam, that portion of 
the river downstream of the dam supported a salmon fishery 
which the dam and its operations effectively eliminated.
    In 1988, a coalition of environmental and fishing interests 
sued the Bureau of Reclamation over its operation of the Friant 
Division in U.S. District Court (Natural Resources Defense 
Council, et al. v. Kirk Rodgers, et al.). One of the grounds 
for the suit as later amended was that operation of Friant Dam 
was in violation of California Fish & Game Code Section 5937, a 
provision requiring dam operators to release sufficient water 
to keep fish in good condition below the dam. On August 27, 
2004, the court issued an order concluding that Reclamation 
violated Section 5937 and scheduled a trial to determine the 
remedy for that violation.
    On September 13, 2006, the parties to the litigation 
(Natural Resources Defense Council, Friant Water Users 
Authority, and the United States) announced a settlement of the 
18 year-old litigation which was approved by the court on 
October 23, 2006. The settlement establishes fishery 
restoration and water management goals that resolve issues 
associated with operation of the Friant Division and the need 
to reestablish a sustainable Chinook salmon population in the 
San Joaquin River by providing for (a) substantial river 
channel improvements; (b) water flows necessary to sustain a 
salmon fishery; (c) reintroduction of Chinook salmon as an 
experimental population pursuant to the Endangered Species Act 
(ESA); and (d) water management planning to minimize settlement 
impacts on existing water users.
    Subsequently, third parties not involved in the 
negotiations expressed concern about potential impacts the 
settlement might have on their interests. The settling parties 
negotiated additional provisions to address their concerns, and 
those provisions were incorporated into the legislation. The 
State of California is also supportive of the settlement, 
having committed approximately $200 million in support of its 
implementation. Federal legislation is needed to authorize the 
full range of actions and resources necessary for the Federal 
agencies to implement the terms of the settlement.

                          LEGISLATIVE HISTORY

    S. 27 was introduced in the Senate on January 4, 2007 by 
Senator Feinstein for herself and Senator Boxer, and referred 
to the Committee on Energy and Natural Resources. The 
Subcommittee on Water and Power held a hearing on S. 27 on May 
3, 2007. (S. Hrg. 110-93.) At its business meeting on May 7, 
2008, the Committee on Energy and Natural Resources ordered S. 
27 favorably reported as amended.

            COMMITTEE RECOMMENDATION AND TABULATION OF VOTES

    The Committee on Energy and Natural Resources, in open 
business session on May 7, 2008, by voice vote of a quorum 
present, recommends that the Senate pass S. 27, if amended as 
described herein.
    The rollcall vote on reporting the measure was 15 yeas, 7 
nays, as follows:
        YEAS                          NAYS
Mr. Bingaman                        Mr. Craig
Mr. Akaka\1\                        Ms. Murkowski
Mr. Dorgan\1\                       Mr. Burr\1\
Mr. Wyden\1\                        Mr. DeMint
Mr. Johnson\1\                      Mr. Barrasso
Ms. Landrieu                        Mr. Bunning\1\
Ms. Cantwell                        Mr. Martinez\1\
Mr. Salazar
Mr. Menendez
Mrs. Lincoln\1\
Mr. Sanders\1\
Mr. Tester
Mr. Domenici
Mr. Corker
Mr. Smith

    \1\Indicates vote by proxy.
    Mr. Sessions did not vote.

                          COMMITTEE AMENDMENT

    During the consideration of S. 27, the Committee adopted a 
substitute amendment to improve the bill. The first set of 
changes are intended to reduce the bill's score as estimated by 
the Congressional Budget Office, while still ensuring that 
funding is available early in the settlement implementation 
phase to meet the construction deadlines associated with the 
settlement's restoration goals. The amendment deletes a 
provision authorizing Friant (or other subdivisions of the 
State) to use the Settlement revenue stream as collateral for a 
bond or loan that would be used to fund construction and other 
implementation activities. This provision would have had the 
effect of making settlement funds available early, when they 
are needed most, instead of being spread out over several 
years. Funds expected to be available through this provision 
are replaced by an alternative approach in the substitute 
amendment. The new provision (Section 110) directs the 
Secretary to negotiate new water supply contracts with the 
Friant districts that will require repayment of Friant's 
construction repayment obligation in a lump sum by 2011, or in 
equal annual installments by 2014. The funds available through 
an accelerated repayment are to be placed in the San Joaquin 
River Restoration Fund and made available for implementation 
activity. The Friant districts are provided other benefits in 
Section 110 to help mitigate for the accelerated repayment.
    The substitute amendment also adds two new titles to the 
bill. The new Title II authorizes financial assistance to the 
California Water Institute to develop a unified Integrated 
Regional Water Management Plan for the counties and hydrologic 
basins associated with the settlement. Title III addresses 
water management improvements in the Friant Division. 
Specifically, it enhances implementation of the Settlement's 
Water Management Goal by authorizing the Secretary to make 
improvements and build a recirculation project on the Friant-
Kern and Madera Canals and authorizing additional cost-shared 
financial assistance to local groundwater projects that reduce, 
avoid, or offset water losses in the Friant Division. Funding 
is drawn in part from funds provided by the Settlement and in 
part by a new authorization of appropriations.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides a table of contents for the Act.

Title I--San Joaquin River Restoration Settlement Act

    Section 101 provides the short title for Title I of the 
Act.
    Section 102 provides the purpose of Title I of the Act.
    Section 103 provides the definition of key terms used in 
Title I.
    Section 104(a) authorizes and directs the Secretary of the 
Interior (Secretary) to implement the Settlement in cooperation 
with the State of California and includes a list of prescribed 
measures to be carried out.
    Section 104(b) authorizes and directs the Secretary to 
enter into appropriate agreements, including cost sharing 
agreements, with the State of California, and a range of other 
appropriate agreements with identified entities which contain 
terms and conditions necessary to achieve the purposes of the 
Settlement.
    Section 104(c) authorizes the Secretary to accept and 
expend non-Federal funds to facilitate Settlement 
implementation.
    Section 104(d) requires that prior to a range of 
implementation actions, the Secretary identify impacts of those 
actions and mitigation measures for downstream water users and 
landowners.
    Section 104(e) authorizes the Secretary to conduct design 
and engineering studies necessary to implement the Settlement.
    Section 104(f) provides that the Settlement and 
reintroduction of Chinook Salmon as provided in the Act shall 
not result in an involuntary reduction in certain contract 
water allocations except as otherwise provided in Section 104.
    Section 104(g) provides a disclaimer of Title I's impact on 
specified rights and obligations.
    Section 105(a) specifies that title to identified property 
and facilities that are modified or improved as part of 
Settlement implementation shall remain in the hands of the 
present owner and not be transferred to the United States 
unless acquired as authorized.
    Section 105(b) authorizes the Secretary to acquire certain 
interests in property under specified conditions to implement 
the Settlement. The Secretary is also authorized to use 
existing authority to carry out Sections 104 and 105.
    Section 105(c) authorizes the Secretary to exercise 
appropriate discretion and dispose of property and property 
interests if no longer needed for settlement purposes. The 
subsection also identifies certain rights of first refusal when 
disposing of property, and specifies that any proceeds are to 
be deposited into the San Joaquin River Restoration Fund.
    Section 105(d) limits the Secretary's authority to operate 
a groundwater bank in a specified area.
    Section 106(a) directs the Secretaries of the Interior and 
Commerce to comply with all applicable federal and state laws, 
rules, and regulations in carrying out the measures authorized 
by Title I.
    Section 106(b) provides that nothing in Title I preempts 
state law or modifies any existing obligation of the United 
States under federal reclamation law to operate the Central 
Valley Project in conformity with state law.
    Section 106(c) authorizes the Secretary, in undertaking 
Settlement implementation measures authorized in Section 104, 
to provide funds made available under Title I to affected 
federal, state, and local agencies, and Indian tribes if 
necessary to enable such entities to effectively participate in 
the environmental review process.
    Section 106(d) provides that the United States' share of 
the costs of implementing Title I is non-reimbursable provided 
that this provision does not limit the use of the funds 
assessed and collected pursuant to specified provisions of 
Reclamation law for implementation of the Settlement. The 
subsection also directs that the legislation shall not be 
construed to limit or modify existing or future Central Valley 
Project Ratesetting Policies.
    Section 107 addresses how implementation of the Settlement 
affects obligations of the Secretary contained in certain 
specified provisions of Reclamation law.
    Section 108(a) states that nothing in Title I confers upon 
any person or entity not a party to the Settlement a private 
right of action or claim for relief to interpret or enforce 
this Act or the Settlement.
    Section 108(b) clarifies that subsection (a) does not alter 
or curtail any rights or claims under any other applicable law.
    Section 109(a) provides that costs of implementing this 
Settlement are to be shared among federal and non-federal 
entities in the estimated amounts, and from the sources, shown. 
The Secretary is also directed to enter into one or more 
agreements, recognizing either monetary or in-kind 
contributions, to fund or implement improvements on a project-
by-project basis with the State of California. Except as 
provided in the Settlement, additional costs incurred solely to 
implement the Settlement are to be incurred on a voluntary 
basis.
    Section 109(b) specifies that, in addition to the other 
funds made available in the San Joaquin Restoration Fund 
established in subsection (c), there are authorized to be 
appropriated the identified amounts to implement Title I and 
the Settlement to be available until expended under the 
criteria set forth. The Secretary is also authorized to use 
monies from the Central Valley Project Restoration Fund for the 
purposes set forth in Title I, as specified.
    Section 109(c) establishes a ``San Joaquin River 
Restoration Fund'' in the Treasury to be used for the purpose 
of implementing the Settlement except as otherwise provided in 
Section 303. The sources of money to be deposited into the Fund 
are identified.
    Section 109(d) specifies that certain payments made by 
long-term contractors who receive water from the Friant 
Division and Hidden and Buchanan Units of the Central Valley 
Project shall be the maximum of the settlement parties' direct 
financial contribution to the Settlement, subject to paragraph 
21 of the Settlement.
    Section 109(e) provides that nothing in Title I requires a 
federal official to expend federal funds not appropriated by 
Congress or to seek the appropriation of additional funds for 
Settlement implementation.
    Section 109(f) provides that, prior to restoring any flows 
other than Interim Flows in a specified section of the San 
Joaquin River (reach 4B), the Secretary shall conduct a study 
of the cost, impacts, and mitigation measures of restoring 
certain levels of flow. The subsection also requires the 
Secretary to file a report with Congress after making a 
determination on restoring flows in that section of the 
existing channel of the San Joaquin River which is to include 
specific identified information. If the estimated federal cost 
for increasing flow capacity in reach 4B exceeds remaining 
federal funding authorized by this Act, then before commencing 
construction, Congress must have increased the applicable 
authorization ceiling as specified.
    Section 110(a) authorizes and directs the Secretary to 
convert, before December 31, 2010, certain listed existing 
Friant division, Hidden Unit, and Buchanan Unit long-term 
irrigation water service contracts to repayment contracts. The 
Secretary is also authorized, but not required, to convert 
other existing long-term water service contracts for irrigation 
and municipal water deliveries to repayment contracts by the 
same date. All such contracts must require the repayment of the 
remaining amount of construction costs allocated to each 
contractor no later than January 31, 2011, or by January 31, 
2014, if payment is made in approximately equal annual 
installments or if the contract is for municipal water. The 
subsection also provides for payment of additional construction 
or other capitalized costs properly assignable to such 
contractor, makes clear that power revenues will not be 
available to aid the contractors in fulfilling the repayment 
obligations, specifies that the repayment contracts will 
continue as long as the contractors pay applicable charges, and 
specifies other terms.
    Section 110(b) directs that payments made under subsection 
(a) shall be adjusted as set forth following a final cost 
allocation of the costs of the Central Valley Project.
    Section 110(c) provides for specific application and non-
application of existing provisions of Reclamation law 
notwithstanding certain continuing repayment obligations set 
out in subsection 110(a). The contractor must continue to pay 
all applicable operation and maintenance costs and other 
charges as set forth.
    Section 110(d) provides that beginning in 2020, the 
Secretary shall reduce the charge mandated in Section 107(1) of 
the Act for a specified time in recognition of financing costs 
incurred by the districts in making the payments under 
subsection 110(a). Other terms related to this reduction are 
also specified.
    Section 110(e) provides that upon the first release of 
Interim Flows or Restoration Flows pursuant to the Settlement, 
if certain conditions are met, any agreement by which one or 
more long-term Friant water service or repayment contractor 
(that has converted its contract) for the transfer or exchange 
of water (other than water released as Interim Flows or 
Restoration Flows) shall be deemed to comply with an identified 
existing provision of Reclamation law. Subsection (e) also 
establishes that any such water transferred or exchanged shall 
not be counted as a replacement or offset under the Settlement 
except as called for in a specific provision.
    Section 110(f) provides that nothing in Section 110 shall 
be construed to alter the repayment obligation of, or shift any 
other costs to, other long term water contractors receiving 
water from the Central Valley Project.
    Section 110(g) states that Title I does not affect the 
right of any Friant Division long-term contractor to use a 
particular type of financing to make certain required payments.
    Section 111(a) contains a Congressional finding as stated.
    Section 111(b) directs that California Central Valley 
Spring Run Chinook salmon be reintroduced in the San Joaquin 
River below Friant Dam as an experimental population pursuant 
to section 10(j) of the ESA and the Settlement under a 
specified condition.
    Section 111(c) directs the Secretary of Commerce to issue a 
final rule pursuant to section 4(d) of the ESA governing the 
incidental take of reintroduced Central Valley Spring Run 
Chinook salmon prior to the reintroduction. The rule is to 
include certain specified provisions but does not diminish the 
applicability of identified provisions of existing law.
    Section 111(d) provides that no later than December 31, 
2024, the Secretary of Commerce is required to report to 
Congress on the progress made on the reintroduction set forth 
in this section and the Secretary's plans for further 
implementation of the reintroduction.
    Section 111(e) directs the Secretary of Commerce to 
exercise his or her authority under Section 18 of the Federal 
Power Act by reserving the right to file prescriptions in 
proceedings for projects licensed by the Federal Energy 
Regulatory Commission on identified rivers until a time 
certain, but no later than December 31, 2025.
    Section 111(f) provides that nothing modifies or 
establishes a precedent with respect to any other application 
of the ESA or Federal Power Act.

Title II--Study to develop water plan; report

    Section 201(a) authorizes the Secretary to provide 
financial assistance to the California Water Institute to 
develop a unified Integrated Regional Water Management Plan 
(Plan) which addresses specific issues within an identified 
study area.
    Section 201(b) describes how the Plan is to be used.
    Section 201(c) requires the Secretary to develop a report 
which contains the results of the Plan.
    Section 201(d) authorizes appropriations to carry out 
Section 201.

Title III--Friant division improvements

    Section 301(a) directs the Secretary to conduct feasibility 
studies on certain identified improvements and facilities.
    Section 301(b) authorizes the Secretary to construct the 
improvements and facilities identified in subsection (a) 
consistent with the studies and in accordance with applicable 
laws.
    Section 301(c) declares that the costs of implementing the 
Section 301 shall be nonreimbursable and consistent with 
Section 303.
    Section 302(a) authorizes the Secretary to provide 
financial assistance to local agencies for costs associated 
with developing local facilities to bank water underground or 
to recharge groundwater, subject to certain criteria and 
certain progress reports and accountings being provided.
    Section 302(b) provides that such projects will be eligible 
for financial assistance only to the extent projects meet a 
number of specified conditions and criteria in the subsection.
    Section 302(c) provides within one year of enactment of 
Title III, the Secretary is to develop guidelines for 
application of the criteria provided in subsection (b) and 
thereafter shall implement the financial assistance program.
    Section 302(d) requires that the Federal assistance 
provided under subsection (a) shall not exceed 50 percent of 
the cost associated with planning, design, environmental 
compliance, and construction.
    Section 302(e) provides that title to, control over and 
operation of such funded projects shall remain in the non-
Federal local agency and that all operation, maintenance and 
replacement and rehabilitation costs of such projects shall be 
the responsibility of the local agency. The subsection also 
states that nothing in Title III authorizes the Secretary to 
operate a ground water bank as described.
    Section 303(a) authorizes and directs the Secretary to use 
up to $35,000,000 from the San Joaquin Restoration Fund 
established to carry out projects under Section 301(a)(1).
    Section 303(b) authorizes the Secretary to expend up to 
$17,000,000 from the San Joaquin Restoration Fund to carry out 
Section 301(a)(2) provided certain conditions are met.
    Section 303(c) authorizes appropriations of $50,000,000 
(October 2008 price levels) to carry out Title III on a 
nonreimbursable basis.
    It is expected by the Committee that the Secretary will 
initiate actions to carry out the provisions of Title I and 
Title III of the bill simultaneously and proceed with 
implementation activity with equal diligence.

                   COST AND BUDGETARY CONSIDERATIONS

    The Congressional Budget Office estimate of the costs of 
this measure has been requested but was not received at the 
time the report was filed. When the Congressional Budget Office 
completes its cost estimate, it will be posted on the Internet 
at www.cbo.gov.

                      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. 27. 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. 27, 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                  Provision              Member
------------------------------------------------------------------------
109.........................  Appropriations,       Senators Feinstein
                               Settlement Fund.      and Boxer.
201.........................  Study to Develop      Senators Feinstein
                               Water Plan; Report.   and Boxer.
303.........................  Authorization of      Senators Feinstein
                               Appropriations.       and Boxer.
------------------------------------------------------------------------

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Department of the Interior at 
the subcommittee hearing on May 3, 2007 on S. 27 follows:

Statement of Mark Limbaugh, Assistant Secretary for Water and Science, 
                       Department of the Interior

    Mr. Chairman and members of the Subcommittee, I appreciate 
the opportunity to appear before you today to discuss S. 27, 
the San Joaquin River Restoration Settlement Act. S. 27 
provides authorization and funding for the Secretary of the 
Interior to implement the terms and conditions of the 
Stipulation of Settlement (Settlement) dated September 13, 
2006, in Natural Resources Defense Council, et al. v. Kirk 
Rodgers, et al., which was approved by the U.S. District Court 
on October 23, 2006. The Department supports S. 27.
    During the eighteen years since this case was filed, 
relations between stakeholders in the San Joaquin River basin, 
including the State of California, Reclamation water users, 
environmentalists, and Federal agencies, have often been 
contentious. However, through the good faith efforts of the 
``Settling Parties,'' namely Natural Resources Defense Council 
(NRDC), Friant Water Users Authority (FWUA), and 
representatives of the Bureau of Reclamation, Fish and Wildlife 
Service, National Marine Fisheries Service, and the Department 
of Justice for the United States, an opportunity has been 
presented to resolve this litigation in a way that will both 
restore the San Joaquin River and increase water supply 
certainty to farmers in the Friant Division. My testimony today 
will provide an overview of the Settlement and the importance 
of this authorizing legislation.

                            brief background

    The Bureau of Reclamation has water service contracts with 
28 entities made up of cities and water districts of various 
sorts that rely on the water supply from the Friant Division, 
one of the key features of the Central Valley Project. Friant 
Dam is located on the upper San Joaquin River, where it forms 
Millerton Lake, and became fully operational in the late 1940s. 
Our understanding is that about 15,000 farms rely on Friant 
water supplies.
    Except for flood-control operations, Friant Dam/Millerton 
Lake is operated to meet minimum downstream flow requirements 
and maximize water deliveries. As a result, approximately 60 
miles of the 153 river miles between Friant Dam and the 
confluence of the Merced River have been dried up in most 
years, except during seasonal flood control releases. Prior to 
construction of Friant Dam, the stretch of river downstream of 
the dam supported a healthy fishery, including salmon runs, 
which the dam effectively eliminated.
    In 1988, a coalition of environmental groups led by NRDC 
filed suit challenging the federal defendants' compliance with 
the National Environmental Policy Act (NEPA) and the Endangered 
Species Act (ESA) in connection with the renewal of the long-
term water service contracts between the United States and the 
Central Valley Project, Friant Division contractors. Most of 
the Friant Division long-term contractors intervened as 
additional defendants.
    Through amended complaints, the plaintiffs subsequently 
included a claim asserting that pursuant to Sec. 8 of the 
Reclamation Act of 1902, the federal defendants must operate 
Friant Dam in accordance with California Fish and Game Code 
Sec. 5937. California Fish and Game Code Sec. 5937 requires the 
owner or operator of any dam in California to allow sufficient 
water to flow through or around the dam in order to keep the 
downstream fishery in ``good condition.'' During the initial 
phase of the litigation, the District Court ruled that the 
contracts were not entered into in violation of NEPA 
requirements, but held that approval of the renewal contracts 
violated procedural requirements of the ESA. The District Court 
did not rule on the Sec. 5937 claim. On June 24, 1998, the 
Ninth Circuit Court of Appeals affirmed most of the District 
Court's rulings but remanded to the District Court the issue of 
the applicability of California Fish and Game Code Sec. 5937 to 
the operation of Friant Dam.
    From 1998 to 2003, without direct involvement by Federal 
defendants, FWUA and NRDC attempted to settle the remanded 
issue. In 2003, those discussions were terminated, and on July 
19, 2003, the plaintiffs amended their complaint by adding the 
Secretary of Commerce and the National Marine Fisheries Service 
as additional defendants and adding claims asserting that the 
long-term renewal contracts do not conform to the requirements 
of the Central Valley Project Improvement Act (CVPIA). In an 
Order issued on August 27, 2004, Judge Karlton concluded that 
Reclamation violated California Fish and Game Code Sec. 5937, 
and scheduled a trial on the issue of remedy for that 
violation.
    During the summer of 2005, at the request of Subcommittee 
Chairman George Radanovich and Senator Dianne Feinstein, FWUA 
and NRDC reinitiated settlement discussions. In November 2005, 
the Federal government was invited into those discussions, and 
in spring 2006, the State of California was also approached 
about the negotiations since the negotiators foresaw that the 
State would have a significant role in the implementation of 
any settlement. On September 13, 2006, the Settling Parties 
filed the Settlement, including proposed Federal implementing 
legislation, with the Court. The Settlement Agreement is based 
on two goals and objectives:
    1. To restore and maintain fish populations in ``good 
condition'' in the main stem of the San Joaquin River below 
Friant Dam to the confluence of the Merced River, including 
naturally reproducing and self-sustaining populations of salmon 
and other fish.
    2. To reduce or avoid adverse water supply impacts to all 
of the Friant Division long-term contractors that may result 
from the Interim Flows and Restoration Flows provided for in 
the Settlement.

                            restoration goal

    The Settling Parties have carefully studied San Joaquin 
River restoration for many years and as part of the Settlement 
have identified the actions and highest priority projects 
necessary to achieve the restoration goal. These include among 
others: expanding channel capacity, improving levees, and 
making modifications necessary to provide fish passage through 
or around certain structures in the river channel. Also called 
for are year-round flows in the San Joaquin River, including 
those areas that have been without continuous flows for 
decades. This action would be taken to restore and maintain 
fish populations in good condition, including naturally 
reproducing and self-sustaining populations of Chinook salmon 
and other fish in the 153-mile stretch of the river between 
Friant Dam and the confluence of the Merced River.

                         water management goal

    Recognizing that the Settlement's Restoration Flows will 
reduce the amount of water available for diversion at Friant 
Dam, the Settlement also includes provisions to protect water 
availability for the 15,000 farms that currently rely on these 
supplies. One million acres of some of the most productive 
farmland in the country as well as many towns and cities along 
the southern San Joaquin Valley's East Side receive all or a 
major portion of their water supplies from the Friant Division. 
The Settlement recognizes the importance of this water to those 
farms and calls for development of water management solutions 
to provide these users water supply certainty for the long 
term. Such a program would include a Recovered Water Account to 
make surplus water available at a reduced rate to farmers who 
have contributed water to the Restoration Flows and a flexible 
combination of recirculation, recapture, reuse, exchange and/or 
transfer programs. Additional groundwater banking may also be 
explored.

                            phased approach

    Restoring continuous flows to the approximately 60 miles of 
dry river will take place in a phased manner. Planning, design 
work, and environmental reviews will begin immediately, and 
interim flows for experimental purposes will start in 2009. The 
flows will be increased gradually over the next several years, 
with the goal of reintroducing salmon by December 31, 2012.
    The flow regime called for in the Settlement continues 
unchanged until 2026, with the U.S. District Court retaining 
jurisdiction to resolve disputes arising under the Settlement.
    After December 31st, 2025 the court, in conjunction with 
the California State Water Resources Control Board, could 
consider any requests by the parties for changes to the 
Restoration Flows.

                       importance of legislation

    As the implementation of this historic Settlement begins, I 
can't emphasize enough how important it is for Federal 
authorizing legislation to be approved and signed into law. 
Passing this legislation soon will demonstrate the kind of 
support and commitment from the Federal government that is 
necessary to prove we are serious about making this settlement 
and its twin goals a reality. Some initial funding and 
authority exists for Interior agencies to work with our State 
partners to initiate planning and environmental review 
activities, which we have already begun to do. Without 
authorizing legislation such as S. 27, however, we lack 
sufficient authority to implement the actions in the 
Settlement. Moreover, beginning in fiscal year 2008 we will 
have insufficient funding to stay on the aggressive schedule 
called for in the Settlement to complete the necessary planning 
and environmental reviews for initiating construction 
activities and ultimately restoring flows into the San Joaquin 
River from Friant Dam. Such delays would send the wrong message 
regarding the Federal support for implementation.

                          restoration funding

    The proposed legislation is consistent with the 
recommendation in the Settlement regarding funding sources to 
support implementation of these projects, including the use of 
current payments from farmers and cities served by Friant Dam, 
redirection of Federal funds from the Reclamation Fund, state 
bond initiatives, and authorization for additional Federal 
appropriations as long as there is a non-Federal cost share. 
Funds are to be used to meet both the Water Management and 
Restoration goals.
    More specifically, the proposed legislation, consistent 
with the Settlement, allows for the continuation of and the 
dedication of the ``Friant Surcharge,'' an environmental fee 
charged pursuant to the Central Valley Project Improvement Act 
(CVPIA) of $7 per acre foot of water delivered to Friant 
Contractors. This fee is expected to average about $8 million 
per year ($160 million over the 20-year period). Up to $2 
million annually of other CVPIA Restoration Fund payments made 
by Friant water users under the CVPIA ($40 million over the 20-
year period) would also be directed for implementation of the 
Settlement.
    The legislation also calls for the dedication of the 
capital component of water rates paid by Friant Division water 
users to the Settlement implementation (approximately $220-240 
million over the 20-year period). These are funds that at 
present go to the Reclamation Fund in the U.S. Treasury to 
repay the capital costs of construction in the Friant Division. 
Under this bill, these funds would be deposited into a newly 
established San Joaquin River Restoration Fund to pay directly 
for implementing the Settlement. The Settlement provides that 
the monies contributed to the Settlement from the Friant 
Surcharge and capital repayment obligation may be used to fund 
bonds, guaranteed loans or other finance instruments issued by 
agencies or subdivisions of the State of California.
    In addition, the legislation authorizes up to $250 million 
of additional Federal appropriations to contribute to the 
implementation and requires a non-federal cost-share of an 
equivalent amount.
    Funding by the State of California will also support the 
Settlement. Last November, State propositions 84 and 1e were 
passed by the California voters and should provide about $200 
million of State bond funds for projects that will directly 
contribute to the restoration efforts.
    Although the Settling Parties have agreed on a suite of 
actions to be taken to restore flows and salmon runs, the total 
cost and the specificity of those actions still contain 
significant uncertainty. The Parties anticipate that a multi-
agency technical team established to implement the Settlement 
would develop additional design details typically found in a 
Feasibility-level study needed to take the proposed actions. 
The Parties also anticipate that the estimated costs projected 
to be required to meet the restoration goal (i.e. $250 million-
$800 million) would be further refined during the initial phase 
of implementation.
    This uncertainty in project costs has been a source of 
concern to both the Administration and the State of California. 
As project partners, we realize that the Federal appropriations 
proposed in this legislation, in addition to the funding 
sources already described, may be integral to implementing the 
settlement. However, the Administration is not willing to 
commit to seeking any particular level of funding until further 
planning and engineering studies are completed that identify 
with more certainty the total estimated cost of this Program. 
All the parties to the Settlement must also realize that 
implementation of this settlement, including this authorizing 
legislation, does not imply a limitless Federal commitment to 
fund whatever it costs.

                        status of implementation

    As already mentioned, some initial funding and authority 
exists for Interior to work with our State partners to initiate 
planning and environmental review activities, and we have been 
doing just that. Interior, through Reclamation and the Fish and 
Wildlife Service, is working with the other Settling Parties, 
the State of California, the affected Third Parties (discussed 
below), and other Federal agencies regarding the implementation 
process and other related matters. A multi-agency Program 
Management Team including California Dept. of Water Resources, 
California Dept. of Fish and Game, and U.S. Fish and Wildlife 
Service, National Marine Fisheries Service, and Reclamation 
have begun efforts to initiate an implementation process, 
including public outreach, planning, design, and environmental 
reviews. This multi-agency team is developing a Program 
Management Plan (PMP), scheduled for completion this Spring, 
that will describe the implementation process, the scope and 
timeline of the activities, studies to be completed, and the 
process to involve and receive input from interested third 
parties as well as the broader public. The PMP will address 
strategies to meet both the Restoration Goal and the Water 
Management Goal described in the Settlement. As a further 
demonstration of the Administration's commitment to 
implementing this settlement, the President's FY 2008 Budget 
for Reclamation presumes a redirection of capital repayment 
receipts away from the Reclamation Fund and into the newly-
created San Joaquin Restoration Fund; it also presumes the 
allocation $7.5 million of funds from the CVPIA Restoration 
Fund to the San Joaquin Restoration Fund. However, these 
actions in the Budget presume enactment of the legislation.

                             third parties

    We fully recognize and appreciate the importance of 
involving affected third parties in the implementation of the 
Settlement, and several steps have been taken to meaningfully 
involve them in the development and implementation of the 
Settlement. Prior to the execution of the settlement documents, 
copies of the draft documents were made available in 
Sacramento, Fresno, and San Francisco for review by interested 
third parties, subject to confidentiality agreements. 
Representatives of water users on the west side of the Central 
Valley; water users from tributaries to the San Joaquin River 
downstream of Friant Dam; the Exchange Contractors, who receive 
water from the Delta in lieu of water they would otherwise 
divert from the San Joaquin River below Friant Dam; and other 
parties concerned about river management issues (collectively, 
``Third Parties'') took the opportunity to review the 
Settlement documents. In addition, the Settling Parties 
conducted numerous briefings throughout the Central Valley, 
which were attended by approximately 70 Third Party 
representatives. At those briefings, the Settling Parties 
reviewed the proposed Settlement in detail, responded to 
questions, and listened to comments. Following those briefings, 
a number of entities submitted written comments on the 
Settlement documents. Their primary areas of concern were 
related to the ESA take provisions, operation & maintenance, 
funding, meaningful participation in implementation of the 
program, and water rights. After consideration of comments from 
Third Parties, the Settling Parties made modifications deemed 
appropriate to some of the settlement documents and further 
provided the Third Parties with a comprehensive written 
response to their written comments. In addition, language was 
added to the legislation before it was introduced to strengthen 
protections for Third Party interests.
    Since the Settlement was signed and the legislation was 
drafted, the Bureau of Reclamation has been working closely 
with a group of Third Parties with downstream concerns on a 
Memorandum of Understanding (MOU), which was reviewed by the 
Settling Parties and was signed on February 26, 2007 by 
Reclamation and the Third Parties involved.
    The MOU articulates the interests of these Third Parties 
and agrees that Reclamation will work closely and involve the 
Third Parties throughout the implementation of the Settlement 
on matters pertaining to their interests.
    In supporting this settlement, the Administration remains 
committed to implementing other salmon restoration programs 
along the Pacific coast. The San Joaquin settlement that would 
be implemented by S. 27 provides a model of how stakeholders 
can come together to rebuild historic salmon populations and 
restore communities. We are open to exploring how this model 
could be used to help implement other similar restoration 
programs.

                               conclusion

    This monumental agreement ends an 18-year legal dispute 
over the operation of Friant Dam and provides increased 
certainty to Friant Division farmers who rely on CVP water 
deliveries while returning flows and salmon runs back to the 
San Joaquin River. S. 27 would provide the federal 
authorization and funding needed to move into implementation. 
We believe that this historic agreement is the start of a truly 
collaborative process that will result in a restored river for 
all. I strongly recommend that this committee act swiftly on 
this legislation to allow the Federal government to move 
forward without delay and to send a message of support to the 
Parties and our implementing partners.
    Mr. Chairman, this concludes my testimony. I would like to 
reiterate my appreciation to the subcommittee for your interest 
in this settlement. I would be happy to answer any questions at 
this time.

                        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. 27, as ordered 
reported.

                                  
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