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28–489 PDF 2006

S. HRG. 109–460

MISCELLANEOUS WATER BILLS

HEARING

BEFORE THE

SUBCOMMITTEE ON WATER AND POWER

OF THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSIONQ08

ON

S. 1577 S. 1962

S. 2028 S. 2035

S. 2054 S. 2205

H.R. 3812

MARCH 30, 2006

(

Printed for the use of the 

Committee on Energy and Natural Resources 

(II)

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

PETE V. DOMENICI, New Mexico, Chairman 

LARRY E. CRAIG, Idaho 

CRAIG THOMAS, Wyoming 

LAMAR ALEXANDER, Tennessee 

LISA MURKOWSKI, Alaska 

RICHARD M. BURR, North Carolina, 

MEL MARTINEZ, Florida 

JAMES M. TALENT, Missouri 

CONRAD BURNS, Montana 

GEORGE ALLEN, Virginia 

GORDON SMITH, Oregon 

JIM BUNNING, Kentucky 

JEFF BINGAMAN, New Mexico 

DANIEL K. AKAKA, Hawaii 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

DIANNE FEINSTEIN, California 

MARIA CANTWELL, Washington 

KEN SALAZAR, Colorado 

ROBERT MENENDEZ, New Jersey

BRUCE M. EVANS, Staff Director 

JUDITH K. PENSABENE, Chief Counsel 

ROBERT M. SIMON, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SUBCOMMITTEE ON WATER AND POWER

LISA MURKOWSKI, Alaska, Chairman 

GORDON SMITH, Oregon, Vice Chairman

LARRY E. CRAIG, Idaho 

RICHARD M. BURR, North Carolina 

MEL MARTINEZ, Florida 

CONRAD BURNS, Montana 

JIM BUNNING, Kentucky 

JAMES M. TALENT, Missouri 

TIM JOHNSON, South Dakota 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

DIANNE FEINSTEIN, California 

MARIA CANTWELL, Washington 

KEN SALAZAR, Colorado 

ROBERT MENENDEZ, New Jersey

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

NATE GENTRY, Counsel 

MIKE CONNOR, Democratic Counsel 

(III)

C O N T E N T S 

STATEMENTS 

Page

Becker, Laurence R., State Geologist and Director, Vermont Geological

Survey, Vermont Department of Environmental Conservation, Vermont

Agency of Natural Resources .............................................................................. 28

Boyer, Jerry J., President, Spearfish Canyon Society .......................................... 41

Craig, Hon. Larry E., U.S. Senator From Idaho ................................................... 3

Hill, Catherine L., Northeast Regional Hydrologist, U.S. Geological Survey, 

Department of the Interior .................................................................................. 16

Jeffords, Hon. James M., U.S. Senator From Vermont ........................................ 22

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

Keys, John, III, Commissioner, Bureau of Reclamation, Department of the 

Interior .................................................................................................................. 7

Krambeck, Jerry, Mayor, City of Spearfish, SD .................................................... 26

Lytle, C. Mel, Water Resource Coordinator, San Joaquin County, CA ............... 29

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

Pollman Rogers, Darla, Riter, Rogers, Wattier & Brown, LLP, Pierre, SD ........ 34

Robinson, J. Mark, Director, Office of Energy Projects, Federal Energy

Regulatory Commission ....................................................................................... 13

Thune, Hon. John, U.S. Senator From South Dakota .......................................... 1

APPENDIXES 

APPENDIX I 

Responses to additional questions .......................................................................... 47

APPENDIX II 

Additional material submitted for the record ........................................................ 65

(1)

MISCELLANEOUS WATER BILLS 

THURSDAY, MARCH 30, 2006

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

The subcommittee met, pursuant to notice, at 2:37 p.m., in room 

SD–366, Dirksen Senate Office Building, Hon. Lisa Murkowski presiding. 

OPENING STATEMENT OF HON. LISA MURKOWSKI,

U.S. SENATOR FROM ALASKA 

Senator MURKOWSKI. Call to order the Subcommittee on Water 

and Power. It is my pleasure to welcome you all here this afternoon. We have seven bills before the committee this afternoon. 

We have S. 1577, which is sponsored by Senators Johnson and 

Thune, exempting a South Dakota hydropower project from FERC 

licensing requirements. We have S. 1962, sponsored by Senators 

Roberts, Brownback, Nelson, and Hagel. This authorizes an extension of Reclamation repayment contracts. S. 2028, sponsored by 

Senators Byrd and Rockefeller, reinstates a FERC hydropower license, extending the time for construction commencement. S. 2035, 

sponsored by Senators Craig and Crapo, reinstates a FERC hydropower license. S. 2054, sponsored by Senator Jeffords, authorizes a 

water resources study for the State of Vermont. S. 2205, sponsored 

by Senators Thune and Johnson, authorizes the reconveyance of 

Reclamation land in South Dakota. And H.R. 3812, coming from 

Congressman Pombo, authorizes a Mokelumne River feasibility 

study. 

Senator Thune, you have joined the subcommittee here this 

afternoon. We welcome your comments. 

I will note, for those that will be here this afternoon, we’re scheduled to have a vote at 3 o’clock, from what I understand, so we’re 

going to try to do this in an expedited manner. 

With that, Senator Thune, I will invite you to provide whatever 

comments you may have on your legislation, and then you, Senator 

Craig, for your comments, as well, before we go to the witnesses. 

Senator Thune, welcome. 

STATEMENT OF HON. JOHN THUNE, U.S. SENATOR

FROM SOUTH DAKOTA 

Senator THUNE. Thank you, Madam Chairman, Senator Craig, 

fellow subcommittee members. I appreciate very much the opportunity to appear before your committee to speak in support of a bill 

2

that I have advocated since my service in the House of Representatives. 

This noncontroversial legislation is something that Senator Johnson and I have supported for a number of years. The Senate Energy Committee reported out an identical bill last Congress, and 

the full Senate approved the legislation by unanimous consent. 

However, it ultimately died, because the House did not act before 

the end of the 108th Congress. 

I’m here today to ask for your assistance in seeing that this legislation is again reported out of your committee so it could be passed 

by the Senate and ultimately signed into law. 

For those who may not know, S. 2205, the Blunt Reservoir and 

Pierre Canal Land Conveyance Act of 2006, would provide a longoverdue remedy to a failed Federal irrigation project in my home 

State of South Dakota. The Flood Control Act of 1944, otherwise 

known as the Pick-Sloan Project, authorized the creation of the 

750,000-acre Oahe Irrigation Project in central South Dakota. This 

project never became a reality. Therefore, the bill before the committee today seeks to de-authorize the Blunt Reservoir and Pierre 

Canal features. This would allow the original landowners the option of purchasing the land they lost to the Blunt Reservoir and 

Pierre Canal Project, thereby putting the land back onto the local 

tax rolls. 

This legislation also seeks to transfer to the State of South Dakota some parcels of land as partial mitigation for the 536,875 

acres of wildlife habitat that were permanently flooded in South 

Dakota. This flooding occurred to allow downstream States the benefits of flood-control navigation and municipal and industrial water 

supplies. 

Madam Chairman, as you can imagine, there are a number of 

original landowners who would like their land back. It’s been 

roughly 30 years since landowners either sold their land to the 

Federal Government or had it taken, through condemnation. My 

bill addresses the roughly 20,000 acres of land that are currently 

owned by the Federal Government and managed by the Bureau of 

Reclamation. 

While this legislation is widely supported by landowners and the 

Governor of South Dakota, I do want to point out that a minor 

modification may need to be made to the purchase-option section 

of the bill. This is largely due to the fact that the State of South 

Dakota and landowners reached an initial agreement in 2001 regarding how the 20,000 acres currently owned by the Federal Government would be repurchased. As Darla Pollman Rogers will testify following my remarks, since 2001 there’s been a noticeable increase in land valuations in Sully and Hughes Counties in South 

Dakota. Nevertheless, even with this recent development, I am confident that this issue can be dealt with before S. 2205 goes before 

the full committee. 

Madam Chairman, I appreciate the opportunity to appear before 

your committee this afternoon. With your help, I’m hopeful that we 

can work together to expedite passage of this long-overdue bill. 

And I might just say, last and not least, I would also like to welcome Mayor Jerry Krambeck, of Spearfish, South Dakota. He will 

be testifying, on another bill that you referenced earlier, before 

3

your subcommittee this afternoon, and that’s S. 1577. This is a bill 

of which I am a cosponsor, along with Senator Johnson, that would 

transfer the Spearfish Hydroelectric Plant No. 1 to the city of 

Spearfish, South Dakota. 

I appreciate this committee’s interest and commitment to this 

issue. And, again, I thank you, Madam Chairman, for the opportunity to testify before your committee this afternoon. 

Senator MURKOWSKI. Thank you. I appreciate you being here 

with us, and thank you for your comments. 

With that, Senator Craig. 

And Senator Johnson, if you want to speak to any of the bills 

that are before us, you’ll be invited after Senator Craig. 

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

FROM IDAHO 

Senator CRAIG. Madam Chairman, thank you very much for holding this hearing and covering the issues that are before you in bill 

form. 

I’m here today to speak in support of S. 2035, the Arrowrock 

Hydro Project, and to help the committee understand the need for 

this legislation. 

The purpose of this legislation is to provide the irrigation districts of Arrowrock Dam with an extension of the original license 

in order to initiate construction. Respectfully, I feel that FERC is 

lost in a bureaucratic maze regarding the construction license of 

the Arrowrock Project. 

The Energy Policy Act of 2005 contained several provisions that 

encourage the development of projects which meet both the requirements of being a hydro project built at an existing dam and a 

hydro project that is a conduit. 

In Idaho, the Arrowrock Hydroelectric Project fits squarely within these frameworks. The irrigation districts have finalized a power 

sales agreement with the Clatskanie PUD to take all of the power 

of that plant. The irrigation districts have engaged in productive 

consultation with the U.S. Fish and Wildlife Service to evaluate 

and protect threatened species in the vicinity of the project, primarily bull trout. They have engaged an engineer of national reputation to design and build the contract. Last, they have financed—

they have financing lined up to build the project. In short, the 

project is literally ready to go forward. 

This project was unable to meet the March 20, 2005, start-of-construction deadline, because—guess what?—the U.S. Fish and Wildlife Service would not begin consultation on the project until after 

it completed consultation on all of the Reclamation projects in the 

Upper Snake River Basin. The Upper Snake River consultation 

was a direct outgrowth of the requirements of the Snake River 

Water Rights Act of 2004. So, it was simply a matter of lining up 

and timing. 

This project has been given an extension in the past, and another 

is needed to—because of the circumstances out of the control of the 

Arrowrock people. Without this amendment, the irrigation district 

would have to completely start the FERC licensing process over; 

thus, spending and wasting unnecessary resources of the agency 

4

and the irrigation district because of all the required collaboration 

and consultation needed that is, in part, already completed. 

So, I look forward to working with my colleagues to see if we 

can’t move this legislation to keep this project on track. Thank you 

for its consideration, Madam Chairman. 

[The prepared statement of Senator Craig follows:]

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

Madam Chairman, thank you for holding this hearing today. 

I am here today to speak in support of S. 2035; the Arrowrock Hydroelectric 

Project and to help the Committee understand the need for this legislation. The purpose of this legislation is to provide the irrigation districts of Arrowrock Dam with 

an extension of the original license in order to initiate construction. 

Respectfully, I feel that FERC is lost in a bureaucratic maze regarding the construction license for the Arrowrock Project. 

The Energy Policy Act of 2005 contains several provisions that encourage the development of projects which meet both the requirements of being a hydropower 

project built at an existing dam and a hydropower project that is a conduit. 

In Idaho, the Arrowrock Hydroelectric Project fits squarely within this framework. 

The irrigation districts have finalized a power sales agreement with Clatskanie 

PUD to take all of the power from the plant. 

The irrigation districts have engaged in productive consultation with the Fish & 

Wildlife Service to evaluate and protect threatened species in the vicinity of the 

project, primarily bull trout. They have engaged an engineer of national reputation 

to design and build the contract. Last, they have financing lined up to build the 

project. 

In short, the project is ready to go forward. 

This project was unable to meet the March 20, 2005 start of construction because 

the Fish & Wildlife Service would not begin consultation on the project until after 

it completed consultation on all of the Reclamation projects in the Upper Snake 

River Basin. That Upper Snake consultation was a direct outgrowth of the requirements of the Snake River Water Rights Act of 2004. 

This project has been given an extension in the past and another is needed because of circumstances out of their control. Without this amendment, the irrigation 

districts would have to completely start the FERC licensing process over. Thus, 

spending and wasting unnecessary resources of agencies and the irrigation districts 

because all of the required collaboration and consultation is complete and the 

project is ready to move forward. 

I look forward to working with my colleagues to pass this legislation.

Senator MURKOWSKI. Thank you, Senator Craig. 

Senator Johnson. 

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

FROM SOUTH DAKOTA 

Senator JOHNSON. Thank you, Senator Murkowski. 

I’ve just come from a Banking Committee markup, and I’m told 

to anticipate a vote on the floor at around 3:00, so this may turn 

out to be more disjointed than we would like, but I appreciate your 

chairing this and your working with us on these key issues. 

I want to thank my colleague, Senator Thune. I know he has an 

intensely busy schedule. So, if there reaches a point where you’ve 

got to get back to your office, we understand that, as well. 

I appreciate, Madam Chairman, your working with me, along 

with the committee staff, to include two bills in today’s agenda that 

are important to South Dakota. 

Before I describe the bills, I want to recognize a few folks from 

back home in South Dakota. Obviously, my colleague Senator 

Thune, who is sponsoring both of these bills in today’s agenda. 

Traveling from South Dakota today is the mayor of Spearfish, 

South Dakota, Jerry Krambeck, who will outline for the committee 

5

how the city is working to balance a basket of multiple uses in operating a century-old hydroelectric facility in the northern Black 

Hills. And, Mayor, I want to thank you for traveling a good deal 

of distance to present your testimony today. 

I’m also pleased that Darla Pollman Rogers could provide testimony in a powerful narrative on behalf of South Dakota landowners affected by the Blunt Reservoir and Pierre Canal Land 

Conveyance Act of 2006. Darla, welcome back to Washington, DC, 

as well. 

The historic Spearfish Hydro Plant Unit No. 1 in Spearfish, 

South Dakota, has operated continuously since 1912. In 2004, the 

city acquired the facility from the Barrick Mining Company, and 

intends to continue operation of the hydroelectric plant for the benefit of that community. 

Prior to the Federal Energy Regulatory Commission’s order asserting jurisdiction to license the power plant, the project has been 

operating for more than 90 years under a 1909 right-of-way permit 

allowing the project to occupy U.S. Forest Service land in the Black 

Hills National Forest. The 1909 right-of-way permit was granted 

through a 1905 Act of Congress providing use for municipal or mining purposes. 

Over the past 90 years, the city of Spearfish has literally grown 

up around the hydroelectric plant, with the historic D.C. Booth 

Fish Hatchery drawing water through the facility’s diversion pipe. 

With a vibrant tourism and recreation economy, along with traditional ranching and timber enterprises, the northern Black Hills is 

also working to capture the potential of the historic Homestake 

Mine through a world-class research laboratory. As the northern 

Black Hills economy diversifies and grows, clean sources of energy 

generation, such as the Spearfish Hydroelectric Plant, can meet 

these energy requirements. 

The city and the Spearfish Canyon homeowners have recognized 

the value, also, of protecting water resources in the Spearfish 

Creek. As the stream from which the city takes its name, it is incumbent on all residents to ensure the continued balance of uses 

and values of the creek. Accordingly, I have encouraged the city, 

the Spearfish Canyon homeowners, and other stakeholders to continue work over managing waterflows along Spearfish Creek. Solving the question of apportioning waterflows in the creek is as important as providing the community with certainty over operation 

of the hydroelectric facility. We need to make sure that those values are protected through balanced streamflows and a commitment 

to environmental protection. Spearfish Canyon is one of the natural 

wonders of our State—in fact, of our Nation—drawing visitors and 

binding lifelong residents to the stunning beauty of the northern 

Black Hills. Accordingly, we need to ensure regulatory continuity 

while also enhancing stream flows and recreational values. 

The second bill coming before the subcommittee, the Blunt Reservoir and Pierre Canal Land Conveyance Act of 2006, is emblematic of the historic circumstances challenging South Dakota since 

the construction of the large-scale Missouri River reservoirs in 

Montana and the Dakotas. Through the Flood Control Act of 1944, 

the Corps of Engineers executed a massive flood-control and waterresources plan commonly referred to as the Pick-Sloan Missouri 

6

Basin Program. Stretching from Missouri to Montana, the Corps of 

Engineers and the Bureau of Reclamation permanently altered the 

pace and direction of what had been one of the longest freeflowing 

rivers in the United States. In exchange for flooding hundreds of 

thousands of acres of valuable riverbottom lands and sacred tribal 

sites in Montana and the Dakotas, producers in rural communities 

would receive the benefits of irrigation and productive farmland. 

The Blunt Reservoir and Pierre Canal are two chapters in the 

Pick-Sloan master plan of reservoirs, levees, and canals. Envisioned in Hughes, Stanley, and Sully Counties was a 190,000-acre 

irrigation project surrounding portions of Lake Oahe. As Darla will 

further explain, in the 1970’s that vision did not become a reality, 

and the Bureau of Reclamation, the State, and local residents have 

grappled with a proper and fair solution ever since. 

The Blunt Reservoir and Pierre Canal Land Conveyance Act of 

2006 provides a mechanism for preferential leaseholders, the original landowners who leased their land from the Bureau of Reclamation, to purchase back their property. Many of these landowners 

and their direct descendants have paid tens of thousands of dollars 

in lease payments over the past 30 years to the Federal Government. Significantly, the South Dakota Department of Game, Fish, 

and Parks will acquire a second smaller set of lands through nonpreferential leaseholders. This provision is an important component 

to the bill, as South Dakota continues efforts required by Federal 

laws to mitigate for damage to fish and wildlife habitat from the 

Missouri River impoundments. 

In 2001, former Senator Tom Daschle and I introduced a similar 

version of the bill, and, in 2003, during the 108th Congress, the 

U.S. Senate passed the bill, only to have the clock run out in the 

House of Representatives. 

In the course of the past 5 years, farm-ground land values 

throughout South Dakota have increased markedly. Increased land 

valuations should be taken into account in judging whether preferential landowners can afford to acquire their lands. This is an 

issue that the subcommittee could resolve prior to full-committee 

consideration of the bill, and an issue that I do not feel will impede 

timely action. 

In conclusion, I look forward to the testimony of all the assembled witnesses, and hope that the committee can make significant 

progress on these bills in a very timely manner. 

Thank you, Madam Chairman. 

Senator MURKOWSKI. Thank you, Senator Johnson. 

Now let’s go ahead and turn to our witnesses today. I’d like to 

welcome the administration witness, Mr. John Keys, the commissioner of Bureau of Reclamation; Ms. Catherine Hill, from the 

USGS; and Mr. Mark Robinson, from the Federal Energy Regulatory Commission. 

I want to also note that this subcommittee has received some 

written testimony on several of the bills that will come before the 

subcommittee today, and that will be made part of the official 

record. 

I also want to take just a quick moment to recognize you, Commissioner Keys. I understand it’s been 34 years that you’ve been 

with the Bureau of Reclamation. And we’re told that this is the last 

7

time that you will appear before this committee in your capacity 

as commissioner before you retire in, apparently, a couple of weeks. 

You have done a terrific job out there. It’s tough work. We recognize that. Your performance as a commissioner during some pretty 

tough times is a testament, truly, to your talent and your dedication. We certainly appreciate it. I have certainly enjoyed the opportunity to work with you, and wish you the best of luck in the future. 

With that, go ahead with your testimony, your final swan song 

here before the committee. 

Mr. KEYS. In other words, ‘‘Do good your last time.’’

[Laughter.] 

Senator MURKOWSKI. We have no doubt. 

Mr. KEYS. It’s been my pleasure to work with you. The 34 years 

is what I had before. It’s almost 40, now. So, it’s time to go do 

something else. 

Senator MURKOWSKI. Wow. 

STATEMENT OF JOHN KEYS, III, COMMISSIONER, BUREAU OF 

RECLAMATION, DEPARTMENT OF THE INTERIOR 

Mr. KEYS. Madam Chairman and members of the subcommittee, 

I am John Keys, commissioner of the Bureau of Reclamation. We 

appreciate the opportunity to appear here today and talk about 

these bills. 

I have submitted testimony that I would appreciate being made 

part of the permanent record. 

Senator MURKOWSKI. It will be made part of the official record. 

Mr. KEYS. Thank you. 

Madam Chairman, the administration supports S. 1962. Four 

water districts—the Kansas Bostwick Irrigation District No. 2 and 

the Webster Irrigation District No. 4, both in Kansas, and the 

Bostwick Irrigation District and the Frenchman-Cambridge Irrigation District, both in Nebraska—are served by Reclamation projects 

of the Pick-Sloan Missouri Basin Program. 

Despite the recent prolonged drought in the West and a continually declining water supply, the district’s contracts require that 

they continue to pay operation-and-maintenance costs and construction obligations to the United States. These districts have 

sought, and have been granted, annual deferments to their payments under Reclamation law. 

When an annual payment is deferred, it’s rescheduled, to be repaid later. It’s just spread out longer, at a higher level, during the 

accepted repayment period. 

The deferments have helped the districts to weather the drought 

in the short run, but have also caused the distribution-work payments to be substantially longer over the remaining terms of the 

contracts. 

The participating districts have done an exemplary job of communicating with Reclamation. They contacted us early in 2005 to 

explore opportunities where—available to them under existing law 

to address their financial concerns. None existed. 

The legislation would spread the distribution-works repayment 

over a longer period, coinciding with the water-supply works repayment term. In addition, slated increases in the reserve-fund payVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00011 Fmt 6633 Sfmt 6602 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
8

ments under the existing contracts would be delayed for about 10 

years. 

This legislation would provide needed financial relief to the districts, while not erasing their financial obligations to the United 

States. The districts’ continued economic viability is important because of what they produce for the U.S. economy and to ensure 

that repayment will ultimately be possible. Therefore, the administration is pleased to support this legislation. 

S. 2205 directs the Secretary of the Interior to convey certain 

parcels of land acquired for the Blunt Reservoir and Pierre Canal 

to the State of South Dakota for the purpose of mitigating lost 

wildlife habitat or to preferential leaseholders, which are original 

landowners of the acquired land. The administration supports the 

intent of the bill, but we have some concerns with a few of its—

pieces of its content. 

The basic concept of S. 2205, to allow original landowners to regain title to lands that Reclamation purchased in anticipation of a 

project that was never built, is straightforward and fair. Further, 

the sponsors of S. 2205 have addressed many of the technical 

issues that were raised in past related—in the past, related to liability, land descriptions, return of land-sale proceeds back to the 

Federal Treasury, and reimbursement of Federal implementation 

costs. 

However, the Department still finds the bill fails to adequately 

protect taxpayers’ interest, for a number of reasons outlined in my 

testimony. 

There’s also a constitutional issue. The bill would require South 

Dakota to agree to accept specified lands and act as an agent for 

the Secretary. Requiring States to take actions to administer Federal regulatory programs may not be constitutional. We suggest 

amending the bill to clarify that South Dakota may voluntarily 

choose to accept or reject the land conveyance and associated responsibilities. 

We appreciate the work done by the sponsors to address several 

technical issues that had been raised in the past, and we look forward to working with your committee and those sponsors and the 

local people to address those outstanding issues and make this 

happen. 

H.R. 3812 would authorize a feasibility study of the Mokelumne 

Regional Water Storage and Conjunctive Use Project, an initiative 

to provide additional water supply within the San Joaquin Valley. 

The focus would be on new water storage and conjunctive-use programs. 

In fiscal year 2005, Congress appropriated $300,000 for an appraisal investigation of the project. The appraisal report is in draft 

form at this time, and it is our hope to have it completed soon. 

It is unusual for a feasibility study to be authorized before the 

appraisal-level work is completed. The $3 million authorized for 

feasibility work would be matched, 50-50, by non-Federal cost sharing. In H.R. 3812, the time allowed for completing the work is 2 

years. Typically, feasibility studies that include environmental-impact statements require about 3 years to complete. 

9

Therefore, the administration recommends the bill be amended 

to extend the study period to a minimum of 3 years for completing 

the feasibility study. 

Notwithstanding this change, the administration cannot support 

H.R. 3812, because the bill authorizes the feasibility study prior to 

the appraisal process being complete, and the authorization would 

compete with already scarce budget resources. 

Madam Chairman, that completes my testimony, and I would 

certainly stand to any questions that you and the panel may have. 

[The prepared statement of Mr. Keys follows:]

PREPARED STATEMENT OF JOHN KEYS, III, COMMISSIONER OF RECLAMATION, DEPARTMENT OF THE INTERIOR

ON S. 1962

Madam Chairman and Members of the Subcommittee, I am John Keys, Commissioner of the Bureau of Reclamation. I am pleased to be here today to give the Administration’s view on S. 1962, a bill to revise certain repayment contracts of four 

irrigation districts that are part of the Pick-Sloan Missouri Basin Program. 

The Irrigation Projects Reauthorization Council (IPRC) represents four member 

irrigation districts in support of this legislation. The districts—the Kansas Bostwick 

Irrigation District No. 2 and the Webster Irrigation District No. 4, both in Kansas, 

and the Bostwick Irrigation District in Nebraska and the Frenchman-Cambridge Irrigation District (also in Nebraska), are served by Reclamation projects built as part 

of the Pick-Sloan Missouri Basin Program. Webster Irrigation District No. 4 is located in the Solomon River basin; the others are in the Republican River basin, both 

tributaries to the Kansas River. 

The districts recently renewed their contracts with Reclamation. The contract renewal addressed repayment of a portion of the water supply works construction cost 

over a 40 year term. Webster Irrigation District No. 4 renewed its contract in 2002; 

the others renewed their contracts in 2000. However, each District’s repayment of 

the distribution works construction cost obligation remained unchanged during contract renewal. Thus, the remaining term for repayment of the distribution works is, 

in each case, significantly less than that remaining for the water supply works. 

Under Reclamation law, the irrigation districts repay irrigation capital costs without 

interest charges. 

As discussed above, currently each of these districts’ contracts has two different 

repayment periods: a water supply works repayment term which extends until 2040 

or 2042 (40 years from when the respective district’s contract was renewed) and a 

distribution works repayment period which extends 40 years from their first payment for the distribution works (to sometime between 2009 and 2015 depending on 

the particular district). This legislation would allow the repayment periods for the 

distribution works to be extended to match the repayment period for the water supply works, and allow for equal annual payments over that period. Additionally, reserve fund payments were slated to increase significantly in about 5 years, following 

scheduled completion of repayment of the distribution works construction costs obligation. Anticipating that this time horizon is too short for the districts to ensure 

financial recovery sufficient to make the increased reserve fund payments, this bill 

delays these increases for an additional 10 years. 

Drought conditions in southwest Nebraska and northwest Kansas have significantly impacted inflows to reservoirs providing a water supply to Kansas Bostwick 

Irrigation District, Bostwick Irrigation District in Nebraska, Frenchman-Cambridge 

Irrigation District and Webster Irrigation District. Annual inflow into reservoirs 

providing these districts’ water supplies has reached new historical lows in the last 

three years. Four of the five canals in the Bostwick Irrigation District in Nebraska 

did not divert water the past two years. The Kansas Bostwick Irrigation District has 

not delivered a substantial amount of water to acres above Lovewell Reservoir the 

past two years. Three of the four canals in the Frenchman-Cambridge Irrigation 

District have not diverted any water the past three years. The Webster Irrigation 

District did not divert water into Osborne Canal this past year. 

Despite the declining water supply available to these Projects, the districts’ contracts require that they pay a portion of annual operation and maintenance costs 

for the water supply works and repay construction cost obligations to the United 

States. This payment obligation to Reclamation is in addition to the districts’ responsibility for 100 percent of the operation and maintenance costs of the distribuVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00013 Fmt 6633 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
10

tion works and those water supply works that have been transferred to the districts. 

Even with no water or a diminished supply, the need for maintenance of these facilities continues. 

The districts assess their irrigators in order to pay the districts’ annual expenses 

and repayment obligations. These irrigators have received a diminished or no supply 

in recent years. For the last couple of years most of these districts have sought and 

been granted annual deferments to their payments under Reclamation law (the Act 

of September 21, 1959, 73 Stat. 584). In order to grant a deferment, Reclamation 

requires a determination that payment of the installments will cause an undue burden on the water users and that there is no alternative source of funds available 

to pay the installments. When an annual payment is deferred, it is rescheduled to 

be repaid as quickly as possible within the remaining term of the contract. The 

deferments have helped the districts to weather the drought in the short run, but 

have also caused the annual distribution works payments to be substantially larger 

over their remaining repayment period, because deferments do not extend the total 

time period allowed for repayment. 

For example, Kansas-Bostwick Irrigation District #2 would, after execution of the 

annual deferment currently being processed, have annual distribution works payments of $421,353 due through 2015, with annual water supply works payments of 

$21,841 through 2015, increasing to $96,512 for 2016 and 2017, then decreasing to 

$85,591 from 2018 through 2040. This results in an annual repayment total for this 

district of $443,194 through 2015 when the distribution works are scheduled to pay 

out in the absence of this legislation. If S. 1962 becomes law, the district will have 

consistent annual payments of $188,387 from 2006 through 2040, thus providing relief to help the district through the current financial crisis. 

The total repayment obligation for the distribution works and water supply works 

for all four districts together is $12,442,447. This legislation does not change the 

dollar amount of this repayment obligation. However, because Reclamation law provides that irrigators do not pay interest on capital costs, this bill would reduce the 

present value of expected Treasury receipts. The difference between the present 

value of the payout stream of the contracts as they currently exist and as they 

would be amended by this bill is $1,620,637. This assumes that, in the absence of 

this legislation, the districts would pay the minimum payments due on time over 

the life of these contracts. 

The IPRC and the participating districts have done an exemplary job of communicating with Reclamation as they sought this legislation. They contacted us in early 

2005 to explore what opportunities were available to them under existing law to address their financial concerns. Other than the deferments discussed above, none existed. Reclamation also very much appreciates the manner by which IPRC has kept 

us informed and worked with us to identify issues. They addressed the possible effect to power repayments through ‘‘aid to irrigation’’ early on by working closely 

with Midwest Electric Consumers Association and with Reclamation. It is our understanding that ‘‘aid to irrigation’’ is not affected by this legislation. 

The legislation would provide needed financial relief to the districts by rescheduling their financial obligations to the United States. Extension of the repayment 

period will not be a permanent solution to the water scarcity facing these districts. 

However, taking this action will provide needed relief for the districts and increase 

the likelihood that they will be able to attain long-term financial viability and fulfill 

their repayment obligation to the United States. Therefore, the Department supports this legislation. 

I am happy to respond to any questions. 

ON S. 2205

Madam Chairman and Members of the Subcommittee, I am John Keys, Commissioner of the Bureau of Reclamation. Thank you for the opportunity to testify on 

S. 2205. 

S. 2205 directs the Secretary of the Interior (Secretary) to convey certain parcels 

of land acquired for the Blunt Reservoir and Pierre Canal—features of the Oahe Irrigation Project in South Dakota—to the State of South Dakota for the purpose of 

mitigating lost wildlife habitat, or to the original land owners of the acquired lands 

or their descendants (preferential leaseholders). The bill directs that the proceeds 

of sales of preferential lease lands be deposited as miscellaneous funds in the treasury and that such funds shall be made available, subject to appropriations, to the 

State for the establishment of a trust fund to pay the county taxes on the lands received by the State Department of Game, Fish, and Parks under the bill. The Administration supports the intent of the bill but has some concern with its content, 

as I will discuss later. 

11

The basic concept of S. 2205—to allow original landowners to regain title to lands 

that Reclamation purchased in anticipation of a project that was never built—is 

straightforward and equitable. Further, the sponsors of S. 2205 have addressed, in 

whole or in part, a number of the technical issues that were raised in the past related to liability, land descriptions, return of land sale proceeds back to the Federal 

treasury, and reimbursement of Federal implementation costs. However, the Department still finds that the bill fails to adequately protect taxpayers’ interests for 

four reasons. First, the bill directs Reclamation to sell the land to preferential leaseholders for less than fair market value. Second, it directs Reclamation to convey to 

the State the non-preferential lease parcels and the preferential lease parcels that 

current lessees choose not to purchase without compensation for the initial taxpayer 

investment in those lands. Third, after conveyance Reclamation would still be responsible for administrative costs associated with the acquisition of those lands, 

such as curation of project archeological collections. Finally, the bill provides that 

parcels may be swapped for other land elsewhere in the State, which may alter the 

potential environmental mitigation benefits of the land, potentially undermining one 

of the purposes of the Act. 

Background 

As background, Reclamation purchased approximately 19,292 acres of land between 1972 and 1977 in preparation for building the Blunt Reservoir and the Pierre 

Canal. In many cases, Reclamation leased the land back to the seller. Currently, 

Reclamation is leasing some 13,000 acres of Blunt Reservoir lands to 18 preferential 

leaseholders and about 1,100 acres of Pierre Canal lands to 11 preferential leaseholders. Although not reflected in title documents, the sellers expected they would 

be able to purchase their lands back if they were not needed for the project. 

Nearly three decades later, construction has not commenced for the Blunt Reservoir, although some earth-moving has been done for the Pierre Canal. Because it 

is unlikely this project will be built, Reclamation no longer needs to hold title to 

the acquired lands. Under S. 2205, the preferential leaseholders (the original landowners or their descendants) would be offered an option to purchase the land they 

currently lease within 5 years of enactment. Section 2(d) of the bill provides that 

the land could be sold to preferential leaseholders for 10% less than fair market 

value for agricultural purposes of the land. Purchases would be from the South Dakota Commission of Schools and Public Lands, acting as an agent for the Secretary 

of the Interior. If a preferential leaseholder declines to purchase the land, the Commission is to convey the parcel to the South Dakota Department of Game, Fish, and 

Parks for wildlife habitat mitigation. Reclamation’s interest in the 5,000 acres currently unleased or leased to parties who are not preferential leaseholders would be 

conveyed to the State of South Dakota Department of Game, Fish, and Parks to be 

used in mitigation of wildlife habitat lost as a result of Pick-Sloan development. 

Valuation and Payment 

S. 2205 directs that proceeds of sales of land under the Act be deposited as miscellaneous funds in the Treasury and such funds shall be made available, subject 

to appropriations, to the State for the establishment of a trust fund to pay the county taxes on the lands received by the State Department of Game, Fish, and Parks 

under the bill. While this partially addresses the Administration’s previous concerns 

(stated in testimony provided on S. 1028 in the 107th Congress) about recovering 

the taxpayer investment in these lands, the Administration remains opposed to the 

transfer of unleased or non-preferential leased lands to the State without compensation to Treasury. Furthermore, the Administration believes that all lands conveyed 

under this bill should be sold for no less than fair market value. In this situation 

we agree that equitable considerations support offering preferential leaseholders the 

right of first refusal to purchase these lands, which their families have been using 

for many years, at appraised fair market value. We do not agree with the provisions 

of the bill effectively subsidizing this sale. Moreover, we note that the best practice 

for determining market value and ensuring that the lands are used for their highest 

and best use is to sell the parcels at an auction, and this would be our preferred 

way to dispose of Federal lands in situations that do not present the circumstances 

that exist here. 

Constitutional Concern 

We have an additional concern about the constitutionality of the bill as currently 

written. The bill contains mandatory language stating that South Dakota ‘‘shall 

agree to accept’’ specified lands and ‘‘act as an agent for the Secretary.’’ Provisions 

of Federal law that require States to take actions to administer Federal regulatory 

programs are unconstitutional. This could be addressed by amending the bill to clarVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00015 Fmt 6633 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
12

ify that South Dakota may voluntarily choose to accept or reject the land conveyance and associated responsibilities. 

Conclusion 

We appreciate work done by the sponsors to address several technical issues that 

have been raised in the past. We look forward to working with the sponsors and 

the Committee to address any outstanding issues that remain. 

I would be pleased to answer any questions. 

ON H.R. 3812

My name is John Keys, and I am Commissioner of the U.S. Bureau of Reclamation. I am pleased to provide the Administration’s views on H.R. 3812, a bill to authorize the Secretary of the Interior to prepare a feasibility study for the 

Mokelumne River Regional Water Storage and Conjunctive Use Project (known as 

the MORE WATER Project), San Joaquin County, California. The Administration 

cannot support this bill because it is premature, and given scarce Federal budgetary 

resources, an expansion of the Federal role in the Mokelumne River cannot be justified. 

Specifically, this bill would authorize the Secretary to study the feasibility of constructing a project to provide additional water supply and improve water management reliability through the development of new water storage and conjunctive use 

programs. The bill would authorize an appropriation of $3,300,000 for the Federal 

cost share of the study, with the proviso that the Federal share shall not exceed 

50 percent of the total cost of the study. Clearly there are many water supply issues 

in the San Joaquin Valley and in San Joaquin County in particular. I am proud of 

the work our people in the Mid-Pacific Region have done to understand the issues, 

the local interests and the role Reclamation might play in solving problems. 

I would like to provide some background relative to current investigations of 

Mokelumne River water supplies and planning investigation costs. In Fiscal Year 

2005, Congress appropriated $300,000 for the initiation of an appraisal investigation 

of the Mokelumne River Regional Water Storage and Conjunctive Use Project. The 

Appraisal Report is in draft form at this time. It is our hope to have it completed 

soon. 

H.R. 3812 directs the Secretary, not later than 2 years from date of enactment, 

to complete a feasibility study and provide copies to the Committee on Resources 

of the House of Representatives and to the Committee on Energy and Natural Resources of the Senate. Feasibility studies, which integrate National Environmental 

Policy Act compliance documentation, and are completed in conformance with the 

Principles and Guidelines for such studies, require a minimum of 3 years to complete. The Administration recommends the bill be amended to extend the study period to a minimum of 3 years for completing the feasibility study and to providing 

the copies to the appropriate Congressional committees. 

The Mokelumne River is tributary to the Sacramento-San Joaquin Delta. There 

is no clear justification for expanding federal involvement into the Mokelumne 

River. Although this broad area is impacted by the Central Valley Project and 

CALFED, the Mokelumne River does not have a Bureau of Reclamation water 

project. 

It is premature to authorize a feasibility study before the appraisal study has 

been completed and reviewed. Moreover, this study would compete for funding with 

other currently authorized projects, including several authorized storage feasibility 

studies authorized under CALFED. I should also note that Reclamation did not seek 

funding for this project in the President’s Fiscal Year 2006 or 2007 budgets. 

The Administration appreciates local efforts to address future water issues. However, in light of the concerns expressed above, we cannot support this bill authorizing Reclamation participation in a feasibility study. That concludes my prepared 

remarks. I would be pleased to answer any questions.

Senator MURKOWSKI. Thank you. I appreciate your comments, 

Commissioner Keys. 

With that, let’s go to Mr. Robinson, with the Federal Energy Regulatory Commission. 

13

STATEMENT OF J. MARK ROBINSON, DIRECTOR, OFFICE OF 

ENERGY PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION 

Mr. ROBINSON. Madam Chairman, Senator, I am Mark Robinson, 

and I appreciate the opportunity to speak today on S. 1577, which 

would exempt the Spearfish Project from the licensing requirements under the Federal Power Act that the Commission administers. 

Just as a matter of background, I’m the director of the Office of 

Energy Projects. We authorize the siting of liquified natural gas facilities, interstate natural gas pipelines, and, more significantly 

here today, the licensing, administration, compliance of, and dam 

safety of hydroelectric projects, some 1,700 hydroelectric projects 

across the country. 

Our jurisdiction for hydroelectric projects derives from the Federal Power Act, and really falls into four areas. If a project exists 

on Federal lands, then it falls under the Commission’s jurisdiction; 

or if it’s on navigable waters, or if it’s on waters that Congress exerts Commerce Clause jurisdiction over, or the fourth rationale is 

if they are at Federal dams. Any of those bring hydroelectric 

projects under the Federal Energy Regulatory Commission’s jurisdiction, pursuant to the Federal Power Act. 

The standard we use, found in the Federal Power Act—and actually it was originally in the Federal Water Power Act of 1920—that 

we use to license projects is that the project has to be found to be 

consistent with comprehensive development of the basin. We take 

into consideration all of the public-interest issues associated with 

that project. More directly, we must give equal consideration, as required by Congress, to both the developmental and nondevelopmental values of the—of these projects. By ‘‘developmental values,’’ 

I mean power generation, irrigation, flood control, things of that 

sort. By ‘‘nondevelopmental values,’’ they’re mostly environmental 

issues—fish and wildlife issues, recreation, public safety, things of 

that sort. 

Specific to the Spearfish Project, our history on this project started in April 2000, when we received a complaint that the Spearfish 

1 and 2 developments, which both had about 5-mile bypass reaches 

on the Spearfish—Creek, I believe it’s called—were not releasing 

water, and there were trout, fish kills associated with it. That’s 

typically what prompts us to look into an operating, nonlicensed 

hydroelectric project; it’s a complaint from someone else that the 

project is not being operated consistent with public-interest values. 

We did look into this project, and found that it—part of the 

project, at least, existed on Federal lands. And, for that reason, the 

Commission, in August 2001, concluded that the project was jurisdictional and ordered that it become—that they apply for a license. 

In March 2002, however, a new piece of information came to the 

Commission, and the Commission reversed itself, in that the 

project—that portion of the project that existed on Federal lands 

was actually permitted by a pre-1920 Federal authorization. So, 

the Commission concluded, at that point, that, as long as that Federal authorization was active, that it did not require to be licensed. 

Unfortunately, that authorization expired shortly thereafter, so in 

14

about 2 months, in June 2002, the Commission reestablished that 

the project needed to be licensed again. 

And then, in May 2002, the Commission, trying very hard to 

work with the operator of the project, granted a 3-year extension 

for the operator to defer starting the active licensing, which, in 

itself, was going to be a 3-year grant, to allow them to do the necessary work to bring it under license. But they granted a 3-year extension at that point. And then we find ourselves here today with 

S. 1577. 

In passing the Federal Power Act, Congress decided that the 

method of licensing projects prior to 1920, the—I’m sorry, the Federal Water Power Act, in 1920, did not give a consistent review for 

hydroelectric projects, and didn’t ensure the protection of the public 

interest, and they vested that power in the Commission to ensure 

that, in fact, projects were licensed and authorized consistently 

across the country to protect all the public interest—not just power 

production or other aspects, but all public interests. 

I know of nothing about this project that would separate it from 

the other 1,700 projects that we have under license or exemption. 

And we have looked. It just doesn’t seem to be there. 

Licensing a project does ensure that we give equal consideration 

to those developmental and nondevelopmental values—the fish and 

wildlife resources and power production. And, therefore, I would 

recommend that this project undergo that same scrutiny to ensure 

that it is operated to the full benefit of the public. 

Thank you very much. 

[The prepared statement of Mr. Robinson follows:]

PREPARED STATEMENT OF J. MARK ROBINSON, DIRECTOR, OFFICE OF ENERGY

PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION

Madam Chairman and Members of the Subcommittee: I appreciate the opportunity to comment on S. 1577, a bill to exempt the Spearfish Project, located in 

South Dakota, from the otherwise applicable licensing requirements of the Federal 

Power Act (FPA). My name is J. Mark Robinson, and I am the director of the Office 

of Energy Projects at the Federal Energy Regulatory Commission. Our office is responsible for non-federal hydroelectric licensing, administration, and safety; certification of interstate natural gas pipelines and storage facilities; and, authorization 

and oversight over the construction, operation, and safety of Liquefied Natural Gas 

(LNG) terminals. I appear today as a Commission staff witness speaking with the 

approval of the Chairman of the Commission. The views I express are my own and 

not necessarily those of the Commission or of any individual Commissioner. 

Under Part 1 of the Federal Power Act, the Commission issues licenses to nonFederal interests authorizing the construction, operation and maintenance of water 

power projects on navigable waters of the United States, on federal lands and on 

streams over which the Congress has jurisdiction. Licenses are also required to utilize surplus water or waterpower from government dams. 

Licenses may be issued under the FPA only if, in the judgment of the Commission, the proposed project is best adapted to a comprehensive plan for the development and utilization of the water resources of the river basin involved for all public 

purposes. The licenses are issued for terms up to 50 years and contain terms and 

conditions that are designed to ensure that the comprehensive development standard is met. The terms and conditions reflect consideration of all environmental and 

developmental aspects of the project, including such factors as the effect of project 

construction and operation on fish and wildlife resources, irrigation, flood control, 

water supply, recreation, and the safety of the public. 

LEGISLATIVE BACKGROUND

Prior to passage on June 20, 1920, of the Federal Water Power Act, the responsibility for licensing and overseeing hydroelectric facilities was dispersed among several arms of government. The construction and operation of dams in navigable waVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00018 Fmt 6633 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
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ters, in non-navigable tributaries whose flows affected such waters, and on federal 

lands were regulated under four general statutes: Section 7 of the River and Harbor 

Act of 1890, as amended; sections 9 and 10 of the River and Harbor Act of March 

3, 1899; the General Dam Act of 1906; and, the General Dam Act of 1910. 

If a hydroelectric project was located on a navigable water of the United States, 

it needed Congressional authorization. In addition, if the project was located on public lands of the United States, it required authorization from the Secretary of the 

Interior. If the project was located on federal forest reserves (i.e., National Forest 

lands), it required authorization from the Secretary of Agriculture. 

The passage of the Federal Water Power Act of 1920 (FWPA) superseded prior 

statutes. The FWPA created the Federal Power Commission and made it unlawful 

to operate a hydroelectric project in navigable waters or on federal lands without 

a license from the Federal Power Commission. The Federal Water Power Act established firmly the principle of federal regulation of water power projects and established a national policy in the use and development of water power projects on public lands and navigable streams. 

Section 23(b) of the FPA requires either a Commission license or a valid pre-1920 

federal permit for a hydropower project covered by Part I of the statute. Such permits were issued before the FPA was passed. They were grandfathered by Section 

23(b), under which the permittee could either operate under the permit until it expired or apply for a license under the FPA. Although most of these permits have 

expired or been converted into licenses, the problem of determining what constitutes 

a valid permit or right-of-way still arises (as in case of the Spearfish Project). In 

1935, the FPA was amended to broaden the Commission’s authority and jurisdiction 

over water power projects to include projects that are located on commerce clause 

waters and which would also affect the interests of interstate or foreign commerce. 

SPEARFISH PROJECT

S. 1577 would exempt the Spearfish Project, located in South Dakota, from the 

otherwise applicable licensing requirements of the FPA. As noted previously, under 

Part I of the FPA, hydropower projects are required to be licensed, if, among other 

things, they are located on the public lands or reservations of the United States. 

In September 2000, following receipt of an environmental complaint, the Commission began a review of the jurisdictional status of the Spearfish Project, operated 

by the Homestake Mining Company (Homestake). The complaint concerned the alleged dewatering of the Spearfish Creek downstream of the Spearfish Project, especially in the summer, to the detriment of resident trout. In August 2001, the Commission found that the project was required to be licensed, because it was located 

on federal lands, within the Black Hills National Forest. 

However, the Commission subsequently reversed this finding on March 1, 2002 

(Order Granting Rehearing and Denying Late Intervention) because Homestake had 

demonstrated that it held a valid right-of-way under a 1905 Act that permitted 

rights-of-way in National Forests for projects, such as Spearfish, that operated for 

mining purposes (at the time of the Commission order, the project’s power was being 

used for mining operations). The Commission therefore concluded that the project 

need not be licensed. 

In April 2002, Homestake informed the Commission that it had ceased mining operations as of December 31, 2001, but that it interpreted the FPA as allowing it to 

continue generating for activities associated with mine reclamation. In an order 

issued June 17, 2002, the Commission ruled that the 1905 Act made no reference 

to reclamation, and that since mining operations had ceased, Homestake or any successor could not generate electricity at the project without a Commission license. 

Homestake did not seek judicial review of this order. To date, the Spearfish Project 

is still operating. It is my understanding that for several years the City of Spearfish 

has been exploring the possibility of acquiring and operating the project. 

In passing the FPA, Congress made the decision that, to protect public resources, 

projects located on federal lands and reservations must be licensed by the Commission. The Spearfish Project, being located in part on National Forest lands, meets 

this criterion. I am aware of no reason why this project should be treated differently 

than others that are similarly situated. Exempting the project from the requirements of the FPA would set a precedent for exempting individual projects from the 

otherwise applicable requirements of the FPA. Congress has charged the Commission with examining thoroughly all of the environmental and developmental aspects 

of projects such as the Spearfish Project, and of licensing those projects with appropriate conditions to ensure that they are best adapted to the comprehensive development of affected waterways. In the absence of the Commission’s licensing jurisdicVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00019 Fmt 6633 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
16

tion, there is no guarantee that there will be any consideration of the resources that 

the Commission is charged with weighing and protecting. 

Exempting this project would also remove Commission oversight for dam safety. 

Therefore, Homestake would not need to comply with Part 12 of the Commission’s 

dam safety regulations. Currently, Homestake has an approved Emergency Action 

Plan and is inspected by the Commission every three years. Conformance with the 

Congressional intent expressed in the Federal Power Act requires that the Spearfish 

Project be licensed. 

As a result of these concerns, I do not support S. 1577. 

I appreciate the opportunity to present my views to the Subcommittee. Thank 

you.

Senator MURKOWSKI. Thank you, Mr. Robinson. 

And next, let’s go to Ms. Catherine Hill, from the United States 

Geological Survey. 

STATEMENT OF CATHERINE L. HILL, NORTHEAST REGIONAL 

HYDROLOGIST, U.S. GEOLOGICAL SURVEY, DEPARTMENT OF 

THE INTERIOR 

Ms. HILL. Madam Chairman and Senator Johnson, I’m Catherine 

Hill, northeast regional hydrologist for the U.S. Geological Survey. 

Thank you for the opportunity to provide the views of the Department of the Interior on S. 2054, a bill to conduct a Vermont water 

resources study. 

The Department of the Interior agrees that the goals of the bill 

are commendable and the needs that could be addressed are real. 

However, we note that studies similar to this have been carried out 

by the USGS in other States, generally carried out within the 

USGS Cooperative Water Program. This is a longstanding costshare program using Federal and State dollars. Given the existing 

authorities for our Cooperative Water Program, we feel congressional authorization of this study is not necessary. 

S. 2054 directs the Secretary of the Interior, acting through the 

director of the USGS and in coordination with the State of 

Vermont, to conduct a study on water resources in the State of 

Vermont. The role identified for the Department in this bill is consistent with USGS’s leadership role in surveying and characterizing groundwater resources. 

The bill requires a survey of groundwater supplies and aquifers 

available for water supply by municipalities throughout the State 

as part of a study to determine whether these supplies provide 

water of potable quality. 

The USGS has a long history of conducting groundwater resources on both local and regional scales. In the 1950’s and 1960’s, 

studies were conducted across the Nation to provide a basic understanding of geologic—geohydrologic conditions at a county-level 

scale. In the 1980’s, 25 regional aquifer systems were studied in detail, including the aquifer systems in Vermont. However, these 

studies provided a regional and national context for—of groundwater that are often not detailed enough for State and municipalities. 

In Vermont, USGS has been actively working with the Vermont 

Geological Survey in the creation of a new bedrock geologic map 

that is scheduled to be completed soon. This new geologic map will 

provide a variety of information that can be used to help define 

groundwater availability and quality. 

17

In 2003, USGS provided information on possible approaches for 

groundwater assessment and aquifer mapping to the State of 

Vermont for a report to the State legislature on the status of 

groundwater and aquifer mapping. In this report, a plan for future 

statewide groundwater and aquifer assessments was presented. 

This document provides a foundation for how work proposed by 

this legislation could be performed. 

The USGS has extensive data bases that include geochemical 

characteristics of rocks, soils, stream sediments, and water, longterm groundwater levels and stream flows, and water use and well 

inventories. We also have a number of ongoing studies that relate 

to groundwater in Vermont. For example, USGS, in cooperation 

with the Vermont Geological Survey, is looking at radionuclide content of wells in the Barre West and Montpelier quadrangles. We 

are also analyzing the presence of arsenic in bedrock wells throughout New England as part of a project with the National Institutes 

of Health. This work will identify the probability of bedrock wells 

having detectable levels of arsenic. In addition, we are evaluating 

how radon and uranium vary from aquifer to aquifer in northern 

portions of the United States, including Vermont. 

In New Hampshire, USGS has already performed statewide surficial and bedrock aquifer mapping and characterization. This 

work, conducted through the USGS’s Cooperative Water Program, 

now serves as the benchmark for groundwater characterization in 

the State, and is the basis for State and local planning and resource protection programs. We envision that a statewide aquifer 

mapping and groundwater characterization effort in Vermont 

would be similar in many respects to the New Hampshire effort. 

The proposed legislation also requires an assessment of how 

groundwater recharges and interacts with surface water. This is 

critical, because groundwater can be a major source of water for 

streams. Vermont’s rivers and streams provide habitat for its trout 

and other fisheries, and supply flows to its many lakes and ponds. 

A better understanding of groundwater aquifers, the areas that 

contribute to both ground- and surface-water systems, and how 

current and future water demands could influence these systems 

will help decisionmakers ensure that sufficient supplies are present 

for the multiple uses of Vermont’s water. 

USGS concurs with the goals of S. 2054. Such an effort will help 

ensure long-term water supplies for Vermont’s citizens, businesses, 

industries, and natural features. However, we feel that such a proposed study would take 5 or more years to complete, rather than 

the 2-year timeframe. We recommend that studies of this type be 

conducted under USGS’s Cooperative Water Program. 

We look forward to working with the State of Vermont, particularly the Vermont Geological Survey, in future groundwater resource and aquifer studies. 

Thank you, Madam Chairman, for the opportunity to present this 

testimony. I look forward to any questions. 

[The prepared statement of Ms. Hill follows:]

PREPARED STATEMENT OF CATHERINE L. HILL, NORTHEAST REGIONAL HYDROLOGIST, 

U.S. GEOLOGICAL SURVEY, DEPARTMENT OF THE INTERIOR, ON S. 2054

Madam Chairman and Members of the Subcommittee, I am Catherine L. Hill, 

Northeast Regional Hydrologist for Water for the U.S. Geological Survey (USGS). 

18

I thank you for the opportunity to provide the views of the Department of the Interior (Department) on S. 2054, a bill to conduct a Vermont water resources study. 

The Department agrees that the goals of the bill are commendable but has concerns with the bill. We note that studies similar to this have been done by USGS 

in other States, generally carried out within the USGS Cooperative Water Program, 

which is a long-standing cost-sharing program using Federal and State funds. Given 

the existing authorities for our Cooperative Water Program, congressional authorization of this study is not necessary. 

S. 2054, VERMONT WATER RESOURCES STUDY

S. 2054 directs the Secretary of the Interior, acting through the Director of the 

USGS and in coordination with the State of Vermont, to conduct a study on water 

resources in the State of Vermont. The role identified for the Department in this 

bill is consistent with USGS’s leadership role in surveying and characterizing 

ground-water resources. 

The bill requires a survey of ground-water supplies and aquifers available for 

water supply by municipalities throughout the State, as part of a study to determine 

whether these supplies provide water of potable (drinkable) quality. 

The USGS has a long history of conducting ground-water assessments on both 

local and regional scales. In the 1950s and 1960s, studies were conducted across the 

Nation to provide a basic understanding of geohydrologic conditions at a countylevel scale. In the 1980s, 25 regional aquifer systems were studied in detail, including the aquifer systems in Vermont. However, these studies provide a regional and 

national context of ground water that are often not detailed enough for State and 

municipal needs. 

As stated, the goals of the S. 2054 can be met through existing authorities, and 

many related activities are being implemented on the ground in Vermont. USGS has 

been actively working with the Vermont Geological Survey in the creation of a new 

bedrock geologic map that is scheduled to be completed in the next few years. This 

new geologic map will provide a variety of information that can be used to help define ground-water availability and quality. Map information will include bedrock 

types that may be correlated with high yield wells or bedrock types that may be 

associated with natural contaminants (for example arsenic or radon). In 2003, USGS 

provided information on possible approaches for ground-water assessment and aquifer mapping to the State of Vermont for a report to the State Legislature on the 

status of ground-water and aquifer mapping. In this report, a plan for future statewide ground-water and aquifer assessments was presented. This document provides 

a foundation for how work proposed by this legislation could be performed. 

The USGS has extensive databases that would provide useful information in evaluating potential ground-water resources in Vermont. These databases include the location and characteristics of most mineral occurrences throughout the United 

States; geochemical characteristics of rocks, soils, stream sediments, and water; 

long-term ground-water level and stream flows; and water-use and well inventories. 

The USGS also has a number of on-going studies that relate to ground water in 

Vermont. USGS, through the Mineral Resources Program and in cooperation with 

the U.S. Environmental Protection Agency, is determining the water quality effects 

of three abandoned mines on local streams and ground water. Another USGS study, 

in cooperation with the Vermont Geological Survey, is looking at the radionuclide 

content of wells in the Barre West and Montpelier quadrangles. USGS is also analyzing the presence of arsenic in bedrock wells throughout New England as part of 

a project with the National Institutes of Health. This work will identify the probability of bedrock wells having detectable levels of arsenic. In addition, through the 

USGS National Water-Quality Assessment Program, we are evaluating how radon 

and uranium vary from aquifer to aquifer in the northern portions of the United 

States, including Vermont. 

In New Hampshire, USGS has already performed statewide surficial and bedrock 

aquifer mapping and characterization. This work, conducted through the USGS Cooperative Water Program, occurred in the 1980s and 90s and now serves as the 

benchmark for ground-water characterization in the State and is the basis for State 

and local planning and resource protection programs. We envision that a statewide 

aquifer mapping and ground-water characterization effort in Vermont would be 

similar in many respects to the New Hampshire effort. 

Ground water is the source of water for two-thirds of Vermont’s residents. From 

1950 to 2000, the amount of ground water used in the State is estimated to have 

increased by at least 60 percent. While Vermont is blessed with a major surfacewater supply source in Lake Champlain to serve its largest cities, most commuVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00022 Fmt 6633 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
19

nities, businesses, and homes away from the Lake rely on ground water for their 

water supply. 

The proposed legislation also requires an assessment of how ground water recharges and interacts with surface water. This is critical because ground water can 

be a major source of water for streams, especially in headwater areas. Vermont’s 

rivers and streams are an important natural resource—providing habitat for its 

trout and other fisheries and supplying flows to its many lakes and ponds. As stated 

previously, USGS is currently working with the States to provide a better understanding of ground-water aquifers, the areas that contribute to both ground-and surface-water systems, and how current and future water demands could influence 

these systems, will help decision makers ensure that sufficient supplies are present 

for the multiple uses of Vermont’s water resources. 

CONCLUSION

In conclusion, the USGS concurs with the goals of the bill to meet Vermont’s need 

for a detailed ground-water assessment and aquifer mapping program, but notes 

that there are already ongoing efforts to address these goals. Such an effort would 

help ensure long-term water supplies for its citizens, businesses, industry, and natural features. However, we feel that such a proposed study would take 5 or more 

years to complete and that the 2-year time frame for completing the study would 

not yield comprehensive results. We recommend that studies of this type be conducted under the USGS Cooperative Water Program, through a cost-share arrangement. The USGS looks forward to working with the State of Vermont, particularly 

the Vermont Geological Survey, in future ground-water resource and aquifer studies. 

Thank you, Madam Chairman, for the opportunity to present this testimony. I 

will be pleased to respond to questions you and other Members of the Subcommittee 

may have.

Senator MURKOWSKI. Thank you, Ms. Hill. 

I haven’t been told that we’ve got a vote yet, so we’ll keep going 

for as long as we can here. 

Commissioner Keys, S. 2205, the Blunt Reservoir and the Pierre 

Canal Land Conveyance, you’ve indicated that the Bureau supports 

the intent of this legislation. Just in understanding some of the 

background, I have been led to believe that the preferential leaseholders here have paid rent on what was originally their land over 

these past 30 years. Does this warrant or suggest a reduced sales 

price because of these rental payments that have gone on prior to 

this point in time? 

Mr. KEYS. Chairman Murkowski, no, it does not. All of our transactions there would be based on fair market value. 

Senator MURKOWSKI. So, what has been paid, historically, in 

terms of rent, has nothing to do with fair market value at today’s 

time and date? 

Mr. KEYS. No, ma’am, it does not. 

Senator MURKOWSKI. Okay. I also understand that some of the 

leaseholders claim that there was a commitment made by the Federal Government to sell back the land at the same price that it was 

purchased at 30 years ago. Is that your understanding? Or, again, 

do you still go back to, ‘‘We’ve got to operate on—based on what’s 

fair market value today’’? 

Mr. KEYS. Madam Chairman, I have no knowledge that there 

were any promise made to sell it back at the price that it was paid 

before. 

Senator MURKOWSKI. You still would have been commissioner 

back then. 

[Laughter.] 

Mr. KEYS. Madam Chairman, I worked on the project before, 

when I was working for a living. 

20

[Laughter.] 

Mr. KEYS. That didn’t sound right, did it? 

[Laughter.] 

Senator MURKOWSKI. We understand. 

Mr. KEYS. When Reclamation purchased that land for the construction of the canal and the reservoir, we paid fair—at least fair 

market value for it in all cases. In some cases, where we had to 

condemn it and it went into court, we paid more than fair market 

value, within the limits allowed by the law. 

And what we’re suggesting in the current legislation is the same 

thing apply now, that when we sell it back to them, it be at fair 

market value. 

Senator MURKOWSKI. Okay. With S. 1962, to revise the repayment contracts, do you anticipate that the irrigation districts will 

be able to meet this proposed new repayment schedule if, in fact, 

this is enacted? You’ve cited the hardship faced in the districts by 

the drought; will they be able to make these repayments? 

Mr. KEYS. Madam Chairman, we think so. In the discussions 

that we’ve had with all four of those districts, it appears that 

stretching it out would give them the opportunity to recover their 

reserve funds, and then keep up with their payment schedule. Of 

course, none of us can predict the drought. The drought in some 

of those areas has lasted 6 years, up to now, and, if it continues, 

that same hardship would be there. But everything that we see 

now is that, if it gets back to some normal precipitation situation, 

that they would be able to meet that schedule. 

Senator MURKOWSKI. Okay. Then the last question for you—and 

this is as it relates to the Mokelumne River feasibility study—at 

this point, is it your belief that this proposed project is the best alternative for alternate water—or additional water for the San Joaquin Valley? 

Mr. KEYS. Madam——

Senator MURKOWSKI. I heard your concerns that you have expressed on the record, but is this the best project? 

Mr. KEYS. Madam Chairman, in that portion of the San Joaquin 

Valley, it’s a good project. Our preference is to finish the appraisal 

study that’s underway. The funding is there. The plans are to have 

it done at the end of this fiscal year. And certainly we would like 

to finish that so that we know what to spend our feasibility-study 

money on. But it’s a good project. And certainly we would look forward to working with you for additional legislation later, and working with the project sponsors. 

Senator MURKOWSKI. Okay. 

Mr. Robinson, as it relates to the Spearfish Hydropower Project, 

if the city did go though this licensing process, can you estimate 

how long that might take, and how much it might cost the city? 

What are you looking at? 

Mr. ROBINSON. It’s hard to put a precise estimate on it, but we 

typically allow about 3 years to develop a license application. That 

allows a couple of sample seasons, which is not unusual for developing information on fish and wildlife issues, and then about a year 

to prepare the application. 

Depending upon the issues that kind of drive the costs—here I 

don’t think there’s any issue associated with fish passage facilities, 

21

which can be very expensive—there would be—I think the main 

focus would be on what flow regimes are necessary. There’s a very 

long bypass reach between the dam itself and the powerhouse. It’s 

5 to 6 miles long. How much water you have to leave in that section of the stream to provide for fish and wildlife, versus putting 

it through the tunnel, the penstock, and the turbines, would probably occupy most of everyone’s attention, and the costs associated 

with it. I just—I don’t have a real estimate on that. 

Senator MURKOWSKI. Does that extend the time period involved, 

as well? 

Mr. ROBINSON. No, I don’t think that would extend the time period. I think that could easily be done within that 3 years. It’s just 

the type of study that you do, typically. It’s called an instream flow 

study, an IFIM, instream flow incremental methodology. Those 

studies can run a couple of hundred-thousand dollars to perform, 

to determine what type of habitat exists and what water levels are 

necessary to protect that habitat. 

Senator MURKOWSKI. Does the U.S. Forest Service administer 

the right-of-way that we’re talking about here? 

Mr. ROBINSON. Yes, for the transmission line. 

Senator MURKOWSKI. And did—has the Forest Service determined, then, that the right-of-way is valid, and is transferable, 

then, to the city? 

Mr. ROBINSON. That, I can’t answer, ma’am. I just don’t know. 

Senator MURKOWSKI. Okay. All right. That’s something that we 

had wanted some clarification on. 

Just so that you’re aware of these buzzers in the background, we 

are in the midst of a vote. Senator Johnson is going to do his duty. 

And when he returns, I will escape quickly and go cast my vote, 

as well. 

Ms. Hill, with regard to the Vermont groundwater study, I guess 

I’m trying to determine what it is that USGS is suggesting would 

help the people of Vermont in more fully understanding their water 

resources. You’ve indicated that you support the goals, that they’re 

commendable, but you’ve indicated that this particular legislation, 

as it’s drafted, you don’t believe is needed. What kinds of studies—

and you’ve mentioned the USGS Cooperative Program is the way 

to go; is there anything else that can be done, in terms of providing 

the assistance that the people of Vermont are looking for in understanding what the water resource is? Is there something legislatively that we can do more—I guess I’m trying to understand 

whether or not you believe that this legislation, or any aspect of 

it, should move forward. 

Ms. HILL. Let me—I’m not trying to be evasive, but we have done 

a similar study in New Hampshire. Typically it’s a wonderful 

project, and I think it definitely is needed, but we like to put it in 

something such as the Water Co-op Program, so that you have a 

Federal share and a State share. 

Senator MURKOWSKI. Does that dilute the—excuse the pun, but 

does that dilute an individual State’s ability to get focus to their 

resource, when it is part of an entire cooperative program? 

Ms. HILL. No, I don’t believe that it does, because you’re in a 

partnership, and we have strong partnerships with the State. So, 

I don’t think it would dilute it. It would be a joint partnership that 

22

you would develop the scope together, which has already been 

done, in fact. 

Senator MURKOWSKI. And so, then, to push a little bit further as 

it relates to S. 2054, are there any aspects of the legislation that 

we should be working to advance? 

Ms. HILL. Well, Vermont would be in the forefront of any legislation that would help move forward a comprehensive study of 

groundwater resources. That just hasn’t been done very often, nationwide. 

Senator MURKOWSKI. Is there an appropriate non-Federal cost 

share for a study of this kind that’s being proposed in this legislation? 

Ms. HILL. I don’t think there’s one being proposed. Well, I 

shouldn’t say that. I guess I would have to get back to you on that. 

I’m not sure. 

Senator MURKOWSKI. Okay. All right. 

Well, I’m going to—that is the extent of the questions that I have 

for the panel. If I can just ask that you stay a few more minutes, 

until Senator Johnson comes back, we will take a brief recess, and 

I’ll let him assume the gavel, so that we don’t miss a beat here. 

He’ll have a chance to ask his questions of the panel, and then, 

when I return from the vote, we will take up the second panel. 

So, with that, we’ll just stand in brief recess. Thank you. 

[Recess.] 

Senator JOHNSON [presiding]. The committee will be back in session while Chairman Murkowski takes care of her vote on the floor. 

And she’ll be returning, I’m certain, but in order to move things 

along—and, obviously, this is all on the record—we’ll proceed here 

from this point. 

Again, Mr. Keys, I want to commend you, and thank you, for 

your years of great service to America through the Bureau of Reclamation. And I know that you’ve been of great service and cooperation to my office and my State on numerous water projects 

and other BOR initiatives in South Dakota. And we wish you the 

very best on your future plans. 

And I have a statement here from Senator Jeffords that I’ll put 

in the record. This is an opening statement from Mr. Jeffords relative to S. 2054. And, without objection, it is accepted into the 

record. 

[The prepared statement of Senator Jeffords follows:]

PREPARED STATEMENT OF HON. JIM JEFFORDS, U.S. SENATOR FROM VERMONT,

ON S. 2054

I want to thank the Energy and Natural Resources Committee for holding today’s 

hearing on my legislation, S. 2054, which would direct the Secretary of Interior, 

through the U.S. Geological Survey, to conduct a study of Vermont’s groundwater 

resources. 

This is a critical issue for Vermont. Vermont’s population is relatively small—just 

over 600,000 people. But, about two-thirds of our population’s drinking water comes 

from groundwater, both from public water systems and from private wells. 

We have our share of contamination and supply issues. Naturally—occurring contaminants like uranium threaten the viability of local water supplies. Proposals for 

increased withdrawals raise the ire of locals who fear for the long-term impact on 

water supplies. 

A groundwater map is step one in the process of figuring out how to address these 

issues. Without the basic data that will be provided by the groundwater study, it 

is difficult to make informed decisions about Vermont’s groundwater. 

23

Today you’ll be hearing from Larry Becker, Vermont’s State Geologist, who will 

be speaking more about the state’s commitment to addressing its need for a groundwater map during the hearing. Mr. Becker has worked for the State of Vermont 

since 1981 serving as Technical Services Chief for the Vermont Geological Service, 

and as a hydrogeologist, groundwater planner, and geology consultant for the 

Vermont Department of Environmental Conservation. He is the Chair of the Association of American State Geologist’s Earth Science Education Committee. His Master’s Degree from the University of Vermont focused on shoreline dynamics and 

sediment transport in Lake Champlain’s Appletree Bay in Vermont. He received his 

B.S. Geology degree from the State University of New York at Buffalo. 

S. 2054 would authorize the U.S. Geological Survey to create a groundwater map 

that could be used as a decision-making tool in the state of Vermont. With the state 

as a partner, USGS brings technical expertise and financial assistance to this 

project that Vermont could not duplicate on the state level alone. This effort is consistent with other similar projects completed by USGS in the northeast and other 

proposals moved through this committee and the full Senate in recent months. I 

look forward to working with you to move this bill through the full Senate, and I 

thank the Committee again for holding this hearing today.

Senator JOHNSON. Commissioner Keys, how much does the Bureau of Reclamation spend to manage the lands acquired for the 

Pierre Canal and Blunt Reservoir? 

Mr. KEYS. Mr. Johnson, currently we spend about $282,000—I’m sorry, that’s how much we get. We spend about $151,000 a year to 

manage those lands. 

Senator JOHNSON. Okay. In your testimony you stated that the 

Bureau will be still responsible for some administrative fees even 

if the Blunt Reservoir bill is enacted. Could you elaborate on the 

nature of those fees, and do you have an estimate of the total 

amount of those costs? 

Mr. KEYS. Mr. Johnson, the one feature that we would still have 

to take care of with provisions of the bill is to take care of the historic—the cultural resources that are there. We would have to do 

those surveys, and then take care of the curation of whatever artifacts were found. 

I am thumbing my notes to see how much that would cost. I 

would certainly provide that figure for the record. 

Senator JOHNSON. Yes, if you could take a look at that and then 

provide that quickly, it would be very helpful. 

Mr. KEYS. I’d be glad to. 

Senator JOHNSON. Could you tell the committee the difference between the BOR’s cost to manage these lands today versus the cost 

if H.R. 4301 was enacted? Excuse me, S. 2205—the cost between 

management of the lands today versus if we were to enact 2205? 

Mr. KEYS. Mr. Johnson, I would assume that’s the cost between 

2001 and 2006. I would have to provide that for the record, also. 

I don’t have those numbers at my fingertips. 

Senator JOHNSON. Well, I think what that would come down to 

is the difference between the $151,000 of management expenditures, less what you are investing in historic and cultural resources. So, again, that would depend on your getting back to us 

on that number, I suppose. 

When lands are taken out of Federal ownership, are they always 

disposed of at fair market value? And, if not, what exceptions are 

there to those rules? 

Mr. KEYS. Mr. Johnson, certainly, any transfer like that is subject to whatever bill is passed to make it happen. 

Senator JOHNSON. Right. 

24

Mr. KEYS. In most cases—and I know of no exceptions now—

when we dispose of land, it’s done at fair market value. 

Senator JOHNSON. And so, it’s really the discretion or the judgment of the Congress to determine whether there’s any special circumstances that might justify a different rule; essentially, that is 

what you’re saying? 

Mr. KEYS. Senator, that’s correct. I would take it back to the 

original purchase of the land. There, fair market value was offered 

to the people that we were purchasing the land from. If they didn’t 

like that, they didn’t take it, and we had to condemn it and go into 

court. And, in some cases, they got more for it, whatever the court 

allowed them. 

Senator JOHNSON. Right. 

Mr. KEYS. And certainly the action of the Congress would prevail 

here. 

Senator JOHNSON. All right. Well, we look forward to working 

with you, and with the BOR, as we try to come to a satisfactory 

and equitable resolution of that particular aspect of the bill. And 

we look forward to working with you in good faith in that regard. 

Mr. KEYS. Senator Johnson, I might just add, our goal is the 

same as yours and the same as the project sponsors here, and 

that’s to get that land back onto tax rolls, back into the hands of 

those people that purchased it. I think it’s—we will work with you 

on the details to get that done. 

Senator JOHNSON. Yes. And we’ll also work with you relative to 

the constitutional issues you raised pertaining to the State of South 

Dakota’s Game, Fish, and Parks Department on what we need to 

do to make sure that BOR is satisfied with the legal basis for that 

transfer, as well. 

Mr. KEYS. Okay. 

Senator JOHNSON. And we’ll be sharing language with you, and 

work with you closely on that. 

Relative to Mr. Robinson, first let me start out by stating that 

I do believe that the licensing and administrative of our Nation’s 

public hydroelectric plants is an important regulatory tool to balance the often competing multiple uses of the Nation’s water resources. Several Senators on the Energy Committee have devoted 

a good deal of time toward improving the Federal license process 

for non-Federal hydropower plants. That being the case, I believe 

that the set of circumstances surrounding this small—very small—

hydroelectric plant in Spearfish are unique, and therefore provides 

for a re-examination, in this instance, of the Federal license requirements. 

So, my first question, Mr. Robinson, is that it’s my understanding that FERC is asserting jurisdiction to require a license on 

the basis that certain right-of-way grants and permits which were 

issued by the Federal Government prior to the enactment of the 

1920 Federal Power Act had expired. Is that your argument, the 

basis for your jurisdictional claim? 

Mr. ROBINSON. Well, the basis is the existence of the transmission lines on Federal lands. Those particular lands were covered by a pre-1920 Federal authorization, which the Commission, 

in its last order, found had expired, and, therefore, no longer proVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00028 Fmt 6633 Sfmt 6602 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
25

vided that exemption from the Federal Water Power—the Federal 

Power Act. 

Senator JOHNSON. Now, I’ve learned that these right-of-way 

grants and permits were not issued by the FERC, or that the 

rights-of-way are administered by the FERC. In fact, the rights-ofway permits are administered exclusively by the U.S. Forest Service, which recently found that they had not expired, and, in fact, 

were validly transferred from the Homestake Mining Company to 

the city of Spearfish. In light of these sets of circumstances, isn’t 

it fair to believe that the FERC is overreaching in asserting jurisdiction, particularly in light of the long-held administration of the 

rights-of-way by the U.S. Forest Service? 

Mr. ROBINSON. I think the Commission would always be in a posture of reviewing any of their findings if new information was provided to them. What you just mentioned, about the Forest Service 

making a finding, is something that doesn’t exist, I don’t believe, 

in our record right now. The Commission, when they made their 

determination that the pre-1920 permits had expired, based that 

on the statute, itself, and its language, which went to power being 

produced for mining purposes. And the mining operation has 

ceased to function there. There’s no argument on that. The Commission concluded from that that—therefore, that those permits 

were no longer valid. But we would always be interested in seeing 

any new information that anyone had on it. 

Senator JOHNSON. All right. I want to ask you a question about 

the time and cost of licensing this project. I understand that the 

median amount of time for a hydro relicense applicant is about 64 

months, from the beginning to the end, and that, under the traditional process, costs average about $2.3 million. Who bears the 

costs for the license? And, in proportion to other hydro projects, 

what could the city of Spearfish expect, in terms of cost and time, 

to license this very small, century-old hydro plant? 

Mr. ROBINSON. To answer your first question, the proponent, or 

the applicant, bears the cost for that. Agencies and others bear 

their own costs for participating. NGO’s—nongovernmental organizations—and private citizens all bear their own costs. As far as the 

timeframe for licensing, it’s our objective—and we just modified our 

licensing process with the integrated licensing process—it’s our objective to license all projects within 2 years after the application is 

filed. Not 64 months, but 2 years. I think some of those numbers 

that you’re quoting go back to the 1990’s, prior to two iterations of 

improvements in the licensing process, the 64 months. The $2.5 million, I have not heard that number before, but we 

certainly have projects that go well beyond that, in terms of their 

costs. We license projects up to the size of the 1,800-megawatt 

Priest Rapids project in the mid-Columbia system. And it’s very expensive to authorize—or to license large projects like that. And it 

tends to skew the average cost associated with it. But it doesn’t 

mean that it’s cheap to license even a small project like this. It 

would be a significant investment to go through licensing. 

Senator JOHNSON. Yes. 

Mr. ROBINSON. That’s indisputable. 

Senator JOHNSON. And you could understand, from the community-of-Spearfish perspective, the electricity production here is a 

26

* The letters have been retained in subcommittee files. 

secondary and incidental issue, and that the real issue is the water 

flow and the water access into the community of Spearfish. 

Mr. ROBINSON. I’ve been involved with licensing projects for 28 

years, and, during that 28 years, the shift from power being the 

significant factor that we looked at to nonpower values being the 

overwhelming aspect of licensing projects is across the country. 

Senator JOHNSON. Well, thank you, Mr. Keys, Mr. Robinson, Ms. 

Hill. And I would presume that, in the case of the South Dakota 

projects, that Mr. Keys and Mr. Robinson would be willing to accept any written questions that we may—that the committee may 

submit——

Mr. ROBINSON. Absolutely. 

Senator JOHNSON [continuing]. After the conclusion of this hearing. 

Mr. KEYS. Yes, we would. 

Senator JOHNSON. Well, thank you very much. 

And I’ll turn it back over to Chairwoman Murkowski. 

Senator MURKOWSKI [presiding]. Thank you for helping out with 

the tag team there. It makes it work a little bit better. 

I want to thank the witnesses for your time this afternoon, for 

coming in and helping out on these issues of importance within the 

region. 

With that, let’s call up the second panel here. Welcome to the 

committee this afternoon. And I think what we will do is, we’ll 

start with you, Mayor Krambeck, and just go down the line in the 

order that you are seated. 

So, with that, welcome. I appreciate the fact that several of you 

have come from a relative distance to be here this afternoon. We 

appreciate your willingness to appear and the time that you are 

giving to us on these respective issues. So, thank you, and welcome. 

Mayor Krambeck. 

STATEMENT OF JERRY KRAMBECK, MAYOR, CITY OF 

SPEARFISH, SD 

Mr. KRAMBECK. Thank you. My name is Jerry Krambeck. For the 

past 6 years, I’ve served as the mayor of Spearfish, South Dakota, 

a municipality of approximately 9,000 people located in the heart 

of South Dakota’s Black Hills. 

I’m here today to testify in support of S. 1577. I would like to 

submit for the record letters from some elected officials, public 

agencies, and water user groups in South Dakota that support this 

legislation being championed by Senators Johnson and Thune.* 

When visiting our city, one cannot help but appreciate the scenic 

beauty of Spearfish Canyon. Frank Lloyd Wright said it best during his 1935 visit to Spearfish Canyon when he declared that it’s 

the best, the most magnificent canyon in the West. We’re proud of 

this heritage, and take seriously our responsibility to preserve it 

for the future generations to enjoy and appreciate. 

The city is located at the base of Spearfish Canyon, through 

which Spearfish Creek runs. Spearfish Creek is the lifeblood to the 

many farms and ranches that operate in our area. Farmers have 

27

been irrigating the fields for nearly 150 years in Spearfish, with 

some water rights dating back to the mid-19th century. Our community also has a rich mining history. For years, many citizens in 

our community were employed by the Homestake Mine, in Lead, 

South Dakota. 

These values prompt our city, in 2004, to purchase the small 

4,000 kilowatt Spearfish Hydroelectric Plant No. 1 from Homestake 

Mining Company. At that time, Homestake was closing its gold 

mine in Lead, and no longer needed the hydropower from this 

plant to supports its operations. The project had been in continuous 

operation since 1912, and had been meticulously maintained and 

preserved. The city saw an opportunity to preserve this historical 

landmark, which stands as a reminder of resilience, ingenuity that 

was required of those early settlers in the West. 

This project is important for more than its historical value. And 

for a very real way, it supports these deeply held values in—of our 

community. For example, the hydro facility bypasses a significant 

sinkhole in Spearfish Creek where surface waters are lost to the 

underlying aquifer. By diverting flows around the sinkhole, the 

project provides additional water for recreation, irrigation, fire protection, and the National Historic D.C. Booth Fish Hatchery. In addition, since acquiring the hydro facility, the city has worked to develop an agreement with the Spearfish Canyon Howeowners Association to provide for additional water to be left in Spearfish Creek 

for aesthetic and environmental benefit. 

The reason I’m here today is that the multiple benefits provided 

by this project are in danger of being forever lost. In the series of 

orders issued in 2001 and 2002, the Federal Energy Regulatory 

Commission ruled that this hydroelectric facility, which, at the 

time, had been operating for about 80 years, falls under its mandatory licensing jurisdiction under the Federal Power Act. The statute was enacted about a decade after Homestake started generating electricity at the facility. FERC justified its claim of jurisdiction over the project by finding that certain right-of-way grants 

issued by the Federal Government for the project in the early 20th 

century had expired. 

These grants are currently administrated by the U.S. Forest 

Service. FERC issued its rulings without even consulting with the 

Forest Service. In fact, the Forest Service is on record that rightof-way grants continue to be valid, even after the hydro facility was 

conveyed from Homestake to the city of Spearfish. Despite the urging of the entire South Dakota congressional delegation, FERC refuses to change its jurisdictional rulings. 

The city does not oppose the goals of the Federal Power Act, 

making sure that our Nation’s waterways are best managed for 

multiple public interests such as power development, energy conservation, the protection of fish and wildlife resources, recreation, 

and flood control. We believe that we have already accomplished 

this in Spearfish Creek. 

Our objection is that FERC’s licensing of this facility would be 

an unnecessary exercise, at a tremendous cost. As this committee 

well knows, the FERC licensing process is an enormous undertaking. Studies conducted by FERC find that even small projects 

28

like this one can take over 6 years to license, at a cost that could 

approach millions of dollars. 

Costs of this magnitude alone would require that the city mothball the project and shut it down. The city does not believe that 

policies and goals of the Federal Power Act support this result, discriminating against a source of clean, renewable energy that is already operated in a manner that best balances public interest considerations, through the sheer imposition of overwhelming administrative costs. 

Thank you very much for letting me testify today. 

Senator MURKOWSKI. Thank you. 

Mr. Becker. 

STATEMENT OF LAURENCE R. BECKER, STATE GEOLOGIST 

AND DIRECTOR, VERMONT GEOLOGICAL SURVEY, VERMONT 

DEPARTMENT OF ENVIRONMENTAL CONSERVATION, 

VERMONT AGENCY OF NATURAL RESOURCES 

Mr. BECKER. Thank you, Madam Chairman and members of the 

subcommittee. I’m Laurence Becker, Vermont state geologist, and 

I direct the Vermont Geological Survey. That’s part—a division of 

the Vermont Department of Environmental Conservation. 

Thanks for the opportunity to represent the State of Vermont in 

response to S. 2054, the Vermont Water Resources Study. And 

thanks to Senator Jeffords for recognizing the importance of 

groundwater through his sponsorship. 

The State of Vermont understands that groundwater is a fundamental resource. We strongly agree that characterizing the resource to support sound water supply and protection decisions is a 

necessary step to plan for the future. We strongly support this bill 

and urge this body to move this authorization forward. 

Coordination with Vermont in the proposed language is a necessary step to create a meaningful partnership between the State 

and the Federal Government. Local control is an important element 

of the Vermont ideal, and the State can work best with USGS to 

bring the operational considerations and results of the study to our 

towns and municipalities. It is recognized that such a study will 

take financial resources and personnel to complete. 

Sixty-six percent of Vermont’s population depends on groundwater for their drinking-water supply, including municipalities, fire 

districts, agricultural, industrial, commercial users, and homeowners. Fisheries habitat is supported by groundwater discharge to 

surface waters. 

For future supplies, the State has little knowledge of the location 

of potential high-yield aquifers. Natural contamination in well 

water from uranium, radium, and arsenic that exceeds public 

health standards is an issue in a number of geologic settings in 

Vermont. Information on where these contaminants can be found 

is needed statewide. 

Vermont has seen well-interference problems in tight geologic 

formations, made worse by periods of drought. These areas need 

characterization. Resource vulnerability can vary, depending on the 

nature of the geology overlying groundwater resources, and this is 

little characterized in relation to aquifers. 

29

In Vermont, the primary aquifers are saturated sand and gravel, 

and water in fractured bedrock. The State’s geology comprises the 

vessel that contains Vermont’s groundwater. Surface water and 

groundwater are connected. Wells in saturated sand and gravel can 

meet larger municipal demands, 500 to 1,000 gallons per minute in 

our State. Domestic users often obtain water from drilled wells in 

bedrock that can supply as little as 2 gallons per minute to meet 

family demand. 

In recent years, with some town partners, the Vermont Geological Survey has focused on characterizations of the surficial and 

bedrock geology to derive groundwater planning maps at a town 

scale. These town-by-town studies are progressing slowly, as limited resources are available to complete the work. The Vermont Geological Survey has completed some localized detailed research and 

mapping in radioactivity, arsenic, and radon, also in radioactivity 

in cooperation with USGS. Comprehensive investigations are needed to protect the public health. Nitrate in groundwater studies are 

underway next to a large farm to ultimately provide best—information for best nutrient management practices in relation to protecting groundwater. And, as you heard, the USGS and the 

Vermont Geological Survey are already cooperating to produce a 

new State bedrock geologic map which would apply to this issue. 

A 2003 report that the Vermont legislature identifies three levels 

of study to develop groundwater and aquifer maps of increasing accuracy. Each level builds upon the previous level, using sophisticated tools, technical expertise and scientific evaluation. The report 

concludes that the most obvious obstacle to completing aquifer 

mapping statewide is the lack of dedicated funding sources for employing people to analyze and compile the data, and to work with 

partners and purchase scientific equipment. 

In conclusion, the State’s compelling interest is that this valuable 

and necessary groundwater resource be understood to protect existing uses, plan for growth, and ensure for the sustainability of the 

health and well-being of Vermonters. In the present information 

vacuum, towns in the State will be hard-pressed to balance economic needs against protection of the resource. This bill is that 

first necessary step to create the information template for future 

planning. Both the USGS and the State of Vermont bring necessary expertise to the effort. A strong partnership with USGS that 

takes the needs of Vermont into account is a beneficial and necessary step to meet the goals of S. 2054. 

Thank you, Senator Murkowski, for this opportunity. We’re glad 

to help in any way as you deliberate in this regard. 

Senator MURKOWSKI. Thank you, Mr. Becker. I appreciate it. 

Dr. Lytle, welcome. 

STATEMENT OF C. MEL LYTLE, WATER RESOURCE 

COORDINATOR, SAN JOAQUIN COUNTY, CA 

Dr. LYTLE. Good afternoon, Madam Chairman and committee 

members. 

I’m Dr. Mel Lytle, the water resource coordinator for San Joaquin County, California. On behalf of the county and the 

Mokelumne River Water and Power Authority, I’m here today to 

30

testify in support of H.R. 3812, the bill sponsored by Chairman 

Richard Pombo. 

Historic shortfalls in surface water supply in San Joaquin County have led to an overreliance on their diminishing groundwater resources. As a result, the county, its cities, and water agencies are 

actively engaged in a stakeholder-supported effort to secure additional water resources to decrease groundwater overdraft, slow saline intrusion, and improve water-supply reliability and environmental protection in the region. 

Recognizing the need for a regional approach, this consensusbased effort has completed significant water management planning, 

including recently adopted countywide water management plans, 

groundwater basin management plans, and will complete an integrated regional plan by the end of 2006. From this effort, the 

Mokelumne River Regional Water Storage and Conjunctive Use 

Project, locally known as the ‘‘MORE WATER Project,’’ has been 

recognized as a major new element of the region’s Integrated Conjunctive Use Program. 

H.R. 3812 will authorize the Department of the Interior to also 

participate in this effort on a cost-sharing basis to complete the 

necessary studies and environmental protection. 

MORE WATER centers on the development of new facilities to 

capture floodwaters from the Mokelumne River for beneficial use, 

including groundwater recharge in the eastern San Joaquin Basin. 

Through improved conjunctive management, the basin’s underground storage potential of approximately 2 million acre-feet could 

be realized. In addition, with water banking, MORE WATER could 

provide greater regional benefit and permit other agencies the ability to store and use excess water from the underlying basin. 

MORE WATER has gained considerable regional attention and 

was foundational in the formation of the Mokelumne River Forum, 

a California Department of Water Resources-sponsored collaborative effort comprised of nearly 20 stakeholder agencies that reach 

from the river’s headwaters in the high Sierra Nevada Mountain 

range, through Alpine County, downstream to Amador, Calaveras, 

and San Joaquin Counties, and on out into the greater East Bay 

area. 

The stakeholders have elected to participate in this collaborative 

effort to develop mutually beneficial and regionally focused projects 

to—and programs to meet water supply and related needs from the 

Mokelumne River. 

Under the Department of the Interior’s Water 2025 Program, 

MORE WATER could set the standard of success for the forwardlooking focus in the water-deficient areas of the Western United 

States. MORE WATER is consistent with the program’s key tools, 

including removal of institutional barriers and interagency cooperation, conservation, efficiency in markets, and improved technology. 

We urge your support for the passage of H.R. 3812 in a timely 

manner. This effort will establish a significant working relationship 

between the county, the Bureau of Reclamation, and a wide range 

of regional stakeholders to ultimately provide new infrastructure to 

improve water resource management and sustainability for California’s future. 

Thank you. That concludes my prepared remarks. 

31

* All figures have been retained in subcommittee files. 

[The prepared statement of Dr. Lytle follows:]

PREPARED STATEMENT OF DR. C. MEL LYTLE, WATER RESOURCE COORDINATOR,

SAN JOAQUIN COUNTY, CA, ON H.R. 3812

LOCAL AND REGIONAL WATER RESOURCE ISSUES

San Joaquin County is located in the heart of the vibrant agricultural communities of the Central Valley of California. It is uniquely situated at the confluence 

of the Sacramento and San Joaquin Rivers, the Bay-Delta, the source of water for 

two-thirds of California’s population, and several eastside rivers flowing from the Sierra Nevada Mountains (Figure 1).* Grape production, dairy products and other 

crops are the major agricultural commodities that come from fields surrounding the 

burgeoning Cities of Stockton, Tracy, Lodi, Manteca, Lathrop, Mountain House and 

Escalon. In all, approximately 700,000 residents call the County home. Of late, population trends are dramatically increasing and are expected to double by 2040 due 

principally to migration from the San Francisco Bay Area and other areas of the 

State. 

Currently, the necessary water supplies to sustain the County’s diverse population, the $1.5 billion agricultural economy, other industry, and sensitive habitats 

in the Delta are not adequate. Opportunities to develop new water supplies are 

heavily constrained by current uses and availability including water that has been 

developed for use out of the Region by either the Central Valley or State Water 

Projects. The County is currently dependent on groundwater for 60% of its supply. 

This dependency has impacted the vital groundwater basin, which is seriously over 

drafted by 200,000 acre-feet per year. The California State Department of Water Resources has designated the Eastern San Joaquin Basin a critically over drafted 

basin (DWR Bulletin 118). This has placed the groundwater basin and the City of 

Stockton’s drinking water supply in jeopardy due to intrusion of saline groundwater 

underlying the San Joaquin River Delta. Within the Delta, water quantity and quality is often inadequate for agricultural and urban users, limiting the types of crops 

that can be grown and lowering crop yields of those that are grown. In addition to 

local threats to water supplies, the County has been adversely affected by changes 

in State and Federal policies, which continue to erode existing supplies and have 

upset longstanding plans to develop new supplies. As a result, new water supply is 

vital to help sustain social, economic and environmental viability in the County and 

surrounding Region. 

REGIONAL WATER SUPPLY PLANNING

Independently, county water districts and cities have found it difficult to wield the 

political and financial power necessary to implement large scale water supply 

projects to mitigate the conditions of groundwater basin overdraft. Recognizing the 

need for a regional approach to water supply planning and implementation and with 

the aide of local, State and Federal representatives and a well represented stakeholder group consisting of over 25 agencies, the County in 2002 adopted the San 

Joaquin County Water Management Plan (WMP). The purpose of the WMP was to 

define the extent of. groundwater overdraft and identify possible solutions and strategies necessary to secure supplemental water supplies using a consensus-based collaborative process. 

In addition, the Northeastern San Joaquin County Groundwater Banking Authority (GBA) was organized to employ a consensus-based approach in solving this problem and with its goal to develop ‘‘. . . locally supported groundwater banking and 

recharge projects that improve water supply reliability in San Joaquin 

County... .’’ Collaboration amongst the GBA member agencies has strengthened 

the potential for broad public support for conjunctive management activities, allowed members to speak with one regional voice as well as increased their ability 

to obtain local, state, and federal funding. Table 1 lists the member agencies of the 

GBA. 

In 2004, the GBA adopted the East San Joaquin Basin Groundwater Management 

Plan (GWMP) to enhance and coordinate existing groundwater management policies 

and programs and to develop new policies and programs to ensure the long-term 

sustainability of groundwater resources in San Joaquin County. The GWMP establishes four basin management objectives (BMO) that relate to groundwater levels, 

groundwater quality, surface water quality and flow, and inelastic land subsidence. 

To meet the established BMO’s, the GBA member agencies have defined the Eastern 

32

Basin Integrated Conjunctive Use Program including possible new supply from the 

Delta, Calaveras, Stanislaus, American and Mokelumne Rivers together with Stockton East Water District and the U.S. Army Corps of Engineers—Farmington 

Groundwater Recharge Program, in order to develop new and affordable surface 

water supplies for beneficial use and groundwater recharge of the underlying 

groundwater basin. 

Table 1.—MEMBER AGENCIES OF THE NORTHEASTERN SAN JOAQUIN 

COUNTY

• Groundwater Banking Authority • City of Stockton • City of Lodi • Woodbridge Irrigation District • North San Joaquin Water Conservation District • Central San Joaquin Water Conservation District • Stockton East Water District • Central Delta Water Agency • South Delta Water Agency • San Joaquin County Flood Control and Water Conservation District • California Water Service Company • San Joaquin Farm Bureau Federation

The Mokelumne River Regional Water Storage and Conjunctive Use Project

(MORE WATER) is a major new supply component of both the WMP and the 

GWMP development efforts. Fundamentally, conjunctive use and groundwater recharge is the major focus of the MORE WATER Project. Under a proposed project 

alternative, the Project could develop a new off-stream storage facility to capture 

flood waters from the Mokelumne River and regulate those flows to an integrated 

system of groundwater banking and recharge projects to help meet San Joaquin 

County water demands (Figure 2). In addition, there is a potential for MORE 

WATER to provide substantial regional benefits because of its strategic proximity 

to the Delta and East Bay Municipal Utility (EBMUD) facilities. This conjunctive 

use program could be utilized to provide critical year flows to enhance water supply 

reliability, fisheries and maintain water quality standards to help meet CALFED 

Bay-Delta Program objectives. 

MORE WATER PROJECT BACKGROUND

In 1990, San Joaquin County acting as the Mokelumne River Water and Power 

Authority (MRWPA) filed a water right application with the California State Water 

Resources Control Board (SWRCB) for unappropriated wet year flows (flood waters) 

on the Mokelumne River. The application cited three project concepts including a 

reservoir at Middle Bar, an off-stream reservoir at Duck Creek or direct diversions 

off the lower Mokelumne River between Camanche Reservoir and Interstate 5. In 

addition, the MRWPA obtained a Federal Energy Regulatory Commission (FERC) 

Preliminary Permit for the proposed Duck Creek Reservoir, which allows the Authority to study the power generation potential at the proposed project site. 

Initial Studies—in 2003, the MRWPA conducted an initial review of historic 

project concepts together with several other project alternatives that included a wide 

array of ideas ranging from a new on-stream reservoir, to desalinization, conservation and wastewater recycling. Additionally, the Authority began work to devise a 

regulatory strategy that would satisfy the requirements of the SWRCB, CEQA, 

NEPA, and all applicable permits to develop a preferred project alternative. By capturing flood flows, studies have shown that substantial supplies could be made 

available from the Mokelumne River. 

Thus far, efforts to complete the initial project investigations have been accomplished through local cost-sharing agreements between the Authority and the Cities 

of Stockton and Lodi. Other local and regional support for the MORE WATER 

Project has come from the GBA member agencies and others. 

Next Steps—at present, Interior’s Bureau of Reclamation Mid-Pacific Region (Bureau) is nearing completion of the initial MORE WATER Appraisal Study. The 

MRWPA welcomes the Bureau’s involvement in the development of the preferred 

MORE WATER alternative that will help meet the needs of the Region while being 

sensitive to the rights of other water users and ensuring that the Mokelumne River 

will provide a source of pride and joy for years to come. The principal goal of feasibility analysis for MORE WATER will be to identify opportunities to capture flood 

flows from the Mokelumne River for groundwater storage and beneficial use consistent with objectives identified in the WMP, GWMP and the requirements develVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00036 Fmt 6633 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
33

oped for the Department of the Interior. On a parallel track to the feasibility analysis, the MRWPA in association with. the Groundwater Banking Authority will complete a programmatic environmental impact report (EIR) to support the East Basin 

Conjunctive Use Program. Subsequently, a project specific EIR and environmental 

impact statement (EIS) will be prepared for the MORE WATER preferred alternative. The approach is indicative of the MRWPA’s commitment to satisfying the 

California Environmental Quality Act, the National Environmental Protection Act, 

and the Federal Clean Water Act. 

REGIONAL COOPERATION

MORE WATER has gained considerable regional attention and was foundational 

in the formation of the Mokelumne River Forum, a collaborative effort comprised 

of 16 stakeholder agencies that reach from the River’s headwaters in Alpine County 

downstream to San Joaquin County and the greater East Bay Area. The stakeholders have elected to participate in this collaborative process to develop mutually 

beneficial and regionally focused projects to meet water supply and related needs 

from the Mokelumne River. Stakeholder input is genuinely welcomed in all phases 

of MORE WATER and is the backbone of regional planning efforts undertaken in 

San Joaquin County. 

MORE WATER BENEFITS

MORE WATER will provide water to decrease groundwater overdraft, prevent saline groundwater intrusion, and to improve water supply reliability and environmental protection for the Region. MORE WATER is an integral component to the 

Eastern Basin Integrated Conjunctive Use Program as a supply and groundwater 

recharge element. 

Consistency with CALFED and Department of the Interior’s Water 2025 Program 

Objectives—while not a component of the CALFED Program, MORE WATER is consistent with CALFED objectives and will provide information important to water resource and environmental protection efforts being conducted under the CALFED 

aegis. The CALFED Record of Decision outlines a myriad of program elements intended to implement the goals and objectives of the CALFED Program. MORE 

WATER is consistent with the following Program elements:

• Water Storage—Conjunctive use programs hinge on the ability for entities to 

capture surface water when available for direct use and groundwater recharge. 

Groundwater recharge is an integral part of the success of MORE WATER. 

• Ecosystem Restoration—The Mokelumne River system is a source of pride for 

the San Joaquin County Community. Stakeholder led efforts such as the Lower 

Mokelumne Restoration Project to replace the aging Woodbridge Irrigation District Diversion Dam with anadromous fish friendly fish screens and ladders and 

the completion of a new fish hatchery at Camanche Reservoir by EBMUD and 

the California Department of Fish and Game are major successes for the Region. MORE WATER will be developed to maximize enhance or create ecosystem restoration benefits like these examples where feasible. 

• Watershed Management—The Mokelumne River Watershed is represented by 

water agencies, irrigation districts, grass roots organizations, interest groups, 

and authorities such as the Mokelumne River Forum and the Mokelumne River 

Authority. The MRWPA will continue to promote MORE WATER to these 

groups and will coordinate formal consultation with federal and State fisheries 

and resources agencies and other non-governmental organizations. 

• Water Transfers—Groundwater banking in San Joaquin County has the potential to provide regional and statewide agencies the ability to store excess water 

in the underlying basin. San Joaquin County’s proximity to the Sacramento-San 

Joaquin Delta would facilitate water transfers and exchanges of banked water 

to areas served by the East Bay, State Water Project and the Central Valley 

Project. Banked groundwater could also be used for fisheries needs under the 

CALFED Environmental Water Account. The underground storage potential of 

Eastern San Joaquin County is estimated at approximately 1.5 to 2 million 

acre-feet, enough to supply 12 million people for one year. MORE WATER 

would provide the necessary infrastructure and improvements necessary to utilize a portion of this resource. 

• Flood Control—The capture of flood flows is a major objective of MORE 

WATER. Through the use of a new off-stream reservoir on Duck Creek, the effects of flooding locally and in the Delta could be lessened during periods of high 

water.

34

Under the Department of the Interior’s Water 2025 Program, MORE WATER 

could be a new standard of success for the ‘‘forward-looking focus’’ in water deficient 

areas of the Western United States. MORE WATER is consistent with the following 

Program Key Tools:

• Removal of Institutional Barriers and Inter Agency Cooperation—MORE 

WATER is a high priority project for the Region. Extensive public outreach is 

a major component to the success of MORE WATER. Thus far, MRWPA staff 

has met with numerous State and Federal regulatory agencies and are also participants in numerous stakeholder led watershed group efforts like the 

Mokelumne River Forum to resolve differences and find mutual benefit in the 

Mokelumne River watershed. 

• Conservation, Efficiency, and Markets—MORE WATER is currently being developed as part of a regional conjunctive use project to enhance urban, agricultural, and environmental water supplies. MORE WATER will use affordable approaches to capture, use, and recharge water as part of the Eastern Basin Integrated Conjunctive Use Program. MORE WATER infrastructure and improvements will help the Region to secure more reliable water supplies through the 

restoration of the underlying basin and potentially the establishment of a regional groundwater bank that is accessible to water markets throughout the 

State and in particular The East Bay and South of Delta Water Users. 

• Collaboration—MORE WATER and other regional planning efforts undertaken 

by San Joaquin County employ a consensus-based approach to water supply 

planning and development. Recently, successful collaborative efforts in the 

County include the Water Management Plan and the Groundwater Management Plan that involved over 40 local, State and Federal agencies. Stakeholder 

input is welcome during all phases of the MORE WATER process. 

• Improved Technology—MORE WATER and other similar conjunctive use 

projects will require extensive knowledge of the underlying Basin. San Joaquin 

County is committed to establishing a science program for Basin research and 

monitoring. Groundwater Banking Authority stakeholders are currently working together with the California Department of Water Resources and the U.S. 

Geological Survey on a $2.5 million, 5-year joint study to determine the source 

and extent of saline intrusion in the Basin.

Should the Senate support the passage of H.R. 3812, the MRWPA would work 

with the Department of the Interior to complete feasibility studies together with the 

necessary environmental documentation and permitting support documents for the 

MORE WATER Project.

Senator MURKOWSKI. Thank you, Dr. Lytle. 

And now, let’s go to Ms. Pollman Rogers. 

Ms. POLLMAN ROGERS. Thank you. 

STATEMENT OF DARLA POLLMAN ROGERS, RITER, ROGERS, 

WATTIER & BROWN, LLP, PIERRE, SD, ACCOMPANIED BY 

JOHN COOPER, SECRETARY, SOUTH DAKOTA DEPARTMENT 

OF GAME, FISH, AND PARKS 

Ms. POLLMAN ROGERS. Madam Chair, Senator Johnson, good 

afternoon. 

My name is Darla Pollman Rogers. I am an attorney engaged in 

the private practice of law in Pierre, South Dakota. And I am here 

today to testify on behalf of preferential leaseholders who live in 

the Pierre Canal and Blunt Reservoir parts of South Dakota. 

I’m also privileged to introduce to you today the secretary of the 

South Dakota Game, Fish, and Parks, John Cooper. We have 

worked very hard together in negotiations to present you with the 

language in S. 2205, and we are both here to answer any questions 

and give any assistance we can to this committee to promote this 

cause. 

My job today, though, is to urge you to focus for a minute on the 

preferential leaseholders and to correct what I perceive to be an ongoing injustice that has occurred to these leaseholders as a result 

35

of the Government’s actions, not only in acquiring private land, but 

also in their prolonged ownership of private land for a public 

project that is now dead, and actually has been for many years. 

And I am here to urge you to correct the injustices by passage of 

S. 2205, or something similar thereto. 

Before I describe these injustices to you a little—in a little more 

detail, I would like to point you to the map that I have on the easel 

here, because I think sometimes a picture is worth a thousand 

words. The picture on the—or the map on the easel now, the red 

portion, depicts the Pierre Canal. And, as you can see, it extends 

from the Oahe Dam—the water was to go down that red canal, traverse all that way, and then go over to the other map that’s on the 

floor in front of you, which depicts the Sully County—or the Blunt 

Reservoir Project. And the Blunt Reservoir, then, is where the—at 

least part of where the land was to actually be—the reservoir was 

to be on that land, and then the land from—or the water from 

there would be pumped out for irrigation purposes. 

The Oahe Project was actually authorized by Congress in 1968, 

and from 1973 to 1977 is when the Bureau of Reclamation acquired 

these lands from the Pierre Canal owners and also the Blunt Reservoir owners. In 1977, the funds were not renewed, so the project, 

at that point, was dead. The Bureau acquired approximately 19,000 

acres along the canal and in the Blunt Reservoir area. 

The first injustice that I want to discuss briefly is the actual acquisition of the land. And I want to emphasize to you today that 

my clients, who owned most of that 19,000 acres of land, were not 

willing sellers. The land was acquired under threat of condemnation. And as part of the enticement to sell, these landowners were 

told, No. 1, that they could lease the land back at the same rate 

until the project went through, and, No. 2, that they could buy 

their land back for the same price if the project did not materialize. 

Neither one of those promises have been fulfilled. 

And that leads me to the continuing injustice. We are now 30 

years down the road. The preferential leaseholders have diligently 

tried to reacquire their land. And so, now you are faced with, How 

do you correct the injustice? How do you right these wrongs in this 

prolonged period of land ownership by a public entity? 

And I would suggest to you what we have tried to provide for you 

in S. 2205 is a possible solution. What the bill will do, bottom line, 

is, No. 1, it will give the preferential leaseholders an option to buy 

back the land. And that’s approximately 14,000 acres of this land. 

It will give the rest of the land, the nonpreferential lease land, to 

the Department of Game, Fish, and Parks for purposes of wildlife 

mitigation. 

I would remind you, however, that the terms of S. 2205 were negotiated back in 2001, and land prices have doubled between 2001 

and 2006. The goal here is to give the preferential leaseholders a 

meaningful option to buy back the land, so it needs to be affordable 

so that they can do so. 

I would like to just quickly wrap up with a personal example. My 

father, who is 83 years old, sold his land—some of his land to the 

Bureau in 1973. And, even at his age, he’s still very intricately involved in our farming operation. He is still waiting for an opportunity to buy back his land. Time is running out for him. It’s runVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00039 Fmt 6633 Sfmt 6602 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
36

* All exhibits have been retained in subcommittee files. 

ning out for all of the preferential leaseholders. I would urge you 

to act now to correct this injustice. 

Thank you for allowing me to testify. I would ask that my written testimony and exhibits be made part of the record. And we 

would be happy to answer any questions. Thank you. 

[The prepared statement of Ms. Pollman Rogers follows:]

PREPARED STATEMENT OF DARLA POLLMAN ROGERS, RITER, ROGERS, WATTIER & 

BROWN, LLP, REPRESENTING PREFERENTIAL LEASEHOLDERS WITHIN THE BLUNT

RESERVOIR AND PIERRE CANAL, ON S. 2205

Members of the Subcommittee, my name is Darla Pollman Rogers. I am an attorney in private practice in Pierre, South Dakota, and I represent preferential leaseholders in the Blunt Reservoir and Pierre Canal areas. Thank you for the opportunity to present testimony to you on behalf of the preferential leaseholders. 

The preferential leaseholders strongly support S. 2205. Since becoming aware of 

legislative proposals concerning the Pierre Canal and Blunt Reservoir lands, as a 

group, the preferential leaseholders have spent many hours negotiating for and providing input into S. 2205 and its predecessors. Please allow me to give you a brief 

background of the history surrounding the long struggle this small group of landowners has had in attempting to regain ownership of their land. 

The Blunt Reservoir land and the Pierre Canal land were originally part of the 

Oahe Unit, James Division, of the Oahe Irrigation Project (hereinafter called the 

‘‘Oahe Project’’), which was authorized as a component of the Pick-Sloan Plan to provide multi-purpose use of the Missouri River water in South Dakota. The Oahe 

Project was authorized and funded by Congress nearly 30 years ago, but the project 

never materialized. The government did, however, acquire approximately 19,000 

acres of land in Hughes and Sully Counties for construction of the Pierre Canal and 

Blunt Reservoir. All of these acres have been removed from county property tax rolls 

since 1977, as the land has literally been in federal ‘‘limbo.’’ Of the 19,000 acres, 

approximately 13,700 acres are preferential lease acres (approximately 25 original 

landowners or descendants who still operate the land as preferential leaseholders) 

and 5,300 are nonpreferential lease acres (original land-owners subsequently relinquished their rights to lease the land, which is now operated by approximately 9 

nonpreferential leaseholders). 

I used the word ‘‘acquire’’ deliberately, because the circumstances of the acquisitions were, at best, misleading. The landowners did not want to give up land that 

was an integral part of their operations. (See Exhibit 1,* one map of Pierre Canal; 

two maps of Blunt Reservoir area.) The original landowners were in fact ‘‘enticed 

to sell their land.’’ (See Exhibit 2, May 27, 2005, letter of Governor Rounds.) They 

were told that they could sell their land to the Government voluntarily, or it would 

be condemned. If they sold voluntarily, they could lease the land back from the Bureau of Reclamation (which administered and managed the land), at a lease rate 

that would not increase, until the project was completed (thus the term ‘‘preferential’’ leaseholders). These landowners were also told that if for some reason the 

project was not completed, they would be able to purchase their land back at the 

same price they were paid for it. 

You may ask how I know what representations were made to the original landowners. I know because they have told me, and I know because I was personally 

involved. My father, Leonard Pollman, was an original landowner, and we are preferential leaseholders today. In fact, my father’s case is a good example of the 

unfulfilled promises made to the original landowners at the time they gave up their 

land. My father did not want to go through costly condemnation litigation, so he reluctantly agreed to sell his land to the government, after he was told he could lease 

it back at the same lease rate until his land was needed for the project. (See Exhibit 

3.) In the event the land was not used, he was told he could buy it back for the 

same price for which he sold it. He asked the representative from the Bureau to 

please put that assurance in writing. See Exhibit 4, which is a copy of the written 

‘‘assurance’’ of the Bureau representative, Arthur E. Mischke, that the lease rate 

would remain the same. The original lease, dated December 19, 1973, was for 

$3,700.00. The ‘‘maximum rate’’ of $3,700.00 has steadily increased over the years, 

and today is nearly double that amount. (See Exhibits 5 and 6.) 

Similar representations were made to other landowners at the time of sale. See 

Exhibit 7, which is another ‘‘assurance’’ made by a Bureau representative to Duane 

37

and Barb Winkler, landowners in the Blunt Reservoir area. As in the case of Mr. 

Pollman, the annual leaseback rate has more than doubled over the years, yet their 

Land Purchase Con-tract has not become null and void. 

It is important to know the sincere and honest intentions of these landowners. 

They did not wish to be uncooperative, but they wanted to protect their interests, 

for as long as possible, in the land they were in essence being forced to sell. (See 

Exhibit 8, letter of preferential leaseholder Aubrey R. Smith.) 

That is still the intent of these same landowners today. After all these years, they 

are still trying to reacquire their land. While most of them have leased the land 

since the government acquired it, the lease rates have not remained the same, but 

have increased dramatically over the years. And to date, these landowners have still 

not had the opportunity to buy back their land, as promised. 

As early as 1981, deauthorization of the Oahe Project was considered, and these 

same landowners testified at a hearing in front of the Subcommittee on Water and 

Power of the Committee on Energy and Natural Resources, United States Senate, 

as follows:

Their (the original landowners’) position is that they should have the first 

chance to buy back their land... This dispositional scheme must be written into the deauthorization legislation itself.

The landowners were supported in their position by the South Dakota Legislature, 

which passed a Concurrent Resolution in 1980 favoring disposing of the land acquired for the Oahe Project by first offering it to the original landowners. Unfortunately, the matter was not resolved in 1981. 

The issue of deauthorization of the Oahe Project resurfaced again in January of 

1998, in the form of S. 1341. In that bill, all the land was to have been transferred 

to the State of South Dakota for wildlife habitat mitigation (See Exhibit 9). John 

Cooper, the Secretary of the South Dakota Department of Game, Fish and Parks, 

sent a letter to the preferential leaseholders (among others) concerning deauthorization of the Pierre Canal and Blunt Reservoir features of the Oahe Project and transferring those lands in Fee Title to the State of South Dakota for wildlife mitigation. 

(See Exhibits 10 and 11.) The landowners were invited to a public hearing in late 

January of 1998, and many landowners attended the meeting. They were told, in 

essence, that acquisition of the Pierre Canal and Blunt Reservoir by South Dakota 

Game, Fish and Parks was part of a much larger effort to re-store wildlife habitat 

that was destroyed by the construction of the Missouri River Dam. The ultimate effect of S. 1341 would have been that these preferential leaseholders would have lost 

their land, probably within a ten-year period. Preferential leaseholders ex-pressed 

their strong opposition to S. 1341, as did then Representative John Thune. (See Exhibits 12 through 16.) 

So the struggle began all over again. The preferential leaseholders had numerous 

meetings with each other, with Game, Fish and Parks, and with their South Dakota 

Congressional delegates. Senator Daschle understood the long struggle of these 

landowners and their unique situation and agreed to champion their cause. S. 1178 

was the result of said meetings, and it was introduced to you in October of 1999. 

We supported S. 1178, but unfortunately, it did not survive the political process. 

Since the defeat of S. 1178, the meetings have continued among landowners, 

Game Fish and Parks, South Dakota Congressional delegates, the Commissioner of 

School and Public Lands, and the Bureau of Reclamation. With Secretary John Cooper acting as facilitator, we stayed in touch intermittently in 2000, and then held 

a series of working sessions in 2001. The result of these efforts was S. 1028. Under 

S. 1028, the Blunt Reservoir feature of the Oahe Project would have been deauthorized. The preferential lease land was to have been transferred to the South Dakota 

Commission of School and Public Lands, and the preferential leaseholders in the 

Blunt Reservoir and Pierre Canal areas would have had the opportunity to buy back 

the land that was acquired from them for a project that never materialized. Nonpreferential lease parcels, unleased parcels, and preferential lease parcels that were 

not repurchased by the original landowner (or his or her descendants) were to have 

been conveyed to Game, Fish and Parks for the purposes of wildlife habitat mitigation. 

S. 1028 was a better bill than its predecessors, because in this round of negotiations, the interested parties tried to resolve all concerns and questions that were 

articulated with the introduction of S. 1178. For example, the terms ‘‘nonpreferential leaseholder’’ and ‘‘preferential leaseholder’’ were redefined to make sure 

there were no arguments or questions about who fit into the categories. The issue 

of liability was addressed in S. 1028, in response to concerns raised by the Bureau. 

The Bureau participated in the working sessions and submitted the liability language included in the bill. Revisions were made in response to concerns of county 

38

officials. Funding clarifications were made in response to concerns of the Commissioner of School and Public Lands. A perpetual easement along the Pierre Canal 

land for future water development was added to appease water development concerns. 

Unfortunately, S. 1028 did not pass. What you have before you today, however, 

is S. 2205, which is in essence identical to S. 1028. Preferential leaseholders have 

the option to buy back their land. Long-term funding mechanisms are included in 

an attempt to make the buy-back a viable option for landowners. Non-preferential 

leaseholders also have a ‘‘trade’’ opportunity, if the land they currently lease is an 

integral part of their home or business. 

I would point out, however, that the preferential leaseholders have concerns about 

the valuation provisions of the bill. As currently drafted, Section 2(d)(4) of S. 2205 

provides that the purchase price will be based upon a fair market value appraisal 

of the land for agricultural use. The preferential leaseholders agreed to that provision in 2001, when all the parties sat at the table and negotiated the terms of this 

bill’s predecessor. From 2001 to the present, the value of farmground in Hughes and 

Sully Counties has nearly doubled. Farmground located in the Blunt Reservoir vicinity sold for $400.00 to $450.00 per acre in 2001; in 2005, similar property sold 

for $750.00 to $844.00 per acre. Because of the lapse in time in getting this issue 

resolved, use of 2001 valuations, or granting preferential leaseholders a discount on 

the fair market value, may be the only way to make the buy-back option meaningful 

for some of the preferential leaseholders who lost thousands of acres of land to ‘‘public use.’’

Many injustices have occurred to the preferential leaseholders throughout this agonizing process. First, their land was taken from them based upon false promises 

and misrepresentations. The misrepresentations continued through the leasing process that transpired over the next 30 years. But perhaps an even greater injustice 

is the prolonged period of time for which government held this private land, even 

though the public project for which the land was originally acquired has been dead 

for years. And now, despite the fact that representatives from the Bureau participated in the negotiations of the language of this bill and agreed to the terms, the 

Bureau appears to oppose the return of the land to the preferential leaseholders. 

S. 2205 is a compromise. Game, Fish and Parks wanted all the land for wildlife 

mitigation; leaseholders wanted all the land returned to private ownership. This 

compromise is the end result of countless hours of drafting and redrafting, which 

has come about as the result of input, negotiations, and compromise of all parties 

directly affected by deauthorization of the Blunt Reservoir feature of the Oahe 

Project. A true consensus has been reached in this bill. My clients, this small group 

of preferential leaseholders who have struggled all these years to have the opportunity to repurchase their land, support S. 2205. It is an appropriate resolution of 

a long-standing situation. 

I will add this. My father is now 83 years old. He is still actively involved in our 

family farming operation. While he has had many promises made to him and broken, his dream is to reacquire his land during his lifetime. 

On behalf of my father and the other preferential leaseholders of the Blunt Reservoir and Pierre Canal, I urge your support and passage of S. 2205. 

Thank you for the opportunity to present this testimony. I am happy to try to answer any questions you may have.

Senator MURKOWSKI. Thank you. And, yes, all the exhibits you’ve 

mentioned, and your full testimony, will be included, as well as 

that of any of the rest of you. 

Just a few very quick questions for the members of this second 

panel here, starting with you, Mayor Krambeck. Both Senator 

Johnson and I brought up the question to Mr. Robinson, in terms 

of the anticipated cost to the city if you did have to go through a 

licensing process. You indicated in your comments that it could 

theoretically approach millions of dollars. Do you have anything 

more specific, in terms of what you anticipate that cost might be? 

Have you looked at that? Or are we just, kind of, estimating that 

it’s going to be a considerable amount? 

Mr. KRAMBECK. From everything that I can gather from all the 

information that we have with the FERC licensing, it could most 

definitely get into the millions of dollars. 

39

Senator MURKOWSKI. And for a community like yours, what does 

that mean to you? 

Mr. KRAMBECK. It would be very much a hardship for us, and, 

as the testimony stated, a possibility of having to mothball the 

project. 

Senator MURKOWSKI. Thank you. 

Mr. Becker, you’ve indicated in your comments that there’s a fair 

amount of cooperation working with the USGS on a groundwater 

study and analysis within the State. What would you intend to 

identify as a priority area of study in cooperation, or in conjunction, 

with USGS if you’re able to move forward with this groundwater 

study? 

Mr. BECKER. Well, I mentioned local control in my testimony, 

and I think that we would—if we did come up with a program for 

the State, driven by this bill, that we would need to check back 

with our citizens and set up a kind of a protocol or maybe a priority system by which we could go through that system, certainly 

near growth areas, issues like that, where we would see growth 

with potential conflict—looking for water, for growth in economic 

development, as well as protection. So, I think that would kind of—

just in a general way, how I might think about it. 

Senator MURKOWSKI. Thank you. 

And, Dr. Lytle, what progress have you made in acquiring the 

rights to the water the proposed project would provide? How far 

along are you in that? 

Dr. LYTLE. What progress we’ve made? The actual feasibility 

study that we’re proposing to work, in cooperation with the Bureau 

of Reclamation, is the feasibility that’ll allow us to secure those 

water rights. But, as interest in—as far as the local and regional 

groups that are involved in this project, we’ve taken it upon ourselves to begin that process by completing the initial phase—Phase 

1 reconnaissance study and a number of other additional water 

rights investigations. But we’re looking to H.R. 3812 to provide 

that cost share that’ll allow us to complete it and move it forward. 

Senator MURKOWSKI. But, at this point, you’re still in the preliminary phases? 

Dr. LYTLE. That’s correct. 

Senator MURKOWSKI. And, finally, to you, Ms. Pollman Roger, 

you mentioned the preferential leaseholders. Do you know of any 

nonpreferential leaseholders who would somehow be disadvantaged 

by the conveyance to the State Game and Fish Department? 

Ms. POLLMAN ROGERS. Yes, Madam Chair. We have tried—some 

of the preferential leaseholders are also nonpreferential leaseholders. And so, some of the land, the nonpreferential land, is also 

very much part of their operations today. We have included a provision in the bill to try to address that, and that gives nonpreferential leaseholders in that particular situation the opportunity to 

go somewhere else in the State of South Dakota to find land that 

could be used for wildlife mitigation, acquire that, and then trade 

the South Dakota Game, Fish, and Parks for that piece, so that 

they can keep their operations intact. And that would be pursuant 

to consent of both parties. But I am sure that the Department of 

Game, Fish, and Parks is willing to work with these people who 

have the land as part of their operations now. 

40

Senator MURKOWSKI. Good. Thank you. 

Senator Johnson, questions? 

Senator JOHNSON. Well, I want to thank the entire panel for your 

observations on the various bills before the committee. It’s all very 

helpful. I have just a few questions for my South Dakotans. 

Mayor Krambeck, the project at Spearfish has been in continuous 

operation since 1912. During these past almost 100 years, the 

project has been a clean source of renewable energy and assured 

a stable water supply to the city of Spearfish, created recreational 

opportunities within the city, and supplied water to the D.C. Booth 

National Historic Fish Hatchery. Although these multiple uses 

clearly strike a balance in the public interest, in the event that S. 

1577 becomes law, do you foresee any operational changes at the 

project? 

Mr. KRAMBECK. Yes, Senator Johnson. I feel—under public ownership, I think that there could be many positive changes. And one 

positive change is the agreement that I referred to in my testimony 

with the Spearfish Canyon Homeowners Association. This was one 

of the groups that I met with that basically are one of the stakeholders within the canyon, and we have a potential agreement basically signed with them to allow more water flow in some of the 

lower reaches of the canyon when the water flows are at certain 

levels. And so, this would be a positive thing. And I think under 

private ownership, when it was under Homestake, that they 

wouldn’t allow this so the studies could be done. And our city council also, in 2004—I don’t remember the resolution number, but we 

did a resolution basically saying that we agree that this aquifer recharge area should be studied, and we will agree to study it. 

In fact, I was on vacation last spring, and received a phone call 

from my public works director, and she said, ‘‘Jerry, we’ve got 

about 120 cubic feet per second in the creek, and USGS wants to 

do some studying this week.’’ I said, ‘‘Go for it.’’ I said, ‘‘Turn the 

gates open and let some water down, and let the—let’s do what we 

can do.’’

So, I feel, under public ownership, yes, that these things could 

be accomplished. 

Senator JOHNSON. Now that the city of Spearfish has assumed 

ownership of the hydroelectric facility, how has it made certain 

that the project is operated and maintained in a safe and efficient 

manner? And does the city have the expertise to run this facility? 

Mr. KRAMBECK. We were able to, fortunately, hire two of the operators that Homestake Mining Company had for years. One of 

them was about a 35-year employee, and he’s retired now and 

working part time for us. And the other one was actually the foreman of the whole mine operation, their electrical foreman. So, we 

brought expertise in with us, and they are actually operating the 

power plant, the same folks. 

And as for any safety issues, or anything like that, that may 

come up with the dams and so forth, I would just like to say that 

we’re very much aware of these types of issues, and if either one 

of the dams broke—one, we refer to as the Maurice Dam—that 

water would just go down Spearfish Creek, and that’s not a flood 

situation; the other one is referred to as Forebay, and that water 

41

* All illustrations have been retained in subcommittee files. 

also, if that dam would breach, would actually end up back into 

Spearfish Canyon. So, there aren’t any issues there with safety. 

Senator JOHNSON. Well, thank you, Mayor Krambeck. 

And, Madam Chairman, I have a statement from the Spearfish 

Canyon Society that I’d like to submit for the record to the committee. 

Senator MURKOWSKI. Absolutely. It’ll be included. 

[The statement of the Spearfish Canyon Society follows:]

SPEARFISH CANYON SOCIETY, 

Spearfish, SD, March 26, 2006. 

Hon. TIM JOHNSON, 

U.S. Senate, Washington, DC. 

DEAR SENATOR JOHNSON: On behalf of the board of trustees of the Spearfish Canyon Society, we thank you for the opportunity to submit our attached comments on 

Senate Bill 1577 contained within Miscellaneous Water and Power Bills to the 

Water and Power Subcommittee of the Senate Energy and Natural Resource Committee. 

If you have any questions, please feel free to contact us. 

The very best, 

JERRY J. BOYER, 

President & Trustee. 

[Enclosures.] 

WRITTEN STATEMENT TO THE WATER AND POWER SUBCOMMITTEE OF THE SENATE

ENERGY AND NATURAL RESOURCE COMMITTEE

INTRODUCTION

My name is Jerry J. Boyer. I am president and trustee of the Spearfish Canyon 

Society. The Society is a not-for-profit public charity whose mission is to establish 

a legacy of Spearfish Canyon through conservation partnerships for preservation 

and enhancement of the canyon landscape, and its heritage. Through conservation 

of land, water, biological and cultural resources, sustainable programs and projects 

including public access, and charitable fundraising activities, the Society promotes 

effective and balanced solutions between ecology and economy. 

On behalf of the Society’s board of trustees, we thank the Subcommittee for this 

opportunity to share its 6-page summary views and attachments by this written 

statement. 

STATEMENT

The Society received an invitation from Senator Johnson’s office to review the purpose of S. 1577 and its impacts on the local community, and examine its national 

public policy ramifications. 

Although we do not support this bill, we applaud the efforts by Senator Johnson 

to achieve a streamflow balance in S. 1577 by inviting the city to meet with the 

Society and adopt the ‘‘win-win’’ streamflow plan. We regret the city declined the 

Senator’s invitation. 

The Society advances a ‘‘win-win’’ streamflow-sharing plan that reflects national 

public policy... economic development enhanced by common sense natural resource management. The plan contains a ‘‘shared pain-shared gain’’ streamflow feature that acknowledges the dramatic hydrological cycles typically experience in 

Spearfish Canyon (see attached chart). The plan allows 50cfs through the hydro diversion and 15cfs to flow downstream to increase and enhance the canyon’s aesthetics and natural resource values. The 15cfs downstream flow is then collected at 

an existing pipeline 3-miles downstream at the old Spearfish Intake (the pipe will 

have to be enlarged) and diverted around the aquifer recharge zone before merging 

with the hydro diversion flow at the City Park. Contrary to the City’s position, the 

Society’s plan also only affects the streamflow for the hydro operation, and does not 

affect any flow through the city or to downstream irrigators. (See Map illustration.*) 

The Society views S. 1577 as regressive from established national procedure that 

engages all public interests. The City understood the requirements and associated 

costs when it acquired the hydroelectric facility. Further, the City may be encumVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00045 Fmt 6633 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
42

bering significant other costs by circumventing an open public process that alienated 

other interested parties, and are now seeking relief through S. 1577. The City, without consideration for other cumulative public economic and environmental benefits, 

chose not to share the stream flow, but to seek all stream flow for its local revenue 

needs. While the Society supports the City’s acquisition and use of the hydroelectric 

facility, the Society believes it is inappropriate for the Congress to reward the municipality for its self-serving and economically stifling choice in demanding all 

streamflow for hydro generation. 

S. 1577 will eliminate the possibility for the competing parties to develop a better 

public resolution involving the Spearfish Canyon streamflow. The FERC permit review process provides an opportunity to objectively catalog the competing values, 

and facilitate a public policy choice that provides a balance between ecology and 

economy. The City position manifests a very local revenue benefit based on an 

unenlightened understanding of the Canyon streamflow. The Society, in contrast, 

supports a streamflow plan that increases the total public economic and environmental values involving tourism, 3-miles of new fisheries, and wildlife habitat including the American Dipper, to name a few. The Society’s ‘‘win-win’’ sharing of the 

streamflow provides a balance between ecology and economy. FERC’s jurisdictional 

decision in 2001, re-affirmed on appeal in 2002, provides a public process opportunity to resolve the conflict between competing parties. This conflict exemplifies the 

exact congressional purpose for FERC’s existence. 

The Society maintains that S. 1577 is not reflective of contemporary national values. An enlightened public trust doctrine, supported by nearly a century of technical 

research, has demonstrated a much greater aggregate economic value for our nation’s stream resources rather than those narrowly focused and often destructively 

consumptive uses of streams in the past, like Spearfish Creek. This contemporary 

value applied locally demonstrates that a hydro constructed in 1914 to create jobs 

in the mining industry to foster western Frontier development in the early 20th 

Century is not the same national necessity as a hydro to be operated for mere municipal revenue in the 21st Century. 

The Society maintains that S. 1577 is not even reflective of local values. The City 

leadership has chosen an extreme position that is not reflective of the citizens of 

the city, the state’s population centers, or the one million annual visitors to the canyon. No local public meetings regarding the contentious streamflow issue were conducted. Local values manifest an admiration of both the community and the picturesque canyon, and a desire that all entities benefit from the streamflow. Spearfish 

Canyon is a national and state scenic byway. The public’s affection and high value 

placed on the canyon landscape is best illustrated by the words of Frank Lloyd 

Wright in his visit of 1935: ‘‘I may be branded as a heretic, but how is it that I’ve 

heard so little of this miracle and we, toward the Atlantic, have heard so much of 

the Grand Canyon when this is even more miraculous. All the better 

eventually... that the Dakota are not on the through line to the Coast . . . My 

hat is off to South Dakota treasures.’’

Finally, S. 1577 establishes a harmful policy precedent that will further erode 

FERC’s jurisdictional authority as other U.S. congressional representatives seek 

similar resolve for their appropriate states. 

We urge the Congress to resist S. 1577, and allow the people, through established 

public policy and process, the opportunity to increase the aggregate public benefits 

by first cataloging the competing values, and then, develop a science-based stream 

management plan that better meets the public needs.

Senator JOHNSON. Okay. 

And to Ms. Pollman Rogers, under our bill, if a preferential 

leaseholder decides to exercise their right to repurchase the land, 

what price would they pay? 

Ms. POLLMAN ROGERS. Section 2(d) of the bill, as it’s currently 

drafted, really contains the terms of the purchase option. And what 

happens under that section, again, as currently written, is, the 

value of the land would be determined by an appraiser, who would 

appraise it at fair market value for agricultural purposes. Then the 

manner of the purchase or buyback would be at the option of the 

landowner, as long as that value was over $10,000. If it’s over 

$10,000, the preferential leaseholder can either exercise the option 

to purchase that land for cash, in which case that preferential 

leaseholder would get a 10-percent discount, because you don’t 

43

have the carrying costs of a contract. If the preferential leaseholder 

chose to purchase it under a contract or the installment plan, he 

or she would have 30 years in which to purchase it. They’d have 

to pay 10 percent down, 30 years to purchase it, at 3 percent interest. 

Now, I would say, however, I think you’ve really placed your finger on the real issue and the concern that some of the preferential 

leaseholders have at this point, and that is, again, when we negotiated the terms of this bill, land prices were much, much less than 

they are now. And the whole point is to make this purchase—repurchase option meaningful. Some of these people have lost thousands of acres, and they—in order to give them a meaningful opportunity to buy it back, it has to be at a price where they can, 

in fact, exercise their option and reacquire it. Land prices in 

Hughes and Sully Counties have escalated dramatically since 2001. 

Senator JOHNSON. What are some of the specific benefits from 

the wildlife mitigation plan that will accompany the lands conveyed 

to the State? 

Ms. POLLMAN ROGERS. With all due respect, Senator Johnson, I 

would like to defer that question to Secretary Cooper, if you 

would—

Senator JOHNSON. Well, if I may, Madam Chairwoman, because 

we do have the South Dakota secretary of Game, Fish, and Parks 

here, if I may call the secretary to the table to respond to just a 

couple of questions I have. 

Senator MURKOWSKI. I absolutely have no objection to that. I do 

have another commitment at 4 o’clock, but I am happy to let you 

continue your line of questioning, Senator Johnson. And if you 

want to just wrap up the panel at that time. 

Senator JOHNSON. I’d be honored to do that. And we only have 

just a few minutes more, I think, really. 

Senator MURKOWSKI. Well, with that, I will thank each and 

every one of the panel members again for coming the distance and 

providing your testimony. Know that the committee will be working on these matters with the bill sponsors. But I do appreciate the 

level of background that you’ve been able to provide us. And thank 

you. 

And, with that, Senator Johnson, I’ll pass the gavel back to you 

and you can wrap it up. 

Senator JOHNSON. Thank you. 

Senator MURKOWSKI. Thank you. 

Senator JOHNSON [presiding]. Secretary Cooper, I think you 

heard the question. Would you care to respond to it? What is in 

this for the wildlife circumstances in the State of South Dakota? 

Mr. COOPER. Yes, sir. Thank you, Senator Johnson. 

As you mentioned in your opening testimony, the Pick-Sloan 

Plan provided for the construction of mainstem dams on the Missouri River, four of which we have in South Dakota. Two of those 

dams—the Big Bend Dam backs up Lake Sharpe, and that’s down 

by the Lower Brule Reservation, the Crow Creek Reservation; and 

the Oahe Dam backs up Oahe Reservoir. When we lost, though, the 

floodplain and the cottonwood bottoms, we lost a significant 

amount of wildlife habitat in the State of South Dakota. And the 

1958 Wildlife Coordination Act required the Federal Government to 

44

mitigate that loss of acres on a one-to-one basis. Part of the whole 

Pick-Sloan—or the Oahe Diversion Project was also involved with 

not only supplying water and benefits as a result of the Pierre 

Canal and the Blunt Reservoir, but also to do wildlife mitigation 

projects. 

We have never received any wildlife mitigation projects as a result of the Pick-Sloan Program in the State of South Dakota. In 

order to solve that, or at least try to address it, we recognized we 

were going to have to compromise somewhat and try to come up 

with something that worked with our various Indian tribes and the 

State to go back in and try to mitigate terrestrial habitat. We did 

receive benefits as a result of the construction of those reservoirs 

for fisheries, but the terrestrial issues have never been solved. 

Your support for title VI of the Water Resources Development 

Act in 1999 was an attempt to compromise and to work with South 

Dakota’s need for that mitigation. As a part of that title VI legislation, we worked with our various Indian tribes to put together a 

compromise solution that required the Federal Government to put 

forth a trust fund, a $108 million trust fund, for the State of South 

Dakota, and various amounts of trust funds for the Lower Brule 

Sioux Tribe and the Cheyenne River Sioux Tribe. 

As a part of this turnover, if we could compromise on this with—

which Darla Pollman Rogers talked to you about, is a compromise. 

We would have the opportunity in this defunct project, which no 

longer is needed by the Federal Government, to provide the opportunity to return those preferential leaselands to the landowners 

who rightfully should have them back. And there is a sum of 4,000 

acres—a little over 4,000 acres, that would be able to come to the 

Department of Game, Fish, and Parks and utilized as a game production area in accordance with our mitigation plan under title VI. 

That title VI mitigation plan requires us to look for 27,000 acres 

that are already in State or Federal control, so that we don’t have 

to go out and purchase productive ag lands, and be able to do what 

we could to mitigate those losses on terrestrial habitat. You’re not 

going to ever mitigate the losses for the flooding of those two reservoirs, to the tune of 385,000 acres, but it’s an opportunity for us 

to move forward. And that 4,000 acres would go toward the 27,000-

acre bank that we have been able to construct under title VI. 

We have plans for those, for those acres. And they basically are 

involved with going back in with grass plantings and small 

shrubbery plantings, and the opportunity to have local farmers become our tenant to work with us on the development of those lands 

into wildlife habitat. 

Senator JOHNSON. Mr. Secretary, you may have heard Commissioner Keys make some observation about a constitutional concern 

he had about imposing this land on the State of South Dakota, and 

the need to make those a voluntary provision for South Dakota. I’m 

fine with that. But my assumption is that the State of South Dakota is very much inclined to take possession of these 4,000 acres. 

Mr. COOPER. Absolutely. And we’re more than willing to work 

with the Bureau of Reclamation on trying to construct language 

that would help them. 

And I might also point out that Commissioner Keys talked about 

the Bureau’s responsibility, continuing responsibility, on cultural 

45

resource issues in Section 106 of the Historic Preservation Act. 

Right now, in our programmatic agreement with all of the tribes 

in South Dakota on the Missouri River corridor, the responsibilities 

under title VI for the State is to assume responsibility with the 

Corps of Engineers, and any other Federal agency, for the protection of all those cultural-resource sites. We do it every day in the 

course of our work on the Missouri River. 

So, from the standpoint of the Bureau of Reclamation being able 

to transfer some of its concerns on their cultural resource, and/or 

whatever else they need to have done, we do have a process right 

now for being able to help them do that. They would not need anyone specifically from the BOR to be able to do that. 

Senator JOHNSON. Ms. Pollman Rogers, how many landowners 

are we talking about? How many people are involved that would 

have preferential——

Ms. POLLMAN ROGERS. There are approximately 25 preferential 

leaseholders. 

Senator JOHNSON. Okay. 

Well, I want to thank all of you. 

Relative to the Blunt Reservoir issue, it seems to me that this 

is a win-win solution we’re trying to lay out. The Government gets 

out from underneath the obligations for its annual maintenance 

costs, which is in the hundreds of thousands of dollars. The landowners are belatedly, but somewhat made whole. We also wind up 

with some extraordinarily valuable wildlife property being managed for those purposes, as at least partial mitigation. And so, I 

think the Government saves money, we serve the public better, and 

we also serve the private sector better. So, again, I appreciate your 

contributions to this hearing. 

Thank you, Mayor Krambeck, for your patience and your tenacity 

of the community to work through these issues. 

And, again, Mr. Becker and Dr. Lytle, thank you for your testimony here. It’s going to be very valuable to the committee, as a 

whole. 

So, with that, this hearing is adjourned. 

[Whereupon, at 4:12 p.m., the hearing was adjourned.] 

(47)

APPENDIXES 

APPENDIX I 

Responses to Additional Questions 

DEPARTMENT OF THE INTERIOR, 

OFFICE OF CONGRESSIONAL AND LEGISLATIVE AFFAIRS, 

Washington, DC, May 25, 2006. 

Hon. LISA MURKOWSKI, 

Chairwoman, Subcommittee on Water and Power, Committee on Energy and Natural 

Resources, U.S. Senate, Washington, DC. 

DEAR MADAM CHAIRWOMAN: Enclosed are responses prepared by the Bureau of 

Reclamation to questions submitted following the March 30, 2006, hearing regarding the following bills: S. 1962, S. 2205, and H.R. 3812. 

Thank you for the opportunity to provide this material to the Subcommittee. 

Sincerely, 

JANE M. LYDER, 

Legislative Counsel. 

[Enclosures.] 

RESPONSES TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. S. 1962/H.R. 4000—Do you feel that the loss of revenues to the 

Treasury if this bill were authorized is justified considering the recent hardship 

faced by the irrigation districts as a result of the drought? 

Answer. The Districts are unable to fulfill their repayment obligations as currently established. If the Districts are unable to meet their repayment obligations, 

repayment will shift to Pick-Sloan Missouri Basin Program (PSMBP) power customers. These customers do not benefit as directly from the facilities in question. 

The loss to the Treasury if this bill is enacted will be in the present value of the 

repayment obligation; the loss to the Treasury in the case that the Districts are unable to make their payments will depend on the way that the PSMBP allocates the 

additional financial obligation imposed by the failure of the Districts. Given that the 

Districts are being financially squeezed by a drought over which they have no control, extending their repayment period is a justified response that increases the 

chances that the Districts will regain financial viability and that costs will not be 

shifted to power customers unnecessarily. 

Question 2. H.R. 3812—How is the proposed project’s appraisal-level study progressing and when do you anticipate it will be complete? 

Answer. The appraisal study is in the final draft stage. We anticipate the study 

being completed by July, 2006. 

RESPONSES TO QUESTIONS FROM SENATOR BINGAMAN

Question 1a. S. 1962/H.R. 4000—Your testimony establishes that Reclamation 

has the authority to grant deferments with respect to the repayment schedules established by contract, but that those deferments do not extend the total time period 

for repayment. 

What are the types of situations where Reclamation has historically granted 

deferments? 

Answer. Deferment of annual repayment obligations has occurred due to conditions such as (1) severe or adverse weather conditions that cause a partial or total 

loss of crops, such as hailstorms, floods, severe windstorms, and drought; and (2) 

48

damage to project facilities where the repair cost to the District exceeds the District’s available reserve funds. 

Question 1b. Should the deferment authority be amended so that Reclamation has 

the authority to extend the total time period for repayment? 

Answer. Reclamation recently completed a review of its deferment policy. This policy review resulted in the issuance of new Directives and Standards in 2006 for 

‘‘Deferment Contracts—Delegation of Authority,’’ and ‘‘Deferment Contracts.’’ The 

existing authority has provided Reclamation the necessary authority to deal with 

the vast majority of hardship cases experienced by our Districts or contractors. Additional authority to extend the total time period for repayment is not necessary at 

this time. 

Question 2a. S. 1962/H.R. 4000—Over the past 20 years, how often has legislation similar to S. 1962 been enacted which provides relief to water users from an 

existing repayment contract? 

Answer. It is our understanding that legislation similar to S. 1962 has been enacted only once in the last 20 years. Public Law 108-231, enacted on May 28, 2004, 

authorized the Secretary of the Interior to revise the repayment contract with an 

irrigation district in Texas by extending the period authorized for repayment of reimbursable construction costs from 40 to 50 years. 

Question 2b. Will this bill create a unique precedent, likely to be followed by many 

similar requests? 

Answer. P.L. 108-231 already created a precedent that S. 1962 is following. S. 

1962 could encourage others to follow suit. 

Question 3a. H.R. 3812—Your testimony indicates that a feasibility study requires 

the completion of NEPA compliance documents. 

Does Reclamation have a new policy requiring NEPA compliance to be an integral 

part of its feasibility studies? 

Answer. Reclamation’s policy on integrated feasibility studies has been in place 

since the early 1980s. The most current version—Directives and Standards CMP 

05–02—(5/01/00) states, ‘‘Feasibility studies will normally be integrated with compliance under the National Environmental Policy Act (NEPA), Fish and Wildlife Coordination Act, Endangered Species Act, National Historical Preservation Act 

(NHPA), and other related environmental, and cultural resource laws. These activities will proceed concurrent with the feasibility study and culminate in an integrated planning report/NEPA compliance document (PR/NEPA Document).’’ The 

analysis generated from the NEPA process provides significant worthwhile information to inform the decision process as to whether a project should go forward, and 

advantages and disadvantages to different project configurations. 

Question 3b. If so, is it an efficient use of limited resources to require a full environmental review while still assessing the technical and financial feasibility of a 

project? 

Answer. Integrated feasibility studies are normally considered the most efficient 

planning approach from a time and resource perspective. Information developed during an environmental review process could have a direct influence and bearing on 

technical and financial feasibility. Current Reclamation policy does provide some 

flexibility in the preparation of feasibility studies. The feasibility study processes established through the Principles and Guidelines and the NEPA processes described 

in Reclamation’s NEPA Handbook have similar preparation and documentation requirements. 

Question 4. H.R. 3812—According to testimony, the San Joaquin County area is 

not within the CALFED project area. 

Is it possible, however, that some of the regional water supply projects being reviewed by the CALFED program could address the water supply issues in San Joaquin County? 

Answer. The testimony commented only on the lack of a Federal role along the 

Mokelumne River. San Joaquin County is included within the CALFED project area; 

CALFED, through the State’s Proposition 13 grant program, has funded several 

groundwater projects within the County. Stockton East Water District received a 

$1,341,000 grant for a groundwater storage pilot project in FY01, and $3,700,630 

for a pipeline construction project related to its groundwater storage project in 

FY02. In addition, through the State’s Proposition 50 grant program, San Joaquin 

County is preparing an integrated regional water management plan. 

RESPONSES TO QUESTIONS FROM SENATOR JOHNSON

Question 1. S. 2205—How much does the Bureau of Reclamation spend to manage 

the lands acquired for the Pierre Canal and Blunt Reservoir? 

49

Answer. Management and O&M costs specific to the Pierre Canal lands are cur- rently approximately $10,000 per year. Management and O&M costs for Blunt Reservoir lands are currently approximately $60,000 per year for land resource management activities related primarily to weed control, lease administration, fencing, and 

erosion control. Additionally, Reclamation spends approximately $130 per year in 

curation costs at the South Dakota State Archaeological Research Center (SARC) in 

Rapid City, South Dakota, for the storage of artifacts collected during cultural resource surveys in the mid 1970s. 

Question 2. S. 2205—In your testimony, you state that the Bureau will be still 

responsible for some administrative fees even if the Blunt Reservoir Bill is enacted. 

Could you elaborate on the nature of these fees? Do you have an estimate on the 

total amount of these fees? 

Answer. The Blunt Reservoir archeological collections include artifacts collected 

from Federal and private lands, both prior to and after the definition of boundaries 

of the proposed Blunt Reservoir, under the authority of the National Historic Preservation Act. The collections are currently curated at the South Dakota State Archaeological Research Center (SARC) in Rapid City. 

The fees referenced in the testimony are, in part, those related to curation of the 

archeological collections. The volume of artifacts collected from surveys and excavations associated with Blunt Reservoir Project activities is approximately 6.5 cubic 

feet, out of approximately 100 cubic feet of Reclamation collections from South Dakota. A Fiscal Year 2004 cooperative agreement with SARC funds curatorial services, including the collection of accession and catalog data, temporary storage costs, 

and a percentage of the new compact storage shelf units. Approximately $5,300 has 

been spent to date on these activities. Future annual expenditures for collection 

curation and storage are estimated to be $20 per cubic foot or approximately $130 

per year in perpetuity, not accounting for inflation. If authorized by law, SARC 

would potentially accept a donation of archeological collections made from Federal 

lands, given a rigorous process of evaluation and approval by both Reclamation and 

the State of South Dakota. Such a congressional authorization could release the 

Federal government from its ongoing curation obligation. 

In addition to curation, Reclamation may face additional costs associated with 

protection and preservation of cultural properties located on lands that would be 

conveyed back to preferential lease holders. Transfer of historic property out of Federal ownership without adequate and legally enforceable restrictions or conditions 

to ensure long-term preservation of the property’s historical significance, regardless 

of the mechanism used to do so (title transfer, quit claim deed, donation, etc.), is 

defined in 36 CFR 800 as an adverse effect on the historic property and therefore 

subject to consultation with the State Historic Preservation Office (SHPO), Advisory 

Council on Historic Preservation (ACHP) and other interested parties. Protection of 

sites that leave Federal ownership is usually achieved through preservation easements or covenants. The ACHP and SHPO expect that a responsible entity will hold 

the easements or enforce the terms of the covenants. If Reclamation retains this responsibility, costs may be incurred if land use changes are made and/or resources 

of historic/cultural value are discovered on the land. The amount of these costs 

would be situationally dependent. 

Question 3. S. 2205—Can you tell me the difference between the BOR’s cost to 

manage these lands today versus the cost if H.R. 4301 is enacted? 

Answer. Aside from the cultural resource work necessary for transfer of the lands, 

Reclamation’s costs of an estimated $70,000 per year would be eliminated if H.R. 

4301 were enacted. Unless Reclamation is relieved of the post-conveyance obligation 

to enforce preservation easements and covenants (by statute, these obligations could 

be transferred to Tribes, universities, tribal colleges, or the State of South Dakota), 

Reclamation would incur annual costs of $130 per year, adjusted for inflation, for 

curation and storage, as well as undeterminable intermittent costs related to the 

continued historical significance of the transferred lands. (From 1997 to 1999, Reclamation paid the University of North Dakota $40,000 for a cultural resources survey of 4,106 acres and for relocation and re-documentation of 84 previously recorded 

cultural resource sites. This may be indicative of possible future costs.) 

The other cost savings to the United States Treasury would be elimination of the 

annual payment in lieu of taxes (PILT), currently estimated at $27,600, to Sully and 

Hughes Counties in South Dakota. The bill proposes establishment of a trust fund 

for the use of the State to pay county taxes on the lands received by the State Department of Game, Fish, and Parks under the bill. However, the bill also indicates 

that the use of sales proceeds for the establishment of this Trust Fund would be 

subject to authorization of appropriations for this purpose. If funds are appropriated 

in accordance with this provision, some potential PILT savings would effectively be 

lost to the Federal government and transferred to the State. 

50

Question 4. S. 2205—When lands are taken out of Federal ownership, are they 

always disposed of at fair market value? If not, what are the exceptions? 

Answer. The General Services Administration Surplus Real Property Disposal 

Regulations contained in 41 CFR 102-75.350 allow disposal agencies to make surplus real property available to local governments and certain non-profit institutions 

or organizations at up to a 100 percent discount. Discounts in the fair market value 

of the lands are available only for public benefit purposes such as education, health, 

parks and recreation, public airports, highways, correctional facilities, etc. 

Additionally, 41 CFR 102-75.990 allows a Federal agency to donate to public bodies any Government-owned real property (land and/or improvements and related 

personal property), or interests therein in cases where the estimated cost of the 

property’s continued care and handling exceeds the estimated proceeds from its sale. 

Outside of these exceptions, Reclamation is not aware of any regulations or laws 

that allow Reclamation to dispose of lands at less than fair market value. 

FEDERAL ENERGY REGULATORY COMMISSION, 

OFFICE OF ENERGY PROJECTS, 

Washington, DC, April 18, 2006. 

Hon. LISA MURKOWSKI, 

Chairman, Subcommittee on Water and Power, Committee on Energy and Natural 

Resources, U.S. Senate, Washington, DC. 

DEAR CHAIRMAN MURKOWSKI: Thank you for your letter of April 3 enclosing questions from Senator Tim Johnson for the record of your Subcommittee’s March 30, 

2006 hearing on S. 1577, a bill to facilitate the transfer of Spearfish Hydroelectric 

Plant Number 1 to the city of Spearfish, South Dakota, and for other purposes. 

Enclosed are my responses to Senator Johnson’s questions. If you have further 

questions or need additional information, please let me know. 

Sincerely, 

J. MARK ROBINSON, 

Director. 

[Enclosure.] 

RESPONSES TO QUESTIONS FROM SENATOR JOHNSON

Question 1. First, let me start out by stating that I do believe the licensing and 

administration of our nation’s public hydro-electric plants is an important regulatory tool to balance the often competing multiple uses of the nation’s water resources. Several Senators on the Energy Committee have devoted a good deal of 

time toward improving the federal license process for nonfederal hydropower plants. 

That being the case, I believe that the set of circumstances surrounding the small 

hydroelectric plant in Spearfish are unique and, therefore, provide for a re-examination in this instance of the federal license requirements. 

It is my understanding that FERC is asserting jurisdiction to require a license 

on the basis that certain rights-of-way grants and permits, which were issued by 

the federal government prior to the enactment of the 1920 Federal Power Act, had 

expired. Is this your argument? 

Answer. Yes, the FERC is asserting jurisdiction over the Spearfish Project based 

on the fact that certain pre-1920 rights-of-way and permits had expired. When a 

pre-1920 permit expires, the authorization once provided by the permit must be obtained from the Commission. [See Scenic Hudson Preservation Conference v. 

Callaway, 370 F. Supp. 162, 166 (S.D.N.Y. 1973), affd, Scenic Hudson Preservation 

Conference v. Callaway, 499 F.2d 127 (4th Cir. 1974)); Wisconsin Power and Light 

Company, 55 FERC ¶ 61,169 (1991). 

Question 2. Now, I’ve learned that these rights-of-way grants and permits were 

not issued by the FERC or that the rights-of-way are administrated by the FERC. 

In fact, the rights-of-way permits are administrated exclusively by the U.S. Forest 

Service, which recently found that they had not expired, and in fact, were validly 

transferred from the Homestake Mining Company to the City of Spearfish. In light 

of these sets of circumstances, don’t you believe that FERC is overreaching in asserting jurisdiction, particularly in light of the long-held administration of the 

rights-of-way by the U.S. Forest Service? 

Answer. Pursuant to section 23(b)(1) of the Federal Power Act (FPA), 16 U.S.C. 

§ 817, a non-federal hydroelectric project must, unless it has a still-valid pre-1920 

federal permit, be licensed if it occupies lands of the United States. The Spearfish 

project occupies federal land, so the inquiry turns to whether it has a still valid pre1920 federal permit. If not, the FPA requires that the project be licensed. 

51

By way of further background, Section 4 of the Transfer Act of February 1, 1905 

(1905 Act) [Ch. 288, 33 Stat. 628] states:

Rights-of-way for the construction and maintenance of dams, reservoirs, 

water plants, ditches, flumes, pipes, tunnels, and canals, within and across 

the national forests of the United States, are granted to citizens and corporations of the United States for municipal or mining purposes, and for 

the purposes of the milling and reduction of ores, during the period of their 

beneficial use, under such rules and regulations as may be prescribed by 

the Secretary of the Interior, and subject to the laws of the State or Territory in which said forests are respectively situated. 

[Emphasis added.]

The 1905 Act also transferred from the Secretary of the Interior to the Secretary 

of Agriculture authority over the forest reserves, together with authority over hydroelectric facilities on those reserves [Homestake Mining Company, 97 FERC at p. 

61,832 n. 18]. It is this Act that allowed the project to be operated, for mining purposes, without a license from the Commission. 

By Commission order issued November 9, 2001 [Homestake Mining Company, 97 

FERC ¶ 61,180], as amended by our order of March 1, 2002 [Homestake Mining 

Company, 98 FERC ¶ 61,236], the Commission found that the Spearfish No. 1 

Project had a valid right of way pursuant to the 1905 Act for those parts of the 

project’s water transmission conduits and pipelines that occupy National Forest 

lands. The right of way was still valid in 2001 because, in compliance with the 1905 

Act, the Spearfish project was built and was still operated for mining and ore-milling purposes, in that all the power it generated was being transmitted to and used 

by Homestake’s mining operations in the town of Lead, South Dakota. 

On April 15, 2002, Homestake confirmed that it ceased mining operations as of 

December 31, 2001, but argued that the pre-1920 permit was still in effect, because 

it permitted ‘‘all requisite mine reclamation operations.’’ However, section 4 of the 

1905 Act makes no reference to mine reclamation, which in 1905 was presumably 

of less regulatory concern than it is today. Nor has a search for references to the 

1905 Act in the administrative decisions of the Departments of Agriculture or the 

Interior uncovered any suggestion that mine reclamation should be considered an 

element of ‘‘mining purposes’’ under the 1905 Act. In these circumstances, the Commission concluded that, since Homestake had ceased mining operations, its pre-1920 

permit did not authorize continues project operation and Homestake or its successor 

must, if the projects is to continue generating, apply for a license pursuant to Part 

I of the FPA. 

The pre-1920 permit issued under the 1905 Act for the project’s water pipes and 

conduits is distinct from the Forest Service right-of-way for the project’s transmission line facilities. The latter permit was not issued under the 1905 Act but rather under the Act of February 15, 1901, or the Act of March 4, 1911. While that permit may have been a valid pre-1920 permit, it ceased to be so when the Forest Service replaced it in 1969 with a new permit. 

Since the Spearfish project no longer has valid pre-1920 permits, a license from 

the Commission is required for the project’s continued operation. 

Question 3. Mr. Robinson: I want to ask you a question about the time and cost 

of licensing this project. I understand that the median amount of time for a hydro 

re-license applicant is about 64 months from the beginning to the end, and that 

under the Traditional Process costs average $2.3 million. Who bears the costs for 

the license? And, in proportion to other hydro projects, what could the City expect 

in terms of cost and time to license this small, century-old hydro plant? 

Answer. According to the Commission’s ‘‘Report on Hydroelectric Licensing Policies, Procedures, and Regulations Comprehensive Review and Recommendations Pursuant to Section 603 of the Energy Act of 2000,’’ completed in May of 2001, the range 

for the amount of time for a hydro relicense applicant to prepare a license application is 32 to 40 months and from application filing to Commission action is 18 to 

43. The report also found the average application preparation cost to be about $2.3 

million. This average cost includes some license applications for very large projects 

that incurred very large costs. The application preparation costs are borne by the 

license applicant. 

Since 2001, the Commission has issued and implemented the Integrated Licensing 

Process (ILP). The ILP was designed to reduce the time and cost of licensing by providing a predictable and efficient licensing process. The benefits of the ILP come 

from early issue identification and study plan development, better coordination with 

other stakeholder processes, established time frames, and early Federal Energy Regulatory Commission staff assistance. Commission staff estimates that licensing will 

be completed in no more than 18 months after an application is filed and costs will 

52

be reduced 30 percent. No projects using the ILP have been filed yet, so staff has 

not yet been able to verify these projections. Results so far from the 14 projects 

using the ILP look promising. All projects have met all deadlines. 

For the Spearfish No. 1 Project, Commission staff estimates that the total time 

from the beginning of pre-filing consultation to application filing is 36 months and 

from application filing to Commission action would be about 18 months. Based upon 

data contained in several recently filed license applications for small projects of 

similar scope, staff would estimate an application preparation cost of about $84.2 

per kilowatt (kW) of installed capacity or about $338,000 for the 4,000-kW Spearfish 

No. 1 Project. These values of cost and time are estimates and they will vary due 

to the facts of the specific case. 

CITY OF SPEARFISH, SD, 

Speafish, SD, April 14, 2006. 

Hon. LISA MURKOWSKI, 

Chairwoman, Subcommittee on Water and Power, Committee on Energy and Natural 

Resources, U.S. Senate, Washington, DC. 

DEAR CHAIRWOMAN MURKOWSKI: It was my pleasure to appear before the Senate 

Subcommittee on Water and Power of the Committee on Energy and Natural Resources on Thursday, March 30, 2006, to give testimony on S. 1577, to facilitate the 

transfer of Spearfish Hydroelectric Plant Number 1 to the City of Spearfish, South 

Dakota, and for other purposes. The City of Spearfish and its citizens appreciated 

the opportunity to convene a hearing on S. 1577, which continues to be a matter 

of primary importance to our community. We look forward to working with the Subcommittee, Senator Tim Johnson, and Senator John Thune, as this bill progresses 

through the legislative process. 

In your letter dated April 3, 2006, you provided a set of questions that has been 

submitted and requested the City’s response. As requested, the City has prepared 

its response, which is attached to this letter. 

Should you have any further questions regarding this matter, please do not hesitate to contact me. We again thank you and the Subcommittee for this opportunity 

to fully vet all views and interests associated with S. 1577 and believe that the bill 

strikes the appropriate balance between developmental and conservational interests, 

while preserving the historic Spearfish Hydroelectric Plant Number 1. 

Sincerely, 

JERRY A. KRAMBECK, 

Mayor. 

[Enclosure.] 

RESPONSES TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. S. 1577 expresses the sense of Congress that the City should: (I) uphold a 2004 MOA with the Spearfish Canyon Landowners Association and (2) ensure the release of an additional 5-10 cubic feet per second between the Intake Dam 

and the Spearfish Division. Please explain the significance of this sense of Congress. 

Answer. The City believes that the significance of this sense of Congress is the 

acknowledgement that the operation and maintenance of the Spearfish Hydroelectric Plant Number 1 concerns not only the generation of emissions-free, renewable energy, but also the public’s interests in aesthetic flows, fisheries protection, 

irrigation, water supply, and recreation. As Mayor Krambeck testified during the 

March 30 hearing, the City understands its role to appropriately balance these interests—which, at times, may be competing—as illustrated by his recounting of a 

recent event where the City, in response to a request by the United States Geological Survey, authorized the release of additional flows into the bypassed reach of 

Spearfish Creek for the purposes of studying the geomorphology and geology of 

Spearfish Canyon. 

In reaching the 2004 Memorandum of Agreement, the City and Spearfish Canyon 

Landowners Association worked tirelessly to investigate historical flow data of 

Spearfish Canyon, as well as downstream water uses, in order to strike a scientifically-supported compromise that would allow for additional flows in the bypassed 

reach, while protecting downstream senior water rights and other public uses of 

Spearfish Creek. Should S. 1577 preclude Federal Energy Regulatory Commission 

involvement in this matter, the City fully intends to execute and uphold the 2004 

MOA, which would satisfy the sense of Congress expressed in the bill. 

Question 2. You testified that the U.S. Forest Service has determined that the 

right of way in question remains valid and is fully transferable to the City. Do you 

53

have the Forest Services assessment in writing so we could make that part of the 

hearing record? 

Answer. While the City was in the process of acquiring Spearfish Hydroelectric 

Plant Number 1 from Homestake Mining Company, it sent an inquiry to the United 

States Forest Service (USFS) regarding the then-current status of right-of-way 

grant, as well as whether the right-of way grant would be affected by the conveyance to the City. The City’s inquiry cited orders of the Federal Energy Regulatory 

Commission holding that the right-of-way grant at issue would expire upon the cessation of extraction activities at the Homestake Mine in Lead, South Dakota. 

The USFS’s response, which is attached, confirmed that ‘‘the 1905 easement 

transfers automatically upon sale of the pipeline facilities’’ and that ‘‘the right-ofway is unaffected by the conveyance unless there is a change of use of the easement.’’

U.S. FOREST SERVICE, 

NORTHERN HILLS RANGER DISTRICT, 

Spearfish, SD, July 30, 2004. 

E. JAMES HOOD, 

City Attorney, City of Spearfish, SD. 

DEAR JIM: Thank you for your draft letter of July 14, 2004 concerning the status 

of acquisition of Spearfish Hydro Plant No. 1 and the transfer of right-of-way grant 

08861. I appreciate you keeping me informed as to the City’s efforts in acquiring 

the Hydro Plant. 

In your letter, you ask that the USFS confirm that the right-of-way remains in 

effect and will be unaffected by the conveyance. I note that under your footnote #4 

on page two of your letter, you state that the Federal Energy Regulatory Commission (FERC) believes that the right-of-way expired once Homestake ceased its extraction activities in Lead. Our position is that the 1905 easement transfers automatically upon sale of the pipeline facilities. We asked that we be notified upon sale 

and transfer of ownership, which you have done. It is also our position that the 

right-of-way is unaffected by the conveyance unless there is a change of use of the 

easement. In that case, an environmental analysis and Special Use Permit may become necessary. 

The position of the Forest Service in our ability to regulate the 1905 easement 

is that we may administer projects as long as that administration does not diminish 

or reduce any vested right granted by the 1905 right-of-way. Because of the subsurface nature of the use of National Forest land, the impact on the National Forest 

is minimized. We have the authority under the Organic Act for general resource protection; and therefore, the Forest Service has authority under 36 CFR 251 to require 

information from the holder, stop resource damage, require that the project be maintained in good repair and require rehabilitation of the project area upon abandonment of the projects. 

I have obtained copies of recorded Assignment between Homestake and the City 

of Spearfish. If there is other information that I need I will let you know. 

Again, thank you for keeping me informed of your progress with the acquisition 

of Hydro Plant No. 1. If you need other information from me, please let me know. 

Sincerely, 

PAMELA E. BROWN, 

District Ranger. 

RESPONSES TO QUESTIONS FROM SENATOR JOHNSON

Question 1. Mayor Krambeck, this project has been in continuous operation since 

1912. During these past nearly 100 years, the project has been a clean source of 

renewable energy, ensured a stable water supply to the City, created recreational 

opportunities within the City of Spearfish, and supplied water to the D.C. Booth National Historic Fish Hatchery. Although these multiple uses clearly strike a balance 

in the public interest, in the event that S. 1577 becomes law, do you foresee any 

operational changes at the project? 

Answer. While the City would continue to operate Spearfish Hydroelectric Plant 

Number 1 for generational purposes, certainly some changes could occur at the 

project in the event of enactment of S. 1577. First, the 2004 MOA between the City 

and the Spearfish Canyon Landowners Association calls for additional instream 

flows through the reach of Spearfish Creek that is bypassed for the operation of the 

project. Second, the City’s interest in acquiring and operating the project is not to 

54

simply maximize power generation. To the contrary, the City understands its responsibilities to balance between developmental and conservational interests, such 

as aesthetics, fisheries protection, irrigation, water supply, and recreation. While 

the City cannot encroach upon perfected senior water rights, it would work with its 

constituencies to best balance among these important public interests. 

Question 2. Mayor Krambeck, now that the City has assumed ownership of this 

hydroelectric facility, how has it made certain that the project is operated and maintained in a safe and efficient manner? Does the City have the expertise to run this 

facility? 

Answer. The City has implemented appropriate safeguards to ensure that the hydroelectric facility is operated in a safe and efficient manner. Most importantly, the 

City hired former Homestake employees who operated and maintained the facility 

for many years. This approach allowed the City to retain years of institutional 

knowledge regarding the facility. At the same time, the City is investigating the feasibility of upgrading certain communications and control equipment at the facility, 

which would allow for a more precise and efficient operation of the facility. Finally, 

Federal Energy Regulatory Commission staff recently inspected the facility and 

found it to be in good working condition and classified it as having a low hazard 

potential. 

RESPONSES OF C. MEL LYTLE TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. In your testimony, you mention State and Federal policies that ‘‘erode 

existing supplies’’ and have ‘‘upset new supplies’’. To which policies are you referring? 

Answer. Historically, as the Department of the Interior’s Central Valley Project 

was constructed in California, San Joaquin County was directed to look to the 

American River through the Auburn-Folsom South Unit as a major source of the 

water it needed to meet its critical deficiencies and has been consistently denied a 

water supply from this source. At the same time, because of the planned availability 

of American River water for San Joaquin County, the County was denied other 

sources of surface water supply, principally from the San Joaquin, Stanislaus and 

Mokelumne Rivers. 

In significant part, the County’s reliance on American River water stems from numerous state and federal actions which have foreclosed other alternatives while always directing us to the American River; however, the Folsom South Canal extension into San Joaquin County has never been constructed and San Joaquin County 

has never received this contemplated water supply from the American River. In this 

regard, we cite the following:

A. Bulletin No. 11 of the State Water Rights Board entitled, ‘‘San Joaquin 

County Investigation,’’ dated June 1955, includes a description of the Folsom 

South Canal extending southward to provide a water supply of approximately 

303,000 acre feet annually to San Joaquin County. Bulletin No. 11 indicates 

that this water and canal is the ‘‘probable ultimate supplemental water requirement for the San Joaquin Area.’’

B. In Decision 858, issued on July 3, 1956, the State Engineer found that the 

North San Joaquin Water Conservation District could receive water from the 

American River through the Folsom South Canal and that this course would be 

cheaper and more dependable then Mokelumne River water which flows 

through the District. As a result of these findings, the North San Joaquin District was granted only a temporary permit to use water from the Mokelumne 

River and denied a requested permanent right. 

C. Four entities within San Joaquin County, consisting of the North San Joaquin Water Conservation District, Stockton and East San Joaquin Water Conservation District (now Stockton East Water District), City of Stockton, and the 

California Water Service Company, all filed to appropriate water from the 

American River. In Decision 893, adopted on March 18, 1958, the then State 

Water Rights Board at the request of the Bureau of Reclamation denied those 

permits. The Board, in granting the permits to the Bureau of Reclamation for 

the Folsom Project, conditioned the permit to allow time for parties desiring 

water within Placer, Sacramento, and San Joaquin Counties to negotiate a 

water supply contract. San Joaquin County interests did diligently negotiate for 

contracts, approved those contracts, and signed them, but they were not approved at the Washington level by the Bureau of Reclamation, as is noted 

below. 

D. The Bureau of Reclamation report entitled ‘‘Folsom South Unit’’ dated January 1960 clearly identified the needs for supplemental water within San JoaVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00058 Fmt 6601 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
55

quin County and service to the County through the Folsom South Canal. Again, 

this gave San Joaquin County reason to rely on a water supply from the American River. 

E. In 1967 and 1971, the Bureau of Reclamation furnished draft contracts to 

San Joaquin County and districts within the County to deliver, in part, American River water through the proposed Folsom South Canal to San Joaquin 

County. Negotiations regarding these contracts resulted in the Stockton East 

Water District, the Central San Joaquin Water Conservation District and the 

North San Joaquin Water Conservation District approving contracts for execution. The contracts were approved by the regional office of the Bureau of Reclamation. Although the contracts were sent to Washington for approval, none 

were executed by the United States. The contracts were not executed, due to 

a combination of circumstances and changing policies. Disapproval was not because San Joaquin County did not need the water. 

F. Following Decision 1400 issued by the State Water Resources Control 

Board in April 1972 modifying permits to the Bureau of Reclamation for American River water from the proposed Auburn Dam for delivery of water, in part, 

to San Joaquin County, San Joaquin County’s agencies continued to work with 

the Bureau of Reclamation regarding various studies concerning the AuburnFolsom South Unit. 

G. In Board hearings on Applications 14858, 14859, 19303 and 1904, for 

Stanislaus River water, which led to Decision 1422 in 1973, the Bureau of Reclamation testified that the portion of San Joaquin County north of the 

Calaveras River would be served by the Folsom South Canal. Furthermore, at 

the time of adopting the New Melones Basin Allocation in 1981, the Secretary 

of Interior noted that the provision of only a small amount of water to San Joaquin County from New Melones was acceptable since water would be provided 

to Eastern San Joaquin County from the American River through the Folsom 

South Canal.

Contrary to these many reports, studies, policies and decisions of both the State 

and the Federal Bureau of Reclamation, San Joaquin County has not received water 

from the American River through the contemplated extension of the Folsom South 

Canal. 

For years, the County has sought to obtain additional surface water supplies to 

supplement available water supplies, including efforts to obtain water from a source 

other than the contemplated American River. This includes expending substantial 

efforts and resources (in excess of 65 million dollars for infrastructure alone) to secure a reliable source of Stanislaus River water. Again, due to changes in State and 

Federal decisions and policies this supplemental water supply to San Joaquin County is not secure. In this regard, we cite the following:

A. As a result of State Water Resources Control Board Decision 1422 issued 

in 1973, the Bureau of Reclamation received conditional permits for Stanislaus 

River water to be diverted at New Melones Dam and Reservoir. In order to receive State permission to appropriate the water from these permits was to demonstrate ‘‘firm commitments’’ within the permitted four county service area, 

which included San Joaquin County. In part, to demonstrate such commitment, 

the Bureau of Reclamation entered into contracts with both Stockton East 

Water District and Central San Joaquin Water Conservation District in 1983 

for a 155,000 acre-foot annual Stanislaus River water supply. 

B. These County districts spent over 65 million dollars on delivery infrastructure. Despite the completion of these delivery facilities in 1993, the Bureau did 

not deliver water to the districts, but a significant amount of New Melones 

water was released in 1993 and 1994 for fish purposes to meet the needs of the 

recently adopted Federal CVPIA. Since 1993 the County districts have only received a small portion of their contracted Stanislaus River water. Instead, the 

Bureau of Reclamation makes discretionary releases from New Melones to meet 

Delta flow and salinity standards and for fish purposes that directly take water 

away from these County districts. 

C. The Bureau of Reclamation’s discretionary decision to meet Delta flow and 

salinity standards with this Stanislaus River water occurs despite the State 

Water Resources Control Board’s Decision 1641 issued in 2000 indicating that 

these standards could be meet from other sources including: releases from other 

CVP reservoirs such as Friant; recirculation of water through the Delta 

Mendota Canal, the Newman Wasteway and the San Joaquin River; construction of a valley drain; and purchases of water from willing sellers to release to 

meet these standards. 

56

D. The Bureau of Reclamation’s discretionary decision to release water from 

New Melones Reservoir for fish purposes to satisfy provisions of the CVPIA also 

deprives these County districts of their contracts Stanislaus River water. Nothing within the CVPIA mandates that these releases must be made from New 

Melones. The releases of Stanislaus River water is completely within the Bureau of Reclamation’s discretion.

These federal and state decisions are continuing to deprive County interests of 

water supplies. As a result, even though it is more costly, the County recognizes 

that surface water supplies obtained in the future for the most part will need to 

be on a conjunctive use basis. Any conjunctive use plan will use surface water in 

times of high flows and use stored groundwater in dry years. This is the basis of 

the MORE WATER Project where flood flows from the Mokelumne River will be 

captured with the construction of new infrastructure to be conveyed to groundwater 

recharge projects in the San Joaquin County. H.R. 3812 will authorize $3.3 million 

in federal appropriations for the Bureau of Reclamation to participate on a costsharing basis in the development of feasibility studies and environmental documentation required to complete this project. 

Question 2. In your testimony, you state that groundwater recharge is the primary 

focus of the project. Do you plan to re-inject project water, offset groundwater depletions with project water, or both? 

Answer. San Joaquin County is faced with numerous water supply challenges including critical groundwater overdraft, declining groundwater levels, diminishing 

surface water supplies, and impending threat of saline groundwater intrusion. The 

Eastern Basin Conjunctive Use Program is intended to help solve many of these 

challenges by creating the infrastructure necessary to facilitate both increased surface water use (in-lieu recharge) and direct groundwater recharge projects. The 

MORE WATER Project is an integral component to this Program. The success of 

the this Program could also allow regional and statewide interests to participate in 

groundwater banking and exchange programs due to the storage potential of the 

Basin estimated at 2 million acre feet or the equivalent of either Folsom or New 

Melones Reservoirs. 

RESPONSES OF C. MEL LYTLE TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Your testimony notes that San Joaquin County has been adversely affected by changes in State and Federal policies which have upset longstanding plans 

to develop new water supplies. Some additional background would be helpful. 

What changes in policies have occurred and how has that impacted the water supply in San Joaquin County? 

Answer. Historically, as the Department of the Interior’s Central Valley Project 

was constructed in California, San Joaquin County was directed to look to the 

American River through the Auburn-Folsom South Unit as a major source of the 

water it needed to meet its critical deficiencies and has been consistently denied a 

water supply from this source. At the same time, because of the planned availability 

of American River water for San Joaquin County, the County was denied other 

sources of surface water supply, principally from the San Joaquin, Stanislaus and 

Mokelumne Rivers. 

In significant part, the County’s reliance on American River water stems from numerous state and federal actions which have foreclosed other alternatives while always directing us to the American River; however, the Folsom South Canal extension into San Joaquin County has never been constructed and San Joaquin County 

has never received this contemplated water supply from the American River. In this 

regard, we cite the following:

A. Bulletin No. 11 of the State Water Rights Board entitled, ‘‘San Joaquin 

County Investigation,’’ dated June 1955, includes a description of the Folsom 

South Canal extending southward to provide a water supply of approximately 

303,000 acre feet annually to San Joaquin County. Bulletin No. 11 indicates 

that this water and canal is the ‘‘probable ultimate supplemental water requirement for the San Joaquin Area.’’

B. In Decision 858, issued on July 3, 1956, the State Engineer found that the 

North San Joaquin Water Conservation District could receive water from the 

American River through the Folsom South Canal and that this course would be 

cheaper and more dependable then Mokelumne River water which flows 

through the District. As a result of these findings, the North San Joaquin District was granted only a temporary permit to use water from the Mokelumne 

River and denied a requested permanent right. 

57

C. Four entities within San Joaquin County, consisting of the North San Joaquin Water Conservation District, Stockton and East San Joaquin Water Conservation District (now Stockton East Water District), City of Stockton, and the 

California Water Service Company, all filed to appropriate water from the 

American River. In Decision 893, adopted on March 18, 1958, the then State 

Water Rights Board at the request of the Bureau of Reclamation denied those 

permits. The Board, in granting the permits to the Bureau of Reclamation for 

the Folsom Project, conditioned the permit to allow time for parties desiring 

water within Placer, Sacramento, and San Joaquin Counties to negotiate a 

water supply contract. San Joaquin County interests did diligently negotiate for 

contracts, approved those contracts, and signed them, but they were not approved at the Washington level by the Bureau of Reclamation, as is noted 

below. 

D. The Bureau of Reclamation report entitled ‘‘Folsom South Unit’’ dated January 1960 clearly identified the needs for supplemental water within San Joaquin County and service to the County through the Folsom South Canal. Again, 

this gave San Joaquin County reason to rely on a water supply from the American River. 

E. In 1967 and 1971, the Bureau of Reclamation furnished draft contracts to 

San Joaquin County and districts within the County to deliver, in part, American River water through the proposed Folsom South Canal to San Joaquin 

County. Negotiations regarding these contracts resulted in the Stockton East 

Water District, the Central San Joaquin Water Conservation District and the 

North San Joaquin Water Conservation District approving contracts for execution. The contracts were approved by the regional office of the Bureau of Reclamation. Although the contracts were sent to Washington for approval, none 

were executed by the United States. The contracts were not executed, due to 

a combination of circumstances and changing policies. Disapproval was not because San Joaquin County did not need the water. 

F. Following Decision 1400 issued by the State Water Resources Control 

Board in April 1972 modifying permits to the Bureau of Reclamation for American River water from the proposed Auburn Dam for delivery of water, in part, 

to San Joaquin County, San Joaquin County’s agencies continued to work with 

the Bureau of Reclamation regarding various studies concerning the AuburnFolsom South Unit. 

G. In Board hearings on Applications 14858, 14859, 19303 and 1904, for 

Stanislaus River water, which led to Decision 1422 in 1973, the Bureau of Reclamation testified that the portion of San Joaquin County north of the 

Calaveras River would be served by the Folsom South Canal. Furthermore, at 

the time of adopting the New Melones Basin Allocation in 1981, the Secretary 

of Interior noted that the provision of only a small amount of water to San Joaquin County from New Melones was acceptable since water would be provided 

to Eastern San Joaquin County from the American River through the Folsom 

South Canal.

Contrary to these many reports, studies, policies and decisions of both the State 

and the Federal Bureau of Reclamation, San Joaquin County has not received water 

from the American River through the contemplated extension of the Folsom South 

Canal. 

For years, the County has sought to obtain additional surface water supplies to 

supplement available water supplies, including efforts to obtain water from a source 

other than the contemplated American River. This includes expending substantial 

efforts and resources (in excess of 65 million dollars for infrastructure alone) to secure a reliable source of Stanislaus River water. Again, due to changes in State and 

Federal decisions and policies this supplemental water supply to San Joaquin County is not secure. In this regard, we cite the following:

A. As a result of State Water Resources Control Board Decision 1422 issued 

in 1973, the Bureau of Reclamation received conditional permits for Stanislaus 

River water to be diverted at New Melones Dam and Reservoir. In order to receive State permission to appropriate the water from these permits was to demonstrate ‘‘firm commitments’’ within the permitted four county service area, 

which included San Joaquin County. In part, to demonstrate such commitment, 

the Bureau of Reclamation entered into contracts with both Stockton East 

Water District and Central San Joaquin Water Conservation District in 1983 

for a 155,000 acre-foot annual Stanislaus River water supply. 

B. These County districts spent over 65 million dollars on delivery infrastructure. Despite the completion of these delivery facilities in 1993, the Bureau did 

not deliver water to the districts, but a significant amount of New Melones 

58

water was released in 1993 and 1994 for fish purposes to meet the needs of the 

recently adopted Federal CVPIA. Since 1993 the County districts have only received a small portion of their contracted Stanislaus River water. Instead, the 

Bureau of Reclamation makes discretionary releases from New Melones to meet 

Delta flow and salinity standards and for fish purposes that directly take water 

away from these County districts. 

C. The Bureau of Reclamation’s discretionary decision to meet Delta flow and 

salinity standards with this Stanislaus River water occurs despite the State 

Water Resources Control Board’s Decision 1641 issued in 2000 indicating that 

these standards could be meet from other sources including: releases from other 

CVP reservoirs such as Friant; recirculation of water through the Delta 

Mendota Canal, the Newman Wasteway and the San Joaquin River; construction of a valley drain; and purchases of water from willing sellers to release to 

meet these standards. 

D. The Bureau of Reclamation’s discretionary decision to release water from 

New Melones Reservoir for fish purposes to satisfy provisions of the CVPIA also 

deprives these County districts of their contracts Stanislaus River water. Nothing within the CVPIA mandates that these releases must be made from New 

Melones. The releases of Stanislaus River water is completely within the Bureau of Reclamation’s discretion.

These federal and state decisions are continuing to deprive County interests of 

water supplies. As a result, even though it is more costly, the County recognizes 

that its last chance for surface water supplies obtained in the future for the most 

part will need to be on a conjunctive use basis. Any conjunctive use plan will use 

surface water in times of high flows and use stored groundwater in dry years. This 

is the basis of the MORE WATER Project where flood flows from the Mokelumne 

River will be captured with the construction of new infrastructure to be conveyed 

to groundwater recharge projects in the San Joaquin County. H.R. 3812 will authorize $3.3 million in federal appropriations for the Bureau of Reclamation to participate on a cost-sharing basis in the development of feasibility studies and environmental documentation required to complete this project. 

Question 2. You note that the water project contemplated in H.R. 3812 is not part 

of the CALFED program. 

Do any of the water supply projects being reviewed as part of the CALFED program have a connection to San Joaquin County, and might they help to address 

some of the issues described in your testimony? 

Answer. Much of the water supply development interests of San Joaquin County 

were not originally included in the CALFED development process. Since that time, 

the MORE WATER Project has developed, primarily through grass-roots efforts, into 

a significant conjunctive use program to correct groundwater basin overdraft with 

available flood waters from the Mokelumne River. Currently, it is focused primarily 

on the development of local supplies, whereas the focus of CALFED predominately 

is to improve water supply reliability for South of Delta Exporters, water quality 

and ecosystem restoration in the Delta as it is impacted by the State and Federal 

Projects. However, MORE WATER is consistent with the goals of CALFED, but has 

not been included as a major component in the CALFED solution to date. 

While not a component of the CALFED Program, MORE WATER will provide information important to water resource and environmental protection efforts being 

conducted under the CALFED aegis. MORE WATER is consistent with the following 

Program elements:

• Water Storage—Conjunctive use programs hinge on the ability for entities to 

capture surface water when available for direct use and groundwater recharge. 

Groundwater recharge is an integral part of the success of MORE WATER. 

• Ecosystem Restoration—The Mokelumne River and the Delta are a source of 

pride for the San Joaquin County Community. MORE WATER will be developed 

to maximize enhance or create ecosystem restoration benefits when feasible. 

• Watershed Management—The Mokelumne River Watershed is represented by 

numerous organizations, interest groups, water right holders and authorities. 

The County will continue to promote MORE WATER to these groups like the 

Mokelumne River Forum and coordinate formal consultation with these agencies. 

• Water Transfers—The underground storage potential of Eastern San Joaquin 

County is estimated at approximately 2 million acre-feet, enough to supply 12 

million people for one year. Groundwater banking in San Joaquin County has 

the potential to provide regional and statewide agencies the ability to store excess water in the underlying basin. San Joaquin County’s proximity to the Delta 

could facilitate water transfers and exchanges to areas served by the State 

59

Water Project, Central Valley Project and the CALFED Environmental Water 

Account. 

RESPONSES OF DARLA POLLMAN ROGERS TO QUESTIONS FROM SENATOR JOHNSON

Question 1. If a preferential leaseholder decides to exercise their right to repurchase the land, what price will they pay? 

Answer. Paragraph (2), Page 6, of S. 2205 sets forth the terms of repurchase if 

a preferential leaseholder exercises his/her option to buy back the land.

A. The value of a preferential lease parcel is its fair market value for agricultural purposes, as determined by an independent appraisal. 

B. If the appraised value of the land is in excess of $10,000.00, the preferential leaseholder has the option to pay cash for the land, or to buy it on an 

installment contract basis: 

(1) If the preferential leaseholder pays cash, the purchase price is the appraised value, less a 10% discount. 

(2) If the preferential leaseholder repurchases the land on an installment 

basis, the purchase price is the appraised value of the land. 

C. If the appraised value of the land is less than $10,000.00, the preferential 

leaseholder must pay cash, and the purchase price is the appraised value, less 

a 10% discount.

Question 2. What are some of the specific benefits from the wildlife mitigation 

plan that will accompany the lands conveyed to the state? 

Answer. The federal lands conveyed through S. 2205 to the State of South Dakota 

(for the use and benefit of the Department of Game, Fish & Parks) will provide the 

critical and essential land base on which the state can move forward with satisfying 

its Habitat Mitigation Plan as authorized by Section 602 of title VI of Public Law 

105-277 of October 21, 1998. By providing the much needed land base for fully implementing the state’s Habitat Mitigation Plan, the state can finally begin to adequately address the 30-year-old obligation to South Dakota by the federal government for wildlife habitat forever lost through inundation associated with construction of dams through the Pick-Sloan Act. It is necessary to have an accessible and 

productive land base on which to implement wildlife habitat mitigation plan practices such as woody cover developments, wildlife food plot and upland nesting cover 

establishments. Specifically, the citizens of South Dakota and its visitors will have 

a place to enjoy and encounter myriad wildlife species that are the direct result of 

habitat developments and improvements made possible by the availability of lands 

obtained through S. 2205 and applied to that land through an approved Habitat 

Mitigation Plan. 

RESPONSES OF DARLA POLLMAN ROGERS TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Do you believe that, if this bill is enacted, a sales price ten percent 

below fair market value will compensate the leaseholders for increase in sales price 

and lease fees over the last 30 years? 

Answer. No, a sales price ten percent below fair market value will not compensate 

preferential leaseholders for the increase in the value of land and lease fees over 

the last 30 years, for the following reasons:

1. Under S. 2205 as currently drafted, the 10% discount applies only if (a) 

the total purchase price is less than $10,000.00; or (b) if the preferential leaseholder pays cash to buy back his/her land. For many of the preferential leaseholders, especially in the Blunt Reservoir area where the tracts of lease land 

are larger, an installment purchase is the only way they will be able to exercise 

their option to buy back their land. Preferential leaseholders who repurchase 

their land via installment do not receive a discount from the appraised value. 

2. The value of the land, and especially the larger tracts, has increased dramatically over the years. Farmground in Hughes and Sully County is currently 

worth from $750.00 to $850.00 per acre. Values in the late seventies were much, 

much less. In addition, preferential leaseholders have paid close to fair market 

value for lease rates over the years, so their lease payments have also increased 

considerably over the 30-year timeframe.

[Responses to the following questions were not received at the 

time the hearing went to press.]

60

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

SUBCOMMITTEE ON WATER AND POWER, 

Washington, DC, April 3, 2006. 

LAURENCE BECKER, 

State Geologist, Vermont Department of Environmental Conservation, Geology and 

Mineral Resources Division, Waterbury, VT. 

DEAR MR. BECKER: I would like to take this opportunity to thank you for appearing before the Senate Subcommittee on Water and Power of the Committee on Energy and Natural Resources on Thursday, March 30, 2006, to give testimony on S. 

2054, to direct the Secretary of the Interior to conduct a study of water resources 

in the State of Vermont. 

Enclosed herewith please find a list of questions which have been submitted for 

the record. If possible, I would like to have your response to these questions by Monday, April 17, 2006. 

Thank you in advance for your prompt consideration. 

Sincerely, 

LISA MURKOWSKI, 

Chairman. 

[Enclosure.] 

QUESTIONS FROM SENATOR MURKOWSKI

Question 1. If enacted, how would the information provided by this study help address your groundwater contamination problems? 

Question 2. Do you feel that you have an adequate level of understanding about 

your surface water resources? 

Question 3. In coordination with the USGS, what will you identify as priority 

areas of study? 

QUESTIONS FROM SENATOR BINGAMAN

Question 1. Your testimony indicates that the State of Vermont is in the process 

of developing an aggressive program to understand its groundwater resource to benefit future planning efforts.

• Are there areas within the State that are beginning to experience significant 

draw down in any of the aquifer systems? Is water supply growing as an issue 

or is most of the concern in the State related to water quality issues? • Is the State able to provide sufficient funding and other resources to partner 

with the USGS in a joint study program? 

• Does the State currently have a permit system in place to regulate access to, 

and pumping of groundwater? 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

SUBCOMMITTEE ON WATER AND POWER, 

Washington, DC, April 3, 2006. 

Hon. JOHN KEYS, 

Commissioner, Bureau of Reclamation, Department of the Interior, Washington, DC. 

DEAR COMMISSIONER KEYS: I would like to take this opportunity to thank you for 

appearing before the Senate Subcommittee on Water and Power of the Committee 

on Energy and Natural Resources on Thursday, March 30, 2006 to give testimony 

on S. 1962, S. 2205, and H.R. 3812. 

Enclosed herewith please find a list of questions which have been submitted for 

the record. If possible, I would like to have your response to these questions by Monday, April 17, 2006. 

Thank you in advance for your prompt consideration. 

Sincerely, 

LISA MURKOWSKI, 

Chairman. 

[Enclosure.] 

QUESTIONS FROM SENATOR MURKOWSKI

Question 1. S. 1962/H.R. 4000—Do you feel that the loss of revenues to the 

Treasury if this bill were authorized is justified considering the recent hardship 

faced by the irrigation districts as a result of the drought? 

61

Question 2. H.R. 3812—How is the proposed project’s appraisal-level study progressing and when do you anticipate it will be complete? 

QUESTIONS FROM SENATOR BINGAMAN

Question 1. S. 1962/H.R. 4000—Your testimony establishes that Reclamation has 

the authority to deferments with respect to the repayment schedules established by 

contract, but that grant those deferments do not extend the total time period for 

repayment.

• What are the types of situations where Reclamation has historically granted 

deferments? 

• Should the deferment authority be amended so that Reclamation has the authority to extend the total time period for repayment?

Question 2. S. 1962/H.R. 4000—Over the past 20 years, how often has legislation 

similar to S. 1962 been enacted which provides relief to water users from an existing repayment contract?

• Will this bill create a unique precedent, likely to be followed by many similar 

requests?

Question 3. H.R. 3812—Your testimony indicates that a feasibility study requires 

the completion of NEPA compliance documents.

• Does Reclamation have a new policy requiring NEPA compliance to be an integral part of its feasibility studies? 

• If so, is it an efficient use of limited resources to require a full environmental 

review while still assessing the technical and financial feasibility of a project?

Question 4. H.R. 3812—According to testimony, the San Joaquin County area is 

not within the CALFED project area.

• Is it possible, however, that some of the regional water supply projects being 

reviewed by the CALFED program could address the water supply issues in San 

Joaquin County? 

QUESTIONS FROM SENATOR JOHNSON

Question 1. S. 2205—How much does the Bureau of Reclamation spend to manage 

the lands acquired for the Pierre Canal and Blunt Reservoir? 

Question 2. S. 2205—In your testimony, you state that the Bureau will be still 

responsible for some administrative fees even if the Blunt Reservoir Bill is enacted. 

Could you elaborate on the nature of these fees? Do you have an estimate on the 

total amount of these fees? 

Question 3. S. 2205—Can you tell me the difference between the BOR’s cost to 

manage these lands today versus the cost if H.R. 4301 is enacted? 

Question 4. S. 2205—When lands are taken out of Federal ownership, are they 

always disposed of at fair market value? If not, what are the exceptions? 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

SUBCOMMITTEE ON WATER AND POWER, 

Washington, DC, April 3, 2006. 

Hon. JERRY KRAMBECK, 

Mayor, The City of Spearfish, SD. 

DEAR MAYOR KRAMBECK: I would like to take this opportunity to thank you for 

appearing before the Senate Subcommittee on Water and Power of the Committee 

on Energy and Natural Resources on Thursday, March 30, 2006, to give testimony 

on S. 1577, to facilitate the transfer of Spearfish Hydroelectric Plant Number 1 to 

the city of Spearfish, South Dakota, and for other purposes. 

Enclosed herewith please find a list of questions which have been submitted for 

the record. If possible, I would like to have your response to these questions by Monday, April 17, 2006. 

Thank you in advance for your prompt consideration. 

Sincerely, 

LISA MURKOWSKI, 

Chairman. 

[Enclosure.] 

62

QUESTIONS FROM SENATOR MURKOWSKI

Question 1. S. 1577 expresses the sense of Congress that the City should: (1) uphold a 2004 MOA with the Spearfish Canyon Landowners Association and (2) ensure the release of an additional 5—10 cubic feet per second between the Intake 

Dam and the Spearfish Division. 

Please explain the significance of this sense of Congress. 

Question 2. You testified that the U.S. Forest Service has determined that the 

right of way in question remains valid and is fully transferable to the City. Do you 

have the Forest Service’s assessment in writing so we could make that part of the 

hearing record? 

QUESTIONS FROM SENATOR JOHNSON

Question 1. Mayor Krambeck, this project has been in continuous operation since 

1912. During these past nearly 100 years, the project has been a clean source of 

renewable energy, ensured a stable water supply to the City, created recreational 

opportunities within the City of Spearfish, and supplied water to the D.C. Booth National Historic Fish Hatchery. Although these multiple uses clearly strike a balance 

in the public interest, in the event that S. 1577 becomes law, do you foresee any 

operational changes at the project? 

Question 2. Mayor Krambeck, now that the City has assumed ownership of this 

hydroelectric facility, how has it made certain that the project is operated and maintained in a safe and efficient manner? Does the City have the expertise to run this 

facility? 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

SUBCOMMITTEE ON WATER AND POWER, 

Washington, DC, April 3, 2006. 

Hon. P. PATRICK LEAHY, 

Acting Director, U.S. Geological Survey, Reston, VA. 

DEAR MR. LEAHY: I would like to take this opportunity to thank you for sending 

Ms. Catherine Hill to appear before the Senate Subcommittee on Water and Power 

of the Committee on Energy and Natural Resources on Thursday, March 30, 2006, 

to give testimony on S. 2054, to direct the Secretary of the Interior to conduct a 

study of water resources in the State of Vermont. 

Enclosed herewith please find a list of questions which have been submitted for 

the record. If possible, I would like to have your response to these questions by Monday, April 17, 2006. 

Thank you in advance for your prompt consideration. 

Sincerely, 

LISA MURKOWSKI, 

Chairman. 

[Enclosure.] 

QUESTION FROM SENATOR MURKOWSKI

Question 1. What do you believe would be an appropriate non-Federal cost share 

for a study of this kind? 

QUESTION FROM SENATOR BINGAMAN

Question 1. Your testimony indicates that authorization of the study contemplated 

in S. 2054 is unnecessary given the existing authorization of the Cooperative Water 

Program. The President’s 2007 budget, however, would cut almost $700,000 in funding for the Cooperative Water Program.

• Without this bill and any specific appropriations that may be provided by Congress, is there any hope of getting significant resources from the USGS to partner with the State of Vermont on this study? 

• Has the USGS allocated any of its Cooperative Water Program money to 

Vermont over the last several years?

Question 2. If S. 2054, as introduced, were enacted into law, would the USGS require a state/local cost-share? How does the USGS interpret the language in S. 1338 

(a similar bill for Alaska) with respect to cost-share? 

63

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

SUBCOMMITTEE ON WATER AND POWER, 

Washington, DC, April 3, 2006. 

Dr. MEL LYTLE, 

Water Resources Coordinator, San Joaquin County, Stockton, CA. 

DEAR DR. LYTLE: I would like to take this opportunity to thank you for sending 

Ms. Catherine Hill to appear before the Senate Subcommittee on Water and Power 

of the Committee on Energy and Natural Resources on Thursday, March 30, 2006, 

to give testimony on H.R. 3812, to authorize the Secretary of the Interior to prepare 

a feasibility study with respect to the Mokelumne River, and for other purposes. 

Enclosed herewith please find a list of questions which have been submitted for 

the record. If possible, I would like to have your response to these questions by Monday, April 17, 2006. 

Thank you in advance for your prompt consideration. 

Sincerely, 

LISA MURKOWSKI, 

Chairman. 

[Enclosure.] 

QUESTIONS FROM SENATOR MURKOWSKI

Question 1. In your testimony, you mention State and Federal policies that ‘‘erode 

existing supplies’’ and have ‘‘upset new supplies’’. To which policies are you referring? 

Question 2. In your testimony, you state that groundwater recharge is the primary 

focus of the project. Do you plan to re-inject project water, offset groundwater depletions with project water, or both? 

QUESTIONS FROM SENATOR BINGAMAN

Question 1. Your testimony notes that San Joaquin County has been adversely affected by changes in State and Federal policies which have upset longstanding plans 

to develop new water supplies. Some additional background would be helpful.

• What changes in policies have occurred and how has that impacted the water 

supply in San Joaquin County? 

Question 2. You note that the water project contemplated in H.R. 3812 is not part 

of the CALFED program. 

• Do any of the water supply projects being reviewed as part of the CALFED program have a connection to San Joaquin County, and might they help to address 

some of the issues described in your testimony? 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

SUBCOMMITTEE ON WATER AND POWER, 

Washington, DC, April 3, 2006. 

J. MARK ROBINSON, 

Director of the Office of Energy Projects, Federal Energy Regulatory Commission, 

Washington, DC. 

DEAR MR. ROBINSON: I would like to take this opportunity to thank you for sending Ms. Catherine Hill to appear before the Senate Subcommittee on Water and 

Power of the Committee on Energy and Natural Resources on Thursday, March 30, 

2006, to give testimony on S. 1577, to facilitate the transfer of Spearfish Hydroelectric Plant Number 1 to the city of Spearfish, South Dakota, and for other purposes. 

Enclosed herewith please find a list of questions which have been submitted for 

the record. If possible, I would like to have your response to these questions by Monday, April 17, 2006. 

Thank you in advance for your prompt consideration. 

Sincerely, 

LISA MURKOWSKI, 

Chairman. 

[Enclosure.] 

QUESTIONS FROM SENATOR JOHNSON

First, let me start out by stating that I do believe the licensing and administration of our nation’s public hydro-electric plants is an important regulatory tool to 

64

balance the often competing multiple uses of the nation’s water resources. Several 

Senators on the Energy Committee have devoted a good deal of time toward improving the federal license process for nonfederal hydropower plants. That being the 

case, I believe that the set of circumstances surrounding the small hydroelectric 

plant in Spearfish are unique and, therefore, provide for a re-examination in this 

instance of the federal license requirements. 

Question 1. It is my understanding that FERC is asserting jurisdiction to require 

a license on the basis that certain rights-of-way grants and permits, which were 

issued by the federal government prior to the enactment of the 1920 Federal Power 

Act, had expired. Is this your argument? 

Question 2. Now, I’ve learned that these fights-of-way grants and permits were 

not issued by the FERC or that the rights-of-way are administrated by the FERC. 

In fact, the rights-of way permits are administrated exclusively by the U.S. Forest 

Service, which recently found that they had not expired, and in fact, were validly 

transferred from the Homestake Mining Company to the City of Spearfish. In light 

of these sets of circumstances, don’t you believe that FERC is overreaching in asserting jurisdiction, particularly in light of the long-held administration of the 

rights-of-way by the U.S. Forest Service? 

Question 3. Mr. Robinson: I want to ask you a question about the time and cost 

of licensing this project. I understand that the median amount of time for a hydro 

re-license applicant is about 64 months from the beginning to the end, and that 

under the Traditional Process costs average $2.3 million. Who bears the costs for 

the license? And, in proportion to other hydro projects, what could the City expect 

in terms of cost and time to license this small, century-old hydro plant?

(65)

APPENDIX II 

Additional Material Submitted for the Record 

STATEMENT OF G. THOMAS BARTLETT III, MAYOR, CITY OF GRAFTON, WV 

Chairman Murkowski, Ranking Member Johnson, and distinguished members of 

the Committee: I am pleased to have this opportunity to submit testimony in support of S. 2028, a bill to reinstatement of a license for Federal Energy Regulatory 

Commission (FERC) project No. 7307. Reinstatement provides the City of Grafton 

with a renewed opportunity to move ahead on a hydroelectric power plant project 

at the Tygart Dam just upstream of Grafton on the Tygart Valley River. Our region 

is in critical need of the economic impact of this project. 

I am encouraged and excited to see the critical factors, which would influence the 

progress of this idea, are joining together in mutual support. I feel much more confident about the prospects of success as compared with the circumstances of this 

same opportunity when it presented itself several years ago. National Renewable 

Resources Conemaugh L.P. (NRRC) is currently supported by a management team 

which encourages involvement in this type of project. The current successful operation by NRRC of a hydroelectric plant in nearby Pennsylvania is a positive influence. The prospect of finding a customer for the electric power produced by this 

project is more likely now than ever before. 

I understand that flow of water during winter pool levels have been considered 

and NRRC engineering has considered it to be more than adequate for the sustained 

power levels. Therefore, no changes to the Corps of Engineers current operational 

procedures are needed. Current generation technology and design will provide for 

a 20 Megawatt output at minimum flows. This much energy would provide sufficient 

electricity for 10,000 homes. This project would intrude to a minimum extent on the 

present dam structure since it would be making use of provisions for hydroelectric 

power which were built into the dam 70 years ago. 

The City will receive regular income from the operation of this project. We look 

forward to the prospect of supporting community projects with these discretionary 

funds. Planning responsible and innovative ways of improving our community would 

be a delightful challenge that I would happily undertake. 

Revenues provided to the City from this project could be used to enhance local 

services to children and the elderly, including the expansion of our local senior citizen center. This senior center provides daily meals to Grafton’s elderly but is having a difficult time extending this service to home-bound seniors. Additional funding 

would help them to support and expand our local meals of wheels program. Further, 

funds would be used to build a memorial to the Sago mine tragedy—some of the 

miners lived in our community. In addition, the City has a laundry list of projects 

that could move ahead with revenues from this project, including: preserving and 

promoting our International Mother’s Day Shrine, preserving the B&O Railroad 

Station, enhancing our Taylor County Museum, maintaining the local National 

Cemeteries, and preserving our stately one hundred year old U.S. Post Office. With 

the discretionary funds that would be received by the City from this project, all 

these historical treasures could receive the attention that they deserve. People from 

everywhere would come to see and enjoy these historical treasures in restored splendor. Without this project the City’s discretionary budget is minimal and many of 

these initiatives will go unfunded. 

Therefore, I encourage you to support S. 2028 which will reinstate Grafton’s 

FERC license; thus, providing a critical first step toward harnessing a renewable 

resource for the benefit of all in the region. 

As I read the testimony of Jeffery Kossack, President of NRRC, I am pleased to 

say that I support and concur with his representation of the situation. 

We invite you, one and all, to come and join us in the celebration of our 150th 

birthday during Memorial Day weekend 2006. 

66

STATEMENT OF JEFFERY KOSSACK, PRESIDENT, NATIONAL RENEWABLE RESOURCES

CONEMAUGH LP, ON S. 2028

Chairman Murkowski, Ranking Member Johnson, distinguished members of the 

Committee: I respectfully submit to you this testimony in support of S. 2028, a bill 

to provide for the reinstatement of a license for Federal Energy Regulatory Commission (FERC) project number 7307. This bill would allow the City of Grafton, West 

Virginia, to obtain an extension to their license for constructing a hydroelectric facility at the Tygart dam. 

As you are no doubt aware, the City of Grafton held a FERC license to develop 

a plan to make use of this power tunnel for a period of time; unfortunately this license has lapsed. During the time when the City of Grafton’s FERC license was 

valid, the project economics were very tight and it was impossible to secure utility 

cooperation to make the project work. Long-term interest rates are now lower and 

the demand for clean fuel sources is now much more robust; both of which now 

make the project viable. My firm is actively engaged in securing a buyer for electricity produced by the proposed facility, we are confident that such a buyer will be 

found. 

My company, NRR Conemaugh LP, has established an agreement with the City 

of Grafton to build the hydroelectric facility in question. This project would open 

and utilize a power tunnel that was built into the Tygart Dam nearly seventy years 

ago. Unfortunately, the envisioned power resource has remained unused for the entire life of the dam. The dam is in fine working order and water is continually running through the facility. Unsealing the power tunnel would not disrupt the dam’s 

ability to maintain water levels and would not compromise dam integrity. Opening 

the power tunnel for hydroelectric production and thereby harnessing this resource 

would provide a clean, safe and efficient energy resource. 

The proposed 20 megawatt hydroelectric project would be located immediately 

below Tygart Dam. The facility would have an annual energy production of 85 

gigawatts, on average, which is enough energy fuel a city the size of Grafton. This 

$45 million project would be completely funded by NRR Conemaugh, which has 

demonstrated success in hydroelectric production in Pennsylvania. 

Our current plan is to finance the Tygart project with approximately 50 percent 

of our own capital and approximately 50 percent with long-term bank debt. We have 

already bid out the equipment package and have completed a number of the civil 

drawings. Project construction could begin within 12 months of FERC license reinstatement. Our company would commit itself to fast tracking this work in order to 

get the project under way as soon as possible. 

My company will take on the entire financial cost of the project and will not request any financial assistance from the City of Grafton, the State of West Virginia 

or the federal government. In fact, each of these governmental entities would gain 

significant revenues as a direct result of this project moving forward. 

The City of Grafton would receive an annual licensing fee of approximately 

$300,000 per year for the life of the facility. These funds could be used at the City’s 

discretion. It is my understanding that this revenue source would be the sole source 

of discretionary spending for the City. Consequently, many City initiatives that are 

currently unfunded could be undertaken. 

Not only would this project have local and regional benefits, but the federal government would receive an annual licensing fee of $200,000 from this project. This 

fee is not significant in terms of federal spending; but it is not often that Congress 

is confronted with projects looking to give dollars back to the Treasury. 

Passage of this bill would result in approximately 200 construction jobs with a 

payroll of over $1 million per month during construction. This will prove to be a 

true economic boom for this region of West Virginia. Our company is committed to 

utilizing local workforce, contractors and suppliers when able. Further, this project 

would create a few well-paying permanent jobs at the facility in addition to providing an ongoing regional economic impact of approximately $200,000 per year for 

the life of the project, which is estimated at 45 years. 

This project fits very well into the national energy plan that has been advanced 

by Congress and has substantial regional support, including that of both of West 

Virginia’s U.S. Senators. 

Further, Rep. Alan Mollohan of West Virginia has introduced companion legislation, H.R. 4417, in the House. 

With your help in reinstating the City of Grafton’s license, I believe that we can 

make this project a reality. The passage of S. 2028 is a critical first step to making 

this important project a success. I assure you that if the needed legislation is enacted, our company is totally committed to making this project work. 

67

In conclusion, I respectfully urge the Committee to approve S. 2028. This project 

is one that will cost the federal government nothing but will have a significant positive economic impact on Grafton and will enhance West Virginia’s clean fuel production capabilities. 

STATEMENT OF JON GROVEMAN, DIRECTOR AND GENERAL COUNSEL, VERMONT

NATURAL RESOURCES COUNCIL WATER PROGRAM, ON S. 2054

My name is Jon Groveman. I am the Water Program Director and the General 

Counsel for the Vermont Natural Resources Council (VNRC). Founded in 1963 by 

farmers and foresters, VNRC has over 4,500 dues paying members and 1,500 activists in the state of Vermont, who are dedicated to VNRC’s mission of protecting 

Vermont’s environment and our working landscape through research, education and 

advocacy. Thank you for this opportunity to submit written testimony on 5.2054. 

VNRC strongly supports S. 2054. Groundwater protection is currently a critical 

environmental issue facing the state of Vermont. In a small, rural state like 

Vermont, most people get their drinking water from individual wells, rather than 

large public water supplies. For example, the most recent statistics available from 

the Vermont Agency of Natural Resources indicate that more than 66% of 

Vermonters are supplied drinking worker directly through groundwater, as opposed 

to surface water. 

Despite the number of Vermonters that rely on groundwater as their primary 

source of drinking water, Vermonters know very little about the quality and quantity of their groundwater. Unlike our neighboring states of New Hampshire and 

Maine, Vermont has not undertaken a program to map our groundwater resources. 

New Hampshire and Maine have received significant assistance from he United 

States Geological Survey (USGS) to map its geologic and groundwater resources, including financial assistance. There is an intrinsic relationship between geology and 

groundwater resources. In New England, groundwater is trapped between the 

spaces of rocks beneath the surface. The quantity and quality of groundwater is directly linked to these geologic formations. Accordingly, federal agencies like the 

USGS play a key role in helping states understand and protect their groundwater 

resources. 

As a result of their work with the USGS, New Hampshire and Maine have a 

much better understanding on where its groundwater is located and what the 

threats to its groundwater resources are than Vermont. S. 2054 would place 

Vermont on equal footing with its neighboring states by ensuring that the federal 

government will assist Vermont to inventory and map its groundwater resources. 

Accordingly, VNRC urges the Committee to pass S. 2054. 

STATEMENT OF EARL BRIGGS, RAPID CITY, SD 

My name is Earl Briggs, a retired farmer from Hughes Co. near Pierre, S. Dak. 

I am writing testimony in reference to the Pierre Canal and Blunt Reservoir Conveyance Act (HR-4301) (S-2205) sponsored by (Stephanie Herseth) (Sen. John 

Thune). 

In the mid 1970’s the Bureau of Reclamation acquired a strip of land (63 acres) 

across our farm in Section 26-111-78 (640 acres) for the defunct Oahe Irrigation 

Project. This was taken against our will by condemnation. The opposition in the irrigation district grew until funding on a 3 year contract (21 miles) after one year was 

cancelled. I have leased this land from the Bureau since the project was abandoned. 

All they done on ours is put in two fences and a $350,000.00 culvert across Dry Run 

Creek. 

The Bureau in their negotiations promised us we could irrigate from the canal or 

they would sell it back to us at purchase price if the project was abandoned, which 

proved to be a ploy to get possession of the land. We. discovered there was no provisions the Master Contract for canalside irrigation, 

In our case we have a strip of land in a S shape, approximately one mile long, 

(320 rods) and 30 rods wide going through 1⁄3 pasture and 2⁄3 farm ground. If this 

remnant is appraised at its actual value, I believe I could live with that and repurchase as the bill is written. 

I do have a problem with the portion of the bill that turns over non-preferential, 

and preferential lands not purchased to the S. Dak. Game Fish and Parks. For 30 

years we have made up the difference in property taxes on nearly 20,000 acres of 

land. In fact the BOR paid $1.39 per acre in taxes while we paid $6.16 per acre 

last year. 

68

1FWS Letter April 27, 2001

2FERC Letter August 16, 2001

3FWS Letter February 25, 2004

These lands were all taken by threat of condemnation in the first place, so rightfully they should be put back in private hands and tax roll by auction of non-preferential land, not yet another government entity, The S. Dak. Game Fish and Parks. 

They keep referring to the mitigation act of 1958 for lands taken by the reservoirs. 

I don’t think Hughes and Sully counties should take the brunt of this ill conceived 

idea, as this was a whole state issue a half century ago. We raise more wildlife by 

accident than they do on purpose. 

Being 78 years old and renting it to my neighbor for 14 years who is 100%, and 

rightfully the successor, I very much want to get this resolved before leaving. this 

earth. This would put this money back into the Gov’t coffers from which it came 

from in the first place. 

Hopefully we can get this bill tweaked and passed making me one happy farmer 

along with my neighbors. 

Thank you. 

STATEMENT OF THE BOISE-KUNA IRRIGATION DISTRICT, BIG BEND IRRIGATION DIS- TRICT, NAMPA & MERIDIAN IRRIGATION DISTRICT, NEW YORK IRRIGATION DISTRICT, AND WILDER IRRIGATION DISTRICT, ON S. 2035

SHORT STATEMENT OF NEED FOR LEGISLATION

In the last eighteen months, the Irrigation Districts have twice been poised to 

begin construction on the Arrowrock Hydroelectric Project. Twice, they have been 

stymied by the inaction and refusal to act by federal agencies. This legislation is 

needed so the Districts can salvage the hundreds of thousands of dollars and countless hours of time and energy invested in the Project. Without the legislation, the 

Project will be lost, along with the opportunity to supply clean, renewable energy 

from an existing dam, and the opportunity help offset water delivery costs to the 

farmers of the Boise River Valley. In 2005, Congress passed a landmark Energy Bill 

designed to encourage development of these clean, renewable power sources. Congress should not permit the agencies’ bureaucratic process to thwart this benign 

Project. The Districts can and will deliver a final Project that meets the highest environmental standards and that coexists with all existing uses of the Boise River 

reservoir system, including fish and wildlife. They just need the time extension this 

legislation offers. The Districts are not seeking any federal appropriations for the 

Project. The Project is supported by a broad range of Idaho and Oregon interests, 

including an Oregon public power entity which has contracted to purchase the output from this plant. The time is now for this Project. 

THE INTERAGENCY CONFLICTS

Five Idaho and Oregon Irrigation Districts hold the FERC license to develop a hydroelectric powerplant at Arrowrock Dam. FERC License No. 4656. In the last eighteen months, their efforts to build this Project have been stymied, not by any lack 

of diligence or effort on their part, but because of the interactions of two federal 

agencies—the Fish & Wildlife Service and the Federal Energy Regulatory Commission. The Districts first received. word in January of 2004 that the licensed start 

of construction deadline for this Project would be March of 2005. They immediately 

went to work and selected a contractor to design and build the Project. A plan was 

developed over the course of summer of 2004 to reduce the size of-the Project and 

presented to FERC staff in submissions and in a meeting in FERC’s offices in August of 2004. Based on this consultation with FERC staff, the Districts planned to 

meet the start of construction date by beginning manufacture of the component 

parts as permitted by Commission precedent and regulations. There was sufficient 

time in the schedule to meet the deadline. 

The Fish & Wildlife Service had been insisting for some time that FERC consult 

with the Service on this Project under Section 7 of the Endangered Species Act because of the presence of bull trout in Arrowrock Reservoir.1 FERC had taken the 

position that there was no new discretionary federal action that required consultation.2 In 2004, the Service again requested that FERC engage in consultation.3

After the Districts’ meeting with FERC staff in August of 2004 to discuss the 

scope of the Project, FERC responded to the Service’s request for consultation with 

a letter requesting the Service’s concurrence that the Licensees’ proposed modification will not affect or is not likely to adversely affect bull trout or any listed speVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00072 Fmt 6601 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
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4FERC Letter September 29, 2004

5SSW Feasibility Study December 2004 (excerpts) 

6FWS Letter December 21, 2004

7FWS Letter April 29, 2005

8FERC Email July 29, 2005

cies.4 The Commission concluded that using of the existing intake structure and existing operations of the dam, the fact that no reservoir draw-down was required and 

that the Districts’ proposed elimination of some transmission lines were all positive 

benefits and unlikely to affect any listed species. The Commission also noted that 

Arrowrock Reservoir was no longer under consideration as critical habitat for bull 

trout. Finally, FERC requested that the Service engage in informal discussions with 

the Districts to resolve any issues the Service might have. 

With the understandings reached with the staff concerning development of the 

Project to meet the March 2005 start of construction date, the Districts worked diligently with their contractor and had a feasibility study completed by December of 

2004, which contemplated the start of construction by fabrication of component 

parts in March of 2005.5 The Districts’ representative previously met with the Service and provided them with all the information provided to FERC. However, the 

Service did not act on the FERC’s letter until three months had passed. At the end 

of December 2004, the Fish & Wildlife Service advised FERC and Licensees that 

it disagreed with the Commission’s determination of no affect or not-likely to adversely affect bull trout, and insisted on formal consultation, but stated that it 

would not be in a position to begin consultation on the Project until the end of 

March 2005, after the deadline for start of construction.6 The Service was engaged 

in a comprehensive consultation which covered multiple species at all Reclamation 

projects on the Upper Snake River Basin, including Arrowrock Reservoir and wanted to complete that consultation before engaging on this smaller consultation. 

Faced with the inability to start construction to meet the deadline because of the 

Service’s stance, the Districts filed a request with FERC to stay the license deadline. 

The Commission has authority to stay deadlines where the delay is caused by action 

or inaction of another federal agency. In response to the request for stay, the Service 

wrote to FERC supporting the stay.7 The Service advised FERC that the Upper 

Snake River Basin consultation had recently been completed and that Reclamation’s 

operations would not jeopardize any threatened or endangered species. The Service 

advised FERC that they had been engaged in informal consultation with the Districts, were cooperating in developing the necessary information, and requested that 

FERC request formal consultation by June 15, 2005. They anticipated completing 

formal consultation in sixty (60) days. The Districts continued to consult with the 

Service, the contractor, and—Reclamation to provide the necessary information for 

a Biological Opinion. 

Despite’s the Service’s willingness to resolve the ESA issues, the Commission denied the request for stay. 111 FERC ¶ 61,271 (May 27, 2005). In denying the request 

for stay, the Commission took the position that the changes proposed by the Districts required a preconstruction amendment to the license. The Commission also 

expressed its skepticism that the Fish & Wildlife Service could complete the consultation in the timeframe it suggested. These conclusions came as a complete surprise to the Districts. They had been operating under the working assumption that, 

as a result of the meetings with the staff, no preconstruction license amendment 

was necessary. They were also quite surprised that the Commission had directed 

the Districts to work with the Service to satisfy the needs to the Service and then 

the Commission would reject the stay request because it did not believe that the 

Service would engage in a timely consultation with the Districts as the Service indicated. 

Accordingly, the Districts filed a timely motion for rehearing, supplying the Commission with additional evidence of the work that the Service, the contractor, and 

the Districts had done in moving the Project forward. The Districts also provided 

significant information about the status of the power sales agreement for the output 

of this Project. In July of 2005, the Districts filed a supplemental memorandum in 

support of its petition for rehearing and reconsideration. Later, in July, the Districts 

advised FERC staff that the informal consultation was completed and that the Service was requesting again that FERC engage in formal consultation. The response 

of the staff was that they could not even discuss the matter with the Districts because of the motion for rehearing.8

The Commission, on September 1, 2005, entered an order denying the motion for 

rehearing. 112 FERC ¶ 61, 240 (Sept. 1, 2005). The Commission made a number of 

factual errors in doing so. First, the Commission contended that the staff ‘‘clearly 

informed’’ the Districts that a preconstruction license amendment was essential for 

70

9Kukla Testimony 

10SSW Letter March 21, 2005 11 Email to FERC staff September 1, 2004 12FWS Letter September 1, 2005 13 Reservoir Operations & Construction Approach 

this Project. This is not correct. After meeting with the staff, the Districts9 and Li- censees10 both understood that no preconstruction amendment was necessary. Indeed, the Commission issued its. no affect letter to the Service which would have 

allowed construction to begin in 2005 (if the Service had concurred) and provided 

information to the Districts and their contractor about how to meet the existing 

deadline by construction of major component parts. The Districts followed up the 

August 25, 2004 meeting with a memo to staff in which the Districts stated their 

understanding that no license amendments would be necessary.11 The Commission’s 

Order, however, claimed that the Districts were not entitled to rely upon either 

their meeting with the staff or the previous experience with the Commission in determining whether a license amendment was necessary. See 56 FERC ¶ 62, 061 (October 24, 1991) (Districts’ Lucky Peak Power Plant Project did not require 

preconstruction amendments). The Commission’s Order contended that the Districts 

had made no progress towards a power sales agreement. In reaching this conclusion, 

the Commission ignored information supplied to the Commission that, at the time 

the Commission made its final ruling, the power sales agreement had been finalized. 

Yet, the Commission’s Order claimed that no progress had been made and that all 

the Districts had was a draft of a letter of intent. Finally, the Commission contended that the Fish & Wildlife Service was not able to carry out its agreement to 

consult with the agency and Districts. The Commission’s Order ignored the extensive informal consultation between the Licensees and the Service since April 2005 

and ignored the fact that the agency was prepared to complete this consultation expeditiously, as soon as the Commission requested formal consultation. The Service 

even wrote to the Commission on September 1, 2005 again requesting formal consultation and advising that they had everything they needed to complete consultation.12 In other words, everything was ready, but the Commission chose to believe 

that the Districts and the Service were not committed-to-the consultation. 

These egregious bureaucratic errors will deprive the Districts of the opportunity 

to build this Project. If allowed to stand, it will deprive the Districts of hundreds 

of thousands of dollars in investments over the years and will deprive them of the 

opportunity to provide services to the landowners in the Irrigation Districts. It will 

deprive Clatskanie PUD of an independent source of power. The Districts urge Congress to pass this legislation. The construction of the Project will provide significant 

benefits to the nation’s energy supply, to the local economy, to the Irrigation Districts and thousands of their patrons, and to a small, publicly owned Oregon Public 

Utility District, who will utilize the power to supply its customers. 

BRIEF DESCRIPTION OF THE PROJECT

The Arrowrock Hydroelectric Project is proposed as a 15 megawatt powerplant 

built at an existing Bureau of Reclamation dam. The dam is located just east of 

Boise, Idaho, on the Boise River. The dam was completed in 1918, and the Districts 

are the major spaceholders for the irrigation water stored behind the dam. No new 

impoundments will be built. No reservoir draw-downs are required. Existing transmission routes will be utilized. Detailed construction and operation summaries were 

developed for consultation-with and provided to the Service and other agencies.13

The Districts are experienced in building and operating hydroelectric facilities, as 

they also own, and under contract with the Seattle City Light, operate the Lucky 

Peak Power Plant Project (FERC Project 2832) immediately downstream of the 

Arrowrock Hydroelectric Project. 

GENERAL BACKGROUND

The Boise-Kuna, Big Bend, Nampa & Meridian, New York and Wilder Irrigation 

Districts are all public entities formed under the laws of the State of Idaho, and, 

Big Bend Irrigation District, is formed under the laws of State of Oregon. These Districts hold storage rights to the water held behind the reservoirs on the Boise River, 

including the Arrowrock Reservoir. The Districts serve 167,000 acres of irrigated 

farm land in the Boise Valley. Most of the land in these Irrigation Districts is in 

small farms, with an average size of less than of 100 acres. 

The Districts have been diligently trying to develop the hydroelectric resource at 

Arrowrock Dam for many years. They are the logical entities to develop that resource, since, as the spaceholders of the irrigation water, they control the vast maVerDate 0ct 09 2002 11:16 Jul 12, 2006 Jkt 109460 PO 28489 Frm 00074 Fmt 6601 Sfmt 6621 P:\DOCS\28489.TXT SENERGY2 PsN: PAULM
71

14SSW email to Reclamation August 26, 2005 15SSW Amended Feasibility Study September 2005 16Power Purchase & Sale Agreement (executed) 17 Clatskanie PUD Brochure 18 Clatskanie PUD Press Release 19 Clatskanie—Districts MOU 20 Canvassing Resolutions 

jority of the water stored behind Arrowrock Dam. The Districts pay the Bureau of 

Reclamation a significant portion of the Bureau’s cost of operation and maintenance 

of that Dam. Development of the Project over the years has been difficult and beset 

with problems from the very beginning. Shortly after the license was originally 

issued in 1989, a severe drought hit the Northwest, including Boise River, making 

any hydroelectric development of major concern. In the mid-1990s, a listing of 

anadorous fish downstream in the Columbia and Snake Rivers caused greater uncertainty about the uses to which water would be put in the tributaries above, including on the Boise. Even though there are no anadorous fish in the vicinity of the 

Arrowrock Dam, or even in the Boise River, the uncertainty about the uses of stored 

water cause greater uncertainties in the viability of any hydroelectric facility, even 

one not within the habitat of the listed anadorous species. In 2001, the energy crisis 

and accompanying volatility of energy prices made a long-term power purchase 

agreement. difficult or impossible to obtain for a hydroelectric facility with its inherent variability in output. Operational issues concerning the location of the Lucky 

Peak Reservoir and the Arrowrock Dam, as the Bureau of Reclamation operates the 

Arrowrock Reservoir and the Lucky Peak Reservoir so as to cause difficulty in maintaining sufficient head between the two reservoirs to insure adequate generation. 

In dealing with these various obstacles, the Districts have examined a number of 

variations on this Project. The Project was originally licensed as a 60 megawatt facility, which would be supplied by drilling large tunnels through the Arrowrock 

Dam, a concrete structure almost 100 years old. Later, the Districts evaluated a 30 

megawatt project. They had a power purchaser willing to purchase the output of a 

30 megawatt project but ran into problems when the former developer was not able 

to deliver the Project for the price that was quoted. Since the spring of 2004, the 

Districts have been working with Shaw/Stone & Webster, an engineering and construction firm of national prominence in the hydroelectric industry, to develop a 

project of 15 megawatts. Recent modifications to the Arrowrock outlet works downstream of the dam by the Bureau of Reclamation have created the configuration 

where the Districts will be able to tie the powerplant into the modified outlet works 

and use the water that is otherwise being released through the dam by the Bureau 

of Reclamation without having to drill additional tunnels through the dam. Shaw/

Stone & Webster has consulted with Reclamation14 and completed a feasibility 

study6 and updated the study in September 200515 The Project is constructible, 

financeable, and will generate sufficient revenues in power sales to pay for itself 

over the remaining course of the FERC license. The Districts have entered into a 

power purchase and sales agreement with an Oregon public power entity, the 

Clatskanie Peoples-Utilities District, to develop the Project, and for Clatskanie to 

purchase all of the output of the facility.16

Clatskanie PUD sells 1.2 million megawatt hours of electricity yearly to retail customers in northern Columbia County and eastern Clatsop County and to industrial 

facilities in Bellingham, Washington, and Halsey, Oregon. The output of a 15 megawatt project is, in the view of Clatskanie PUD, a perfect fit for their system, which 

is otherwise heavily dependent on the Bonneville Power Administration. Clatskanie 

PUD is a strong supporter of this Project and this legislation.17,18

POWER SALES AGREEMENT

The Districts and Clatskanie People’s Utility District have executed a Power Purchase and Sale Agreement for all of the output of this Project.15 In 2005, the Districts negotiated a memorandum of understanding with Clatskanie PUD for the development of the Project.19 By July, the Irrigation Districts and Clatskanie PUD 

had completed extensive negotiations on a power purchase agreement. The power 

purchase and sale agreement was put in final form and approved by the Boards of 

each of the Irrigation Districts for a vote of the electors of the Irrigation District. 

The final form was also approved by Clatskanie. In an election held in August of 

2005, the voters of the Irrigation Districts overwhelmingly approved the power sales 

contract with Clatskanie PuD.20 A two-thirds majority vote was required, and the 

lowest approval rate of any of the Irrigation Districts was in excess of 75%. One 

District’s (New York) electors unanimously approved the agreement. The Irrigation 

Districts and Clatskanie were prepared to execute the final agreement in September 

72

21Photographs (separate file) 22 Arrowrock Expenditures 23Lehman Bros. Letter March 16, 2006 24 IPCo Interconnection Approval 25 IDWR Permit 26 COE Email 

of 2005, when FERC untimely denied the petition for rehearing. Even though FERC 

has refused to permit construction to begin, the Irrigation Districts and Clatskanie 

PUD believe in this Project so strongly that they recently executed the final agreement approved in the summer of 2005 by the Irrigation Districts’ voters and by 

Clatskanie.16 A formal signing ceremony of this agreement was held at Arrowrock 

Dam March 10, 2006 by the parties.18,21 Clatskanie PUD and the Irrigation Districts 

have held their first Steering Committee Meeting and will continue to hold regular 

Steering Committee meetings through the course of the development and construction of the Project. 

EXPENDITURES

The Districts and Clatskanie have agreed to share in the future development cost 

of the Project on a 50/50 basis. Over the years, the Districts have expended in excess of $900,000.00 on this Project.22 The only way the Districts will recover these 

expenditures is for the Project to be constructed and begin generating electricity. 

FINANCING

The Districts have been working with Lehman Brothers as a bond underwriter 

for several years in trying to bring this Project online. Lehman Brothers has carefully scrutinized the power sales agreement and determined that the agreement is 

financeable with Clatskanie as a power purchaser.23 The Districts have the ability 

as public entities to issue bonds for the development of this Project. The Districts 

have the authority under Idaho Code § 43-2301 to sell bonds for the development 

of a hydroelectric Project as long as the bonds are approved by the voters. Overwhelming voter approval of the bond issuances was obtained in the August 2005. 

EPC Contractor 

In 2004, the Districts issued requests for proposals for design and construction of 

the Arrowrock Project. As a result of a rigorous selection process, Shaw/Stone & 

Webster was determined to offer the best proposal. Shaw/Stone & Webster has prepared two feasibility studies—one in December of 2004,6 and an amended feasibility 

study in September 2005.15 The feasibility studies demonstrate that the Project will 

generate sufficient electricity to pay the cost of the Project on a project financing 

basis. Shaw/Stone & Webster remains solidly committed to this Project.10

OTHER CONSULTATIONS

Idaho Power conducted an updated system interconnection study of the reduced 

project generation capacity to 15 megawatts in 2004. This alternative will minimize 

impact from the Project by significantly reducing power line construction from that 

authorized by the License. The License authorizes 15 miles of transmission lines. 

This current plan approved by Idaho Power will allow a tie-in to existing lines at 

a location only 5 miles from Project No. 4656. Idaho Power confirmed the tie-in and 

described the interconnection facilities on October 28, 2004.24 In addition, the transmission line route will upgrade an existing Reclamation line to Arrowrock Dam at 

no additional cost to Reclamation, so no new power line routes will be required. Line 

specifications and easement information have been provided to SSW and the Bureau 

of Reclamation, and are incorporated in the Project plans developed by SSW. In addition to the interconnection studies, Clatskanie has conducted negotiations with 

Idaho Power on wheeling the output across Idaho Power’s transmission system. 

Idaho Power has also determined there is system capacity for the wheeling to meet 

Clatskanie’s needs. 

The Districts also have a valid water license from the Idaho Department of Water 

Resources for use and generation of electricity.25 Representatives of the Districts 

have engaged in consultations with various other agencies, including the Corps of 

Engineers—the operator of Lucky Peak Reservoir just downstream of the Arrowrock 

Dam where the powerhouse will be located. The Corps has advised the Districts that 

no additional consultation will be necessary for placement of the powerhouse, other 

than a 404 permit.26 The Districts have engaged in extensive consultation with all 

of the other agencies and are prepared to complete that consultation as required by 

the terms of the existing FERC license. 

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27 IWUA Letter March 6, 2006 28 Boise Metro Chamber of Commerce Letter March 15, 2006

Finally, it should be noted that this Project enjoys extensive support. Of course, 

the Districts’ landowners overwhelmingly approved the contract with Clatskanie 

PUD.19 Clatskanie is a strong supporter. The Bureau of Reclamation worked with 

the Districts and the contractor and is committed to finalizing an agreement with 

the Districts to review and approve the Districts’ construction activities as required 

by the FERC license. The Project is supported by the Idaho Water Users Association, a statewide organization.27 In addition, the Boise Metro Chamber of Commerce 

has expressed its support of the Project, and the Chamber’s Board unanimously 

voted to support the Project because of the energy and economic development benefits that the Project will bring.28

The Districts have put forth an extensive effort to develop this Project. They have 

the ability to bring the Project online, with all of the support from the regulatory 

agencies, the contractor, the power purchaser, and the community at large. The Districts urge Congress to pass this legislation and to allow this clean, renewable hydro 

project to come online. 

STATEMENT OF MIKE D. KUKLA, MEMBER, BOARD OF DIRECTORS OF THE BOISE-KUNA

IRRIGATION DISTRICT

I am a director of the Boise-Kuna Irrigation District. I was first elected to the 

Board of Directors of the Boise-Kuna Irrigation District in 1998. I have served continuously since that time. I have fanned ground in the Boise-Kuna Irrigation District for most of my adult life. 

Shortly after my election to the Board of Directors of Boise-Kuna Irrigation District, I was appointed to the Steering Committee for the Lucky Peak Power Plant 

Project and for the Power Committee which oversees the Arrowrock Hydroelectric 

Project. The revenues from the Lucky Peak Hydroelectric Project are critical to our 

District’s ability to deliver water to the District’s landowners, as the revenues are 

used to help offset the costs of delivery. The goal of the Irrigation Districts with the 

Arrowrock Hydroelectric Project would be to provide a similar source of income to 

help pay costs of the operation of the irrigation delivery system. The Boise-Kuna Irrigation District is a non-profit, governmental entity. All revenues are used for operation and maintenance of the. system. 

Boise-Kura Irrigation System is one of five Irrigation District that make up the 

Boise Project Board of Control. Collectively, these Districts irrigate 167,000 acres of 

land in the Boise Valley. As fuel costs grow and commodity prices drop, farming is 

a very difficult business with small margins. Using the power revenues to help keep 

the costs of delivery of water under control is critical to many of the farmers in our 

Irrigation District and throughout the Boise Project 

As part of my responsibilities with the Power Committee, I have attended all the 

Power Committee meetings. The Districts have been working very hard over the last 

several years to build a project at Arrowrock Dam. Many of the difficulties we have 

experienced have been due to bureaucratic delays in various governmental agencies, 

particularly with the Fish & Wildlife Service and with the Federal Energy Regulatory Commission. 

In March of 2003, we submitted to FERC an application for an extension of time 

to start construction of the project. FERC did not rule on that request for extension 

of time until January of 2004, at which time we had a little more than one year 

left to actually get the project-under construction. The Power Committee met several times a month during 2004 to issue requests for proposals, evaluate and select 

a new contractor for the project, and to reconfigure the project so that it was economically viable. We also met on a regular basis with potential power purchasers. 

Of course, those power purchasers needed to be assured that the project could be 

built and that the regulatory agencies had approved the project. 

The Districts selected Shaw Stone & Webster to help them redesign the project 

to meet the needs of the power purchasers. We worked closely with Shaw Stone & 

Webster over the course of the summer of 2004 and came up with a project that 

would significantly reduce the impact of the powerplant by eliminating tunnels 

through the Arrowrock Darn and to connect into the newly refurbished outlet works 

on the downstream face of the Dam. Realizing that FERC approval of what we were 

trying to accomplish was critical and that the deadline for start of construction of 

March of 2005 was quickly approaching, we scheduled a meeting with the staff of 

FERC. That meeting took place on August 25, 2004, with approximately six members of the FERC staff. I was present at this meeting, along with our attorney and 

74

representatives from Shaw Stone & Webster. We explained the proposal for the 

project, and had drawings available for review of the new configuration. The new 

configuration involved placing the powerhouse in the exact same location as the 

powerhouse for the licensed project. The only significant differences were a reduction in the generation capacity and elimination of a penetration through the Dam. 

The powerline would follow the licensed route using the existing Bureau of Reclamation powerline right of way, but would not require extension to a substation in Boise 

because of the reduction output from the smaller facility. 

At this meeting, the initial reaction to the proposal from members of the staff was 

that these changes would require a license amendment, and that a license amendment would require a significant processing time. We discussed at length the schedule for building the project. It did not appear that we could meet the start of construction date for the proposal if a license application would have to have been processed as originally suggested by FERC staff. Accordingly, we began discussing alternatives. From my perspective, I thought we had reached consensus by the time we 

left the meeting that a license amendment would not he required and that we could 

meet the start of construction date by start of manufacturing of component parts 

or ‘‘bending of metal.’’ In fact, when we left, the staff agreed to provide the contractor, Shaw Stone & Webster, with information on ‘‘bending of metal’’ as meeting 

the deadline for start of construction. 

The other significant issue related to a potential license amendment was the question of bull trout. Between the time the license was originally issued and the time 

of the meeting with FER.0 in August 2004, the Fish & Wildlife Service had listed 

bull trout as a threatened species. The Fish & Wildlife Service had advised us and 

FERC that the Service insisted on consultation over the operations of the Arrowrock 

hydroelectric facility. With the modifications to the project eliminating the tunnels 

through the Dam, it was clear to us at this meeting that the potential for impact 

to the bull trout in Arrowrock Reservoir from the hydroplant was limited or nonexistent. This was so because the Arrowrock powerplant can only use water that is 

released for irrigation purposes and has no independent authority to demand water 

releases. No longer would the releases all go through the powerplant and a separate 

tunnel, but would go through the existing outlet works. The decision was reached 

at that meeting by FERC staff that FERC would send a letter to the Fish & Wildlife 

Service advising the Service that, with the revised configuration of the facility, there 

would be no effect on the species. A determination that the hydroelectric plant 

would not affect the species would allow the project to start construction by the 

March 2005 start of construction date. Therefore, no amendment to the license 

would be necessary to trigger a Section 7 consultation with the Fish & Wildlife 

Service because the Service should concur in the no effect determination. 

Ultimately, the Fish & Wildlife Service did not agree with the no effect determination, although it took three months for the Service to make that decision. At 

that time, the Service advised us that it would not even begin consultation on the 

project until after the deadline for start of construction because of other consultation 

the Service was conducting. Without approval of the project from the Fish & Wildlife Service, there was no way that the Districts would have been able to issue bonds 

to fund the project, and the start of construction date was doomed. 

The Districts then asked FERC for a stay of the license conditions just to give 

us sufficient time to complete the consultation with Fish & Wildlife Service, because 

Fish & Wildlife Service was willing to initiate consultation after March of 2005. 

FERC turned us down on the stay request asserting that the staff had told us that 

we were required to amend the license, and, because we had not sought a license 

amendment, we could not even hope to start construction. This conclusion in the 

FERC order was a shock to me because it directly contradicted what 1 understood 

the direction of FERC staff to have been when we left the meeting in August of 

2004. We then sought rehearing, and FERC again turned us down. This time, they 

also asserted we had no hopes of getting Fish & Wildlife Service approval, and that 

we did not have a real power sales contract in place. Both of these assertions are 

false. We worked with Fish & Wildlife Service over the course the spring and summer of 2005, and the Fish & Wildlife Service was prepared to, and in fact advised 

us that they could have issued a biological opinion within as little as thirty days 

once formal consultation began because of the consultations that we had been engaged with them in advance and because of the previous work that Fish & Wildlife 

Service had done on Arrowrock Reservoir operations. In addition, FERC totally ignored the fact that we finalized a power sales contract with Clatskanie People’s 

Utility District, and that the Irrigation Districts’ voters overwhelmingly approved 

this contract in elections held in August of 2005. Under our state law, the voters 

are required to approve any power sales agreements and borrowing money for financing of hydroelectric facilities. A two-thirds majority is required, and each of the 

75

Districts approved that by far more than two-thirds majority. In fact, in Boise-Kuna, 

the voters approved the contract by an excess of 90% approval. 

This vote shows that the Arrowrock Hydroelectric Project is very important to the 

farmers and landowners of the District. It will provide a tremendous benefit to the 

landowners at no cost to the federal government. We will provide significant employment in building the project, and we will do our small part in helping to reduce this 

country’s reliance on foreign oil and natural gas and other fossil fuels. On behalf 

of the people of the Boise-Kuna Irrigation District and all of the farmers and landowners throughout the Boise Project, I strongly urge Congress to pass this legislation. 

STATEMENT OF THE CLATSKANIE PEOPLE’S UTILITY DISTRICT

The Clatskanie People’s Utility District and five Idaho and Oregon Irrigation Districts recently signed an agreement to jointly develop the 15 megawatt Arrowrock 

Hydro-Electric Project on the Boise River northeast of Boise, Idaho. Pending extension of the Federal license by Congress, construction could proceed by November of 

this year, and be completed by 2008. 

The Arrowrock Dam, owned by the U.S. Bureau of Reclamation, was built in 1915 

and is 353 feet high. When built, it was the highest dam in the world. Water is currently released from Arrowrock Dam with a series of outlet-valves and a spillway. 

The project, to be financed by the Boise-Kuna, Nampa & Meridian, New York, 

Wilder, and Big Bend Irrigation Districts is expected to cost $41 million and produce 

an average of 81,000 megawatt-hours of electricity per year, which will be purchased by Clatskanie PUD. The project will consist of placing 2—7.5 MW turbines 

on two existing dam outlets, and reconstructing a 5.5 mile power line to a nearby 

substation. 

‘‘This clean renewable energy project would produce enough electricity to power 

5,400 average homes, or about 8% of Clatskanie PUD’s current energy needs,’’ according to Greg Booth, General Manager at the PUD. The project has-no anadromous fishery impact and will have very little impact on the environment. ‘‘This 

project will be a long term, low-cost resource for the PUD and, with minimal environmental impact, is as green as it gets,’’ according to Booth. 

Clatskanie PUD is a joint owner of the 36 megawatt Wauna Cogeneration PowerPlant and owns the 11 megawatt Alden-Bailey Natural Gas Power Plant. 

Clatskanie PUD sells 1.2 million megawatt hours of electricity yearly to retail customers in northern Columbia County and eastern Clatsop County and to industrial 

facilities in Bellingham, Washington, and Halsey, Oregon. It has annual revenues 

of approximately $45 million and has the third lowest residential rate in the country. 

The Irrigation Districts are also public entities. They own the storage rights to 

the water behind Arrowrock Dam. The Irrigation Districts supply water to irrigate 

167,000 acres in the Boise River Valley and most of the land is farmed in small parcels of less than 160 acres. The Irrigation Districts currently own and operate the 

101 megawatt Lucky Peak Hydro-Electric Power Plant located on the Boise River 

just a few miles downstream from the Arrowrock Dam. The Lucky Peak powerhouse 

has been operating since 1988. 

The voters of the Irrigation Districts overwhelmingly approved the agreement 

with Clatskanie PUD. ‘‘This vote shows that the Arrowrock Hydroelectric Project is 

very important to the farmers and landowners of the District’’, according to Mike 

Kukla, a Director of the Boise-Kuna District and member of the Irrigation Districts’ 

Power Committee. ‘‘It will provide a tremendous benefit to the landowners at no cost 

to the federal government.’’

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