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[Senate Hearing 112-588]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 112-588

                          RURAL WATER PROJECTS

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   TO

RECEIVE TESTIMONY ON S. 3385, A BILL TO AUTHORIZE THE SECRETARY OF THE 
     INTERIOR TO USE DESIGNATED FUNDING TO PAY FOR CONSTRUCTION OF 
                    AUTHORIZED RURAL WATER PROJECTS

                               __________

                             JULY 31, 2012

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                       Printed for the use of the
               Committee on Energy and Natural Resources

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          JAMES E. RISCH, Idaho
MARIA CANTWELL, Washington           MIKE LEE, Utah
BERNARD SANDERS, Vermont             RAND PAUL, Kentucky
DEBBIE STABENOW, Michigan            DANIEL COATS, Indiana
MARK UDALL, Colorado                 ROB PORTMAN, Ohio
JEANNE SHAHEEN, New Hampshire        JOHN HOEVEN, North Dakota
AL FRANKEN, Minnesota                DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia      BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Baucus, Hon. Max, U.S. Senator From Montana......................     3
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Bracken, Nathan, Legal Counsel, Western States Water Council, 
  Murray, UT.....................................................    32
Brumfield, Gayla, Chairwoman, Eastern New Mexico Rural Water 
  Authority, Albuquerque, NM.....................................    24
Connor, Michael L., Commissioner, Bureau of Reclamation, 
  Department of the Interior.....................................     6
Larson, Troy, Executive Director, Lewis and Clark Regional Water 
  System, Tea, SD................................................    21
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     2
Sunchild, Bruce, Chairman, the Chippewa Cree Tribe of the Rocky 
  Boy's Reservation, Box Elder, MT...............................    27

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    43

                              Appendix II

Additional material submitted for the record.....................    57

 
                          RURAL WATER PROJECTS

                              ----------                              

                         TUESDAY, JULY 31, 2012

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. OK, why do we not get started? Senator 
Murkowski will be here shortly but asked us to proceed.
    This morning, the committee will hear testimony on S. 3385, 
the Authorized Rural Water Projects Completion Act. This was 
introduced by Senator Baucus, who is here to be our first 
witness. This important legislation addresses the serious 
backlog in the construction of already authorized Bureau of 
Reclamation projects that are intended to provide domestic 
water supplies for rural and tribal communities.
    All of these projects have previously been studied and 
approved by the Congress. However, the funding for constructing 
the projects has lagged, causing a delay in providing for the 
delivery of potable water to rural and tribal communities.
    The ongoing drought in many parts of the West underscores 
the importance of rural water supply projects, such as the ones 
that would be covered by this bill.
    The Reclamation Fund was established in 1902 by Congress. 
It is to be used as a funding source to construct water 
projects in the West. It is funded through a variety of 
receipts, including Federal minerals leasing receipts. However, 
the use of moneys from the Reclamation Fund has been subject to 
appropriation, and, therefore, large balances have remained in 
the Fund and continue to increase.
    This chart here, which I think most of you cannot see 
because it is faced in the wrong direction, it makes the point. 
It shows that the balance in the Reclamation Fund in fiscal 
year 2011 was $9.6 billion. It is estimated to continue to 
rise. While these funds were intended to be used for water 
project construction, they have not always been appropriated 
when needed.
    S. 3385 would direct that every year $80 million that would 
otherwise be deposited in the Reclamation Fund be made 
available without further appropriation for the construction of 
the authorized rural water projects.
    According to Bureau of Reclamation analysis, an increase in 
funding for the construction of rural water projects to $80 
million per year would reduce the total Federal appropriations 
needed to complete the projects by more than $1 billion. That 
is when projects costs and inflation are taken into account. So 
while the bill provides for spending, it actually results in 
savings to the Treasury over time.
    The bill also includes language that states that amounts 
may not be transferred for rural water projects pursuant to the 
legislation if to do so would raise the deficit. This is 
essentially a placeholder that indicates our intent to find an 
offset for the spending in the bill.
    The legislation provides that the Secretary may not expend 
any amounts until programmatic goals are developed that would 
enable completion of rural water projects as quickly as 
possible, that reflect the goals and priorities identified in 
the laws authorizing the rural water projects, and reflect the 
goals of the Reclamation Rural Water Supply Act of 2006.
    The bill does not direct that a particular project receive 
funding. Rather, it provides that the Secretary develop funding 
prioritization criteria to serve as a formula for distributing 
funds consistent with considerations set forth in the bill.
    The bill is important to our citizens in rural and tribal 
communities in the West. Adequate water supplies are 
fundamental to our way of life, and far too many Americans 
still live without adequate, safe drinking water.
    I want to thank Senator Baucus for introducing the 
legislation, and thank the witnesses for being here today.
    Before I introduce the witnesses, let me call on Senator 
Murkowski for any comments she would have.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman. I appreciate 
the opportunity to focus on water here this morning.
    We have a lot of water up North. But when it comes to 
providing for what I think most would consider to be pretty 
basic needs in my home State, we are seriously, seriously 
lacking in far too many areas. We have got about 280 isolated 
villages around the State. The average population of the 
villages is somewhere around 300 people, not a lot and not 
accessible by road.
    Most of these villages are accessible only by air or by 
boat, subsistence lifestyle, very little economy. So when we 
are looking to install water systems, it is extraordinarily 
expensive.
    I have been working for about 8 years now to get a 
community hooked into water, just basic water, a flush toilet. 
I was in Buckland, Alaska back in 2000--I think it was 2005--
and had a full community meeting with just about every resident 
in the village. As I was getting ready to leave, an elderly 
woman comes up to me, she grabs me by the arm, and she says, 
``Lisa, all I want before I die is a flush toilet.''
    We kind of chuckle at it, but it is pretty basic. If you 
don't have flush toilets, it is tough to do other things. It is 
tough to have clean water. It is tough to wash your clothing. 
It is tough to be able to just focus on basic health care 
needs. In too many of our communities, those basic needs are 
yet to be met.
    We have made some progress in Alaska. Back in 1994, only 37 
percent of our rural households had adequate sanitation. Today, 
the good news is we are up to about to 77 percent of our 
Alaskan homes that have running water and flush toilets. But 
still, that is only 77 percent. So what do the rest of the 
people do?
    In far too many of our communities, they haul their waste 
in a bucket down to the lagoon, or they have a honey wagon that 
comes around and basically pumps the stuff out. But it is an 
area that is ripe for disease, and it is simply not acceptable. 
Twenty-one communities have never had piped water or sewer. 
Many of them have just simply not been connected. So I think we 
recognize that we have made progress but there is so much more 
that needs to happen.
    As we address the bill before us today, I want to note that 
circumstances have changed since this committee passed several 
of the bills that were envisioned to be funded in this bill. 
Many of the projects that this bill would direct money to have 
not received much funding since they were originally 
authorized, mainly because they are not within the traditional 
mission or priorities of the BOR, the Bureau of Reclamation. In 
addition, with the budget and the deficit constraints, all of 
these projects face some grim statistics.
    But I am pleased that we are looking today at additional 
tools that we may have to help fund these rural projects. I 
also look forward to hearing from our witnesses in looking at 
some new and perhaps some innovative ways to approach funding 
them. But I think we recognize our budget resources are under 
more strain than ever, and the spending that this bill would 
mandate has to come from somewhere.
    I look forward to hearing from Commissioner Connor on how 
the Bureau of Reclamation intends to implement their water 
programs and the steps that it is taking to address the other 
larger, unmet water needs in this country.
    With that, Mr. Chairman, I thank you.
    The Chairman. Thank you.
    Before we go to our two panels of witnesses, Senator Baucus 
is here. He is the sponsor on this legislation. Why do we not 
ask him to make any statement he would like to make? I know he 
has another important meeting that he has to get to. So thank 
you for being here, and thanks again for sponsoring the bill.

          STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR 
                          FROM MONTANA

    Senator Baucus. Thank you very much, Mr. Chairman. Thank 
you for holding this hearing today on our bill, the Authorized 
Rural Water Projects Completion Act, and thank you for your 
outstanding leadership to help find solutions for rural 
Americans who still lack good, clean water.
    As Ben Franklin said long ago, ``When the well is dry, we 
learn the worth of water.'' I might say as an aside, in parts 
of Alaska I am sure and New Mexico, and South Dakota, and 
Minnesota, and certainly my State of Montana where it does not 
rain near as much as it does back on the East Coast here, it is 
especially an issue. In some of our States, because it does not 
rain, there are fewer people per square mile, which makes it 
very difficult to get water--good, clean drinking water out to 
people.
    It really doesn't rain west of the 100th meridian and that 
is dictated--such the culture that we have in West United 
States because precipitation has just been so low compared with 
east of the 100th meridian, where it rains just a lot more.
    The main point being that city people even in our part of 
the country, in western States, most of them, when they move 
into a house and turn the tap on, they just take for granted 
that there is water there. Just take it for granted. Turn the 
tap on, and there is drinking water.
    But that is not true for other parts of our States, as we 
have well known, particularly the more rural parts. In the more 
rural parts, there is often no municipal drinking water system. 
There just isn't. You get your water from wells. Sometimes the 
wells work, sometimes they don't. Sometimes you have to go down 
pretty deep. Sometimes the water is brackish. It is 
contaminated, it is unreliable, and there is not enough of it, 
good, clean water. For years, many of us have tried to find the 
resources so that people in our States--in the rural parts of 
our States can be served.
    The big issue clearly is lack of resources, lack of 
funding. Appropriations tend to be pretty slim around here. Mr. 
Chairman, and I, and others have come up with this idea of 
mandatory spending for some of these projects. We have listed 
the projects that are most needed. It is true that we have to 
then come up with the offsets to finance this mandatory 
spending.
    But we set it out at $80 million a year for these projects. 
It is a good start. We will keep working on it. We will keep 
improving on it, but I do believe very strongly this is 
extremely important.
    We in the Finance Committee will work very hard, do our 
level best, to help find the offsets so there is--that there is 
$800 million over 10 years to finance this. We are just going 
to have to do it. I cannot tell you what the source of that 
revenue will be. I don't know at this point, but I do know that 
this approach makes a lot of sense because the old ways of 
doing things just hasn't worked very well. There just has not 
been enough appropriations to complete some of these projects. 
In the current rate we are going, it is going to take a long, 
long time, maybe a generation, before some of these projects 
are finally completed.
    There are several in Montana. One that is especially 
important is the Fort Peck Dry Prairie Project, and we have two 
or three in Montana. A little later, we will hear from Chairman 
John Sunchild. John Sunchild is the chairman of the Rocky Boy's 
Reservation in Montana.
    We all know, some Reservations are rich. They have got lots 
of resources. Some don't. It just varies. In some parts of the 
country, it is casino revenue, and in our part of the country, 
there are not near enough people to have casinos. So we cannot 
have any casinos. In some parts of our State, reservations are 
rich in coal and gas. Other parts there is not much of anything 
and the Rocky Boy's Nation, John Sunchild is chairman, is one 
of the reservations--they just do not have resources. They are 
small, and they just have a hard, hard time of getting drinking 
water. It is just very, very difficult. So they have developed, 
and some money has been spent on the Fort Peck Dry Prairie 
project.
    Many communities in Montana, too, are further stressed 
because of the oil boom. The Bakken formation has put a lot 
more pressure on communities who otherwise had a hard enough 
time as it was to provide water. This makes it even worse.
    But I just thank you very much for your help here. Of 
course, Dry-Redwater is extremely important. I think you will 
be moved by the testimony of my good friend, Bruce Sunchild, 
when he testifies a little bit later, and he speaks movingly 
about the unsanitary groundwater wells that his people continue 
to use.
    I have a hunch that when he speaks, it will remind you, 
Senator Murkowski, of some of the problems you addressed in 
Alaska. They are not dissimilar. In fact, looking at all the 
members of this committee, I strongly suspect that each have 
communities that face these very same problems.
    But thank you very much, Mr. Chairman, for taking up this 
bill, and it is very, very important for a lot of people who 
otherwise, you know, really are not in the most powerful 
position to find ways to address their basic needs. In this 
case, it is drinking water.
    Thank you.
    [The prepared statement of Senator Baucus follows:]

    Prepared Statement of Hon. Max Baucus, U.S. Senator From Montana
    Thank you for holding this important hearing today on our bill, the 
Authorized Rural Water Projects Completion Act. And thank you for your 
outstanding leadership to find solutions for rural Americans who still 
lack good clean water.
    As Ben Franklin said long ago, ``When the well is dry, we learn the 
worth of water.''
    Most Americans are lucky. They connect to city water systems that 
don't run dry.
    But in rural Montana, we know the worth of water. The wells are 
dry. The wells are old. And they are salty, contaminated, and 
expensive.
    Today in eastern Montana, an oil boom is challenging small towns 
that barely meet their own water needs. Rural water projects like Fort 
Peck-Dry Prairie provide a basic service. They are a good investment.
    That project is now providing clean water to oilfield workers who 
have moved to the small town of Bainville. At the same time, the 
project is meeting our tribal trust responsibility.
    My bill will ensure that the Bureau of Reclamation program that 
provides potable water to rural Americans is a wise investment. At the 
current rate of appropriations, it will be twice as expensive as it 
should be to pay for projects like Rocky's Boy-North Central and Dry 
Redwater.
    We can do better.
    We don't have extra money floating around this place. We need to 
spend it on essentials. And clean drinking water is an essential.
    I am so pleased to introduce my good friend Chairman Bruce Sunchild 
to testify today.
    Chairman Sunchild has been a leader of the Chippewa Cree tribe for 
decades. His homeland in north central Montana is a beautiful stretch 
of the Great Plains. He speaks movingly about the unsanitary 
groundwater wells that his people continue to use.
    I urge you to listen closely to his wisdom. Thank you again.

    The Chairman. Thank you, again, for your leadership on this 
legislation, and thank you for being here today to advocate for 
it.
    Senator Baucus. Senator, Bruce Sunchild is sitting behind 
me. He is back here, and you are going to hear from him later.
    The Chairman. OK. All right. We will look forward to that.
    Let me call first on our first panel, which is the 
Honorable Michael Connor, who is well-known to all of us here 
on this committee. He used to work with us and is now the 
Commissioner of the Bureau of Reclamation, and is the leading 
brain behind this effort, and we are glad to have him here to 
give us the Administration's perspective on it.
    So, Mike, why do you not go ahead?

   OPENING STATEMENT OF THE MICHAEL L. CONNOR, COMMISSIONER, 
       BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR

    Mr. Connor. Thank you, Mr. Chairman. Mr. Chairman, Ranking 
Member Murkowski, and members of the committee, I am Mike 
Connor, Commissioner of the Bureau of Reclamation. I am pleased 
to provide the views of the Department of the Interior on S. 
3385, the Authorized Rural Water Projects Completion Act. I 
have submitted my written statement for the record.
    Like its sponsors, the Department supports the goals of S. 
3385 to encourage vibrant rural economies and safe, reliable 
drinking water for rural residents. Our objective has been to 
further those goals, while taking into account competing budget 
priorities through the annual budgeting process.
    The Obama Administration has supported Reclamation's Rural 
Water Program over the last 4 years to a significant extent, 
allocating $231 million in the fiscal year 2010 through fiscal 
year 2013 budgets for authorized rural water projects. In 
addition, we allocated $232 million for new construction 
activities through the Recovery Act. Notwithstanding the 
projects' importance, current budget constraints have limited 
the ability to make Federal investments that match on-the-
ground capabilities.
    The goal of S. 3385 is to provide a constant level of 
dedicated funding for construction of authorized rural water 
projects. The Department supports the goals of advancing the 
economic security of Americans living in rural areas, and 
constructing these projects will not only help provide the 
economic benefits of clean, reliable drinking water systems 
that most Americans take for granted, but will also create jobs 
through ongoing construction activity.
    Since the 1980s, Congress has authorized Reclamation to 
undertake the design and construction of specific projects 
intended to deliver potable water to rural communities located 
primarily in the 17 western States. These projects exist in 
communities that are experiencing urgent needs for water due to 
poor quality of existing supply or the lack of a secure, 
reliable supply for the long-term.
    As you know, Mr. Chairman, in eastern New Mexico, the 
existing communities currently rely on the diminishing Ogallala 
Aquifer, and the current drinking water systems are projected 
to face significant shortages within the next 25 to 40 years, 
if not sooner. Reclamation's Rural Water Program provides a 
resource to rural communities under those circumstances, and 
Congress has authorized Federal assistance to meet those needs.
    The Rural Water Supply Act of 2006 authorized the 
Reclamation to establish a program to work with the rural 
communities to assess water supply needs and conduct appraisal 
and feasibility studies without individual acts of Congress.
    Pursuant to the Act, Reclamation created a rural water 
program to enable coordinated examination of the various 
options to address communities' water supply needs through a 
cost-effective, priority-based process.
    The 2006 Act also required the Secretary of the Interior, 
in consultation with other relevant agencies, to develop a 
comprehensive assessment of the status of existing authorized 
rural water projects. In response, Reclamation recently issued 
a draft assessment report, which is available for public 
comment through September 10th of this year.
    As described in the assessment report, most congressional 
authorizations for the rural water supply projects required 
that the cost ceilings be indexed to adjust for inflation. The 
result of these indexing requirements is that the overall cost 
of authorized rural water projects has risen and continues to 
rise during the time needed for construction. The total 
estimated funding that would be required to complete these 
projects is now at $2.6 billion, substantially higher than the 
original authorization amounts, which are approximately $2 
billion.
    Reclamation recognized the need to make meaningful progress 
in constructing authorized rural water projects and has 
budgeted $52 million in fiscal year 2013 toward that effort, a 
substantial increase from the fiscal year 2012 budget. At the 
current budgeted level, however, it will still take decades to 
complete the construction of these projects.
    S. 3385 establishes a dedicated Reclamation Rural Water 
Construction Fund in the U.S. Treasury comprised of funds that 
would otherwise be deposited into the Reclamation Fund. Eighty 
million dollars per year will be deposited into the Fund and 
allowed as an expenditure from the Fund through 2034. This 
funding would help reduce the total cost associated with 
construction of authorized rural water projects and enable 
earlier completion of these projects.
    S. 3385 provides that the bill's cost would be offset so as 
to not increase the deficit. The Department supports such 
language, but even if an equivalent and acceptable offset is 
identified, use of those funds must be weighed against other 
priorities across the Federal Government, including deficit 
reduction. For this reason, the Department continues to support 
achieving the goals of this legislation through the allocation 
of discretionary budget resources.
    As a final matter, I would note that State, local, and 
tribal governments are taking a greater leadership role in 
water resources investments, including financing projects the 
Federal Government would have done in the past. We expect that 
this trend will continue. Even with the additional resources 
that would be made available through S. 3385, the non-Federal 
entities will likely need to increase their share of funding to 
build these projects in the timeframes that they have 
envisioned.
    Mr. Chairman, I understand the importance of these rural 
water projects to New Mexico, as well as the other western 
States, and appreciate your leadership and support for 
Reclamation's Rural Water Program. We stand ready to work with 
you to achieve the goals of S. 3385.
    This concludes my statement, and I am happy to answer 
questions.
    [The prepared statement of Mr. Connor follows:]

   Prepared Statement of Michael L. Connor, Commissioner, Bureau of 
                Reclamation, Department of the Interior
    1Chairman Bingaman, Ranking Member Murkowski and Members of the 
Committee, I am Mike Connor, Commissioner of the Bureau of Reclamation 
(Reclamation). I am pleased to be here to provide the views of the 
Department of the Interior (Department) on S. 3385, the ``Authorized 
Rural Water Projects Completion Act''. Like the sponsors of this 
legislation, the Department supports the goals of encouraging vibrant 
rural economies and ensuring safe, reliable sources of drinking water 
for rural residents. Rural water projects help build strong, secure 
rural communities and are important to our non-federal sponsors, which 
is why the President's FY 2013 Budget includes $52 million for new 
construction activity plus another $18 million for operating and 
maintaining existing projects.
    As a threshold matter, the Obama Administration has supported 
Reclamation's rural water program over the last four years, allocating 
$231 million of funding, in the FY 2010-2013 budgets, to construct, 
operate, and maintain authorized rural water projects in addition to 
$232 million provided for these projects in the Recovery Act. Still, 
the rural water program must compete with a number of other priorities 
within the Budget, including aging infrastructure, Indian water rights 
settlements, environmental compliance and restoration actions, and 
other priorities intended to address future water and energy related 
challenges. Notwithstanding the importance of rural water projects, 
current budget constraints have limited the ability to make Federal 
investments that match on-the-ground capabilities.
    Despite such constraints Reclamation has made progress in promoting 
certainty, sustainability, and resiliency for those who use and rely on 
water resources in the West and in supporting the basic drinking water 
needs of rural communities, as directed by the Congress. S. 3385 
provides a constant level of mandatory funding to support the 
construction of authorized rural water projects to deliver water to 
smaller, isolated communities. However, the Department believes Federal 
investments in such projects must recognize the current fiscal 
constraints and the need to make tough choices in prioritizing those 
investments. The Administration supports the goals embodied by S. 3385 
of advancing the economic security of Americans living in rural areas, 
and constructing these important infrastructure projects will not only 
help provide the economic benefits of a clean, reliable, drinking water 
system that most Americans take for granted, but will also assist in 
creating jobs in the short-term through ongoing construction, but the 
Administration supports discretionary funding for these projects.
    Since the 1980s, Congress has authorized Reclamation to undertake 
the design and construction of specific projects intended to deliver 
potable water supplies to rural communities located in North Dakota, 
South Dakota, Montana, New Mexico, Minnesota and Iowa. These projects 
exist in communities that are experiencing urgent needs for water due 
to poor quality of the existing supply or the lack of a secure, 
reliable supply. For example, in rural Montana, some communities have, 
from time-to-time, been subject to ``boil water'' orders due to the 
unsafe conditions of the existing drinking water supplies. In Eastern 
New Mexico, the existing communities currently rely on the diminishing 
Ogallala Aquifer and the current drinking water systems are projected 
to be depleted within 40 years. Reclamation's Rural Water Program 
provides a resource to rural communities under those circumstances and 
the Congress has authorized federal assistance to meet those needs.
    The Rural Water Supply Act of 2006 (P.L. 109-451) authorized 
Reclamation to establish a program to work with rural communities, 
including tribes, in the 17 Western States to assess rural water supply 
needs and conduct appraisal and feasibility studies without individual 
acts of Congress. Pursuant to the Rural Water Supply Act, Reclamation 
created a rural water program to enable coordinated examination of the 
various options to address rural communities' water supply needs 
through a cost effective, priority-based process.
    In addition to authorizing appraisal investigations and feasibility 
studies, Section 104 of the Rural Water Supply Act required that the 
Secretary of the Interior, in consultation with the Secretary of 
Agriculture, the Administrator of the Environmental Protection Agency, 
the Director of the Indian Health Service, the Secretary of Housing and 
Urban Development and the Secretary of the Army, to develop a 
comprehensive assessment of the status of the existing, authorized 
rural water projects. Section 104 also directs Reclamation to describe 
its plans for completing the design and construction of the authorized 
rural water projects.
    In response to Section 104, Reclamation issued a draft assessment 
report titled ``Assessment of Reclamation's Rural Water Activities and 
Other Federal Programs that Provide Support on Potable Water Supplies 
to Rural Water Communities in the Western United States'' which is 
posted on Reclamation's website (www.usbr.gov/ruralwater/docs/Rural-
Water-Assessment-Report-and-Funding-Criteria.pdf). Comments on the 
draft report may be submitted through September 10, 2012. In addition 
to providing a report of the status of the existing authorized rural 
water projects, the assessment report describes how Reclamation's Rural 
Water Supply Program will be carried out and coordinated with other 
Federal programs which support the development and management of water 
supplies in rural communities in the western states and to maximize 
efficiency of the various programs by leveraging Federal and non-
Federal funding to meet the shared goals of the programs.
    As described in the assessment report, with the exception of Title 
III of P.L. 107-331 that authorized the Jicarilla rural water supply 
system, each of the Acts of Congress authorizing Reclamation's 
involvement in the rural water supply projects required that the cost 
ceilings included in the original authorizing legislation be indexed to 
adjust for inflation which is estimated to be 4% annually. The result 
of these indexing requirements is that the overall cost of the 
authorized rural water projects has risen and continues to rise during 
the time needed for construction, such that the total estimated funding 
that would be required to complete these projects is now $2.6 billion, 
which is substantially higher than the original authorization amounts, 
which totaled $2.0 billion.
    Reclamation has recognized the need to make meaningful progress in 
constructing authorized rural water projects and has budgeted $52 
million in FY2013 toward that effort. At the current funding level, and 
without additional non-Federal funding, progress would be made towards 
project completion, but some of the currently authorized projects would 
be completed much later, perhaps not until well after 2063 despite 
close to $4.0 billion being invested by that time. It is estimated that 
as of 2063, an outstanding balance of approximately $1.1 billion would 
remain to complete construction of currently authorized projects.
    Across the country, state, local, and Tribal governments are taking 
a greater leadership role in water resources investments, including 
financing projects the Federal government would have in the past. 
Constrained Federal budgets do not preclude the ability of non-Federal 
parties to move forward with important investments in water resources 
infrastructure and the Department stands ready to support that effort. 
Even with the additional resources made available through S. 3385, we 
would expect that non-Federal entities will likely need to increase 
their share of funding to build these projects in the timeframes they 
have envisioned.
    S. 3385 establishes a dedicated Reclamation Rural Water 
Construction Fund in the United States Treasury comprised of funds that 
would otherwise be deposited into the Reclamation Fund established by 
the first section of the Act of June 17, 1902 (32 Stat. 388, chapter 
1093). This funding source would enable earlier completion of projects. 
Section 3(b)(3) of S. 3385 provides that the bill's cost would be 
offset so as to not increase the deficit. The Department supports such 
language. However, even if an equivalent and acceptable offset is 
identified, use of those funds must be weighed against other priorities 
across the Federal government, including deficit reduction.
    Section 3 of S. 3385 provides that for each fiscal year from 2013 
through 2029, $80,000,000 per year will be deposited into the Fund in 
addition to interest earned on invested money that is available in the 
Fund but not utilized for the current withdrawal. Section 3(c) of S. 
3385 limits expenditures from fiscal year 2013 through 2034 from the 
Fund to not more than $80,000,000 in addition to interest accrued in 
that same fiscal year, with an allowance for the use of funds carried 
over from prior years.
    S. 3385 also provides that if Reclamation has completed feasibility 
reports pursuant to Title I of the Rural Water Supply Act by September 
30, 2012, recommending construction of additional rural water projects, 
and those projects are subsequently authorized by Congress, they may be 
eligible to receive funding through the Reclamation Rural Water 
Construction Fund. S. 3385 directs the Secretary of the Interior to 
develop programmatic goals enabling the expeditious completion of 
construction of the existing rural water projects and to establish 
prioritization criteria for the distribution of funds. Reclamation's 
draft assessment report would meet these requirements when complete. 
Reclamation's first goal is to advance the construction of rural water 
projects that meet the most urgent water supply needs in the shortest 
amount of time, given our current budget constraints. The second goal 
is to give priority to rural water projects that address Indian and 
tribal water supply needs.
    Within the context of the above goals, Reclamation recognizes that 
current and projected funding levels may not be sufficient to 
expeditiously complete the federal funding portion of every project and 
that it must prioritize the allocation of available funding. The draft 
assessment report outlines prioritization criteria to guide 
Reclamation's decision making to maximize the agency's ability to meet 
its programmatic goals, to maximize water deliveries to rural 
communities in as short a period as possible, and to reflect the 
diverse needs and circumstances facing each individual project. The six 
criteria identified by Reclamation for rural water construction 
prioritization are:

   Is there an urgent and compelling need for potable water 
        supplies?
   How close is the Project to being completed and what is the 
        commitment of the project sponsors to making that happen?
   What is the financial need of the communities and what is 
        the relative economic effect of the Project?
   Does the Project fulfill Reclamation's authorized niche for 
        taking a regional and watershed approach to rural water 
        projects?
    Does the project minimize water and energy consumption and 
        encourage the development of renewable energy resources such as 
        wind, solar, hydropower, etc., to meet local needs?
   Does the project serve the needs of tribal communities and 
        tribal members?

    The analysis outlined in the draft assessment report underscores 
that in times of constrained federal budgets, non-federal funding in 
excess of the minimum contributions originally contemplated will be 
required to expedite project completion and reduce the effects of 
indexing over the construction period.
    This concludes my written statement. I am pleased to answer 
questions at the appropriate time.

    The Chairman. Thank you very much and thanks for your 
leadership and help with the development of the legislation.
    One obvious question is, is there sufficient funding in the 
Reclamation Fund to meet the needs of Department of 
Reclamation, even if we dedicate $80 million per year to 
addressing this construction backlog? In your view, is there 
still adequate funding in there for the other needs that the 
fund was established for?
    Mr. Connor. If the legislation were to be enacted and 
taking an additional $80 million from the Reclamation Fund for 
direct financing of these rural water investments, it is my 
view, having looked at the numbers, that there would still be 
substantial resources in the Reclamation Fund to fund our other 
priority programs.
    I say that based on, just on general, we are averaging 
about $2 billion per year of revenues into the Reclamation Fund 
right now and through the annual appropriations process. The 
Reclamation Fund is used to fund a large percentage of 
Reclamation's programs through the appropriations process on an 
annual basis and averages somewhere in the neighborhood of $900 
million to $1 billion per year. So there is a surplus on a 
year-to-year basis, even taking into account the $80 million 
per year.
    The Chairman. All right. As you know, a lot of my interest 
in this whole subject results from the problems that we have in 
eastern New Mexico with the depletion of the Ogallala Aquifer 
and the threat that that poses for the water supply for many of 
the communities in eastern New Mexico. We have, of course, the 
Eastern New Mexico Rural Water Supply Project, which we have 
authorized.
    Can you give us any information about the time horizon for 
construction of that project if this legislation does not get 
enacted? If something like this automatic funding is not 
provided for, do you have an idea as to how long it might take 
to accomplish the construction of the project?
    Mr. Connor. I can look at that a little closer, but sitting 
here before you today, I do not have a good estimate of the 
time horizon that we would have. You know, we have had--even at 
the $52 million level for new construction activity, which is 
what we have got in our existing 2013 budget, we are looking at 
significant timeframes in the completion of these rural water 
projects. I think the estimate that we put in our draft rural 
water assessment report was at that level, about $52 million 
per year. We would still by 2063 not have completed all of the 
existing authorized projects and there would be still something 
on the order of a $1.1 billion backlog at that point in time.
    The Chairman. That's 2063, you----
    Mr. Connor. 2063, that's correct.
    The Chairman. I think I will probably have left the 
committee by then.
    [Laughter.]
    Mr. Connor. I would just say that we are continuing to look 
at ways to increase the investments for these rural water 
projects. Certainly the Recovery Act helped greatly to reduce 
the backlog. We did substantially increase the resources in 
2013 versus 2012, and we are having an active dialog about how 
we can continue to do that in the future through the 
appropriations process.
    The Chairman. Since at the current time these communities 
in eastern New Mexico are dependent primarily on the--on 
groundwater that they get from the Ogallala Aquifer, has the 
Bureau of Reclamation, to your knowledge, or any of the other 
Federal agencies done a calculation as to how long that 
underground aquifer, the Ogallala Aquifer, will remain a viable 
source of water for communities in eastern New Mexico?
    Mr. Connor. Not that certainly the Bureau of Reclamation 
has done. We have not done in-depth analysis of the Ogallala 
Aquifer and its ongoing viability for a supply that has certain 
levels of reliability on an annual basis. You know, I think our 
best information is that provided by the various entities that 
we work with, that it is a declining aquifer. Those problems 
have certainly been exacerbated over the last decade in certain 
areas of the country.
    I know there have been a number of studies that have been 
done by USGS and other entities. I am not aware of how 
comprehensive they are or how detailed the modeling is for the 
long-term.
    Mr. Chairman. All right. Senator Murkowski.
    Senator Murkowski. Mr. Connor, we know that there is many--
well, I should not say many--but there are multiple Federal 
agencies that have funding availability for rural areas to 
construct and improve water and wastewater facilities.
    Can you describe what else is out there other than what you 
administer, and also the level of collaboration or how the 
different agencies are working together to address the need 
that clearly exists?
    Mr. Connor. I think through the legislation that was 
enacted in 2006, the Rural Water Supply Act, which directed the 
Secretary to collaborate with 6 other agencies in defining the 
programs and to figure out ways to collaborate and--to the 
extent--of not merging those programs, but at least having them 
work better together so that we are not overlapping authorities 
and programs, that is taking place increasingly. We have 
outlined that in our draft report that we just issued. There is 
something like ten programs out there that we identified 
through the 6 agencies. I have to say, whether it is rural 
water projects or some of the Indian Water Rights Settlements 
that we are doing, which are similar in nature, such as the 
Navajo-Gallup pipeline project, we have had enhanced 
collaboration of such.
    In Navajo-Gallup, we have got funding that was provided 
through the USDA's Rural Water Utilities program to do 
distribution lines in association with the Navajo-Gallup 
pipeline project. The Indian Health Service, which has another 
major program for rural communities, is also participating in 
that effort and constructing some of the distribution lines. So 
we are trying to marry up our authorities and Reclamation's 
role, which is generally the large water delivery systems, with 
these other programs like Rural Utilities or Indian Health 
Service that do distribution lines.
    So there is some synergy there. There are other programs 
that just are related to wastewater treatment, which is outside 
the purview of what we are doing in our Rural Water Program.
    Senator Murkowski. Let me ask you about prioritization 
because, as we recognize with the budget issues that we are 
facing, it is all a matter of priorities now.
    How are you going to ensure that the money that will be 
spent on these projects that are authorized within this 
proposed legislation are actually the most feasible and the 
most cost-effective?
    Mr. Connor. There's two level of priorities. Let me put it 
that way. We prioritize our overall programs with Reclamation, 
and that results in a certain amount of money that we can apply 
toward the Rural Water Program in our annual budgeting process.
    Then I think the question that you asked was then, taking 
those resources, how do you ensure that we make the best 
investments possible? We have through the 2012 appropriations 
process in the funding that Congress provided for rural water 
programs and then our 2013 budget, we have revised our criteria 
for those--prioritizing our investments in rural water 
projects.
    Senator Murkowski. Are those then reviewed by OMB?
    Mr. Connor. They did participate in that effort. We work 
with them, and----
    Senator Murkowski. In the priority setting then. So they 
worked with you ahead of time?
    Mr. Connor. Yes, absolutely. We work with them as we apply 
those criteria in the budget process. We work with them as we 
release the draft Rural Water Program. We have got six, 
basically, prioritization criteria right now, and we are taking 
comments on those 6 criteria and figuring out how we may revise 
them before issuing a final report and then finalizing them.
    Senator Murkowski. Are those 6 criteria the same criteria 
then that OMB uses? My question is whether or not you are in 
sync with----
    Mr. Connor. We are in sync, yes.
    Senator Murkowski. OK. Let me ask then about what would 
happen if this bill were to be enacted. You have $80 million 
per year that will be disbursed to the fund. Do you think then 
that the Appropriations Committee is going to view this funding 
as an additional amount to the allocation that traditionally 
comes to Bureau of Reclamation?
    My concern is that as an appropriator sitting on the 
committee, I am going to look at this and say, well, Bureau of 
Reclamation already is receiving $80 million a year. We do not 
need to worry about making sure that that budget allocation 
that we typically have seen is there.
    How have you factored this into the equation, because, as 
you know, we are all looking for dollars under every rock out 
there.
    Mr. Connor. Right.
    Senator Murkowski. How do you make sure that these 
priorities that have been set with this legislation are 
addressed, while at the same time addressing the pent-up needs 
within the Bureau of Reclamation?
    Mr. Connor. That is a very good question, Senator 
Murkowski, and it is something that we would have to go through 
in our annual budgeting process. I think what we have tried to 
do in our draft report is basically start with laying out the 
facts and the figures so that we can assess those in our budget 
priorities, as well so as folks in Congress can assess those 
facts.
    So, for instance, the bill would make available $80 million 
per year in mandatory funding. Right now, our investments are 
about $52 million for construction activities, as we pointed 
out in the 2013, and that still is going to leave a substantial 
backlog. We also identified that to optimize funding on the 
ground and to complete the projects in the timeframes 
contemplated, some of those projects are through I think the 
2029 timeframe--we would need something on the order of $162 
million per year, certainly over the next decade when we are 
doing a lot of construction activities.
    So you can see there, the $80 million would certainly allow 
for increased on-the-ground activity, more than the budget 
resources currently available. But it is not the optimum level 
of funding.
    So there is a mix or some judgments that have to be made. 
That is where our prioritization criteria comes in. What we are 
trying to do is take whatever resources we have, ensure we can 
make the most valuable investments so that we don't have 
stranded assets, so that we can try and complete sections of 
these projects so that they serve communities and meet the most 
compelling needs that are out there.
    Senator Murkowski. Thank you, Mr. Chairman.
    The Chairman. Senator Johnson.
    Senator Johnson. Welcome, Commissioner Connor. You 
testified that the current funding level of $50 million for 
construction, some of the authorized projects will extend well 
beyond 2063, with a substantial outstanding balance remaining. 
This is obviously not an acceptable timeline. How would 
starting with $80 million annually from Reclamation funding 
impact projects time lines and overall costs?
    Mr. Connor. I think going back to that range I just 
mentioned at the optimum $160-plus million funding levels, I 
think our projections are that we could complete the authorized 
projects, marrying up with the non-Federal cost shares that are 
out there, by the 2029 time period.
    You mentioned the $52 million and then the 2063 time 
horizon. I think our projections are at the $80 million per 
year range, if that is what it was through enactment of this 
legislation, we are looking at about a 2039 timeframe for 
completion of the authorized projects, assuming that the non-
Federal cost shares are all in place.
    Senator Johnson. I appreciate that the investments of that 
the Administration made in rural water through the Recovery Act 
and certainly the Lewis and Clark's Water Treatment Plant 
likely would not be coming online this week without it.
    Unfortunately, the regular budgeting process seems to be 
continuously under invest in these projects. For example, the 
Administration fiscal year 1912 budget would have provided just 
$20 million for construction across all projects, though 
Congress added back significant funds.
    During an appropriations hearing in April of last year, I 
asked about the disproportionate hit. You conceded that it was 
an area within BOR's budget that perhaps took the largest cut. 
In the absence of this dedicated funding, what can we expect 
from budgets in the coming years?
    Mr. Connor. Senator, I don't have to tell you that budgets 
are very tight, as we all know. We did look at the 2012 budget 
level. We did cut back the construction dollars significantly. 
Part of it was the tight budgets. Part of it was the 
investments that continued to be available as we were 
completing activity based on the Recovery Act investments, the 
substantial resources that were applied toward rural projects 
as part of that effort.
    So notwithstanding that, we did increase the 2013 budget. 
That is certainly our goal and preference is to try and 
maximize our investments through the discretionary budget 
process. But there are a number of competing programs that we 
have at Reclamation. Certainly it starts with our operating and 
maintaining our projects and the infrastructure, and then the 
legal obligations that we have, whether it be Indian water 
rights settlements, compliance with the environmental laws, 
court-ordered activity that we have to undertake and those are 
the highest priority levels, those two categories, within our 
budget. They do take up substantial resources.
    Senator Johnson. For communities like Madison, South 
Dakota, that are at the end of the line to be hooked up to 
rural water, can you provide any assurance that these projects 
will ever be completed?
    Mr. Connor. The assurance that I can make is that we are 
trying to make the best use possible of the resources we have 
through their prioritization criteria. Certainly, as you know, 
for some projects, when we get close to completion, that is 
another element of our priority criteria. We have certainly 
done that with the Mni Wiconi project as we have gotten close. 
Through our 2013 budget, we expect to then complete the current 
Federal investments authorized for that project. So we are 
systematically going through and completing the construction of 
these projects, albeit slowly. But that is part of our priority 
criteria.
    Senator Johnson. I yield back.
    The Chairman. Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman.
    I just want to open my questions with--and thank you for 
coming--by just telling you that I do not support this bill. I 
don't think this is the way to fund western water projects. 
This bill puts some water projects ahead of the line of other 
projects that I think where there are greater needs. I think 
the process that funds these projects lacks transparency and 
that the bill leaves key terms undefined and Secretarial 
authority vague. I think the bills says it is deficit-neutral, 
but it really does not explain where the offsets come from. The 
bottom line is that some States win under this bill; others 
simply lose. The public needs some clarity as to what this bill 
really does.
    So with that said, Mr. Connor, I look at the term in the 
bill ``rural water project'' and what that is supposed to mean. 
I am just kind of interested in what your thoughts are, what 
that actually means, that definition?
    Mr. Connor. We would identify 12 rural water projects that 
have been authorized over time. Of that, we have completed 4 to 
date, and that leaves 8 projects, two more which we expect to 
complete soon. So there is a set number of projects that we 
have identified in our rural water report that we would apply 
to that term. That is how we would interpret it. There are 
other projects that are essentially rural water projects that 
we also need to think about, such as the Arkansas Valley 
Conduit, et cetera. So we do have in our mind what we would 
include under that term.
    Senator Barrasso. OK. You know, there is a 2006 Rural Water 
Supply Act, and that is kind of different than rural water 
supply project, rural water project, and just kind of looking 
at the definition differences to see how that would be covered.
    You know, the Administration says it supports the goals 
embodied in this legislation, S. 3385, of advancing the 
economic security of Americans living in rural area. Yet 
nowhere in the testimony do you actually state that the Bureau 
of Reclamation or the Administration supports the bill. So I am 
just curious if the Bureau and the Administration support this 
bill as written?
    Mr. Connor. The Administration, as identified in the 
testimony, supports the goals of the legislation. We do have 
concerns with the mandatory funding aspect of it.
    Senator Barrasso. It looks like many of the projects 
targeting for funding in the bill have been around for decades. 
It is my understanding that the Bureau of Reclamation has 
opposed some of these projects in the past. Is that correct?
    Mr. Connor. Yes. Testimony has opposed the enactment of 
some of this legislation.
    Senator Barrasso. The next is that I frankly do not see the 
value in creating a new trust fund such as the one contemplated 
in this bill. Money goes in, but rarely does the money come 
out. Congress uses the funds as slush funds to cover deficit 
spending. What is held in trust is not cash. Instead, the so-
called trust funds hold debt, debt that is never paid back. We 
see it time and again, and I think we see it in this bill. You 
say in your testimony that the bill creates a constant level of 
mandatory funding, and I don't read it that way.
    The Secretary of the Treasury may only make the transfer if 
the transfer will not increase the deficit. Given that the 
current level of deficit spending the Federal Government is at, 
you can imagine scenarios in which the transfer will not occur.
    I think it is also important to point out that, even if a 
transfer to the new fund occurs, the bill creates no obligation 
for the Secretary to spend the money. There is no obligation--
on page 3, with regard to expenditures from the Rural Water 
Fund, it says, ``The Secretary may expend from the fund not 
more than the sum of $80 million.'' In section 2 of page 4, it 
states again that, ``The Secretary may use the amounts.''
    Do you agree this language gives the Secretary the ability 
not to spend the money on the authorized rural water projects 
in the bill?
    Mr. Connor. That may be the interpretation of the bill. 
Given the strong need on the ground and the investments and the 
capabilities that exist, I expect that the money would be 
expended.
    Senator Barrasso. But it says, ``may," not ``shall," so 
just in terms of the legislation.
    Mr. Connor. Understood.
    Senator Barrasso. Thank you. With regard to page 3 under 
the section entitled, ``Limitation,'' it states that, ``No 
amounts may be deposited in or made available from the fund.'' 
Under those paragraphs, if the transfer or availability of the 
amounts would increase the deficit. I mean, this language is 
somewhat confusing. There is no process or method for 
determining whether or not a transfer would increase the 
deficit.
    I see in your testimony, the Administration supports this 
provision. In your written testimony, you also state that an 
equivalent and an acceptable offset must be identified. So I am 
wondering how you are going to implement this provision. Are 
you going to raise fees on other government operations, cut 
costs to pay for the transfers. How this--will allow power 
rates to be increased for hydro dam users in the west. So I am 
just kind of looking at that. What are the different ways the 
Secretary can use to make these transfers deficit-neutral, and 
should there not really be a formal process to ensure that the 
bill will be deficit-neutral?
    Mr. Connor. In the testimony and our contemplation is that 
the bill would be deficit-neutral when it is enacted by 
Congress.
    Senator Barrasso. We will see how that turns out.
    Are you familiar with the GAO report in February 2006, 
entitled: Indian Irrigation Projects. Numerous Issues? The 
whole title is Indian Irrigation Projects. Numerous Issues Need 
to be Addressed to Improve Project Management and Financial 
Sustainability.
    Mr. Connor. It has been a long time, but, yes, I am 
familiar with the report.
    Senator Barrasso. OK. We actually had hearings related to 
this in Wyoming in the Wind River Reservation.
    I just want to point out that the GAO study says that there 
were nearly 16 irrigation projects initiated in the late 
1800s--because, I mean, you are talking about 2063m down in the 
future--that there were 16 irrigation projects initiated in the 
late 1800s and the early 1900s by the Department of Interior 
that were never completed, are not sustaining themselves, and 
all but one of these projects are now managed by the Bureau of 
Indian Affairs. The report says--and I apologize Mr. Chairman 
for running over. But I will just, if it is all right, just 
finish this one question.
    Because of insufficient funding, project maintenance has 
been consistently postponed, resulting in an extensive and 
costly list of deferred maintenance. These are in Indian 
Reservations. You state that the projects funded through this 
bill must compete with other priorities of the Bureau of 
Reclamation budget, including aging infrastructure.
    The question is, why are we funding these new projects in 
this bill when authorized Bureau of Reclamation projects for 
Indian irrigation projects that are from a hundred years ago 
are still not completed and have severe deferred maintenance 
backlog?
    So I am just curious if you could talk about that and 
should fixing these projects not be a top priority of the 
Bureau of Reclamation and the Department of Interior as opposed 
to moving forward with something new?
    Mr. Connor. Actually for the vast majority of those 
projects that are currently within the jurisdiction of the 
Bureau of Indian Affairs, we are not authorized to go and do 
rehabilitation activity. We have been specifically authorized 
for rehabilitation activity on Indian irrigation systems, for 
instance, with respect to the Crow Tribe's irrigation system as 
a result of the Crow Water rights settlement.
    There are specific instances where we are responsible for 
rehabilitation. We do prioritize those activities in our 
budget.
    Senator Barrasso. Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Franken.
    Senator Franken. Thank you, Mr. Chairman. Thank you, 
Commissioner.
    Senator, Secretary Salazar testified here that he felt--and 
Senator Johnson mentioned the Lewis and Clark Project. He 
testified that that was a priority.
    Minnesota communities have paid 100 percent of their share 
years ahead of when they were told water was going to be there. 
But the project is being delayed. Minnesota communities are 
paying additional costs because they have no water.
    Lincoln Pipestone spent $6 million to secure an interim 
water supply. Rock County spent $1.75 million on system 
upgrades. Luverne spent $650,000 on a water reclamation system 
and a new well. Do you understand that the distrust that this 
builds in these communities about the Federal Government?
    Mr. Connor. I do understand that there is frustration at 
the lack of funding levels that would optimize the construction 
of the Lewis and Clark Project, yes, sir.
    Senator Franken. I mean, these communities are losing 
economic development projects. They are losing--you know, we 
lost an ethanol plant in, the expansion of a pork processing 
plant in Worthington. Yet, these communities have now paid more 
really than their share. Do we know when Lewis and Clark will 
get completed? Do you have a date?
    Mr. Connor. I do not have a date off the top of my head.
    Senator Franken. OK. These are not new projects. In other 
words, I support this legislation, and I would just say to the 
ranking--or not the ranking member, but Senator Barrasso, that 
these aren't new projects. To say they are new project is just 
wrong. Is that correct? Lewis and Clark is not a new project, 
is it?
    Mr. Connor. It has been authorized for a significant amount 
of time.
    Senator Franken. Yes, since 2000, right?
    Mr. Connor. Since 2000, yes, sir.
    Senator Franken. Yes and Minnesota has not gotten a drop of 
water from it, and these communities have paid 100 percent of 
their share. Now, what we are getting--so and the--you know, 
because of inflation, the amount that is being appropriated 
actually does not keep up with inflation. So the Federal 
share--let's see. The inflation was more than the $5.5 million 
that the project was appropriated last year.
    So, under this level of funding, it is not going to get 
done by 2063. It will just never get done. Now I am hoping the 
Chair--I know the Chair is leaving. Maybe he will take--get a 
second wind. He will stay out of the Senate for a few years and 
maybe he will be chairing this in 2063.
    But, I mean, what this does is just actually increase the 
cost of the projects, does it not?
    Mr. Connor. Certainly as we have pointed out, the indexing 
that occurs in the annual inflation figures are very 
significant in this program and to stay ahead of that aspect, 
it is somewhere in the $40 million range of construction 
activities to get ahead of the annual inflation.
    Senator Franken. OK. So we got ourselves a problem here, do 
we not? We really do.
    Mr. Connor. Overall funding for these programs faces some 
significant challenges.
    Senator Franken. OK. But I think what we should consider 
here is the commitment that was made to these local communities 
in Minnesota and in Iowa, which are not getting the water that 
they have paid for. These are local communities who cannot run 
a deficit. These are local communities that are seeing economic 
development not happen, that would have otherwise happened.
    If there is any--you know, we talk about return on 
investment in anything, in corporate, in private industry. The 
return on investment of this project would be tremendous in the 
sense that we would be building infrastructure. We would be 
creating jobs for the people that are--at a time when we do not 
have enough people working, when we have high unemployment, 
when, actually, the treasuries now are getting less--you know, 
have to pay out less than 1 percent interest, which is less 
than inflation.
    You know, essentially, you are being paid to borrow money. 
Let us do this work now. Let us do this work now so we can have 
the ethanol plant, so we can have the pork plant expanded, so 
we can have the dairies expanded, like the one in Hull. This is 
pennywise and pound foolish as far as I am concerned, and it is 
also creating a sense of distrust of the Federal Government.
    When the State of Minnesota and the communities in 
Minnesota have paid 100 percent of their share of this, and 
now, they are being told that this might not be done until 
2063. I just think that we--you need to support more than the 
goals of this. If we need to figure out some changes in the 
language of this, I am all fine with that. But we need to fund 
these projects.
    Thank you, Mr. Chairman.
    The Chairman. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman, and I think we have 
seen how strong the passions are today about water. As Mr. 
Connor knows, in our part of the country in the west, water is 
our lifeblood. We need it for people, for drinking water. Our 
farmers need it at a crucial time for agriculture. It is an 
environmental priority in terms of fish. I just wanted to have 
a brief colloquy with you, Mr. Chairman, and I think our staffs 
have talked about this.
    In our State, in our part of the world, it is absolutely 
essential that we get a long-term solution to the Klamath. This 
has gone on and on for years, and I think Mr. Connor is 
familiar with this as well. I think these are good projects, 
and we have heard some very good arguments. Certainly, Senator 
Franken's point about the fact so much has been done already, 
in terms of financing is compelling to me.
    I would just like your assurance, Mr. Chairman, that before 
these bills advance, you would commit to working with me so 
that we can get a long-term solution to the Klamath, and the 
Klamath does not fall further behind in terms of getting 
resources for an urgent need for my State.
    The Chairman. No, I am glad to work with you to see what 
can be done to resolve that issue and I think there have been 
several issues that have been brought up here that, obviously, 
we need to focus on, this being a major one. I certainly commit 
to work with you before we try to move forward with the 
legislation.
    Senator Wyden. Thank you, Mr. Chairman. That is very 
helpful.
    Mr. Connor, your question, to start with, also deals with 
the Klamath. You have spent a lot of time on projects in 
Oregon. Can we have your assurance, much like I have asked 
Chairman Bingaman, that before this goes forward, you will 
commit also to a long-term solution on the Klamath?
    I and Congressman Walden, the Congressman from the area, 
Senator Merkley, a number of us from our State are talking to 
people on the ground, in the basin, actually getting out and 
talking to all of those concerned about the issue. We want to 
come up with a long-term solution. Will you commit to me today 
that before these projects go forward, you will work with us on 
a long-term solution on the Klamath Basin?
    Mr. Connor. Senator Wyden, I am delighted to make that 
commitment to you, to move forward and to help resolve these 
ongoing systemic conflicts that exist in the Klamath Basin 
because of the competing nature for the resources that are 
available. So we are systematically through our 
responsibilities through the Secretarial determination process. 
We are investing resources to support the goals of the KBRA 
itself, those broad goals. So, working with you to see how we 
can continue in the effort and move forward is a priority for 
Reclamation's priority for the department.
    Senator Wyden. I want to characterize this, and I do for a 
very specific reason, as working for a long-term solution 
because when you are out listening, you know, to people, 
getting their input, and getting their ideas, that is what they 
want. That is how they characterize it. They want a long-term 
solution. You have committed to me to work for something I 
characterize that way, and I appreciate it.
    Last question for you is, will you also work with us to 
help reduce the cost of a long-term solution? I think there is 
a very strong sense that that is going to be a prerequisite to 
an effective approach here, an approach that works, that can 
get bipartisan support. Will you commit to work with us to help 
reduce the cost of a long-term solution in the Klamath?
    Mr. Connor. Yes, I will, Senator.
    Senator Wyden. OK. Mr. Chairman, thank you, and I 
appreciate your willingness to work with me, as well.
    The Chairman. All right. Thank you very much. We will let 
you go, Commissioner Connor. Thank you, again, for your 
involvement in this and your help, and in your testimony today.
    We will go on to the second panel.
    Mr. Connor. Thank you, Mr. Chairman.
    Senator Murkowski. I think Senator Barrasso may want----
    The Chairman. Oh, did you have another question, Senator 
Barrasso?
    Senator Barrasso. I did, Mr. Chairman----
    The Chairman. Oh, I am sorry. I thought we were through 
with questions. Go ahead.
    Senator Barrasso. Just briefly, because you allowed me to 
extend beyond in the last. It is just a couple of quick 
questions.
    I agree with the comments by Senator Franken about what has 
been built up and so much work still needs to be done. I mean, 
I am just looking at--and it wasn't Bur Rec, but it was the 
Department of Interior that started these projects on the 
Indian Reservations in the 1800s, 1900s. You know, Blackfoot 
Irrigation Project, Colorado River Irrigation Project, Crow 
Irrigation Project, Fort Belknap Irrigation Project, Pine River 
Irrigation, San Carlos Indian Works Irrigation Project, San 
Carlos Joint Works Irrigation Project, go on and on, the Wind 
River Irrigation Project.
    We have things with pent-up demand for well over a hundred 
years, and I just--you know, I have problems with saying, well, 
we will do all these new things when we still have not done 
that, and it may have been shunted off to the Bureau of Indian 
Affairs now. But clearly, there are still areas that involve 
water and the Department of Interior with original commitments 
made by the Department that are not being met.
    One other thing. In your testimony, you state that a 
criteria for funding will be does the project minimize water 
and energy consumption and encourage the development of 
renewable energy resources, such as wind, solar, hydropower, to 
meet local needs. You specifically leave off oil, gas, coal 
development in the west. But isn't it true that all the funding 
for the Reclamation Fund comes from oil, gas, and coal 
development?
    Mr. Connor. The large majority of it, but not exclusively. 
But you are correct that that is the vast majority of revenues 
into the Reclamation fund.
    Senator Barrasso. It is also true then that the 
overwhelming amount of the money transferred to the Reclamation 
Fund over the years--actually more than 50 percent--comes from 
the mineral activity in just one State, and that State would be 
Wyoming?
    So under this bill before the committee, not a single 
project intended to be funded in this bill is located in the 
State that has the greatest impact on the fund. Do you find 
that ironic?
    No further questions, Mr. Chairman. Thank you.
    Mr. Connor. Thank you, Senator Barrasso.
    Senator Franken. May I just weigh in here?
    The Chairman. Senator Franken, go right ahead.
    Senator Franken. This is not a new project. I just want to 
repeat to the Senator from Wyoming. This is not a new project, 
and this is a project that has bipartisan support. Senator 
Thune, Senator Grassley, Congressman King from Iowa, 
Congresswoman Noem have all weighed in on this. This is a 
project that is not a new project, and to characterize it as a 
new project is just dead wrong, right? Am I right?
    Mr. Connor. No, as I mentioned, it has been a long, 
authorized project.
    Senator Franken. OK. I just wanted to make that clear. This 
is not a new project. This is--and this is a project in which 
the local communities in Minnesota have paid 100 percent well 
in advance, and have not gotten one drop of water.
    The Chairman. All right. We appreciate your testimony, and 
we will move on to the second panel. Thank you very much.
    Let me introduce the second panel as they are coming 
forward.
    The Honorable Bruce Sunchild, who is the chairman of the 
Chippewa Cree Tribe of the Rocky Boy's Reservation in Box 
Elder, Montana. Appreciate you being here.
    Ms. Gayla Brumfield, who is chairwoman of the Eastern New 
Mexico Rural Water Authority. Thank you for being here.
    Mr. Troy Larson, executive director of Lewis and Clark 
Regional Water System in South Dakota--from Tea, South Dakota.
    Mr. Nathan Bracken, who is legal counsel with the Western 
States Water Council in Murray, Utah. Thank you for being here.
    Why do we not--usually we just go from the left to the 
right. If that is OK with everybody, we will just start with 
Mr. Larson, and then Ms. Brumfield, and then Mr. Sunchild, and 
then Mr. Bracken.
    Mr. Larson, go right ahead. If each of you will take 5 or 6 
minutes and tell us the main things we need to understand about 
your testimony. We will include your full written testimony in 
the record.
    Go right ahead.

 STATEMENT OF TROY LARSON, EXECUTIVE DIRECTOR, LEWIS AND CLARK 
                 REGIONAL WATER SYSTEM, TEA, SD

    Mr. Larson. Mr. Chairman, Ranking Member, and members of 
the committee, my name is Troy Larson, executive director of 
the Lewis and Clark Regional Water System. On behalf of our 
board of directors, I voice strong support for the Authorized 
Rural Water Projects Completion Act.
    Lewis and Clark is a regional approach to address common 
problems of water quality and quantity in a more effective and 
cost-efficient way than each of the 20-member cities and rural 
water systems could do alone. The project will provide a 
desperately needed source of drinking water to an estimated 
300,000 people in southeast South Dakota and northwest Iowa, 
and southwest Minnesota.
    Authorized and signed into law in 2000, the project is 
currently 65 percent complete. Just yesterday, we marked a huge 
milestone when we began delivering water from our treatment 
plant to 11 of our 20 members.
    Lewis and Clark is now an operational system, which is the 
good news. However, the bad news is the schedule to connect the 
remaining 9 members is entirely dependent upon a Federal 
funding stream that does not even cover inflation, let alone 
make any meaningful construction progress.
    Based on Federal funding levels, the last 2 years, the 
project would never be completed. Even if Lewis and Clark 
receives $10 million a year, our engineers estimate the project 
would not be completed until 2050. The 3 States and 20 local 
members have prepaid over $153 million, representing 99.7 
percent of the non-Federal cost share. Many members prepaid 
millions a decade before expecting to receive water, showcasing 
the strong local support and importance of Lewis and Clark to 
the region.
    By contrast, the remaining Federal cost share last year was 
$194.3 million, but has risen to $200.6 million this year, an 
increase of $6.3 million, because Federal funding is not 
keeping up with inflation. To put the remaining Federal cost 
share of $200.6 million into perspective, when the project was 
authorized in 2000, the Federal cost share was $270.1 million. 
The Federal Government to date has appropriated just over $202 
million, but because of the slow pace of funding, the balance 
has only been reduced by just under 70 million.
    This is a double whammy for taxpayers. Not only does the 
project become more expensive, but it takes longer to realize 
the economic benefits. Lewis and Clark would create thousands 
of jobs on the front end through construction and manufacturing 
and more importantly, many more long-term jobs on the back end 
through expanded economic development. As has been noted by our 
tri-State congressional delegation, Lewis and Clark will pay 
for itself many times over.
    We have a number of economic impact examples. A large pork 
processing plant in Worthington, Minnesota cannot expand 
because of the lack of water. Ethanol plants have been turned 
away in northwest Iowa and southwest Minnesota. Proposed 
dairies have been turned away in southwest Minnesota.
    The most striking example is in Hull, Iowa. Because of an 
emergency connection where Lewis and Clark is temporarily 
buying water from one member and reselling it to Hull, a large 
cheese factory opened in 2008. The plant employs 135 people and 
processes 300,000 gallons of milk a day from area dairies. 
Company officials have flatly stated that without this 
emergency connection and the promise of future water, the plant 
have--would not have located in Hull.
    This cheese factory has been Lewis and Clark's poster child 
for the economic development that can take place when there is 
enough water. Now the cheese factor is a poster child for how 
economic development can be curtailed because of the lack of 
water. The factor wants to double production and higher another 
50 workers but cannot, because it needs more water than is 
available. The emergency connection we have in place is maxed 
out. We need to get the pipeline to Hull and the other 8 
members.
    When times are tough you go back to the basics. What is 
more basic than drinking water? It is the cornerstone of life 
and economic development. The 3 States and 20 local members 
have gone above and beyond by prepaying their share of the 
project. To be frank, the members are angry and outraged that 
the Federal Government is not honoring its commitment. They 
feel the Federal Government is leaving them high and dry at a 
time when they need water the most.
    The tri-State region is in the midst of the crushing 
nationwide drought. We have members who under--who are under a 
total water ban for any non-essential use. During a drought, 
people often ask the question, how can we solve our water 
needs? Here is a situation where we already have the solution, 
just not the funding to carry it out.
    Lewis and Clark greatly appreciates the strong bipartisan 
support it has enjoyed through the years, including from 
committee members Senator Johnson and Senator Franken. We 
respectfully urge Congress to pass this bill so Lewis and Clark 
and the other 6 projects languishing on the Bureau of 
Reclamation's plate can be completed in a timely manner, 
bringing much needed water to our Nation's heartland. We 
strongly urge the Federal Government to honor its commitment 
and not leave Lewis and Clark's members high and dry.
    Thank you.
    [The prepared statement of Mr. Larson follows:]

Prepared Statement of Troy Larson, Executive Director, Lewis and Clark 
                     Regional Water System, Tea, SD
    Mr. Chairman, Ranking Member and Members of the Committee:
    My name is Troy Larson, Executive Director of the Lewis & Clark 
Regional Water System. On behalf of our Board of Directors, I voice 
strong support for the Authorized Rural Water Projects Completion Act. 
Lewis & Clark is a unique regional approach to address common problems 
of water quality and quantity in a more effective and cost-efficient 
way than each of its 20 member cities and rural water systems could do 
alone. The project will provide a desperately needed source of quality, 
reliable drinking water to an estimated 300,000 people in southeast 
South Dakota, northwest Iowa and southwest Minnesota.
    Authorized and signed into law in 2000, the project is currently 65 
percent complete. Just yesterday we marked huge milestone when we began 
producing treated water from our treatment plant, which is being 
delivered to 11 of our 20 members. Lewis & Clark is now an operational 
system, which is the good news. However, the bad news is the schedule 
to connect the remaining nine members is entirely dependent upon a 
federal funding stream that does not even cover inflation, let alone 
make any meaningful construction progress. Based on federal funding 
levels the last two years, the project will never be completed. Even if 
Lewis & Clark receives $10 million a year, our engineers estimate the 
project would not be completed until 2050.
    The three states and 20 local members have pre-paid over $153 
million, representing 99.7 percent of the non-federal cost share. Many 
members pre-paid millions a decade before expecting to receive water, 
showcasing the strong local support and importance of Lewis & Clark to 
the region. By contrast the remaining federal cost share last year was 
$194.3 million, but has risen to $200.6 million this year--an increase 
of $6.3 million because federal funding is not keeping up with price 
increases caused by inflation.
    To put the remaining federal cost share of $200.6 million into 
perspective, when the project was authorized in 2000 the federal cost 
share was $270.1 million. The federal government to date has 
appropriated just over $202 million but because of the slow pace of 
funding the balance has only been reduced by just under $70 million.
    This delay is a double-whammy for taxpayers. Not only does the 
project become more expensive, but it takes longer to realize the 
economic benefits. Lewis & Clark would create thousands of jobs on the 
front end through construction and manufacturing, and more importantly 
many more long-term jobs on the back end through expanded economic 
development. As has been noted by our tri-state congressional 
delegation, Lewis & Clark will pay for itself many times over.
    We have a number of economic impact examples. A large pork 
processing plant in Worthington, Minnesota cannot expand because of the 
lack of water. Ethanol plants have been turned away in northwest Iowa 
and southwest Minnesota. Proposed dairies have been turned away in 
southwest Minnesota.
    The most striking example is in Hull, Iowa. Because of an emergency 
connection where Lewis & Clark is temporarily buying water from one 
member and re-selling it to Hull, a large cheese factory opened in 
2008. The plant employs 135 people and processes 300,000 gallons of 
milk a day from area dairies, which has an enormous impact to the area. 
Company officials have flatly stated that without this emergency 
connection and the promise of future water, the plant would not have 
located in Hull. This cheese factory has been Lewis & Clark's poster 
child for the kind of economic development that can take place when 
there is enough water. Now the cheese factory is a poster child for how 
economic development can be curtailed because of the lack of water. The 
factory wants to double production and hire another 50 workers but 
cannot because it needs more water than is available. The emergency 
connection we have in place is maxed out. We need to get the pipeline 
to Hull and the other eight members!
    When times get tough you go back to the basics. What is more basic 
than drinking water? It's the cornerstone of life and economic 
development. The three states and 20 local members have gone above and 
beyond by pre-paying their share of the project. To be perfectly frank, 
the members are angry and outraged that the federal government is not 
honoring its commitment. They feel the federal government is leaving 
them high and dry at a time when they need water the most.
    The tri-state region is in the midst of the crushing drought. We 
have members who are under a total water ban for any non-essential use. 
During a drought people often ask the question, ``How can we solve our 
water needs?'' Here is a situation where we already have the solution, 
just not the funding to carry it out.
    Lewis & Clark greatly appreciates the strong bi-partisan support it 
has enjoyed through the years. We respectfully urge Congress to pass 
this bill so Lewis & Clark and the other six projects that are 
languishing on the Bureau of Reclamation's plate can be completed in a 
timely manner, bringing much needed water to our nation's heartland. We 
strongly urge the federal government to honor its commitment and not 
leave Lewis & Clark's members high and dry. Thank you.

    The Chairman. Thank you very much.
    Ms. Brumfield, go right ahead.

 STATEMENT OF GAYLA BRUMFIELD, CHAIRWOMAN, EASTERN NEW MEXICO 
             RURAL WATER AUTHORITY, ALBUQUERQUE, NM

    Ms. Brumfield. My name is Gayla Brumfield. I am a former 
mayor of the city of Clovis, New Mexico, and I currently serve 
as the Chair for the Eastern New Mexico Water Utility 
Authority. I am here to present testimony in strong support of 
Senate bill 3385, the Authorized Rural Water Projects 
Completion Act, which would resolve some of the most critical, 
potable water situations in the Western United States and 
specifically impacting the 7 Eastern New Mexico water utility 
member agencies.
    Mr. Chair, we applaud and deeply appreciate your 
recognition of the importance of rural water projects and the 
need for the Federal Government to provide an adequate level of 
funding dedicated each year to complete these projects in a 
timely manner.
    The Federal Government's participation and funding 
capabilities are essential to making Eastern New Mexico Rural 
Water System a reality for our area residents. We are caught in 
a race against the failing Ogallala Aquifer and the time it 
will take for the Federal Government to meet its commitment to 
complete this important project.
    If Federal funding continues along the trends and Senate 
bill 3385 fails to become law, then our potable water supply 
will continue to decline at a rate that is outpacing our only 
viable alternative to meet our communities' needs. In fact, we 
figured that it would be about 200 years on the same pace 
before we would actually have our situation taken care of. We 
believe this legislation will help us avoid costly delays in 
completing construction phases, limit long-term taxpayer 
obligations, and ensure a more predictable and cost-efficient 
ways of building the Eastern New Mexico Rural Water System, so 
we can realize a sustainable supply of water.
    This legislation is vital for eastern New Mexico to 
establish sustainable supply of water and ensure our socio-
economic future. A sustainable supply of water is critical to 
the future of our region which supports, among other things, 
the 27th Special Operations at Cannon Air Force Base, which is 
a huge security for our country; a number of industries, 
including the dairy industry and the largest cheddar cheese 
plant in the world, large-scale food production and processing, 
colleges and universities.
    Providing a sustainable water supply for eastern New Mexico 
is our most significant challenge. Our communities rely solely 
on water reserves located in the Ogallala. Our member 
communities are investing millions of dollars basically chasing 
water, chasing water rights, wells, and transmission lines, 
just to keep up with the demand. Even with continuous 
investment in production facilities, pumping capacity is 
declining in double-digit percentages every year.
    The rate of decline of the aquifer is variable and it is 
hard to predict exactly how many more years we have. But we 
absolutely know that if we do not begin receiving substantial 
increases in Federal funding over the next several years, the 
outlook for our communities is dire. In fact, south of Clovis, 
right now, some of the wells have gone dry and they are hauling 
water in.
    Significant progress has been made since the Eastern New 
Mexico Rural Water System has received authorization. However, 
the majority of funding, more than $25 million to date, is just 
from the State. All of our communities have stepped up to the 
plate and have taken care of it and identified their funding 
sources.
    Last year, the project broke ground on phase one, building 
the intake structure at the Ute Reservoir. We are currently 
seeking Federal funding for our next phase, which is an interim 
groundwater pipeline, which could provide relief for a few 
additional years.
    We are at a critical point in the development of the 
project and appear before you today to please expeditiously 
pass Senate bill 3385. We cannot emphasize strongly enough just 
how important this project is for our members and for our way 
of life, for our military, and for the citizens and businesses 
of Eastern New Mexico. While our situation is dire, we are well 
aware that 6 other critical regional rural water systems are 
languishing and this effort will assure a future for the West.
    As mayor, I realized how important it was to take care of 
our communities. I love Clovis, I love Eastern New Mexico, and 
our people do, too. It is a way of life that we cherish. But, 
without water, we will not be able to do that.
    My grandchildren--two of my grandchildren live in Clovis, 
Kate and Nicolas, and this is for them. It is really not about 
me over the next few years, but it is for our children and it 
is for our grandchildren.
    So, Mr. Chair, I thank you for championing this effort, and 
please know that the Eastern New Mexico Water Utility stands in 
strong support of 3385 and will gladly assist you in moving 
this important legislation through Congress.
    I would also like to just take a minute, Senator Bingaman, 
to thank you for what you have done for our area, for New 
Mexico and for Clovis. We dearly will miss you. You have been a 
champion for us with Cannon Air Force Base and with this 
project. So I want to personally thank you for what you have 
done, and you will be very much missed.
    [The prepared statement of Ms. Brumfield follows:]

 Prepared Statement of Gayla Brumfield, Chairwoman, Eastern New Mexico 
                 Rural Water Authority, Albuquerque, NM
    Chairman Bingaman, Ranking Member Murkowski and Members of the 
Committee, my name is Gayla Brumfield. I am a former Mayor of the City 
of Clovis, New Mexico and I currently serve as the Chairwoman of the 
Eastern New Mexico Water Utility Authority (Authority). I am here to 
present testimony in strong support of S. 3385, the Authorized Rural 
Water Projects Completion Act, which would resolve some of the most 
critical potable water supply issues in the Western United States and 
those specifically impacting the seven Eastern New Mexico Water Utility 
member agencies.
    Mr. Chairman, we applaud and deeply appreciate your recognition of 
the importance of rural water projects and the need for the federal 
government to provide an adequate level of funding dedicated each year 
to complete these projects in a timely manner. The federal government's 
participation and funding capabilities are essential to making the 
Eastern New Mexico Rural Water System a reality for our area residents. 
We are caught in a race against the failing Ogallala aquifer and the 
time it will take for the federal government to meet its commitment to 
complete this important project.
    If federal funding continues along current trends and S. 3385 fails 
to become law then Eastern New Mexico's potable water supply will 
continue to decline at a rate that is outpacing our only viable 
alternative to meet our communities' needs. We believe this legislation 
will help us avoid costly delays in completing construction phases, 
limit long-term tax payer obligations, and assure a more predictable 
and cost efficient means of building the Eastern New Mexico Rural Water 
System to realize a sustainable supply of water.
    This legislation is vital for Eastern New Mexico to establish a 
sustainable supply of water and assure our socio-economic future. A 
sustainable supply of water is critical to the future of our region 
which supports, among other things, the 27th Special Operations Wing at 
Cannon Air Force Base, a number of industries including dairy, large-
scale food production and processing, and colleges and universities.
    Providing a sustainable water supply for Eastern New Mexico is our 
most significant challenge. Our communities rely solely on water 
reserves located in the Ogallala aquifer. Our member communities are 
investing millions of dollars each year in buying water rights, wells 
and transmission lines just to keep up with a demand that is 
essentially flat. Even with continuous investment in production 
facilities pumping capacity is declining in double digit percentages 
every year.
    The rate of decline of the aquifer is variable and it is hard to 
predict exactly how many more years we have. But, we absolutely know 
that if we do not begin receiving substantial increases in federal 
funding over the next several years, the outlook for our communities is 
dire.
    Significant progress has been made since the Eastern New Mexico 
Rural Water System received Congressional Authorization in 2009. 
However, the majority of funding, more than $25 million to date, has 
come from the state of New Mexico and our member communities. Last year 
the project broke ground on Phase I, building the intake structure at 
Ute Reservoir. We are currently seeking federal funding for our next 
phase of construction, the building of an interim groundwater pipeline, 
which could provide relief for a few additional years while the rest of 
project is built.
    We are at a critical point in the development of the project and 
appear before you today to urge Congress to expeditiously pass S. 3385. 
We cannot emphasize strongly enough just how important this project is 
for our member entities, for our military, and for the citizens and 
businesses of Eastern New Mexico.
    While our situation is dire, we are well aware that six other 
critical regional rural water systems are languishing and this effort 
will assure a future for the west.
    Mr. Chairman, thank you for championing this effort and please know 
that the Eastern New Mexico Water Utility Authority stands in strong 
support of S. 3385 and will gladly assist you in moving this important 
legislation through Congress.

    The Chairman. That is very kind. Thank you for your great 
service to the city of Clovis as mayor. You did a great job, 
and are doing a great job as head of the Water Authority now.
    Chairman Sunchild, go right ahead, please.

STATEMENT OF BRUCE SUNCHILD, CHAIRMAN, THE CHIPPEWA CREE TRIBE 
         OF THE ROCKY BOY'S RESERVATION, BOX ELDER, MT

    Mr. Sunchild. Mr. Chairman, members of the committee, my 
name is Bruce Sunchild. I chair the Chippewa Cree Rocky Boy 
Reservation and I also co-chair the Coordinating Committee for 
North Central Water.
    I have submitted a more detailed statement for the record 
and will summarize my remarks. I want to extent my gratitude to 
Chairman Bingaman and the members of this committee for 
convening this hearing on such a timely basis, for allowing me 
to testify. I want to extend appreciation of thousands of 
Indians and non-Indian residents of north central Montana to 
Senators Baucus and Tester for--and others as--other sponsors 
of S. 3385.
    If I could leave this member--the members of this committee 
with one impression, it would be for you to understand how 
difficult life is when you have no assurances when you turn the 
water on in your house that water will in fact come out of the 
tap, or be potable and safe to drink.
    We have one particular community in my Reservation that was 
impacted by flood waters when 27 out of 30 homes testified 
positive for E. coli bacteria and for fecal coliform bacteria. 
In recent years, we have hundreds of cases of H. pylori, 
bacteria which causes stomach ulcers, extreme gastritis, and 
even stomach cancer.
    We have spent years in negotiating with the State of 
Montana, the United States, with our non-Indian neighbors to 
quantify our water rights to deal with water quality. President 
Clinton signed into--signed Public Law 106 to 163, our water 
rights, Settlement and Act, in 1999. Among other provisions, 
the act included a reservation of 10,000 acre feet of water in 
Lake Elwell, a Bureau of Reclamation Reservoir that is 50 miles 
west of our Reservation.
    The 1999 Act did not, however, provide a delivery system to 
withdraw, treat, convey the 10,000 acre feet of water to us. It 
was understood that the delivery of that water to my 
reservation would also--while also serving our neighbors and 
our--and a number of off-reservation communities would be 
authorized by subsequent pieces of legislation.
    The Federal Government was true to its word and President 
Bush signed the Rocky Boy's North Central Montana Regional 
Water System Act 2002. This act established a congressionally 
authorized water project to distribute drinking water from Lake 
Elwell to meet tribal, municipal, rural, industrial needs for 
the Rocky Boy's Reservation, and 7 other communities--counties 
in Central Montana.
    Mr. Chairman, to date, 13 years after the United States 
signed a historic water rights agreement with my Tribe, and 10 
years after the enactment of the Federal law to deliver water 
to us, less than 20 percent of the Federal appropriations 
required to construct this project has been received.
    When my people continue to suffer with waterborne 
illnesses, it is hard for them to believe that the U.S. kept 
its word when we settled our water rights in 1999 and we were 
told that drinking water was on the horizon.
    Many of neighboring communities in North Central Montana 
also have water problems and some have been placed on boil 
water orders by Department of Environmental Quality for 
having--that water does not meet standards--minimum standards.
    Since the its authorization in 2002, the funding ceiling 
for the Rocky Boy's North Central Water System Project was 
increased to $229 million to over $350 million due to the 
application of annual indexing factors by Bureau of 
Reclamation. The receipt insufficient levels appropriations and 
the impact inflation on having a significant impact on our 
water project completion. If Federal appropriations do not 
exceed, at least offset the impact of annual indexing, the 
completion of the Rocky Boy's North Central will be extended 
indefinitely.
    I direct your attention to the chart on the easel that is 
to my left here, which also supports--appended to my written 
statement. Not only does this delay hurt my people in the 
health and welfare of both reservation and off-reservation 
residents over a large swath of Montana, but increased costs 
associated with delays are adding unnecessarily to the Federal 
deficit.
    As you can see the attached chart, if we are not receiving 
the funding of $35 million a year, we could complete this 
project at a total cost of $418.6 million by year 2021. Were we 
to receive the Federal funding levels of $15 million a year, 
total cost--total project cost would be $647 million and we 
would not finish until 2046. The latter would cost the United 
States an additional $228 million--billion.
    Sadly, only twice in the last 9 years have we received 
funding that exceed over $10 million. We appreciate what has 
been done here and we appreciate your efforts to get an annual 
funding for The Chippewa Cree Tribe in our north central 
Montana. But we have been at this for a number of years. I go 
all the way back to Mike Connor in negotiating the water rights 
of The Chippewa Cree Tribe and I appreciate your attention. We 
definitely support this legislation. I thank you very much.
    [The prepared statement of Mr. Sunchild follows:]

Prepared Statement of Bruce Sunchild, Chairman, The Chippewa Cree Tribe 
             of the Rocky Boy's Reservation, Box Elder, MT
    Mr. Chairman and members of the Senate Committee on Energy and 
Natural Resources, my name is Bruce Sunchild, Sr., and I serve as 
Chairman of the Chippewa Cree Tribe of the Rocky Boy's Reservation and 
Co-Chairman of the Rocky Boy's/North Central Montana Regional Water 
System (NCMRWS) Coordinating Committee. I have also served as Co-Chair 
of the Joint Federal-Tribal Water Funding Task Force, which has been an 
ad-hoc group coordinated by the Western States Water Council, the 
Native American Rights Fund and the Secretary of the Interior. Our 
emphasis dealt with the funding of Indian water rights settlements.
    On behalf of the Chippewa Cree Tribe and Rocky Boy's/NCMRWS 
Coordinating Committee, I extend our gratitude to Chairman Jeff 
Bingaman and the members of the Senate Energy and Natural Resources 
Committee for the timely convening of this hearing and the invitation 
to testify on Senate Bill 3385, the Authorized Rural Water Projects 
Completion Act. This legislation authorizes the Secretary of the 
Interior to use designated funding to help pay for construction of 
authorized rural water projects, and for other purposes.
    Our thanks also goes out to our Senator Max Baucus who introduced 
the bill and to our Senator Jon Tester who co-sponsored the bill along 
with several other distinguished Senators including Jeff Bingaman and 
Tom Udall of New Mexico, Al Franken and Amy Klobuchar of Minnesota, 
Kent Conrad of North Dakota, Tom Harkin of Iowa and Tim Johnson of 
South Dakota. It should also be acknowledged that former Senator Pete 
Domenici of New Mexico was keenly interested in finding a funding 
source for Indian water projects and spent a large of amount of time 
advancing concepts to do so.
    The passage of S. 3385 will provide the long-awaited secure funding 
mechanism for the completion of construction for authorized rural water 
projects, like the Rocky Boy's/NCMRWS Project. The Act is consistent 
with the requirements of the Rural Water Supply Act of 2006 that 
authorized the Secretary of Interior to establish and carry out the 
Rural Water Supply Program with funding prioritization criteria to 
serve as a formula for distributing funds consistent with the 
authorizing language in each rural water project bill.
    Mr. Chairman and Committee members, I would like to briefly explain 
my tribe's journey to ensure the continuity of clean water for our 
reservation. Water is sacred to our people and is the lifeblood for our 
permanent homeland, the Rocky Boy's Reservation located in north 
central Montana. This is also true for the surrounding communities 
since water is the scarce common resource that connects us together. 
Without water, my tribe cannot survive on the permanent homeland held 
in trust by the United States on behalf of the tribe. This is certainly 
one of the reasons we chose to negotiate a settlement of the Tribe's 
water rights claims against the United States.
    Our priority in the settlement negotiations was to have a source 
for clean drinking water since our groundwater is very limited in 
capacity and contaminated with naturally occurring arsenic from the 
underground Missouri River Ancestral channel. In fact, our groundwater 
resources are so limited that all outside water use (car washing, lawn 
watering) is prohibited, and indoor water use is never assured.
    In December of 1999, after many years of negotiations with our non-
Indian neighbors, the State of Montana and representatives of Interior 
and Justice Departments, President Clinton signed the ``Chippewa Cree 
Tribe of the Rocky Boy's Reservation Indian Reserved Water Rights 
Settlement and Water Supply Enhancement Act of 1999'' into law as 
P.L.106-163. Among its provisions, that Act provided 10,000 acre feet 
of water to the Tribe from the Tiber Reservoir (also known as Lake 
Elwell), located 50 miles west of the reservation\1\. PL 106-163 did 
not include a water delivery system to withdraw, treat, and convey the 
10,000 acre feet of tribal water right stored at Tiber Reservoir to the 
Rocky Boy's Reservation. It was understood that the authorization for 
the delivery of that water to my Reservation, while also serving our 
neighbors in off-Reservation communities, would be accomplished in a 
subsequent piece of legislation.
---------------------------------------------------------------------------
    \1\ SEC. 201. TIBER RESERVOIR.
      (a) Allocation of Water to the Tribe.--
        (1) In general.--The Secretary shall permanently allocate to 
the Tribe, without cost to the Tribe, 10,000 acre-feet per year of 
stored water from the water right of the Bureau of Reclamation in Lake 
Elwell, Lower Marias Unit, Upper Missouri Division, Pick-Sloan Missouri 
Basin Program, Montana, measured at the outlet works of the dam or at 
the diversion point from the reservoir.
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    In the next Congress, on December 12, 2002, President Bush signed 
S. 2017, the Rocky Boy's/North Central Montana Regional Water System 
(NCMRWS) Act of 2002 (Title IX of PL 107-331, 116 Stat. 2859) into law. 
We were told that this would be the final step in the federal approval 
process and the beginning of a project to improve the quality of life 
for the Tribe and residents of north central Montana. This Act 
established a congressionally authorized water project to distribute 
clean drinking water from Tiber Reservoir to meet tribal, municipal, 
rural and industrial needs for the Rocky Boy's Reservation and seven 
(7) counties in north central Montana. It was an essential component of 
the implementation of our water rights settlement, as again, it was the 
delivery mechanism for 10,000 acre feet of water in Lake Elwell.
    Mr. Chairman, to date--13 years after the United States signed a 
historic water rights agreement with my Tribe and 10 years after the 
enactment of a Federal law to deliver that water to us--less than 20% 
of the Federal appropriations required to construct this project 
(approximately $60 million) has been received.
    Since its authorization in 2002, the funding ceiling for the Rocky 
Boy's/NCMRWS Project has increased from $229 million to over $350 
million due to the application of annual indexing factors by the Bureau 
of Reclamation. The receipt of insufficient levels of Federal 
appropriations and the impact of inflation are having a significant 
negative impact on realizing Project completion. If Federal 
appropriations do not exceed, or at least offset, the impact of annual 
indexing, the completion date for the Rocky Boy's/NCMRWS Project will 
be extended indefinitely as shown in the attached graph depicting the 
effects of inflation versus the annual Federal funding levels. (Exhibit 
1--Effects of Inflation vs. Annual Federal Funding Levels, dated March 
2012).* Not only does this delay hurt my people and the health and 
welfare of both Reservation and off-Reservation residents over a very 
large swath of Montana, but the increased costs associated with these 
delays are adding unnecessarily to the Federal deficit. As you can see 
in the attached chart, if we were to receive funding at the level of 
$35 million a year we could complete this project at a total cost of 
$418.6 million by the year 2021. Were we to receive funding at a level 
of $15 million a year, total project costs would be almost $647 million 
and we would not finish until the year 2046. The latter would cost the 
United States an additional $228 million and that does not even take 
into account the impact of health care costs on my people, which as 
discussed below is considerable. Mr. Chairman I am loathe to report 
that we have not been receiving annual funding at even $10 million. As 
you can see from the chart, funding at that level does not allow us to 
keep place with the inflationary factors used by the Bureau of 
Reclamation and therefore the project would take an infinite period.
---------------------------------------------------------------------------
    * Exhibit has been retained in committee files.
---------------------------------------------------------------------------
    Despite the limited funding received to date, we are extremely 
proud of the progress that has been made to address severe water 
shortages and surface water regulatory violations. The funding we 
received through ARRA was especially helpful. Average annual Federal 
appropriations of $30 to $38 million are needed to maintain anything 
resembling a reasonable implementation and construction timeline.
    The passage of the bill pending before you today, S. 3385, will 
provide a consistent funding stream and certainly will help us get to 
completion. S. 3385 creates the Reclamation Rural Water Construction 
Fund. It directs the Secretary of Treasury to deposit $80 million per 
fiscal years 2013 through 2029, funds that would otherwise be deposited 
in the Reclamation Fund, to be made available without further 
appropriation for the construction of authorized rural water projects. 
As Chairman Bingaman has noted, Reclamation's analysis shows that an 
increase in funding for the construction of rural water projects to 
$80M per year would reduce the total Federal appropriations needed to 
complete the projects by more than $1B, due to project costs and 
inflation. This is a prudent use of the Reclamation Fund that your 
colleagues created back in 1902 to construct water projects in the 
West. Despite having senior water rights to much of the water used by 
Reclamation Fund dollars, Indian tribes have not benefitted by the 
establishment of that fund. Allowing us to access this fund is long 
overdue to put it nicely. It should also be noted that the Fund has 
increased from $3.8 billion in 2004 to over $9 billion in 2009. Even 
more noteworthy is the fact that it has carried a surplus of at least 
$960 million a year every year since 2005. Clearly there are sufficient 
surplus funds in this account to pay for this bill.
    I applaud the Act's funding prioritization criteria that include 
authorized projects that address the needs of Indian tribes and its 
members along with other community needs or interests. This is 
consistent with the goals of our regional water project by serving the 
Rocky Boy's Reservation and numerous off-reservation systems including 
municipalities, county water districts, Hutterite colonies and others.
    Our reservation has endured and overcome many hardships over the 
years. However, the devastation of two recent consecutive years of 
disastrous flooding required two declarations of disasters by President 
Obama in 2010 and 2011. Due to the catastrophic impact of multiple 100-
year flood events we have endured significant damage across much of our 
Reservation, the worst being to our already archaic water system. Our 
unsanitary drinking water conditions have resulted in numerous 
problems.

          1. Groundwater wells not being able to handle the tremendous 
        surface water flows that resulted in infiltration of 
        contaminating fecal coliform and Escherichia Coli (E. Coli) 
        bacteria into our drinking water;
          2. Parker Canyon was one of the reservation communities 
        impacted by the floods and 27 out of 30 homes tested positive 
        for E. Coli and fecal coliform bacteria. Our Tribal 
        Environmental Health Department had to provide bottled water to 
        all the communities such as Parker Canyon that experienced 
        similar groundwater well contamination;
          3. Regular water quality testing of the groundwater wells on 
        the reservation has shown that 66 homes in 2011 still tested 
        positive for E. Coli and fecal coliform bacteria. We have 
        gotten consistent fecal coliform and E. Coli hits on monthly 
        Bac-T testing;
          4. The extensive flooding of the Reservation watersheds are a 
        direct cause of many Reservation residents' septic drain fields 
        being overwhelmed with flood water and the resulting over 
        saturation causes fecal particulate transfers to the ground 
        water drinking source. What this means is we have fecal 
        coliform bacteria from the flooding of the septic drain fields 
        resulting in an extreme public health emergency similar to what 
        you find in third world countries. Construction funding is 
        desperately needed to connect those reservation communities 
        impacted by contaminated ground water wells to the on-
        reservation portion of the regional water project; and

          A direct result of the flooding and fecal coliform bacterial 
        contamination of groundwater wells from septic tank effluent 
        resulted in hundreds of cases of Helicobacter pylori (H. 
        pylori). H. pylori is a bacterium that causes stomach 
        inflammation and ulcers in the stomach and duodenum. This 
        bacterium is the most common cause of ulcers and severe gastric 
        discomfort and is acquired from contaminated food and water or 
        through person-to-person contact. It is common in crowded 
        populations with poor sanitation, such as third world countries 
        that lack the water treatment facilities that we take for 
        granted here in the U.S.

          Complications associated with H. pylori infection include:

                  a. Ulcers: H. pylori can damage the protective lining 
                of your stomach and small intestine. This can allow 
                stomach acid to create an open sore (ulcer).
                  b. Inflammation of the stomach lining: H. pylori 
                infection can irritate your stomach, causing 
                inflammation (gastritis).
                  c. Stomach cancer: H. pylori infection is a strong 
                risk factor for certain types of stomach cancer.

    Mr. Chairman and Committee members, as you can see, the completion 
of the construction of the Rocky Boy's/NCMRWS must happen within the 
next decade or two in order to honor our water rights settlement by 
bringing clean drinking water to our reservation and more importantly 
to prevent the proliferation of H. pylori to our tribal members who 
suffer from its effects, similar to living in third world country 
without the means for clean treated water.
    It must also be noted that we cannot make progress against the high 
levels of unemployment that exist on our Reservation until we have this 
most basic aspect of infrastructure in place. No business is going to 
locate on an Indian Reservation if they cannot be assured of good 
drinking water.
    In closing, we fully support S. 3385 and respectfully request that 
provisions be included in the legislation that consider the impacts of 
project cost indexing applied by the Bureau of Reclamation and the 
corresponding completion timeline for all of the presently authorized 
Tribal and rural water projects. Such provisions include:

          1) increased funding levels on an annual basis to keep pace 
        with project cost indexing;
          2) supplemental fiscal year contributions pending an improved 
        state of the economy in the future; and
          3) the possibility of extending the duration of S.3385 in the 
        event that the completion of currently authorized rural water 
        projects is not achieved by year 2034.

    Mr. Chairman and Committee members, I thank you again for allowing 
me to testify on this critically important legislation that will help 
us to complete the construction of our authorized regional water 
project on a more timely basis thereby increasing our standard of 
living on the Rocky Boy's Reservation and surrounding communities in 
north central Montana to that of rest of the U.S. The ability to drink 
clean water is not too much to ask for.
    Thank you.

    The Chairman. Thank you very much for your testimony.
    Our final witness is Mr. Nathan Bracken, who is legal 
counsel for the Western States Water Council.
    Go right ahead.

  STATEMENT OF NATHAN BRACKEN, LEGAL COUNSEL, WESTERN STATES 
                   WATER COUNCIL, MURRAY, UT

    Mr. Bracken. Chairman Bingaman, Ranking Member Murkowski, 
and members of the committee, I am legal counsel for the 
Western States Water Council, which is a non-partisan advisory 
body on water policy issues that represents 18 Western 
Governors and their States. I appreciate the opportunity to 
discuss our support for 3385 and the importance of rural water 
projects in the West.
    Across the 17 Western States, rural and tribal communities 
are experiencing water supply shortages due to drought, 
decrease in groundwater supplies, and inadequate 
infrastructure. Those water supplies that are available are 
often of poor quality and many communities are struggling to 
comply with increasingly stringent Federal water quality and 
drinking water mandates.
    In 2009, the Council worked closely with the Bureau of 
Reclamation to identify sources of information on potable water 
supply needs in non-Indian rural areas of the West. Reclamation 
recently estimated that the identified need for potable water 
systems ranges from $5 billion to $8 billion, not including 
another $1.2 billion for specific Indian water supply projects.
    As Reclamation Commissioner Mike Connor recently said, his 
agency also estimates that it will cost about $2.6 billion to 
complete currently authorized projects, which is substantially 
higher than the $2 billion that Congress originally authorized.
    At current funding levels around $50 million per year for 
construction, Reclamation estimates that some projects could be 
delayed beyond 2063, despite the expenditure of almost $4 
billion in Federal funds by that point. An additional $1.1 
billion in Federal expenditures will be needed to complete 
those projects that are not constructed by 2063.
    The $80 million per year that S. 3385 would provide for 
authorized projects represents a relatively modest Federal 
investment when compared to the increased cost that will likely 
occur if Federal funding remains at current levels.
    We recognize that there are Federal budget constraints. 
Nevertheless, such constraints do not negate the Federal 
responsibility to complete authorized rural water projects, 
especially those projects intended to fulfill, in part, a 
solemn Federal promise and trust responsibility to compensate 
States and Tribes for lost source--lost resources as a result 
of the construction of Federal flood control projects.
    It is also important to note that the Federal expenditures 
provided under Senate bill 3385 would generate significant and 
actual returns on this investment. For example, a 2006 study by 
HDR, Incorporated on the economic impacts of constructing Lewis 
and Clark Rural Water System found that the total economic 
impact to South Dakota, as well as Iowa and Minnesota, would 
total $414.4 million, including the direct and indirect 
creation of 7,441 jobs.
    Other notable benefits of rural water supply projects 
include improved potential for economic development and 
improved health and quality of life in affected communities.
    The Council also supports S. 3385's use of moneys that 
would otherwise accrue to the Reclamation Fund, to help finance 
the construction of authorized rural water projects.
    Congress established the fund in 1902 to be the principle 
means of financing Federal Western water and power projects, 
and its receipts are derived from water and power sales, 
project repayments, and receipts from public land sales and 
leases in the 17 Western States, as well as oil and mineral-
related royalties. However, these funds are only available for 
expenditure, pursuant to annual appropriations.
    Over the years, rising energy prices and declining Federal 
expenditures from the fund for reclamation purposes have 
resulted in an increasing large unobligated balance, which is 
estimated to total around $12 billion by the end of fiscal year 
2013. Contrary to Congress' original intent, instead of 
supporting western water development, much of this money has 
gone instead to other Federal purposes at a time when funding 
for reclamation has been constrained.
    The Council has long supported using the Reclamation Fund 
for its intended purpose of financing Western water 
development, including the types of rural water projects that 
would receive funding under this bill.
    It is also important to note that the bill's use of 
Reclamation Fund's moneys would not be subject to further 
appropriation. It would be in addition to other amounts 
appropriated for the authorized projects and should not result 
in corresponding offsets to other critical reclamation or 
Department of the Interior programs.
    Last, the programmatic goals and funding priorities that S. 
3385 requires the Secretary of the Interior to develop should 
be created in a transparent manner, in consultation with the 
affected communities and States, and should consider existing 
State water plans and priorities. States in the affected 
communities have on-the-ground knowledge of the facts and 
circumstances associated with these projects and are, 
therefore, the most appropriate entities to assist the 
Secretary in this effort.
    I appreciate the opportunity to testify and urge the 
committee to approve S. 3385.
    [The prepared statement of Mr. Bracken follows:]

  Prepared Statement of Nathan Bracken, Legal Counsel, Western States 
                       Water Council, Murray, UT
                            i. introduction
    Chairman Bingaman, Ranking Member Murkowski, and members of the 
Committee, my name is Nathan Bracken and I am the Legal Counsel for the 
Western States Water Council (WSWC). The WSWC is a non-partisan 
advisory body on water policy issues that represents eighteen western 
states and their governors. Our members are appointed by their 
respective governors, and include senior state water managers and 
administrators. We are also closely affiliated with the Western 
Governors' Association (WGA). I appreciate the opportunity to discuss 
our support for the ``Authorized Rural Water Projects Completion Act'' 
(S.3385) and the importance of rural water projects in the West.
    As discussed below, the WSWC supports S. 3385 as authorizing a 
timely federal investment of modest amounts that will minimize long-
term federal expenditures, create more jobs now, and fulfill long-
standing promises and trust responsibilities to rural and Tribal 
communities, some of which date back decades. My testimony today is 
based primarily on WSWC Position #343 (attached as Attachment A),* 
which we sent to Chairman Bingaman and Ranking Member Murkowski in the 
form of a letter on June 8, 2012, expressing our support for 
legislative action to establish a dedicated funding source for the 
completion of federal rural water projects authorized by Congress for 
construction by the Bureau of Reclamation. Portions of my testimony are 
also based on WSWC Position #333 (attached as Attachment B), which sets 
forth the WSWC's long-standing policy in support of using receipts 
accruing to the Reclamation Fund to finance western water development, 
including the types of rural water projects that would receive funding 
under S. 3385.
---------------------------------------------------------------------------
    * Attachments A and B have been retained in committee files.
---------------------------------------------------------------------------
           ii. the need for rural water projects in the west
    Across the West, rural communities are experiencing water supply 
shortages due to drought, decreasing groundwater supplies, and 
inadequate infrastructure. Some communities have had to haul water over 
substantial distances. Moreover, those water supplies that are 
available to these communities are often of poor quality and may be 
impaired by naturally occurring and man-made contaminants, including 
arsenic and carcinogens, which impacts their ability to comply with 
increasingly stringent federal water quality and drinking water 
mandates. At the same time, many rural and Tribal communities in the 
West are suffering from significant levels of unemployment and simply 
lack the financial capacity to pay for drinking water system 
improvements.
    Since the 1980s, Congress has authorized Reclamation to address 
this need by designing and constructing projects to deliver potable 
water supplies to rural communities in the 17 western states. 
Furthermore, Congress established Reclamation's Rural Water Supply 
Program when it enacted the Rural Water Supply Act of 2006 (Pub .L. 
109-451), authorizing the agency to work with rural communities in the 
West, including Tribes, to assess potable water supply needs and 
identify options to address those needs through appraisal 
investigations and feasibility studies.
    In 2009, the WSWC worked closely with Reclamation to identify 
sources of information on potable water supply needs in non-Indian 
rural areas of the West. Reclamation recently released a draft 
assessment report on July 9, 2012 (``Draft Report'') that discusses the 
results of this effort, finding that the identified need for potable 
water supply systems in rural areas of the 17 western states ranges 
from $5 billion to $8 billion, not including another estimated $1.2 
billion for specific Indian water supply projects.\1\
---------------------------------------------------------------------------
    \1\ BUREAU OF RECLAMATION, ASSESSMENT OF RECLAMATION'S RURAL WATER 
ACTIVITIES AND OTHER FEDERAL PROGRAMS THAT PROVIDE SUPPORT ON POTABLE 
WATER SUPPLIES TO RURAL COMMUNITIES IN THE WESTERN UNITED STATES, 8 
(July 9, 2012), available at: http://www.usbr.gov/ruralwater/docs/
Rural-Water-Assessment-Report-and-Funding-Criteria.pdf.
---------------------------------------------------------------------------
    The Draft Report notes that there are currently eight active rural 
water projects located in Montana, New Mexico, North Dakota, and South 
Dakota, including the Lewis and Clark Rural Water Supply Project, which 
is located mostly in South Dakota but encompasses parts of the non-
Reclamation states of Iowa and Minnesota.\2\ The report also notes that 
of eleven rural water projects that Congress authorized Reclamation to 
undertake between 1980 and 2007 (when the Rural Water Supply Act was 
enacted), only four have been completed.\3\
---------------------------------------------------------------------------
    \2\ Id. 3-4.
    \3\ Id. at 1-3.
---------------------------------------------------------------------------
    According to Reclamation, the total amount of Federal funding 
needed to complete these eight authorized projects is now $2.6 billion, 
which is substantially higher than the $2 billion that Congress 
originally authorized. This increase is due in part to the rising costs 
of materials and labor as well as inflation. Nevertheless, Reclamation 
estimates that these authorized projects could be completed by 2029 at 
a total Federal cost of around $3 billion, so long as Federal funding 
reflects the estimates provided in the original final engineering 
reports for each of the authorized projects--about $162 million 
annually. However, at current funding levels of around $50 million for 
construction, Reclamation estimates that some projects could be delayed 
beyond 2063 despite the expenditure of almost $4 billion in Federal 
funds by that point. Moreover, an additional $1.1 billion in Federal 
expenditures would be needed to complete those projects that are not 
completed by 2063.\4\
---------------------------------------------------------------------------
    \4\ Id. at 5.
---------------------------------------------------------------------------
      iii. federal funding for rural water projects under s. 3385
    S. 3385 would provide $80 million per year for each of fiscal years 
2013 through 2029 to complete the construction of rural water projects 
that have already received Congressional authorization. Other projects 
may be eligible for funding if: (1) the Secretary of the Interior 
completes a feasibility report for the project by September 30, 2012 
that recommends its construction; and (2) Congress authorizes the 
project's construction after S. 3385's enactment.
    This funding represents a relatively modest Federal investment, 
compared to the increased costs that will likely occur if funding 
remains at current levels. We recognize that there are Federal budget 
constraints. Nevertheless, such constraints do not negate the Federal 
responsibility to complete authorized rural water projects, 
particularly those intended to fulfill in part a solemn Federal promise 
and trust responsibility to compensate States and Tribes for lost 
resources as a result of the construction of Federal flood control 
projects. It is also important to note that the Federal expenditures 
provided under S. 3385 would generate significant and actual returns on 
this investment, including but not limited to:

   National Economic Impacts: According to a 2008 U.S. 
        Conference of Mayors report, one dollar invested in water 
        supply and sewer infrastructure increases private output, or 
        Gross Domestic Product, in the long-term by $6.35. Furthermore, 
        for each additional dollar of revenue generated by the water 
        supply and sewer industry, the increase in revenue that occurs 
        in all industries for that year is $2.62.\5\
---------------------------------------------------------------------------
    \5\ THE U.S. CONFERENCE OF MAYORS: MAYORS WATER COUNCIL, LOCAL 
GOVERNMENT INVESTMENT IN MUNICIPAL WATER AND SEWER INFRASTRUCTURE: 
ADDING VALUE TO THE NATIONAL ECONOMY, i (August 2008), available at: 
http://www.usmayors.org/urbanwater/documents/
LocalGovt%20InvtInMunicipalWaterandSewerInfrastructure.pdf.
---------------------------------------------------------------------------
   Economic Impacts and Job Creation in Rural Communities: 
        Investments in rural water projects have a direct impact on the 
        economies of the communities serviced by those projects. For 
        example, a 2006 study by HDR, Inc. on the economic impacts of 
        constructing the Lewis and Clark Rural Water System, which 
        would receive funding under S. 3385, found that the total 
        economic impact to South Dakota, Iowa, and Minnesota would 
        total $414.4 million. The report also estimates that the 
        project's construction would directly or indirectly create 
        7,441 jobs. On a yearly basis, this equals the creation of 533 
        direct and indirect jobs with average annual salaries ranging 
        from $25,591 to $33,462. Approximately 72% of the economic 
        impacts would be realized in South Dakota, with 17% in Iowa and 
        11% in Minnesota.\6\
---------------------------------------------------------------------------
    \6\ HDR, INC., THE ECONOMIC AND FISCAL IMPACTS OF CONSTRUCTING THE 
LEWIS AND CLARK RURAL WATER SYSTEM: 2004 STUDY AND 2006 UPDATE, 2--3, 
63--64 (March 2006), available at: http://www.lcrws.org/pdf/
EconomicImpactStudy/EconomicImpactStudy.pdf. See also BUREAU OF 
RECLAMATION, supra note 1 at 4 (discussing Federal costs for currently 
authorized rural water projects)
---------------------------------------------------------------------------
   Improved Potential for Economic Development in Rural Areas: 
        The economy of every community, especially rural communities, 
        requires sufficient water supplies of suitable quality. Such 
        supplies depend upon adequate water infrastructure. Improving 
        the water infrastructure of the rural and Tribal communities 
        that would be affected by S. 3385 will improve their ability to 
        develop their economies in ways that are not possible with 
        their current water supplies.
   Improved Quality of Life: The types of water projects that 
        would receive funding under S. 3385 would meet the same water 
        quality standards as public systems. These projects would 
        therefore provide a higher quality of safe drinking water and 
        associated health benefits than the water supplies upon which 
        these communities currently rely.
   Reduced Costs: Rural communities would no longer need to 
        expend limited resources drilling and maintained wells, 
        softening and treating water, or hauling water. In addition, 
        such communities would see decreased electrical pumping costs.
   Rural Fire Protection: Rural water systems provide access to 
        water supplies for fire protection.
   Livestock Use: Rural water projects provide a more reliable 
        and better supply of water for livestock. They also have the 
        potential to decrease the impacts of livestock grazing on 
        riparian areas by allowing for the delivery of water away from 
        these sensitive areas.
   Increased Property Values: In some areas, the resale value 
        of property may increase with a more reliable, safe, clean and 
        adequate water supply.
           iv. the use of the reclamation fund under s. 3385
    Section 3(a) of S. 3385 would provide funding for eligible rural 
water projects by establishing a Reclamation Rural Water Construction 
Fund (RRWCF) within the U.S. Treasury that would be financed from 
revenues that would otherwise be deposited in the Reclamation Fund. 
These funds would not be subject to further appropriation, would be in 
addition to other amounts appropriated for the authorized projects, and 
should not result in corresponding offsets to other critical 
Reclamation and Department of the Interior programs. The Secretary of 
the Interior would also invest the portion of these receipts not needed 
to meet current withdrawals, and the resulting interest and proceeds 
from the sale or redemption of any obligations would become part of the 
RRWCF. The RRWCF would terminate in September 2034, at which point its 
unexpended and unobligated balance would transfer back to the 
Reclamation Fund.
    Congress established the Reclamation Fund when it enacted the 
Reclamation Act of 1902 (P. L. 57-161) and it was intended to be the 
principle means of financing Federal western water and power projects 
in the 17 western states. As stated in Section 1 of the Reclamation 
Act, it provides monies ``. . .reserved, set aside, and appropriated as 
a special fund in the Treasury.''
    The Reclamation Fund's receipts are derived from water and power 
sales, project repayments, and receipts from public land sales and 
leases in the 17 western states, as well as oil and mineral-related 
royalties. However, the receipts that accrue to the Fund each year are 
only available for expenditure pursuant to annual appropriations acts. 
Over the years, rising energy prices and declining Federal expenditures 
from the Fund for Reclamation purposes have resulted in an increasingly 
large unobligated balance.
    According to the Administration's FY 2013 budget request, actual 
and estimated appropriations from the Reclamation Fund are $953 million 
for FY 2011, $877 million for FY 2012, and $859 million for FY 2013. 
While these appropriations have decreased, the Fund's unobligated 
balance has grown from an actual balance of $9.6 billion in FY 2011 to 
an estimated $12.4 billion by the end of FY 2013. Contrary to Congress' 
original intent, instead of supporting western water development, much 
of this money has gone instead to other Federal purposes.
    The WSWC has long supported using the Reclamation Fund for its 
intended purpose of financing western water development, including the 
types of rural water projects that would receive funding under S. 3385. 
As stated in WSWC Position #333, Congress and the Administration 
should:

                  [F]ully utilize the funds provided through the 
                Reclamation Act and subsequent acts for their intended 
                purpose in the continuing conservation, development and 
                wise use of western resources to meet western water-
                related needs--recognizing and continuing to defer to 
                the primacy of western water laws in allocating water 
                among uses--and work with the States to meet the 
                challenges of the future.

    Unlike typical Congressional authorizations that often do not 
specify a funding source and may require more Federal monies in 
addition to current authorizations, the RRWCF would rely on the 
established stream of receipts and associated interest that already 
accrue to the Reclamation Fund. Furthermore, as required by Section 
3(b)(3) of S. 3385, no amounts may be deposited or made available to 
the RRWCF if the transfer or availability of the amounts would increase 
the Federal deficit.
    It is also important to note that the concept of using receipts 
accruing to the Reclamation Fund to establish a separate account to 
finance specific water projects is not new. Specifically, Congress 
established the Reclamation Water Settlements Fund (RWSF) under Title X 
of the Omnibus Public Lands Management Act of 2009 (Pub .L. 111-11). 
Like the RRWCF, the RWSF consists of receipts transferred from the 
Reclamation Fund and provides specified levels of funding starting in 
FY 2020 for a period of 10 years to help finance specified water 
infrastructure projects that are part of Congressional-authorized water 
settlements, especially Indian water rights settlements. The WSWC 
supports the RWSF for the same reason it supported the establishment of 
the RRWCF as proposed in S. 3385--the use of these funds furthers the 
construction of much needed water infrastructure in the West in 
accordance with the Reclamation Fund's original intent and purpose.
                v. funding prioritization under s. 3385
    Before expenditures from the RRWCF could be made, Section 3(c)(3) 
of S. 3385 would require the Secretary of the Interior to develop 
programmatic goals to ensure that the authorized projects are 
constructed as expeditiously as possible, and in a manner that reflects 
the goals and priorities of the projects' authorizing legislation and 
the Rural Water Supply Act of 2006. The bill would also require the 
Secretary to develop funding prioritization criteria that would 
consider: (1) the ``urgent and compelling need'' for potable water 
supplies in affected communities; (2) the status of the current stages 
of completion of a given project; (3) the financial needs of affected 
rural and Tribal communities; (4) the potential economic benefits of 
the expenditures on job creation and general economic development in 
affected communities; (5) the ability of a given project to address 
regional and watershed level water supply needs; (6) a project's 
ability to minimize water and energy consumption and encourage the 
development of renewable energy resources, such as wind, solar, and 
hydropower; (7) the needs of Indian tribes and Tribal members, as well 
as other community needs or interests; and (8) such other factors the 
Secretary deems appropriate.
    As the WSWC stated in its June 8 letter, these programmatic goals 
and funding priorities ``. . .should be developed in a transparent 
manner in consultation with the affected communities and States--and 
should consider existing state water plans and priorities.'' States and 
the affected communities have on the ground knowledge of the facts and 
circumstances associated with the authorized projects that would 
receive funding under S. 3385, and are therefore the most appropriate 
entities to assist the Secretary in developing these goals and 
priorities.
                             vi. conclusion
    The expedited construction of authorized rural water projects will 
save money in the long run as costs continue to rise, and fulfill 
Federal obligations in a more timely manner, including Federal tribal 
trust responsibilities. Postponing spending on this obligation through 
inadequate or insufficient funding levels only increases Federal costs 
and perpetuates hardships to rural and Tribal communities in the West. 
S. 3385 would not only fulfill solemn Federal obligations, but also 
provide needed economic development and job creation.
    Importantly, the bill would use receipts that are already accruing 
to the Reclamation Fund for their intended purpose of financing the 
construction of western water projects.
    I appreciate the opportunity to testify on behalf of the Council, 
and we urge the Committee to approve S. 3385 and work with the States 
towards its effective implementation.

    The Chairman. Thank you very much for your testimony.
    I am going to introduce into the record of the hearing, 
testimony from D.L. Sanders, who is chief counsel to the New 
Mexico State engineer, in strong support of the legislation we 
are considering today, and also a statement for the record 
from--signed by Mr. Chris Udall. I am not sure his exact 
relationship to our Member here and to my colleague, as well. 
But he is the Executive Director of the Agri-Business Council 
of Arizona, indicating their strong support for this 
legislation, as well.
    Let me just ask a few questions.
    Gayla Brumfield, let me ask you about--can you recall how 
much State and local money has been contributed toward 
construction of this project to date, and how that compares to 
what the Federal Government has done?
    Ms. Brumfield. Yes, sir. In fact, the State of New Mexico, 
with the last loan, or groan, that we received, by the end of 
the year, will be close to 29 million. Right now, we sit at 
around 25, 26 million.
    The local communities have put forth everything that they 
have needed to, to date, or have made arrangements to make sure 
to fund their piece, which Clovis', by the way, is a total of 
$34 million. We have put in a sales tax and some other entities 
on how we are going to fund that.
    So right now, to date, we have started the intake 
structure, phase one, which is about a $15 million project, I 
believe, on the first phase, and we do have the funds for that, 
which most of that has come from the State of New Mexico.
    The Chairman. All right. That is useful information. In 
addition to Clovis' sales tax to pay its portion of it, are the 
other communities that stand to benefit from this construction, 
are they also making arrangements to be able to pay their 
portion?
    Ms. Brumfield. Yes, sir, they have. They have been paying 
their portion to date, and every one of the 7 entities have 
taken care of what they need to do. They are ready to go, and 
so we have--in my opinion, the local communities have done 
their part. The State has stepped up and done their part. Now 
we are ready for the Federal Government to move forward and do 
their part.
    The Chairman. Let me just ask any of the 4 of you if you 
have information about how--in my State, we are in, what is I 
guess meteorologists have characterized as a prolonged drought, 
and that is getting worse it seems. Are the projects that we 
are talking about constructing here and completing construction 
on, are they going to be able to help communities deal with 
this prolonged drought in a serious way? Chairman Sunchild, did 
you have a perspective on that?
    Mr. Sunchild. Yes. As we speak right now, a lot of my 
reservation is on a water restriction. If you could see a map, 
the agency lies up here and then our community is going down 
into Box Elder, which is 14 miles away. If you water your lawn 
out here Box Elder, I am out of water up here because that is 
at the top of the system. I am the chairman. I would not. No, 
that is a joke.
    But anyway, we are also in a big development stage. We just 
recently completed a detention center. We are now building a 
clinic because of our flood a couple of years ago destroyed our 
clinic, so we have to move it down further. So down further, as 
we construct--continue to construct, we are really water-short 
in that area. This coming from Tiber Dam, I think we have got 
14 miles in as we speak.
    I would just like to make a comment here. Even more 
significant is that since 2005, the Reclamation Fund had a 
surplus of over $960 million every year in surplus funds alone. 
There was more than enough money available to pay for this bill 
without requiring any further appropriations, and I would 
support this bill.
    The Chairman. All right.
    Mr. Sunchild. Thank you.
    The Chairman. Let me just ask one other question here. 
Maybe, Mr. Bracken, you could answer this. Your statement 
indicates that the unobligated balance in the Reclamation Fund 
is projected to increase from $9.6 billion to $12.4 billion by 
the end of 2013. Could you explain why that increase is 
scheduled to occur?
    Mr. Bracken. Sure. The fund requires that appropriations be 
made each year. Appropriations as you have mentioned have 
averaged a little bit under a billion dollars. At the same 
time, energy revenues and other sources of revenue to the fund 
have increased. So, quite frankly, the appropriators aren't 
appropriating the amount of money that goes into the fund each 
year and that leaves an unobligated balance that grows.
    Importantly, this unobligated balance is growing at a time 
when funding to reclamation itself for these types of projects 
is constrained. The Council has long supported using the 
revenues that accrue to the Reclamation Fund to support these 
types of projects, which is what the fund was originally 
created to do.
    The Chairman. As I understand it, the unobligated balance 
in the fund is growing much more rapidly than the $80 million 
we are considering in this legislation that would be 
automatically used to help with construction of these projects 
each year. Is that right?
    Mr. Bracken. Yes, Chairman, that is my understanding as 
well.
    The Chairman. All right.
    Senator Johnson.
    Senator Johnson. Thank you, Mr. Chairman.
    First, I would like to welcome Troy Larson, Executive 
Director of the Lewis and Clark Regional Water System. Troy is 
a constituent of mine from South Dakota, and we have worked for 
many years together to advance this critical water system.
    I note that Red Arndt is also seated in the audience. He is 
the Chairman of the Board of Lewis and Clark, and he is from 
Luverne, Minnesota.
    Troy, you have testified that we have reached a historic 
milestone this week with our water treatment plant coming 
online. Lewis and Clark can now start delivering treated water 
to 11 of the 20-member communities. Ten of those communities 
are in South Dakota, and we are grateful for that.
    At the same time, these members are going to have to pay 
quite a bit more until all other members are connected. Could 
you expand on the impacts to those communities?
    Mr. Larson. Thank you, Senator for your support and that 
question.
    Yes, the 11 members that are receiving water are in much 
better shape obviously than those 9 members who do not--who are 
not connected at this point. But those 11 members certainly 
have plenty of skin in the game to make sure the project is 
completed.
    The reason I say that is, they are paying through their 
water rates 100 percent of the cost to operate a very large and 
expensive treatment plant. We do not get any funding for O&M, 
so any operations and maintenance comes from the water sales. 
Those members will be paying approximately 50 percent more for 
their water until all the members are connected. Obviously, as 
more members are connected, then they share in the cost to 
operate the treatment plant.
    Senator Johnson. The slow pace and uncertainty of 
construction funding has never--negative consequences, one of 
which is that we build the projects more inefficiently. Could 
you touch on some of those challenges? Also, how might the 
Authorized Rural Water Completion Act help alleviate these 
challenges and avoid unnecessary costs?
    Mr. Larson. Thank you for that question. Yes, it would 
provide a more predictable source of funding for us, which 
would be a huge help. We spend so much time and money on what 
if scenarios, trying to jerry-rig the project, thinking of, 
well, if we can only do this many miles, how would we make that 
work? We just spend an enormous amount of time and money on 
that.
    One example is every time we slice a segment of pipe in 
half, if we wanted to do 12 miles, but we can only do 6 miles, 
our engineers estimate that adds a quarter million dollars to 
the cost. That just adds up over time.
    So what we find ourselves doing is either having to hold on 
to the money that Congress has appropriated and risk 
reprogramming, or spending it to build 3 or 4 miles of pipe 
when we know that is going to cost more in the long run. Our 
goal is to bring this project in under budget. Right now, we 
are right at budget. Every time we have to do something 
creative, that ends up spending more money in the long run. 
This bill would provide a much more predictable source of 
funding and allow us to plan accordingly.
    Senator Johnson. Mr. Bracken, you discussed the significant 
returns on investment from the rural water supply projects in 
the west. If Congress enacts this legislation to provide a 
minimum consistent funding level to advance these projects, 
what types of benefits could we expect to see in the local and 
regional economies this project has served?
    Mr. Bracken. I think the most significant benefit is that 
it allows business to take place. Any economy, regardless of 
where it takes place, specifically in rural areas, requires 
water of suitable quality and a certain amount. These systems 
will allow industries and businesses to have a certain amount 
of--or a greater amount of certainty to know that when they 
relocate or they build facilities in a certain area, that they 
will have the water that they need to conduct their operations. 
I think that is perhaps the biggest impact.
    There are a number of other related impacts to that. You 
also have added fire protection the water supplies provide 
through these systems. You have benefits relating to property 
value increases in homes that have a more reliable water 
supply. Obviously, someone is willing to pay more money for a 
home where you don't have to haul water to it or haul waste 
away from it.
    So, I would say those are probably the most common 
benefits.
    Senator Johnson. My time has expired.
    Mr. Chairman. Senator Franken.
    Senator Franken. Thank you, Mr. Chairman. Thank you to all 
of you.
    Mr. Larson, in your testimony you noted that the States and 
local communities have prepaid 99.7 percent of their 
commitment. I know Minnesota, it is 100 percent. I heard from a 
number of the Minnesota communities that it was not easy to 
make the financial commitment, as Ms. Brumfield testified about 
the communities in New Mexico.
    But on top of that, there are communities in Minnesota that 
have had to make--and I suppose in Iowa--have had to make--and 
in South Dakota--have had to make additional investments 
because they do not yet have the water that they were counting 
on. Can you elaborate a bit on these communities and what these 
communities have had to pay over and above the 100 percent 
commitment that they met to Lewis and Clark?
    Mr. Larson. Absolutely. Thank you for that question, 
Senator.
    This has been really insult to injury. These members have 
struggled mightily to come up with the money to prepay the 
project costs, the non-Federal costs, based on the promise of 
the Federal funding coming through. But the delays have been 
such that these members just haven't been able to wait any 
longer. They have had to make infrastructure improvements or 
changes that they simply didn't plan for.
    The totals so far in Minnesota, Iowa, and South Dakota is 
$9.3 million. The vast majority of that, as you noted earlier, 
actually has been the Minnesota members have--who have borne 
the biggest brunt out of that. Out of the $9.3, $8.3 million of 
that has been in Minnesota, and so, truly, it is insult to 
injury that this is money on top of what they have already 
spent to the project. Still, there is no idea when they are 
going to get water.
    Senator Franken. OK. In the meantime, we are seeing 
economic development for stalled.
    Mr. Bracken, I noted in your testimony, you said that there 
is an estimated $414 million in economic development that would 
come from this project that is not happening?
    Mr. Bracken. Yes, that was my understanding from a 2006 
report by HDR, Incorporated.
    Senator Franken. We have this unobligated funds, this 
unobligated balance in the bureau. So there is money there to 
do this. Right now, basically our Treasury is paying private 
investors to borrow our money because the rate of return on the 
Treasury's is less than inflation.
    So instead of paying other people to buy our debt, why do 
we not get these projects done and create economic development 
in these communities? I mean, it does not make sense. It is 
like, let us pay people to borrow our money. Or why do we not 
we invest in the infrastructure? We are borrowing it anyway. I 
mean, one way we are--and the other way we are investing it. I 
mean, either way, it is the same thing.
    This way, we meet our obligations to these local 
communities and to the States, and we invest in their ability 
to have a dairy in Hull, and expand the dairy in Hull to create 
50 more jobs, and to build the ethanol plant in southwestern 
Minnesota, or a number of them, to expand the pork facility in 
Worthington, to create jobs all over the place. This is what we 
are supposed to be doing.
    To me, this just makes sense, this piece of legislation and 
it seems absurd to me that we are letting this money be 
unobligated, billions of billions of dollars be unobligated, 
and that this $80 million is--a year makes absolute makes 
perfect sense and it makes--in fact, to me, it is absurd not to 
use it.
    Any reaction to my tirade?
    Mr. Connor. Senator Franken, I believe our respective high 
school math teachers would be very proud of us that we have 
figured out this a no-brainer from a financial standpoint.
    The taxpayers are losing money on this. It is the example 
of--I have shared of, if you decide to take a year off paying 
your credit card thinking you are saving money, it is costing 
you more in the long run. The fees continue to accumulate.
    So, again, I believe our math teachers would be proud of us 
that we have figured this out, but hopefully this bill will 
pass and we will get back on track.
    Senator Franken. OK. Obviously, my time is up. But, Ms. 
Brumfield, since you are from New Mexico, I think the 
Chairman--I see you wanting to say something, I think.
    Ms. Brumfield. No, I just could not agree with you more.
    Senator Franken. Oh, OK.
    Ms. Brumfield. Thank you for your comments today.
    Senator Franken. I didn't mean to try to fish for a ``I 
couldn't agree with you more.''
    Ms. Brumfield. No, I just wanted to thank you for your 
comments, and that we support, absolutely, what you are saying 
and agree with that.
    Senator Franken. Thank you.
    The Chairman. All right. Any other questions?
    If not, let me thank the witnesses. I think it has been a 
useful hearing, and we hope very much we can get the support to 
move ahead with the legislation. That will conclude our 
hearing. Thank you.
    Mr. Larson. Thank you, Mr. Chairman.
    Ms. Brumfield. Thank you.
    [Whereupon, at 11:38 a.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              

                               Appendix I

                   Responses to Additional Questions

                              ----------                              

   Responses of Michael L. Connor to Questions From Senator Bingaman
                     need for rural water projects
    Question 1a. There are many agencies involved in rural water 
matters. Can you please describe the particular niche that the Bureau 
of Reclamation's program fills?
    Answer. Reclamation has, over its more than 100 years in existence, 
designed and constructed some of the largest and most important water 
supply projects in the Western United States including Hoover Dam, 
Grand Coulee Dam, and the Central Valley Project. Because of that 
expertise, rural communities have often sought Reclamation's expertise 
and assistance to address their need for potable water supplies. Public 
Law 109-451 authorized Reclamation to investigate, identify, plan, 
design and oversee the construction of rural water projects that serve 
rural areas and small communities or Indian tribes in the Reclamation 
states and which meet certain criteria outlined in the statute such as 
promoting and applying a regional or watershed perspective to water 
resources management and addressing an urgent or compelling need. 
Reclamation's recently completed draft assessment report titled 
``Assessment of Reclamation's Rural Water Activities and Other Federal 
Programs that Provide Support on Potable Water Supplies to Rural Water 
Communities in the Western United States'' (www.usbr.gov/ruralwater/
docs/Rural-Water-Assessment-Report-and-Funding-Criteria.pdf) details 
the separate role played by various Federal agencies involved in rural 
water matters. Reclamation's program complements these other Federal 
programs, as well as State programs established to support the 
construction of discrete water treatment facilities and/or water 
distribution systems for particular communities.
    Question 1b. What is the need for these projects?
    Answer. Many rural communities in the United States have an ongoing 
need for potable water supplies. Non-Federal parties have traditionally 
been responsible for constructing municipal water supply systems. The 
six ongoing congressionally authorized Federal rural water projects 
exist in communities that are experiencing urgent needs for a potable 
water supply due to poor quality of the existing supply or the lack of 
a secure, reliable supply. For example, in rural Montana, some 
communities have, from time-to-time, been subject to ``boil water'' 
orders due to the unsafe conditions of the existing drinking water 
supplies. In eastern New Mexico, existing communities currently rely on 
the diminishing Ogallala Aquifer, and the current drinking water 
supplies are projected by the Eastern New Mexico Rural Water Authority 
to be depleted within 40 years.
    Question 1c. Should we not build these projects because relatively 
few Americans will be served by them?
    Answer. Constructing these infrastructure projects will not only 
help provide the health and economic benefits of a clean, reliable, 
drinking water system that most Americans take for granted, but will 
also assist in creating jobs in the short-term through ongoing 
construction.
                         costs of the projects
    Question 2. Your testimony states that by building the projects at 
an accelerated rate we can actually save the Treasury money. How much 
will be saved? What is the basis for this analysis?
    Answer. The cost of these projects is dependent upon the rate of 
completion. In general, the longer it takes to complete authorized 
rural water supply projects, the higher the cost ceiling for incomplete 
projects. Each of the Acts of Congress authorizing Reclamation's 
involvement in rural water supply projects generally requires that the 
cost ceilings included in the legislation be indexed to adjust for 
inflation that includes the rising cost of materials and labor, which 
was estimated to be 4% annually. The result of this requirement is that 
the overall cost of rural water projects that are under construction 
has risen and continues to rise, and the total funding required to 
complete these projects is now $2.6 billion, which is substantially 
higher than the original authorizations, which totaled $2.0 billion. 
Increased non-Federal funding could also serve to contain these costs.
    The analysis conducted as part of the draft assessment report cited 
above determined that Reclamation would continue to make progress 
toward completion of authorized rural water supply projects at an 
annual funding level of approximately $50 million for construction. 
However, some of the currently authorized projects would not be 
completed until after 2063 despite close to $4.0 billion in Federal 
funds being invested by that time. It is estimated that as of 2063, an 
outstanding balance of approximately $1.1 billion in Federal funding 
would remain to complete construction of currently authorized projects 
at an annual funding level of$50 million. In contrast, at an annual 
funding level of $80 million, all currently authorized projects would 
be completed by 2039 at a total cost of approximately $3.4 billion.
                            competing needs
    Question 3a. Do you view these projects and the spending provided 
for by this bill as competing with other water needs in the West?
    Answer. Yes, The Rural Water Program must compete with other 
priorities within Reclamation's budget, including aging infrastructure, 
Indian water rights settlements, environmental compliance and 
restoration actions, facilitating more sustainable water supplies, and 
other priorities intended to address future water and energy related 
challenges.
    Question 3b. Is there sufficient funding in the Reclamation Fund to 
meet these needs even if we dedicate $80 million per year to address 
the construction backlog for the authorized projects?
    Answer. Based on the incoming revenues, averaging $2 billion 
annually, the commitment in S. 3385 to dedicate $80 million per year to 
construction for Congressionally authorized projects would fit within 
the revenues available from the Reclamation Fund. However, any monies 
expended from this fund would require a PAYGO offset, and even if an 
equivalent and acceptable offset is identified, use of those funds must 
be weighed against other priorities across the Federal government, 
including deficit reduction. This is one of the reasons why the 
Administration supports discretionary funding for these projects.
                                drought
    Question 4. Many parts of the West are experiencing extreme weather 
and a prolonged period of drought. Will these rural water supply 
projects help in addressing drought? If so, how?
    Answer. Yes, completing infrastructure for a dependable potable 
water supply will help these communities to withstand some of the 
uncertainties associated with drought. While the vast majority of water 
use in rural areas is for agriculture, drought can also impact potable 
drinking water supplies. These projects would help to alleviate the 
severity of drought's impact on potable water supply by providing local 
communities with clean, safe, reliable sources.
                                ogallala
    Question 5a. I believe you are familiar with the extremely serious 
situation in eastern New Mexico where several communities rely on the 
Ogallala Aquifer as their sole source of water supply for domestic use. 
Can you give us any information on the time horizon for construction of 
the Eastern New Mexico Rural Water Supply project without this 
legislation?
    Answer. The Eastern New Mexico Rural Water Supply project is the 
newest addition to the Bureau's current portfolio of six ongoing, 
authorized rural water projects. At the 2012 enacted level of Federal 
funding (approximately $50 million for construction), and assuming no 
non-Federal funding beyond the minimum requirement of 25 percent, 
Reclamation would continue to make progress toward completion of 
authorized rural water supply projects and the Eastern New Mexico Rural 
Water Supply project would likely be completed sometime after 2063. 
However, constrained Federal budgets do not preclude the ability of 
non-Federal parties to move forward with important investments in water 
resources infrastructure and the Department stands ready to support 
that effort.
    Question 5b. Do you have any information you can provide for the 
record of how long the Ogallala will remain a viable sole source of 
water for the communities in the eastern part of the state?
    Answer. Reclamation has not completed an in-depth analysis of how 
long the Ogallala aquifer will remain a viable source of water. 
Reclamation has been provided information by the Eastern New Mexico 
Rural Water Authority through a groundwater memorandum which indicates 
that, based on saturated thickness and drawdown rates, current drinking 
water systems reliant upon the aquifer are projected to be depleted 
within 40 years, with cost and water quality issues likely to arise 
before then.
   Responses of Michael L. Connor to Questions From Senator Murkowski
    Question 1. What do you consider is the main mission of the Bureau 
of Reclamation? Please describe whether projects that provide water for 
municipal and industrial (M&I) uses in rural areas-has evolved into a 
core mission of the BOR? Has this evolution been congressionally or 
administratively led?
    Answer. The mission of the Bureau of Reclamation is to manage, 
develop, and protect water and related resources in an environmentally 
and economically sound manner in the interest of the American public. 
Success in this approach will help ensure that Reclamation is doing its 
part to support the basic needs of communities, as well as provide for 
economic growth in the agricultural, industrial, energy and 
recreational sectors of the economy. Although Reclamation generally 
does not distinguish between Reclamation's ``mission'' and ``core 
mission'', the Department supports the goals of encouraging vibrant 
rural economies and ensuring safe, reliable sources of drinking water 
for rural residents, as authorized by Congress through authorized rural 
water projects and the Rural Water Supply Program. For instance, the 
Administration has supported Reclamation's rural water program over the 
last four years, allocating $231 million of funding, in the FY 2010-
2013 budgets, to construct, operate, and maintain authorized rural 
water projects in addition to $232 million provided for these projects 
in the Recovery Act. Still, the rural water program must compete with a 
number of other priorities within the Budget, including aging 
infrastructure, Indian water rights settlements, environmental 
compliance and restoration actions, and other priorities intended to 
address future water and energy related challenges. At the direction of 
Congress, Reclamation is working on six ongoing authorized rural water 
projects to promote certainty, sustainability, and resiliency for those 
who use and rely on water resources in those project areas and to 
support the basic drinking water needs of those rural communities.
    Question 2. How has Reclamation addressed M&I water deliveries from 
a programmatic level prior to the rural water program that you recently 
released? Are these types of systems generally incidental to larger 
Reclamation project purposes?
    Answer. Prior to establishment of the Rural Water Supply Program 
authorization in 2006 (P.L. 109-451), Reclamation had no specific 
program to address rural water projects. Instead, Reclamation carried 
out individual Congressional directives, some that authorized M&I water 
deliveries from existing projects and some that directed our 
involvement in specific rural water projects. With only incidental 
participation in the technical and engineering aspect of the planning 
process for determining how to best meet the needs, Reclamation only 
became formally involved in aspects of each rural water project as 
authorized by Congress, typically after the design was already 
determined and authorized. Prior to P.L. 109-451, all of the options 
for addressing the water supply needs were not necessarily explored and 
therefore, the most cost effective and technically superior option may 
not have been selected. The establishment of the Rural Water Supply 
Program allowed Reclamation to formally coordinate with rural 
communities to explore all options through appraisal and feasibility 
studies--complying with the full scope of requirements that exist for 
all appraisal and feasibility studies carried out by Reclamation.
    Question 3. How many federal agencies have programs designed 
specifically for rural areas to construct or improve water and 
wastewater facilities? In addition, please describe the different 
program and requirements for eligibility within those programs? Are 
there any currently authorized rural water projects within the BOR that 
could meet the funding requirements of other agencies supporting 
similar projects?
    Answer. Reclamation issued a draft assessment report titled 
``Assessment of Reclamation's Rural Water Activities and Other Federal 
Programs that Provide Support on Potable Water Supplies to Rural Water 
Communities in the Western United States'' (www.usbr.gov/ruralwater/
docs/Rural-Water-Assessment-Report-and-Funding-Criteria.pdf) that 
provides in depth information related to federal rural water programs. 
This report was available for a 60-day public review with Reclamation 
seeking comments in order to ensure that it accurately and 
appropriately reflects these programs.
    In addition to the Reclamation Rural Water Supply Program and the 
information referenced above, there are a number of federal programs 
that provide assistance for drinking water and wastewater 
infrastructure to rural communities referenced in the April 2012 
Congressional Research Service (CRS) report titled ``Federally 
Supported Water Supply and Wastewater Treatment Programs.'' The CRS 
report identified 10 programs located in the Departments of the 
Interior (Reclamation), Agriculture (Rural Utilities Services), Housing 
and Urban Development, Commerce (Economic Development Administration), 
the Army Corps of Engineers, and the Environmental Protection Agency. 
Further, in November 2001, the General Accounting Office (now the 
Government Accountability Office) reported that four agencies--EPA, 
USDA, HUD and Commerce accounted for 98% of the total Federal funding 
for drinking water and wastewater capital improvements.
    Each of the individual programs referenced above have unique 
authorities which require specific eligibility criteria and meet 
specifically authorized needs as defined by their Congressional 
mandates. Reclamation's draft assessment report provides more detailed 
information related to the individual programs and requirements for 
eligibility within those programs.
    A component that is integral to Reclamation's Rural Water Supply 
Program is the requirement that Reclamation coordinate with other 
Federal agencies to both minimize the overlap between its efforts and 
those of other agencies, as well as leverage the budgetary and 
financial resources of other agencies involved in the similar 
geographic area. This is discussed in detail in the publically 
available draft assessment report.
    Question 4. Please describe the repayment obligations for each 
project specified within the bill. How do these repayment obligations 
coincide with your programmatic goals and prioritization criteria for 
rural water projects?
    Answer. As we read the bill, S. 3385 does not enumerate individual 
projects nor specify particular repayment obligations. The legislation 
instead creates a Federal funding source for existing, already 
authorized projects which have varying levels of non-Federal cost share 
specified in their individual authorizations. As summarized in the 
testimony, the Department's Rural Water Program assesses needs and 
studies particular projects to address those needs through a priority-
based process.
    Question 5. Will the build out of these rural water projects have 
any direct impact on project power rates in their regions?
    Answer. The impact of rural water projects to power rates depends 
on a number of factors. There is not likely to be an immediate impact 
on rates, but as an increasing number of water systems are completed, 
more pressure will be placed on a limited resource. If the rural water 
projects were to grow significantly larger in size or quantity, Western 
Area Power Administration (WAPA) may have to withdraw federal power 
marketed to power customers, meaning the customers would in turn 
purchase power from supplemental suppliers, effectively raising their 
own rates. WAPA has not withdrawn any Federal power to date for this 
reason. Alternatively, if projects grow significantly, WAPA could 
purchase more power, a scenario that would also place upward pressure 
on rates.
    Question 6. Please describe how the prioritization and funding of 
your rural water activities are reviewed by the Office of Management & 
Budget? What type of controls does OMB require, as they review rural 
water funding? Are the authorized projects within the bill going to go 
through any additional review by OMB prior to receiving funding, if 
this legislation becomes law?
    Answer. The Office of Management and Budget (OMB) reviews 
Reclamation's budget submittals each year to ensure that they are 
consistent with the goals, policies and priorities of the President's 
budget government-wide. This includes ensuring that the Federal 
investment in rural water projects is the best and most cost effective 
investment and that it furthers the priorities of the Administration. 
It is our expectation that analysis would continue--to ensure that the 
investments best protect the taxpayer's financial investment in these 
activities.
    Question 7. Of the currently authorized projects eligible for 
funding within the bill, what was or has been the involvement of 
Reclamation during project development?
    Answer. Prior to about 1980, Reclamation generally did not have 
congressional authorization to provide more than limited technical 
assistance in the scoping and development of rural water projects. 
Congress specifically authorized Reclamation's involvement in certain 
projects to deliver potable water supplies to rural communities--
generally not in the initial project scoping, but in the implementation 
and construction of a project. The majority of rural water projects 
were authorized prior to passage of the Rural Water Supply Act. Because 
Reclamation did not have a rural water program at the time of these 
authorizations, our role and involvement in the planning and scoping 
was very limited. In most cases, the studies to determine the need and 
to evaluate the options for how to address the water supply needs of 
these communities were completed by non-Federal project sponsors. 
Reclamation did not direct or publish these early reports.
    In most cases, Reclamation's full role was determined after the 
projects were scoped out, designs were mostly determined, and Congress 
enacted legislation for Reclamation to build those projects. Although 
Reclamation implemented the construction of these projects cost 
effectively, all potential options for how the needs could be met had 
not been explored.
    In 2006, the Rural Water Supply Act of 2006, (P.L. 109-451), 
authorized the Secretary of Interior to establish and carry out a rural 
water supply program in the 17 western states to:

          (a) Investigate and identify opportunities to ensure safe and 
        adequate rural water supply projects for domestic, municipal 
        and industrial use in small communities and rural areas of the 
        Reclamation States;
          (b) Plan the design and construction of rural water supply 
        projects through the conduct of appraisal investigations and 
        feasibility studies; and
          (c) Oversee, as appropriate, the construction of rural water 
        supply projects that are recommended for construction by 
        Reclamation in a feasibility report developed under the Rural 
        Water Supply Program and subsequently authorized by Congress.

    Question 8. Of the authorized projects in the bill, given the 
competing budgetary demands among rural water projects and within 
Reclamation's overall budget, how do you ensure that the money is spent 
on the most feasible, and cost effective project? Is it possible to 
work in the most cost effective manner when the BOR was not involved in 
the scope and complexity of these authorized rural water systems during 
the planning and the development stages of these projects? Which of the 
projects, if the bill becomes law, would meet your requirements to 
ensure projects provide sustainable water supplies at the least cost?
    Answer. Given current fiscal constraints, Reclamation must make 
tough decisions and set priorities across all investments, including 
rural water projects. Reclamation has developed a set of objective 
prioritization criteria to guide its decision making to maximize the 
agency's ability to meet its programmatic goals, to maximize water 
deliveries to rural communities in as short a period as possible, and 
to reflect the diverse needs and circumstances facing each individual 
project. The draft criteria are publically available and were open for 
public comment through September 10, 2012.
    Question 9. In developing your new rural water assessment program, 
what lessons have you learned from the authorized projects in the bill 
that you do not want to occur in the future? How will implementation of 
the Rural Water Supply Act enhance the likelihood of the success of 
projects?
    Answer. In most cases, the legislation authorizing the 11 rural 
water projects underway or constructed to date was adopted without 
Administration support, and prior to the completion of detailed 
feasibility studies for the projects. As a result, the non-Federal 
cost-shares, appropriation ceilings and other features were not 
consistent with the ``beneficiaries pay'' principle that underlies most 
traditional Reclamation water projects. Nevertheless, the Department is 
committed to completing the authorized projects as directed in as 
expeditious manner possible given existing budget constraints. 
Implementation of the Rural Water Supply Act, and the prioritization 
criteria referenced in the draft Assessment, will enhance the 
successful allocation of resources to the projects through application 
of six priority criteria.
    Question 10. If S. 3385 were to be enacted, and the $80 million per 
year disbursed to fund rural water project construction, how would OMB 
look at these types of projects within your budget submittal. In 
addition, do you believe that Congress would view these amounts as 
additional to annual appropriations allocations for the Bureau of 
Reclamation? If not, please describe your reasoning.
    Answer. S. 3385 creates a mandatory Federal appropriation for rural 
water projects which, under current law, receive Federal funding 
through discretionary appropriations. It is not possible to answer this 
question on how OMB may view future funding on behalf of prospective 
future Congresses or Administrations, or future budget requests.
    Question 11. If the Bureau is to get $200 million in mandatory 
spending, once the $120 million per year of mandatory funding for 
Indian water rights settlements kicks in in 2020, do you perceive that 
you will continue to get your current $50 million appropriation on top 
of that?
    Answer. As stated in the answer above, S. 3385 creates a mandatory 
federal appropriation for rural water projects which, under current 
law, receive federal funding through discretionary appropriations. 
Discretionary funding levels in the Budget would continue to be 
determined on an annual basis.
    Question 12. Current appropriations for rural water project 
construction are not even close to this level of funding. If this were 
to occur, wouldn't other projects funded in Reclamation's appropriation 
be impacted by this reduction in discretionary appropriation levels? Is 
it possible that you will get more money overall, but lose your ability 
to direct funding to any new or different priorities?
    Answer. S. 3385 creates a mandatory federal appropriation for rural 
water projects which, under current law, receive federal funding 
through discretionary appropriations. This change would require a PAYGO 
offset. However, even if an equivalent and acceptable offset is 
identified, use of those funds must be weighed against other priorities 
across the Federal government, including deficit reduction.
    Question 13. The Reclamation Fund was designed to fund construction 
of new federal water projects in the West. There are many areas of the 
West in dire need of new storage facilities, renewable hydroelectric 
projects, and other infrastructure where the federal nexus is an 
existing federal project or restrictions due to federal law, such as 
the Endangered Species Act. Should these projects be allowed the 
ability to qualify for similar or greater funding levels from the 
Reclamation Fund in the same manner proposed by S. 3385?
    Answer. New storage facilities and other significant new 
infrastructure contemplated for an existing Federal project would 
require new Congressional authorization. S. 3385 would create a funding 
stream for already-authorized projects. As amended, the laws that 
created the Reclamation Fund were written to allow for a source of 
discretionary appropriations for authorized projects from the Fund. The 
Department's testimony stated that the Administration supports the 
goals of encouraging vibrant rural economies and ensuring safe, 
reliable sources of drinking water for rural residents. However, the 
Department believes that Federal investments in such projects must 
recognize the current fiscal constraints and the need to make tough 
choices in prioritizing those investments and therefore, supports , the 
use of discretionary funding for these projects.
                                 ______
                                 
    Responses of Nathan Bracken to Questions From Senator Murkowski
    Question 1a. What is the magnitude of the need for infrastructure 
rehabilitation, modernization, and development necessary to support 
these and other water projects throughout the Reclamation States?
    Answer. The WSWC has made no independent assessment quantifying 
water resources infrastructure needs in the West, and the Bureau of 
Reclamation is in the best position to respond to this question with 
respect to authorized federal projects in the Reclamation States. 
However, the magnitude of the need for water infrastructure 
rehabilitation, modernization, and development in the Reclamation 
States and the nation as a whole is substantial.
    In April 2005, under the leadership of then Chairman Domenici, your 
Committee held a Water Resources Summit that included the participation 
of former WSWC Executive Director D. Craig Bell and Wyoming State 
Engineer and WSWC member Pat Tyrrell. Both addressed the need for 
funding for the Bureau of Reclamation, as well as Reclamation's role in 
the West.\1\ At that time, Reclamation's estimate of foreseeable future 
rehabilitation and betterment (R&B) costs totaled approximately $645 
million. This figure included estimates from each region for facilities 
operated and maintained by project sponsors. With respect to dam 
safety, the Bureau estimated that it needed some $227 million to 
complete corrective actions. Spending under the Bureau's Challenge 
Grant program, for water delivery system improvements, has been 
consistently oversubscribed and more than matched by non-federal 
dollars. The demands for dam rehabilitation and betterment, dam safety 
and water delivery system improvements at that time approached $1 
billion.\2\
---------------------------------------------------------------------------
    \1\ Water Conference Before the S. Comm. on Energy and Natural 
Resources, 109th Cong. (April 5, 2005) (statement of Craig Bell, 
Executive Director, Western States Water Council); Water Conference 
Before the S. Comm. on Energy and Natural Resources, 109th Cong. (April 
5, 2005) (statement of Pat Tyrrell, Wyoming State Engineer).
    \2\ Maintaining and Upgrading the Bureau of Reclamation's 
Facilities to Improve Power Generation, Enhance Water Supply and Keep 
Our Homeland Secure: Oversight Hearing Before the H. Comm. on 
Resources, Subcomm. on Water and Power, 109th Cong., 2 (July 19, 2005), 
statement of Tony Willardson, Deputy Director, Western States Water 
Council), http://naturalresources.house.gov/uploadedfiles/
willardsontestimony07.19.05.pdf
---------------------------------------------------------------------------
    In June 2011, the WSWC released a report on western water 
infrastructure needs entitled, ``Western Water Resources Infrastructure 
Strategies: Identifying, Prioritizing and Financing Needs.'' The report 
summarizes the findings and recommendations that emerged from a 
November 2010 symposium attended by over 100 federal, state, and local 
officials, consultants, engineering firms and other stakeholders 
interested in water infrastructure needs in the West.\3\ Some of the 
notable findings that emerged from the symposium included:
---------------------------------------------------------------------------
    \3\ W. STATES WATER COUNCIL, WESTERN WATER RESOURCES INFRASTRUCTURE 
STRATEGIES: IDENTIFYING, PRIORITIZING AND FINANCING NEEDS (June 2011), 
http://www.westgov.org/wswc/
infrastructure%20report_final_lowresolution.pdf.

   The Environmental Protection Agency estimated that state and 
        local governments had spent $1.1 trillion since the 1960s on 
        water and wastewater infrastructure, with an additional federal 
        investment of $140 billion, while EPA's 2002 analysis 
        identified a continuing need for investment of $540 billion.\4\
---------------------------------------------------------------------------
    \4\ Id. at 9.
---------------------------------------------------------------------------
   The most recent American Society of Civil Engineers (ASCE) 
        Report Card gives the nation's drinking water and wastewater 
        infrastructure a ``D-'' grade.\5\
---------------------------------------------------------------------------
    \5\ Id. at 2.
---------------------------------------------------------------------------
   Of the $135 billion in construction-related federal stimulus 
        spending, only $21 billion was directed towards water and 
        wastewater projects.\6\
---------------------------------------------------------------------------
    \6\ Id. at 10.
---------------------------------------------------------------------------
   The Texas Water Development Board's investment in water and 
        wastewater infrastructure totaled $12.4 billion, including $1.5 
        billion in 2010.\7\
---------------------------------------------------------------------------
    \7\ Id, at 11.

    More recently, the American Water Works Association (AWWA) released 
a report in February 2012 that found that the cost of repairing and 
expanding buried U.S. drinking water infrastructure will exceed $1 
trillion in the next 25 years (2011 to 2035) and $1.7 trillion in the 
next 40 years (2011 to 2050). In general, the report found that the 
West and South will face the steepest investment challenges, with the 
West facing projected costs of $236.6 billion over the next 25 years 
and $409.2 billion over the next 40 years. Notably, the AWWA report 
defines the West as excluding the Reclamation States of Kansas, 
Nebraska, North Dakota, Oklahoma, South Dakota, and Texas, which means 
that the total for water infrastructure needs in the Reclamation States 
will be significantly higher than AWWA's estimates for the West.\8\
---------------------------------------------------------------------------
    \8\ AM. WATER WORKS ASS'N, BURIED NO LONGER: CONFRONTING AMERICA'S 
WATER INFRASTRUCTURE CHALLENGE, 6, 9, 11 (Feb. 2012), http://
www.awwa.org/files/GovtPublicAffairs/GADocuments/
BuriedNoLongerCompleteFinal.pdf.
---------------------------------------------------------------------------
    Question 1b. Are the projects referenced in this bill projects that 
you would prioritize over other water needs throughout the West, if 
mandatory funding was made available?
    Answer. With the exception of support for completion of the Animas-
La Plata Project in Colorado and New Mexico as part of the Southern Ute 
Water Rights Settlement, the WSWC has never taken a position regarding 
a specific project. It does not have a position on whether the projects 
referenced in S. 3385 should be prioritized over other water needs in 
the West if mandatory funding is made available.
    Prioritizing federal spending as it relates to water project 
investments has a long and storied history that continues with the 
current reevaluation of past principles and guidelines by the Council 
on Environmental Quality. It includes various changes to non-federal 
cost sharing requirements and the use of Congressional earmarks. In the 
past, the WSWC has stated that the project with the highest score from 
a National Economic Development (NED) view is not necessarily the best 
project, as there are other important considerations, including past 
federal promises. Consistency between authorized federal projects and 
state water plans is another such consideration.
    With respect to the authorized projects that would receive funding 
under S. 3385, all are supported by the respective states and some were 
authorized to fulfill solemn federal promises and trust 
responsibilities to rural and tribal communities. In particular, the 
Garrison Diversion Unit is intended to compensate the State of North 
Dakota for the loss of over 300,000 acres of prime farmland that was 
lost as a result of the construction of the Pick-Sloan Missouri River 
Basin Program,\9\ which also inundated over 550 square miles of Native 
American land and displaced more than 900 Native American families.\10\ 
Additionally, the North Central/Rocky Boys rural water project will 
implement the tribe's water rights settlement (as codified in P.L. 106-
163) with the U.S. and the State of Montana. Authorizing the increased 
use of Reclamation Fund revenues to expedite completion these projects 
fulfills both a financial and moral obligation some of the 
beneficiaries have been waiting for decades to see fulfilled.
---------------------------------------------------------------------------
    \9\ GARRISON DIVERSION CONSERVANCY DISTRICT, HISTORY & FEDERAL 
LEGISLATION: THE PICK-SLOAN MISSOURI BASIN PROGRAM, http://
www.garrisondiv.org/about_us/history_federal_legislation/.
    \10\ SENATE REP. NO. 105-146, 4 (1997) (accompanying S. 156 and 
describing the impacts of the Pick-Sloan Missouri River Basin Program 
on the Lower Brule Sioux Tribe), http://www.gpo.gov/fdsys/pkg/CRPT-
105srpt146/pdf/CRPT-105srpt146.pdf.
---------------------------------------------------------------------------
    The WSWC has long supported using funds accruing to the Reclamation 
Fund for their intended purpose of supporting water infrastructure 
development in the Reclamation states as directed by the Congress in 
1902 when it passed the Reclamation Act. Any mandatory funding that 
would be made available for the projects referenced in S. 3385 should 
not come at the expense of other Reclamation projects.
    As stated in the WSWC's testimony, the unobligated balance of the 
Reclamation Fund is expected to exceed $12 billion by the end of FY 
2013. Providing $80 million per year from the Fund for these projects, 
with anticipated offsets to other federal programs, only appropriately 
spends a small amount of the unobligated balance that has been used for 
other federal purposes contrary to the vision of the Congress in 1902.
    Question 2a. Please describe the characteristics of Reclamation 
that you believe make Reclamation a better agency to handle rural water 
projects than other existing federal water quality or water supply 
programs, such as the USDA's Rural Utility Service or the EPA's state 
revolving loan fund (SRFs).
    Answer. These specific projects are already authorized and under 
construction by Reclamation, which is well suited to handle these tasks 
given its long history of planning, designing, and constructing water 
infrastructure projects in the West. With respect to future projects, a 
careful evaluation of the appropriate federal role and agency 
responsibilities in meeting rural water needs is appropriate, given 
program specific abilities, eligibility requirements, and federal 
mandate. In contrast, other federal water programs (including the 
USDA's Rural Utility Service and the SRFs) provide rural and tribal 
communities with loans, grants, or loan guarantees. However, many 
smaller and poorer rural communities lack the capacity and experience 
that Reclamation can provide to help assess needs, design, plan, and 
construct larger water infrastructure projects.
    Of note, Reclamation's June 2012 assessment report for the Rural 
Program provides a detailed description of the types of federal 
programs that support rural water supply development.\11\ The report is 
available at: http://www.usbr.gov/ruralwater/docs/Rural-Water-
Assessment-Report-and-Funding-Criteria.pdf.
---------------------------------------------------------------------------
    \11\ BUREAU OF RECLAMATION, ASSESSMENT OF RECLAMATION'S RURAL WATER 
ACTIVITIES AND OTHER FEDERAL PROGRAMS THAT PROVIDE SUPPORT ON POTABLE 
WATER SUPPLIES TO RURAL WATER COMMUNITIES IN THE WESTERN UNITED STATES, 
10 - 17 (July 2012).
---------------------------------------------------------------------------
    Question 2b. In addition, would you prioritize rural water programs 
within Reclamation as the best use of their limited dollars?
    Answer. As noted in 1(B) above, the completion of these specific 
authorized projects is needed to fulfill legal, financial and moral 
obligations of the United States. Future rural water projects would 
continue to be subject to authorization and therefore Congress' 
evaluation of appropriate priorities.
    Question 3a. Please describe the cost share mechanisms of the 
projects authorized to receive funding within this bill.
    Answer. Reclamation's July 2012 assessment report describes the 
cost share mechanisms of the projects referenced in S. 3385 as 
follows:\12\
---------------------------------------------------------------------------
    \12\ Id. at 4.

 
----------------------------------------------------------------------------------------------------------------
                   Project                                       Authorized Federal Cost-Share
----------------------------------------------------------------------------------------------------------------
Garrison Diversion Unit (ND)                  100% (tribal component)
                                              75% (non-tribal component)
----------------------------------------------------------------------------------------------------------------
Mni Wiconi Rural Water System (SD)            100% (tribal component)
                                              80% (non-tribal component)
----------------------------------------------------------------------------------------------------------------
Lewis and Clark Rural Water System (SD, IA,   80%
 MN)
----------------------------------------------------------------------------------------------------------------
Perkins County Rural Water System (SD)        75%
----------------------------------------------------------------------------------------------------------------
Fort Peck Reservation-Dry Prairie Project     71% (tribal component)
 (MT)                                         29% (non-tribal component)
----------------------------------------------------------------------------------------------------------------
Rocky Boys/North Central Project (MT)         76% (tribal component)
                                              24% (non-tribal component)
----------------------------------------------------------------------------------------------------------------
Jicarilla Apache Rural Water System (NM)      ARRA funds were obligated at the end of FY 2010 to complete the
                                               federal share of the project.
----------------------------------------------------------------------------------------------------------------
Eastern New Mexico Rural Water System (NM)    75%
----------------------------------------------------------------------------------------------------------------

    Question 3b. Are these any different than other cost share 
provisions for other traditional Reclamation projects?
    Answer. These cost share percentages are consistent with provisions 
of Reclamation law and policy, and may be compared to Title XVI water 
reuse project cost sharing, as well as WaterSMART project cost sharing. 
A project sponsor's ability to pay is also a consideration.
    The 1986 Water Resources Development Act (WRDA) included new cost 
sharing requirements for most Corps project purposes, which also served 
as a guide for some Reclamation project purposes at the time.
    Given its trust responsibilities, the federal government has 
provided all or a significant portion of the funding needed to 
construct Congressionally-authorized infrastructure projects that are 
part of Indian water rights settlements, while also requiring varying 
levels of state and local contributions for components that provide 
non-tribal benefits. For example, under the Navajo Nation's agreement 
with the U.S. and New Mexico (as codified by P.L. 111-11), the City of 
Gallup and the Jicarilla Apache Nation will reimburse the U.S. for up 
to 35% of the capital costs of the Navajo Gallup Water Supply 
Project.\13\ Additionally, the Taos Pueblo's settlement agreement in 
New Mexico (as codified by 111-291) includes a 75% federal cost share 
for non-Pueblo projects benefited by the agreement.\14\
---------------------------------------------------------------------------
    \13\ W. STATES WATER COUNCIL, SETTLEMENTS APPROVED BY CONGRESS, 10 
(Aug. 2011) (describing the federal, state, and local costs of 
Congressionally-authorized Indian water rights settlements), http://
www.westgov.org/wswc/SETTABLE%202011%20%2808-15-11%29.pdf.
    \14\ Id. at 13.
---------------------------------------------------------------------------
    Consistency and flexibility with regard to non-federal cost sharing 
requirements is a difficult balance to achieve, and in some cases may 
seem somewhat arbitrary. Some factors that might be considered in 
evaluating the need for cost sharing include direct and indirect 
federal and non-federal benefits; the extent to which a project meets 
national economic development and social goals associated with economic 
stability and income or wealth redistribution; the extent to which the 
federal government has by statute or rule mandated requirements to 
achieve clean and safe water supplies; and/or fulfillment of federal 
trust responsibilities and other obligations as evidenced by previous 
commitments or promises in treaties, decrees, legislation, etc.\15\
---------------------------------------------------------------------------
    \15\ W. STATES WATER COUNCIL, STATE/FEDERAL FINANCING AND WESTERN 
WATER RESOURCES DEVELOPMENT, 8-11 (May 1984) discussing federal cost 
sharing) (on file with author).
---------------------------------------------------------------------------
    Other factors to consider include the extent to which federal 
investments are repaid over time by project sponsors, or are otherwise 
financed from project revenues, such as hydropower, or dedicated 
revenues such as those accruing to the Reclamation Fund, which again 
have been specifically designated by the Congress for use for 
authorized purposes, including these projects.\16\
---------------------------------------------------------------------------
    \16\ Id.
---------------------------------------------------------------------------
                                 ______
                                 
    Responses of Gayla Brumfield to Questions From Senator Murkowski
    Question 1. In your experience, what are the typical water rates of 
both the community systems and wells within the areas that your project 
intends to serve? Are the rates for these projects higher than what you 
would find in the larger municipalities?
    Answer. Water rates among our members are tabulated below. 
Albuquerque is the largest municipality in New Mexico and is included 
for reference. The maximum, minimum, and average rates over all of New 
Mexico are also included. 

    The rates are generally higher than for larger municipalities. What 
is more, the income disparity between our area and some of the larger 
municipalities means that the rates paid are also a higher proportion 
of our per-capita income.
    Question 2. Do you, or does Reclamation intend to pay for the 
operation and maintenance of the projects intended to be funded in this 
bill? If Reclamation does not pay for the O&M, are you financially 
capable of funding it?
    Answer. We intend to pay for the operation and maintenance (O&M) of 
our project. The authorization for our project specifically excludes 
federal assistance for operation and maintenance. We are financially 
capable of funding O&M. Our financial plan, which was approved by 
Reclamation, demonstrates the ability of our member local governments 
to fund the ongoing operations, maintenance and replacement of the 
system from rates and charges for water delivered from the project. Our 
member communities have already enacted user fees and additional gross 
receipts taxes as needed to meet their obligation.
    Question 3. Please describe your expectations on utilizing public 
power to operate the system. Do you know how much additional 
electricity will be needed in pumping, moving and treating the water?
    Answer. We will be using public power to operate our system. We 
anticipate that current energy use will be reduced when our system is 
in operation.
    Long-term energy use by project facilities would replace existing 
energy demand from existing facilities, and would consolidate a variety 
of services that currently are completed at a community-by-community 
basis. Well completion, individual community pumping, individualized 
water treatment, and other water services would be replaced with a 
consolidated regional system with efficiencies of scale. There are 
ongoing discussions surrounding harvesting energy from gravity-fed 
portions of the pipeline system, and those discussions will continue 
through the design process.
    Question 4. Please describe your current repayment obligations for 
your project, as well as the remaining Federal Funding needed to 
complete the project.
    Answer. There is not a repayment obligation as such. Rather, the 
Federal funding is 75% of the capital cost of the project and the 
matching costs are 15% from the State of New Mexico and 10% from the 
members. Additionally, the entire cost of O&M is paid by the members.
    The capital costs of the project are indexed and will increase over 
the time that it takes to complete this project. However, as of now, 
the cost of the project is approximately $500M. The Federal share of 
this (75%) is $375M, the State share (15%) is $75M, and the Member 
share (10%) is $50M.
    Today, we are expecting to receive approximately $1M from the 
Federal FY2012 budget and $2M from the FY2013 budget. The remaining 
Federal funding needed to complete this project today would be $372M. 
Expressed as a percentage, 99.2% of the Federal funding remains needed. 
They have met 0.8% of their obligation.
    Conversely, this year the State will have contributed a total of 
$25M which puts them at 33% of their obligation. The members have 
contributed $8.5M so far, which puts them at 17% of their obligation.
    Our members have already committed to meeting their total 
obligation by enacting user fees and gross receipts taxes for that 
purpose.
                                 ______
                                 
      Responses of Troy Larson to Questions From Senator Murkowski
    Question 1. In your experience, what are the typical water rates of 
both the community systems and wells within the areas that your project 
intends to serve? Are the rates for these projects higher than what you 
would find in the larger municipalities?
    Answer. It is important to note when talking about water rates that 
Lewis & Clark is a non-profit wholesale provider of water to our 20 
member cities and rural water systems. Our members in turn sell the 
water to their customers. Lewis & Clark does not sell water directly to 
homes, businesses or industries. As a result, comparing Lewis & Clark's 
wholesale water rates to those charged by a municipality or traditional 
rural water system would not be apples to apples.
    That being said, if I understand the question correctly Lewis & 
Clark's water rates in the near future will be higher than the rates of 
communities and rural water systems in our region. The reason for that 
is because only 11 of our 20 members are receiving water at this time. 
These 11 members are paying the entire cost to operate the treatment 
plant and distribution system. There are a number of fixed costs that 
will be spread out over more members as they are connected, thereby 
bringing down the water rates. Given the large upfront investment by 
the local members in the construction of the System, it is expected 
that when all 20 members are connected Lewis & Clark's wholesale water 
rates will be less than the water rates of neighboring cities and rural 
water systems.
    Question 2. Do you, or does Reclamation intend to pay for the 
operation and maintenance of the projects intended to be funded in this 
bill? If Reclamation does not pay for the O&M, are you financially 
capable of funding it?
    Answer. Lewis & Clark RWS does not receive any state or federal 
funding for O&M. All O&M expenses are covered by the water rates, which 
the members are financially capable of paying.
    Question 3. Please describe your expectations on utilizing public 
power to operate the system. Do you know how much additional 
electricity will be needed in pumping, moving and treating the water?
    Answer. As part of our congressional authorization, Lewis & Clark 
RWS will purchase electricity from the Western Area Power 
Administration (WAPA) for the ``irrigation season,'' which runs May 1 
through Oct. 31. For the other six months, we will purchase electricity 
from our local electric suppliers. No other power is needed.
    Question 4. Please describe your current repayment obligations for 
your project, as well as the remaining Federal Funding needed to 
complete the project.
    Answer. Lewis & Clark RWS as an organization has no debt. The 20 
local members pre-paid their share of the project (just over 10% of the 
overall cost). In almost all cases, members borrowed money to pre-pay 
their share of the project and are now making payments on that debt.
    The remaining federal funding is $200.6 million, which is indexed 
each year for inflation by the Bureau of Reclamation. Last year the 
remaining federal cost share balance was $194.3 million, which shows 
that the current federal funding is not even keeping up with inflation. 
Consequently, as this rate the project will never be completed.
                                 ______
                                 
    Responses of Bruce Sunchild to Questions From Senator Murkowski
    Question 1. In your experience, what are the typical water rates of 
both the community systems and wells within the areas that your project 
intends to serve? Are the rates for these projects higher than what you 
would find in the larger municipalities?
    Answer. Water rates in north central Montana vary considerably but 
are generally higher than average for Montana and the upper mid-western 
United States. In January 2009, the North Central Montana Regional 
Water Authority (NCMRWA) compiled rate information for the community 
water systems to be served by the Rocky Boy's/North Central Montana 
Regional Water System (RB/NCMRWS) Project. As shown in the attached 
graphic,* the data indicate that most of the systems (all but four) are 
at or above the target rate established by the State of Montana for the 
six-county area to be served by the RB/NCMRWS Project. The target rate 
of $34.71/month, as defined by the Montana Department of Commerce, was 
calculated as 1.4 percent of the average median household income for 
counties represented in the project area.
---------------------------------------------------------------------------
    * All graphics have been retained in committee files.
---------------------------------------------------------------------------
    Regarding a comparison to larger municipalities, AE2S, our 
engineering consultant for the Tribal portion of the regional water 
system, completes a North Central Utility Rate Survey on an annual 
basis to present and compare rate information for communities in 
Minnesota, North Dakota, South Dakota, Montana, and Wyoming. The 
attached graph* shows rate information for communities of population 
greater than 5,000 people from Montana and Wyoming that participated in 
the rate survey. By comparison to the rates provided in the graphic* 
prepared by the NCMRWA, the larger municipal water systems in Montana 
and Wyoming typically enjoy considerably lower monthly water rates.
    Question 2. Do you, or does Reclamation intend to pay for the 
operation and maintenance of the projects intended to be funded in this 
bill? If Reclamation does not pay for the O&M, are you financially 
capable of funding it?
    Answer. The Bureau of Reclamation is not responsible for operations 
and maintenance (O&M) costs for the RB/NCMRWS Project. The O&M costs 
associated with the RB/NCMRWS Project are to be provided from two 
sources of revenue. The O&M costs for the Core System of the RB/NCMRWS 
Project are to be provided from interest earnings from a trust fund 
established by authorizing legislation for the RB/NCMRWS Project. The 
trust fund, which has been established, is administered by the Bureau 
of Indian Affairs with assistance from the Chippewa Cree Tribe. Beyond 
the scope of the RB/NCMRWS Project, the Chippewa Cree Tribe currently 
pays a monthly water rate for the distribution of water on the Rocky 
Boy's Reservation, which will continue in the future. The O&M costs for 
the Non-Core System portion of the RB/NCMRWS Project will be paid via 
user rates charged by the NCMRWA to the participating water systems. 
Preliminary rates for the purpose of estimating the cost of water 
purchase have been presented to the participating water systems, and 
the participating water systems have signed commitment agreements based 
on that information. It should be noted that the response to this 
question is specific to the RB/NCMRWS Project. The payment of costs for 
O&M related expenditures for other rural water supply projects funded 
by the Bureau of Reclamation may deviate based on the authorizing 
legislation specific to those individual projects.
    Question 3. Please describe your expectations on utilizing public 
power to operate the system. Do you know how much additional 
electricity will be needed in pumping, moving and treating the water?
    Answer. The authorizing legislation for the RB/NCMRWS Project 
indicates preference for the use of power from the Western Area Power 
Administration (WAPA). Currently, it is anticipated that the power 
supply for the Core System Intake and Water Treatment Plant at Tiber 
Reservoir and the primary pumping facility located on the Rocky Boy's 
Reservation will be provided by WAPA. The power requirements for these 
facilities were recently estimated and provided in the Operations, 
Maintenance, and Repair (OM&R) report prepared by AE2S. At full build-
out, the annual Core System power requirements, provided in units of 
kilowatts (kW), are estimated as follows:

 
 
 
 
Intake System:                                                102,000 kW
Water Treatment Facility:                                  13,774,000 kW
Core Pipeline:                                                  7,200 kW
On-Reservation System:                                         55,000 kW
------------------------------------------------------------------------
Total                                                      13,938,200 kW
 

    Power requirements for the Non-Core System pumping facilities have 
been estimated on the basis of conceptual design information. A summary 
of the estimated horsepower requirements for pumping facilities 
anticipated for the Non-Core System is attached for reference. At this 
point in time, it is uncertain whether WAPA will provide power to the 
proposed Non-Core System pump stations.
    Question 4. Please describe your current repayment obligations for 
your project, as well as the remaining Federal Funding needed to 
complete the project.
    Answer. In accordance with Tribal water rights settlement 
negotiations and authorizing legislation, the Tribal component of the 
Core System of the RB/NCMRWS Project is funded entirely by the Federal 
government. The non-Tribal component of the Core System and the Non-
Core System are funded by the Federal government, the State of Montana, 
and the local water systems at a ratio of 80:10:10, respectively. Based 
on information provided by the Bureau of Reclamation for Federal Fiscal 
Year 2012, the estimated funding obligation for the local water systems 
is approximately $20.8 million. The NCMRWA intends to finance the local 
share of costs via loans from the Drinking Water State Revolving Fund 
program. Repayment of the loans will be included in the water rate 
structure developed by NCMRWA. Similar information provided by the 
Bureau of Reclamation indicates that, as of Federal Fiscal Year 2012, 
the remaining Federal funding required to complete the RB/NCMRWS 
Project is approximately $272.4 million.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

Statement of Floyd Azure, Chairman, Assiniboine and Sioux Tribes of the 
                         Fort Peck Reservation
    I am Chairman of the Assiniboine and Sioux Tribes of the Fort Peck 
Reservation. I would like to thank Senator Bingaman and the Committee 
for the opportunity to submit this testimony for the record in support 
of S. 3385, the Authorized Rural Water Projects Completion Act. The 
goal of providing safe drinking water to all of the residents of the 
Fort Peck Reservation has been a primary goal of the Fort Peck Tribes 
for more than two decades. This bill would ensure that the Fort Peck 
Reservation Rural Water System will be completed in a timely manner and 
in way that could save the American taxpayer several million dollars.
    The Fort Peck Tribes are a large, land-based tribe located in 
northeastern Montana. The Fort Peck Reservation encompasses 2.0 million 
acres. The Reservation's Indian population is approaching 8,000 and our 
Tribal enrollment is over 12,000 members. Our greatest need is health 
care, infrastructure, economic development and public safety. The 
Tribes' unemployment rate on the Reservation is 56%. Of our Tribal 
members who are working, four in ten live below the poverty level. The 
United States has a continuing trust responsibility to assist Tribes 
address the basic governmental services such as safe drinking water, 
public safety and healthcare. We view this bill as one way for the 
United States to fulfill its commitment to the Tribes.
    The water quality within the Fort Peck Indian Reservation and 
surrounding communities ranks among the poorest in the country. A 
Bureau of Reclamation Needs Assessment documented drinking water of the 
Project Area, including both an inadequate supply and unacceptable 
quality of our water. Specifically, the water exceeds the standards for 
total dissolved solids, iron, sulfates, nitrates, and in some cases for 
selenium, manganese, and fluoride. For example, iron levels in Poplar, 
Brockton, and Frazer are one and half to five times the standard. These 
contaminants make the available supplies unhealthy for drinking, 
cooking, and bathing. Most recently, a brine plum has contaminated some 
of the drinking water wells of the City of Poplar, which is the site of 
Tribal Government, schools, federal agencies, a hospital and an 
airport.
    The history of the Fort Peck Reservation Rural Water System dates 
back to more than two decades, with the Bureau of Reclamation 
undertaking the Needs Assessment. In 1993, following completion of the 
Needs Assessment; the Tribes began the arduous process of seeking 
authorization of the Fort Peck Reservation Rural Water System. We were 
soon joined by our neighbors surrounding the Reservation and the 
historic partnership of between the Fort Peck Tribes and Dry Prairie 
was formed. The Tribes and Dry Prairie worked for almost a decade to 
get final authorization. There were Congresses when we would get the 
bill through the House and not through the Senate or through the Senate 
and not the House. However, we persevered and finally on October 27, 
2000, the Fort Peck Reservation Rural Water System Act become law. See, 
P.L. 106-382.
    The Fort Peck Reservation Rural Water System when completed will 
have a service population of approximately 30,000 people. The Fort Peck 
Reservation service population is approximately 14,000 and for Dry 
Prairie it is approximately 16,000. Total project investment to date 
has been $129 million. Currently, the Fort Peck Reservation Rural Water 
System Act is at 44% completion. This year the Project's major 
milestone is the completion of the Wambdi Wahachanka Water Treatment 
Plant that happened this summer. Notwithstanding this major 
accomplishment, we still have almost sixty-percent of the Project that 
needs to be completed. This includes delivery of water to communities 
that are in the most desperate need of water. The cost to complete the 
remaining 56% is approximately $166 million, in today's dollars. At the 
current rate of funding of $7.5 million per year, the Project would not 
be completed for more than 20 years. Further, as this rate the indexed 
cost to complete this project would almost quadruple in excess of $400 
million
    This is unacceptable. The Fort Peck Tribes entered into a Treaty 
with the United States. When we ceded our vast areas of land to the 
United States for our Reservation, it was with the promise that the 
United States would do all that it could to ensure that this 
Reservation would be a permanent homeland for the Fort Peck Tribes. 
This promise included the promise that our people would have access to 
safe drinking water, for you cannot have a permanent homeland without 
drinking water. Furthermore, if we have any hope of achieving any level 
of economic development on my Reservation, we need safe drinking water 
now. We cannot wait 20 more years. We need this Project completed as 
soon as possible, and this bill would afford the authorized projects in 
the BOR Rural Water Program this opportunity. Finally this bill is a 
great deal for the American taxpayer. It allows funding that is now 
sitting in the Bureau of Reclamation Fund to be used to further reclaim 
the west, which was the intent of the Reclamation Fund, and it will 
spare the American Taxpayer the burden of the increased construction 
cost of this Project if it is built over a twenty year period.
    I thank the Committee of the opportunity to submit this testimony.
                                 ______
                                 
  Statement of Scott J. Buss, Executive Director, Minnehaha Community 
                      Water Corp., Dell Rapids, SD
    On behalf of the Minnehaha Community Water Corporation, thank you 
for your leadership on S. 3385, the Authorized Rural Water Projects 
Act. We appreciate the role that you have taken in working to complete 
the seven Bureau of Reclamation rural water projects. As you know, 
timely funding of these seven projects will benefit all taxpayers 
nationwide by avoiding increased costs due to inflation. Locally, these 
projects will provide economic benefits by providing jobs, attracting 
new businesses, and allowing the expansion of existing businesses.
    As part ofthe Senate Energy & Natural Resources Committee hearing 
on July 31st regarding S. 3385, please accept this letter as testimony. 
in strong support of S. 3385. MCWC is a member of the Lewis & Clark 
Regional Water System and one ofthe 20 members who have prepaid their 
local cost share of the project. The states of Iowa, Minnesota, and 
South Dakota, along with the 20 members of the Lewis & Clark project, 
have prepaid over $153 million. This total represents 99.7% of the non-
federal cost share.
    On July 30th, MCWC started receiving water from Lewis & Clark at 
our west connection. While the delivery of L&C water has helped us meet 
increasing water demands due to drought conditions, only one of our two 
connections to the Lewis & Clark System has been completed. Until more 
federal funding is allocated to complete the project, MCWC will pay a 
higher water rate for L&C water, and cannot plan on when our second 
connection will be finished. Current federal funding for the project 
has not even kept up with inflation.
    The Minnehaha Community Water Corporation strongly urges Congress 
to pass S. 3385. Timely completion of the seven Bureau of Reclamation 
authorized rural water projects is in the best interest of all 
Americans. Thank you again for your leadership on this important 
legislation.
                                 ______
                                 
  Statement of Thomas F. Donnelly, Executive Vice President, National 
               Water Resources Association, Arlington, VA
    On behalf of the membership of the National Water Resources 
Association (NWRA), I am writing in strong suppmt ofS.3385, the 
Authorized Rural Water Projects Completion Act.
    For over a decade NWRA has called on Congress and various 
Administrations to make rural water supply projects in the Reclamation 
West a high priority.
    The West's rural water delivery needs have been largely ignored in 
over a century of Reclamation water development. It is now time that 
the Congress and this Administration focuses its resources and 
expertise on providing quality water supplies to the rural communities 
and Tribes throughout the West. Many of the congressionally authorized 
projects are under construction, but proceeding so slowly that costs 
are rising to an unacceptable level. It is vitally important for the 
Committee to specifically identify rural water supply as a primary 
focus of the Bureau of Reclamation.
    If there is anything NWRA can do to expedite the passage of S. 
3385, do not hesitate to call upon us to assist the Committee.
                                 ______
                                 
   Statement of Jeanne Duchscher, Finance Officer, City of Parker, SD
    On behalf of the City of Parker, South Dakota,thank you for your 
leadership on S.3385,the Authorized Water Projects Completion Act. We 
applaud your efforts to complete the seven Bureau of Reclamation rural 
water projects that have been languishing for years due to the lack of 
federal funding.
    Please accept this letter as part of the testimony in strong 
support of S.3385. Our water system is part ofthe Lewis & Clark 
project. Lewis & Clark members and the three states have prepaid over 
$153 million,which represents 99.7 percent of the non-federal cost 
share. The City of Parker began receiving Lewis & Clark water on July 
30, 2012.
    The federal funding the last two years has not even kept up with 
inflation,and under the current federal funding levels the project will 
never be completed, thereby leaving the remaining nine members high and 
dry. Many cities and rural systems have had to spend millions on 
infrastructure improvements on top of what that they pre-paid for the 
Lewis & Clark project because of these delays. Even though the City of 
Parker is currently receiving water it is crucial that the project is 
fully completed because until it is the eleven members will be paying 
for the o/m of the facility through our water rates at a higher rate.
    Completing projects such as Lewis & Clark as quickly as possible 
will benefit the taxpayers by avoiding inflationary price increases as 
well as the economic development benefits of towns and rural water 
systems having enough water to attract and expand businesses and 
industries. Not to mention the quality of life benefits by having a 
dependable source of high quality drinking water. The sooner Lewis & 
Clark is fully completed the better. Thank you again for your 
leadership on this important legislation.
                                 ______
                                 
          Statement of Richard H. Garcia, Mayor, Edinburg, TX
    Good morning Mr. Chairman and Members of the Committee on Energy 
and Natural Resources. I am Richard H. Garcia, honored to be the Mayor 
of the City of Edinburg, Texas, located in the 15th Congressional 
District of Texas. My testimony today is related to the federal waste 
water and sewer system programs.
    I am submitting this testimony to share with you some very 
important economic statistics from the City of Edinburg and tell you 
about some important jobs the City is creating even as we speak, and to 
seek your counsel regarding a dilemma that the City faces--how to fund 
the infrastructure upgrades needed to keep up with the City's booming 
economy and service the 56 rural ``Colonias'' found both within and 
just outside the City limits that depend on our facilities.
            edinburg population and economy both are booming
    Edinburg is located deep in South Texas, approximately 15 miles 
from the Texas/Mexican border. We are a city of 77,000 people. The City 
has grown to this population from less than 20,000 in 1960, and is now 
the fastest growing city in South Texas.
    This year, we are seeing the grand opening of two major 
manufacturing and produce facilities that will add over 1,600 jobs to 
the City's employment rolls.
    These two new plants are of enormous importance not only to the 
City but to the Nation. They are two important examples of what a 
community can do in the face of the deepest economic recession our 
Country has faced in many, many years.
    First, there is the new plant being established by Santana 
Textiles, the largest denim manufacturer in the world. With grants from 
the State of Texas Enterprise Zone Program as well as tax breaks 
extended by the City of Edinburg, the company is having the grand 
opening of the plant this summer. This plant will hire 800 new 
employees to make denim in Edinburg, using US cotton and exporting the 
finished product all over the world.
    The other new plant houses a major Don Hugo produce operation 
formerly located in Chicago. It opened its doors in Edinburg on April 
2012, and the Don Hugo Company is hiring 800 new employees to staff it. 
Don Hugo is a produce importer and is moving to Edinburg because of 
Edinburg's proximity to the border of Mexico in re cognition of the 
fact that Mexico is shipping the lion's share of its produce through 
South Texas, making our region the largest importer of Mexican produce 
in the USA. Don Hugo is also taking advantage of similar tax breaks 
from the City and will become one of the biggest employers in the area.
    Also, our airport, which previously was used as a military defense 
airport and was converted to general aviation after WWII, is slowly but 
surely becoming a commercial airport, which it will need to be to 
adequately service Edinburg's business community. In fact, Fed Ex 
Ground has opened a new ground station in Edinburg close to our 
airport.
    Edinburg also assists 56 essentially rural communities known as 
Colonias in South Texas. As described by the Federal Reserve Bank of 
Dallas, Texas Colonias date back to at least the 1950s. Using 
agriculturally marginal land, land that lay in floodplains, or other 
rural properties, developers created unincorporated subdivisions. They 
divided the land into small lots, put in little or no infrastructure, 
then sold them to low-income individuals seeking affordable housing. 
Colonia residents generally have very low incomes. Per capita annual 
income for all Texas counties bordering Mexico--where most of the 
Colonias are located--tends to be much lower than the state and 
national averages. These communities clearly are overburdened, but they 
also provide many of the workers that fuel the growth of the Rio Grande 
Valley economy. Like it or not, many of the City's services end up 
being provided to the residents of these Colonias.
    The City government provides to the City's residents and the 
Colonias sewer and water treatment, fire fighting assistance, police 
assistance, emergency management assistance, and airport services in 
case of an emergency or natural disaster that requires people living in 
the Rio Grande Valley of Texas to seek a port of entry or egress, such 
as our airport and highways located north of the Texas/Mexican border. 
In short, during this period of growth, the City is working hard to 
make certain that its citizens, those who live in the Colonias, and the 
businesses that have located in our community continue to have the 
necessary services for a good quality of life as well as being able to 
attract even more jobs.
                         edinburg's challenges
    I fully understand that the Congress is out of the earmark 
business. However, I am here today to share with you a major dilemma 
the City faces regarding its sewer plant and water plants, airport, and 
law enforcement funding.
    The City's population continues to grow because the City is working 
hard to add jobs, fight off the devastating economic effects of the 
recession, and do our part to stimulate economic growth. Thus, my job 
today on behalf of the citizens of Edinburg, Texas, is to ask you what 
the federal government can do to assist the City with federal dollars 
other than earmarks to help us address the cost of building an $11 
million sewer plant and an $8 million water plant.
    Do you have suggestions as to where the City might find the public 
resources to build these plants that will support our economic 
development? Unfortunately, the citizens of Edinburg cannot afford both 
to pay for more necessary improvements to the City's utilities and also 
assist the other surrounding unincorporated communities as well as the 
Colonias. Yet, the City has been faced with fines from the federal 
Environmental Protection Agency because its burgeoning population is 
pushing the water and sewer facilities to their limits.
    This current state of affairs does not do any of us any good, and 
for certain, the City will have to either work with you to find federal 
dollars to help the citizens of Edinburg get through these rough spots, 
or the City will begin to turn away businesses that are eager to invest 
in bricks and mortar and jobs in Edinburg.
    The same goes for our airport, when FAA tells us that we need more 
volume in order to access money from the Airport Improvement Act to 
expand the runway, the City responds that it cannot get more volume 
with a runway that is too short for commercial planes. It's the 
proverbial question of which comes first, the chicken or the egg. This 
is a good example of a government program that is not serving the 
communities it was designed to serve.
    Finally, because of our proximity to the Texas/Mexican border, we 
also need federal dollars to strengthen border security, due to the 
horrible problems that Mexico is allowing to spill over into the Texas 
side of our border with Mexico. This is a national problem, but part of 
that battle is being fought on the local level--by our City's law 
enforcement officers.
          an invitation for you to see the problems first hand
    Today, I invite this committee to hold a hearing in Edinburg, tour 
the airport, the local Colonias that Edinburg services and let us show 
you exactly why we need help from the federal government. The dollars 
that we need from the federal government will be used carefully to help 
the City continue to be able to support its population growth as well 
as prove to you that the City is doing its part to stimulate the 
economy.
    Come down to Edinburg, let me escort you to tour the Rio Grande 
Valley of Texas, see the Mexican border first hand, see the issues we 
face with drought and the need for irrigation, see the impressive farm 
land that produces sugar cane, feed grains, cotton, citrus, vegetables, 
and cattle, hogs and sheep, as well as the oil and gas industry, solar 
energy and renewable fuel, and what these industries mean to Edinburg 
and South Texas in terms of jobs, jobs, jobs.
                               conclusion
    Our area is one of the fastest growing areas in the USA, and we 
need help from the federal government to make certain we continue to 
grow, add jobs, and allow the people of Edinburg and South Texas to 
prosper. Thank you for the opportunity to submit this testimony to the 
Committee.
                                 ______
                                 
  Statement of Hon. Dennis Daugaard, Governor, State of South Dakota, 
                               Pierre, SD
    I am writing in support of S. 3385, the Authorized Rural Water 
Projects Completion Act. In South Dakota, a number of our communities 
are dependent upon the Lewis & Clark Regional Water System to address 
current water quantity and quality issues. Fully funding the Lewis & 
Clark project will provide reliable drinking water to an estimated 
300,000 people--not just in South Dakota, but in Southwest Minnesota 
and Northwest Iowa as well.
    To date, the states of South Dakota, Iowa, and Minnesota, as well 
as a number of communities, have pre-paid over $153 million toward the 
Lewis & Clark project, representing 99.7 percent of the non-federal 
share. Trus total includes $31.9 million in funding from the state of 
South Dakota. States and communities that have already made the 
investment to provide quality water for their residents await 
Congressional action to complete this vitally needed project.
    Thank you for your leadersrup in introducing S. 3385, and I hope 
the Congress will live up to the commitment it made more than a decade 
ago and fully fund the Lewis & Clark Regional Water System. r;;f;
                                 ______
                                 
Statement of Scott Hain, General Manager, Worthington Public Utilities, 
                            Worthington, MN
    On behalf of the City of Worthington, MN, thank you for your 
leadership on S. 3385, the Authorized Rural Water Projects Completion 
Act. As part of the Senate Energy & Natural Resources hearing on July 
31, please accept this letter as part of the testimony in strong 
support of S. 3385. We applaud your efforts to complete the seven 
Bureau of Reclamation rural water projects that have been languishing 
for years due to the lack of federal funding.
    Worthington became a charter member of the Lewis & Clark Regional 
Water System Project due to decades of failed local water exploration 
efforts. Although Minnesota is known as ``the Land of 10,000 Lakes,'' 
the glaciers missed southwest Minnesota and adequate water resources 
are scarce. All four of the Minnesota members of Lewis & Clark, 
including Worthington, have had economic development stifled for 
decades due to inadequate water resources. The same is true for our 
fellow Lewis & Clark members located in southeastern South Dakota and 
northwestern Iowa. We are located in a primarily agricultural area and 
ag related businesses, particularly production and processing, use 
significant amounts of water.
    We in Worthington, along with the other members of Lewis & Clark 
and the States of Minnesota, Iowa and South Dakota have prepaid over 
$153 million, which r presents 99.7 percent of the non-federal cost 
share. We made this investment based on the ``promise'' made by the 
federal government when the Lewis & Clark project was authorized and 
signed into law in 2000. These funds have been used to construct a 
treatment plant and water distribution: system that began delivering 
water to eleven of the twenty Lewis & Clark members on July 30 of this 
year. However, federal funding over the last two years has not even 
kept up with inflation.Under the current federal funding levels the 
project will never be completed leaving Worthington and eight other 
project members high and dry. In the me.antime, we have had to spend 
money we didn't plan on spending on various other infrastructure 
improvements just to get by. To date, the four Minnesota have spent 
$8.3 million on these ``band aids'' which is on top of what we pre-paid 
for the Lewis & Clark project itself. In short, we've done our part and 
it's time for the federal government to hold up their end of the 
bargain.
    Again, thank you for your leadership on S. 3385 and for you efforts 
toward getting these vital rural water projects completed.
                                 ______
                                 
Statement of Tex G. Hall, Chairman, Mandan, Hidatsa and Arikara Nation 
                    of the Fort Berthold Reservation
    Chairman Bingaman, Ranking Member Murkowski and Members of the 
Committee, my name is Tex Hall. I am the Chairman of the Mandan, 
Hidatsa and Arikara Nation (MHA Nation) of the Fort Berthold 
Reservation in North Dakota. Our Fort Berthold Rural Water Project is a 
part of the Garrison Diversion Unit, the first authorized rural water 
project. Thank you for the opportunity to testify on S. 3385, the 
Authorized Rural Water Projects Completion Act.
    The MHA Nation strongly supports S. 3385 and the funding the bill 
would provide to help ensure completion of authorized rural water 
projects. However, to make real progress toward completing these long 
overdue projects and avoid additional unnecessary costs to the Federal 
government, the amount of funding provided in the bill should be 
substantially increased. We should not be asked to wait any longer for 
clean water supplies. On my Reservation, our rural water project was 
promised more than 50 years ago when the Pick-Sloan Missouri River 
Basin Project and the Garrison Dam flooded the heart of our Reservation 
and displaced our families, homes, infrastructure and our most valuable 
economic resources.
                   congressional action is needed now
    Congress and the Administration are having a serious problem 
completing already authorized rural water projects. This problem is 
resulting in substantial additional costs to the government. S. 3385 
provides much of the solution, but its funding levels should be 
increased and it should be passed by Congress this year.
    It really is that simple. About 50 years ago, Congress began 
authorizing the Bureau of Reclamation to design and construct specific 
projects intended to deliver clean and secure water supplies to 
specific rural communities. Over this period, 12 projects were 
authorized and only 4 have been completed. The cost to complete the 
remaining 8 projects keeps rising to keep pace with increasing 
construction costs. Reclamation estimates that the cost to complete 
these projects will double if nothing is done. We need a substantial 
and stable funding source to make real progress toward completing these 
projects. S. 3385 could provide that funding.
    I applaud Senator Baucus and all of the cosponsors of the 
legislation for drafting a simple and straightforward bill to address 
this problem. I also greatly appreciate the support of Senator Conrad 
from North Dakota as a cosponsor of this legislation. I will be working 
to seek the support of the rest of the North Dakota Congressional 
Delegation for S. 3385, including Senator Hoeven who sits on this 
Committee.
    However, the funding that the bill would provide needs to be 
tripled, at least, to $240 million per year to make any real impact and 
to avoid unnecessary additional costs to the Federal government. As it 
currently stands, the failure of Congress and the Administration to 
fully fund and complete these projects in a timely manner is resulting 
in additional costs to the Federal government. As you know, Reclamation 
estimated in a July 9, 2012 report, entitled ``Assessment of 
Reclamation's Rural Water Activities and Other Federal Programs that 
Provide Support on Potable Water Supplies to Rural Water Communities in 
the Western United States,'' that at the current level of funding the 
eventual cost of the projects will be double their original 
authorization. Reclamation estimated that it will take about $4 billion 
to complete the authorized rural water projects compared to their 
original $2 billion in authorizations.
    Reclamation's report seems to blame these additional costs on the 
cost indexing included in the original authorizing language. To the 
contrary, cost indexing is not the problem, the problem is the failure 
of the Congress and the Administration to adequately fund these 
projects on an annual basis. Cost indexing to keep pace with inflation 
is entirely appropriate, simply requires that annual project 
construction costs are based in reality and ensures that the projects 
will be completed as originally intended.
    Our Fort Berthold Rural Water Project, part of the Garrison 
Diversion Unit, provides a good example of the level of funding needed. 
S. 3385 would make $80 million available each year. If Garrison 
received $20 million of that amount, because it was the first 
authorized project and because of the large federal share remaining, 
this would not be enough funding to make a significant difference in 
completing the Fort Berthold Rural Water Project. From that $20 
million, the State of North Dakota would keep $10 million and the 
tribes in North Dakota would split the remaining $10 million. 
Ultimately, the MHA Nation and our Fort Berthold Rural Water Project 
would end up with a few million dollars to keep construction moving 
along slowly.
    As explained in more detail below, even if the funding amount were 
tripled, or more, it would still only be one-quarter, about 24%, of the 
surplus that is available in the Reclamation Fund each year. After all 
the other shares are taken, this level of funding would provide the MHA 
Nation about $10 million a year that could be devoted to Fort Berthold 
Rural Water Project construction. The MHA Nation has the staff and 
construction teams in place to easily use this level of funding on an 
annual basis. This is the level of funding needed to make a real impact 
and ultimately lower the cost to the Federal government by completing 
the project in a timely manner.
      congress should keep it simple and pass this simple solution
    Unfortunately, approval of S. 3385 does not appear to be the only 
issue on the table. Instead, we are also talking about the Rural Water 
Supply Act of 2006, P.L. 109-451 that authorized Reclamation to 
establish a program to assess rural water supply needs which created 
additional work for Reclamation, and the convoluted process Congress 
has developed for managing costs and the federal budget. We need to put 
these two issues aside to complete the rural water projects Congress 
committed to long ago.
    First, the Rural Water Supply Act of 2006 has Reclamation reviewing 
priorities that Congress already expressed in the authorization for 
each project and conducting appraisal and feasibility studies for new 
rural water projects. Reclamation may need a new programmatic approach 
to manage future demand for rural water projects needed by deserving 
communities, but, before we take that on, we need to complete the 
projects that are already authorized and should have been completed 
long ago. While our authorized projects have languished for lack of 
funding, Reclamation reports that it has funded 17 appraisal 
investigations and 5 feasibility studies in just two years. Neither 
Congress nor Reclamation should create new work or reassess long-
standing commitments while existing projects remain underfunded and 
uncompleted.
    Second, Congress should put an end to its convoluted process for 
managing costs and the federal budget. These processes effectively 
require legislation to pass Congress twice--first on the merits and 
then on cost. These processes also consolidate power in the hands of a 
few members with jurisdiction over revenues and expenditures. At a 
minimum, these rules should be waived for the kind of funding proposed 
by S. 3385.
    The funding identified for S. 3385, the Authorized Rural Water 
Project Completion Act, would come from what is known as the 
Reclamation Fund. The Reclamation Fund is an existing account within 
the Federal government that is running huge surpluses and which should 
be used for exactly these kinds of rural water projects. I understand 
that approximately $2 billion is paid into this fund each year. About 
$1 billion of that is spent on existing operations and there is about a 
$1 billion annual surplus. S. 3385 would commit $80 million, or about 
8% of that surplus, to complete authorized projects that are getting 
more and more expensive to complete each year. Moreover, even if this 
amount is raised to $240 million, or 24% as discussed above, this is 
still a small amount to spend to lower the overall cost to the Federal 
government.
    Spending a small portion of the Reclamation Fund to complete 
authorized rural water projects is one of the smartest funding 
decisions Congress could make. It would use existing funds that should 
be spent on rural water projects and it would reduce the overall costs 
expected for completing these projects. However, instead of making this 
straightforward decision, S. 3385 and recent Congressional procedures 
would require that any of the Reclamation Funds used be paid for by 
cuts in other Federal spending or by increases in revenues.
    Instead of getting tied up in knots by its own procedures, Congress 
should simply provide the funding needed to complete the projects it 
has authorized. The $80 million that S. 3385 would provide would be a 
good start. Congress needs to do this in a timely manner so that the 
projects do not end up costing far more than originally planned. Each 
day we wait the costs only grow higher. We need straightforward action 
from Congress to fulfill the commitments made to our communities.
  completion of the garrison diversion unit would address past wrongs
    While all of the remaining 8 authorized rural water projects need 
the funding that S. 3385 would provide, the promises the Federal 
government made to the MHA Nation deserve special attention. The 
Federal government committed to provide the MHA Nation and all of our 
homes with a clean and secure municipal and industrial water system. 
This promise was made because the construction of the Garrison Dam as a 
part of the Pick-Sloan Missouri River Basin Project flooded the heart 
of our Reservation and displaced families, homes, churches, school and 
our very way of life. Few communities have been asked to sacrifice to 
the extent the MHA Nation has been asked to sacrifice.
    In the 1950's, the MHA Nation's most abundant and fertile resources 
were flooded by the massive Garrison Dam, one of a number of dams 
constructed as a part of the Pick-Sloan Missouri River Basin Project. 
Originally authorized by the Flood Control Act of 1944, Pub. L. No. 78-
534, Sec.  9, 58 Stat. 891 (1944), the Pick-Sloan Project was intended 
to fulfill national public purposes of flood control, navigation, 
irrigation, hydropower, municipal and industrial water supply, fish and 
wildlife, water quality and recreation. However, from the MHA Nation's 
perspective the Project flooded our most valuable resources and 
devastated the economic and social systems that sustained us.
    The MHA Nation was pressured and steam-rolled into signing away our 
prime river bottom lands to make way for Garrison Dam. Other sites were 
available to construct the Dam, but the site that would flood the most 
Indian lands and have the least impact on non-Indian towns was 
selected. Even with tribal resolutions opposing the Dam, by May of 
1948, MHA Nation Chairman George Gillette had little choice but to 
travel to Washington, D.C. to sign the final agreement with the 
Department of Interior. A photograph of that event shows Chairman 
Gillette weeping as Interior Department officials sign away our trust 
lands to be flooded for public purposes by Garrison Dam's giant 
reservoir, Lake Sakakawea. Chairman Gillette said, ``Right now, the 
future does not look too good for us.'' I have attached to my testimony 
an article from a North Dakota historical foundation that describes 
those events and that includes this photograph.
    As a result of the Garrison Dam, the MHA Nation's land and our 
traditional social and economic structures were devastated. The 
Garrison Dam flooded more than 156,000 acres, the heart of our 
Reservation. It flooded much of our prime agricultural lands, 84 
percent of our roads network, more than 400 homes, our Hospital, 
schools and churches, and 90 percent of our tribal membership was 
forced to relocate to higher, less hospitable ground. The Dam also 
flooded forests, the red willows that protected and nourished our 
stock, and displaced the wildlife that MHA Nation members harvested.
    Compensation provided to the MHA Nation was far too little to make 
up for what was lost and was not adequate compensation for the use of 
our lands to produce hydroelectric power and provide navigation. In 
addition, projects to make the MHA Nation whole were promised but not 
fulfilled, including: irrigation and drinking water systems, 
preferential electric power, financial assistance for Reservation 
farms, development of recreational shoreline opportunities, and 
replacement of infrastructure that was flooded. These promises remain 
unfulfilled and the new economy brought by Garrison Dam provides little 
benefit to the members of the MHA Nation, yet we live daily with the 
most impacts.
    After much study and discussion about how to begin making up for 
the losses that the MHA Nation suffered, our Fort Berthold Rural Water 
Project was authorized as a part of the Garrison Diversion Unit to make 
good on a decades old promise. Unfortunately, as a part of the Garrison 
Diversion Unit, by the time Reclamation's funding reaches our project 
managers there is little for us to spend on construction each year.
    As I mentioned above, the State of North Dakota takes half of the 
Garrison funding and the other half is split among four tribes. As a 
result, in many years, the Fort Berthold Rural Water Project barely has 
the money to keep going. In contrast, the State currently enjoys a $1 
billon dollar budget surplus and in recent years had a water budget 
between $200 and $400 million. Until the Fort Berthold and other tribal 
projects catch up to the State water project, the State of North Dakota 
should be required to waive its share of Federal funding. This needs to 
be done to shorten the overall timeline for completing the tribal 
projects and make good on the promises to the MHA Nation for the 
flooding of our lands.
    Because of the impacts the Pick-Sloan Project and the Garrison Dam 
had on the MHA Nation, our rural water project means more to us that 
just the promise of a clean and secure municipal and industrial water 
supply. The Fort Berthold Rural Water Project will help to address the 
devastating impact the Pick-Sloan Project had on our most valuable 
resources, our way of life and our homelands. We ask that Congress and 
the Administration increase the funding in S. 3385 and pass this bill 
so that promises made when our lands were flooded can finally be 
fulfilled.
                               conclusion
    Thank you Chairman Bingaman, Ranking Member Murkowski and Members 
of the Committee for the opportunity to provide this testimony in 
support of S. 3385 and its solution to the ongoing delays in completing 
authorized rural water projects. We only ask that the funding levels in 
the bill be increased to a level that will ensure the completion of 
these projects and which will save the Federal government hundreds of 
millions of dollars. This needs to be done to complete these long 
promised rural water projects, and also to help address impacts to the 
MHA Nation from the Pick-Sloan Missouri River Basin Project.
                                 ______
                                 
  Statement of Mary A. Heller, General Manager, North Central Montana 
                  Regional Water Authority, Havre, MT
    Members of the Senate Committee for Energy and Natural Resources, 
thank you for holding a hearing on Senator Max Baucus' bill S.3385 on 
July 31, 2012. I was in attendance at this hearing as a representative 
of the North Central Montana Regional Water Authority which is 
partnering with the Rocky Boy's Reservation of the Chippewa Cree Tribe 
to develop, construct, and operate the Rocky Boy's/North Central 
Montana Regional Water System (RB/NCMRWS) Project.
    As you know, in 1999, President Clinton signed the Chippewa Cree 
Tribe of the Rocky Boy's Reservation Indian Reserved Water Rights 
Settlement and Water Supply Enhancement Act into law. That settlement 
act provided 10,000 acre-feet of water for the Chippewa Cree Tribe via 
Tiber Reservoir. In 2002, President George W. Bush signed the Rocky 
Boy's/North Central Montana Regional Water System Act into law. As a 
Congressionally authorized project, the RB/NCMRWS Project will 
distribute clean drinking water to meet tribal, municipal, rural and 
industrial needs for the Rocky Boy's Reservation and seven counties in 
north central Montana.
    Since the signing of the authorized regional water project, the RB/
NCMRWS Project partners have worked diligently to utilize the funds 
granted to them through the appropriation process. Our progress has 
been limited, however, due to the fact that the appropriated funds to 
date fall very short of the costs associated with construction of a 
project of this magnitude in a timely manner. Since its authorization 
in 2002, the funding ceiling for the RB/NCMRWS Project has increased 
from $229 million to over $350 million due to the application of annual 
indexing factors by the Bureau of Reclamation. While we are 
appreciative of the funding received--to date approximately $60 
million--we are nowhere close to receiving the funds necessary to 
complete the project.
    During the hearing, Senator Max Baucus and Rocky Boy's Chairman 
Bruce SunChild testified that safe drinking water is scarce in north 
central Montana. Many of our public water systems and residents are 
faced with Administrative Orders from the Montana Department of 
Environmental Quality (DEQ) due to regulatory violations. Some water 
systems are at risk of enforcement action because of recent and 
anticipated drinking water regulations administered by the 
Environmental Protection Agency (EPA). Recently, I was told by a local 
water district operator that a customer came to him with a jar full of 
water that she had obtained from the tap at her kitchen sink. The water 
contained small worms and, obviously, was not safe for her family to 
drink.
    Anyone associated with public drinking water is familiar with the 
Safe Drinking Water Act and the regulations mandated by the EPA to 
enforce that Act. They do not have to be reminded of how stressed our 
aging infrastructure is when it comes to public drinking water supply 
systems here in Montana. Water treatment plants, storage facilities, 
and distribution systems that are, in many cases, well over 50 years 
old are at risk of enforcement action by the DEQ because that 
infrastructure can no longer adequately protect human health. The 
reality is, however, our communities cannot afford to pay for the cost 
of updating and maintaining these individual, aging systems to comply 
with mandated EPA regulations. Regionalization, through the RB/NCMRWS 
Project, is the right solution.
    North central Montana is very rural and the economy here relies 
primarily on agriculture. Our towns and water districts that deliver 
public water are small compared to many of the areas across the United 
States. However, the EPA regulations for safe drinking water that are 
mandated for communities of 100,000-plus residents are predominantly 
the same regulations that a community of 100 residents must abide by. 
The costs associated with updating aging infrastructure simply cannot 
be passed onto our small rural communities.
    Try to imagine a day-to-day life that consists with the struggle to 
have clean drinking water in the home. The sources of water available 
to north central Montana residents are impacted by drought or require 
increased treatment to safeguard against contamination. Drinking 
contaminated water can pose significant health risks such as gastro 
intestinal illnesses, cancer, central nervous system problems, liver 
and kidney problems, and reproductive effects, including miscarriages.
    As many Montana citizens face a daily struggle of obtaining safe 
drinking water at the front door, the DEQ and EPA are at the back door 
with additional compliance regulations that public water systems simply 
can't afford.
    The RB/NCMRWS Project was signed into law with its authorization in 
2002. However, the law has not been upheld by the US government as 
funding has been scarce, and we usually had to rely on Congressionally-
directed funds to get any construction done.
    This is not only a great concern in regards to lack of funding, but 
we're also concerned about the possibility of newly authorized 
projects. While we would not want to turn anyone away from clean 
drinking water, we also see the reality that currently authorized 
projects should receive all the funds necessary to complete and ``get 
the projects off the books.''
    Past federal appropriation dollars awarded to the RB/NCMRWS Project 
created numerous jobs. We witnessed a large spike in employment when 
funds from the American Reinvestment and Recovery Act (ARRA) were 
obtained--it is estimated that over 550 jobs were created. This 
includes jobs in a wide variety of sectors including raw materials, 
manufacturing, transportation, suppliers, construction, engineering, 
management, administration, legal, easements acquisition, etc. This is 
the largest project occurring in north central Montana, and the 
livelihood for many hard working Montanans depends on it.
    Completed segments within the project area have provided North 
Havre County Water District (CWD), South Chester CWD, and Riverview 
Colony with water treated to current drinking water standards. 
Furthermore, the Rocky Boy's Reservation has taken several steps 
towards receiving a reliable supply of clean drinking water.
    According to the 2010 Census, the Rocky Boy's Reservation is the 
fastest growing reservation in Montana. However, infrastructure there 
is not expanding. As Chairman SunChild testified, current groundwater 
supplies are inadequate, and water rationing limits the quality of life 
and has prevented industrial and economic development opportunities.
    Off-reservation areas such as Shelby and Havre, Montana are also 
witnessing the potential for economic growth opportunities with oil and 
gas developments, biodiesel and wind power projects, agricultural 
centers and even homeland security. However, economic growth in these 
communities is also stifled unless additional clean drinking water can 
be provided.
    The federal government plays a significant role in this regional 
water system project. That role is to provide support for the growth of 
commerce, trade and the ability for citizens to strive for a prosperous 
future.
    As our nation prepares for another election season, the buzz words 
used with each candidate are strikingly familiar; ``job creation'' and 
``economic growth.'' Regardless of political affiliation, all Americans 
seem to agree on one thing; the use of taxpayer dollars needs to be 
spent wisely on projects that will provide jobs, economic growth and 
positively impact America's future.
    The RB/NCMRWS Project is a federally authorized project that 
provides solutions to the issues of human health, job creation and 
economic growth. We fully support Senator Baucus' bill S. 3385--a Bill 
to Authorize the Secretary of the Interior to Use Designated Funding to 
Pay for Construction of Authorized Rural Water Projects. With the 
passage of this bill, we can obtain the necessary funding needed to 
provide a lifeline to our fellow citizens with clean, safe, and 
reliable drinking water. We cannot achieve future growth and prosperity 
without this most precious natural resource.
    Mr. Chairman and Committee members, on behalf of the RB/NCMRWS 
Project, I thank you for your hard work and support to bring clean 
drinking water to citizens of the United States.
                                 ______
                                 
          Statement of Gene Hexom, Mayor, City of Madison, SD
    On behalf of the City of Madison, thank you for your leadership on 
S. 3385, the Authorized Rural Water Projects Act. We applaud your 
efforts to complete the seven Bureau of Reclamation rural water 
projects that have been languishing for years due to the lack of 
federal funding. Completing these projects as quickly as possible will 
benefit the taxpayers by avoiding inflationary price increases, as well 
as realizing the economic development benefits of towns and rural water 
systems having enough water to attract and expand businesses and 
industries. Not to mention the quality of life benefits by having a 
dependable source of high quality drinking water.
    As part of the Senate Energy & Natural Resources hearing on July 
31'' regarding S. 3385, please accept this letter as part of the 
testimony in strong support of S. 3385. Three rural water systems and 
eight communities in southeast South Dakota are part of the Lewis & 
Clark project, as well as nine cities and rural water systems in 
southwest Minnesota and northwest Iowa. The 20 members and three states 
have prepaid over $153 million, which represents 99.7 percent of the 
non-federal cost share.
    Eleven of the 20 Lewis & Clark members just began receiving water 
on July 30. However, because federal funding the last two years has not 
even kept up with inflation, under the current federal funding levels 
the project would never be completed. This would leave the remaining 
nine members, including the City of Madison, high and dry, while the 
members who are receiving water will continue to pay higher than 
expected water rates because they are paying the entire cost to operate 
the treatment plant. In the meantime, the City of Madison is also 
facing tough decisions about potentially investing hundreds of 
thousands of dollars which would not have to be spent would the federal 
govermnent live up to their promise to Lewis and Clark and the citizens 
of the City of Madison.
    Lewis & Clark is critically important to the quality of life and 
economy of the City of Madison. The City of Madison strongly urges 
Congress to pass S. 3385. The sooner Lewis & Clark is completed, the 
better. Thank you again for your leadership on this important 
legislation.
                                 ______
                                 
       Statement of Mike Huether, Mayor, City of Sioux Falls, SD
    On behalf of the City of Sioux Falls, thank you for your leadership 
on S. 3385, the Authorized Rural Water Projects Act. We applaud your 
efforts to complete the seven Bureau of Reclamation rural water 
projects that have been languishing for years due to the lack of 
federal funding. Completing these projects as quickly as possible will 
benefit the taxpayers by avoiding inflationary price increases, 
realizing the economic benefits by expanding and attracting new 
businesses, and providing a dependable source of high-quality drinking 
water.
    As part of the Senate Energy and Natural Resources hearing on July 
31, 2012, regarding S. 3385, please accept this letter as part of the 
testimony in strong support of S. 3385. Sioux Falls is fortunate in 
that it is one of the 11 members who finally began receiving water from 
Lewis & Clark at the end of last month. However, it is critically 
important that the remaining 9 members be connected as soon as 
possible. All 20 members are in this project together. We cannot stop 
pressing forward until everyone is connected. In addition, the 11 
connected members will be paying elevated water rates until all the 
members are connected.
    The 20 local members and 3 states have prepaid over $153 million, 
which represents 99.7 percent of the nonfederal cost share. However, 
because federal funding the last two years has not even kept up with 
inflation, under the current federal funding levels, the project would 
never be completed. In the meantime, members have had to spend 
additional funds on infrastructure improvements. This has not been the 
case fortunately for Sioux Falls, but I understand from Lewis & Clark 
officials that the other members have spent a combined $9.3 million, 
which is on top of what they prepaid for the Lewis & Clark project 
itself. This further highlights the need to complete this project in a 
timely manner.
    Thank you again for your leadership on this important legislation.
                                 ______
                                 
  Joint Statement of Dan L. Janssen, City Administrator, and Jerry L. 
                   Johnson, Mayor, City of Sibley, IA
    On behalf of the City of Sibley, Iowa a member of the Lewis and 
Clark Regional Water System, thank you for your leadership on S. 3385, 
the Authorized Rural Water Projects Act. We applaud your efforts to 
complete the seven Bureau of Recla mation rural water projects that 
have been languishing for years due to the l ack of federal funding. 
Completing these projects as quickly as possible will benefit the 
taxpayers by avoiding inflationar y price increase, as well as 
realizing the economic development benefits of towns and rural water 
systems having enough water to attract and expand businesses and 
industries. Not to mention the quality of life benefits by having a 
dependa ble source of high quality drinking water.
    As part of the Senate Energy & Natural Resources hearing on July 31 
regarding S. 3385, please accept this letter as part of the testimony 
in strong support of S. 3385. The City of Sibley is a member of the 
Lewis and Clark Regional Water System project. Other members of Iowa 
including Hull, Sioux Center, Sheldon and Rock Rapids are also members 
of the system. They and the other members and three states have prepaid 
over $153 million, which represents 99.7 percent of the non-federal 
cost share. Eleven of the 20 Lewis & Clark members just began receiving 
water on July 30. However, beca use federal f unding the last two years 
has not even kept up with inflation, under the current federal funding 
levels the project would never be completed, thereby leaving the 
members in Iowa high and dry. In the meantime, because of the delays 
these cities and rural water systems have had to spend money they did 
not plan to on infrastructure improvements and have missed out on many 
lost economic development opportunities.
    The City of Sibley, Iowa strongly urges Congress to pass S. 3385. 
The sooner Lewis & Clark reaches northwest Iowa, the better. Thank you 
agai n for your leadership on this important legislation.
                                 ______
                                 
 Joint Statement of Stan Knobloch, Chairman of the Board, and James E. 
     Hoye, General Manager, Rock Rapids Utilities, Rock Rapids, IA
    Rock Rapids Municipal Utilities thanks you for your leadership on 
S. 3385, the Authorized Rural Water Projects Act. We appreciate your 
efforts to complete the seven Bureau of Reclamation rural water 
projects that have been in limbo for years due to the lack of federal 
funding. Completing these projects as quickly as possible will benefit 
the taxpayers by avoiding inflationary price increase, as well as 
realizing the economic development benefits of towns and rural water 
systems having enough water to attract and expand businesses and 
industries.
    As part of the Senate Energy & Natural Resources hearing on July 31 
regarding S. 3385, please accept this letter as pat1of the testimony in 
strong support ofS. 3385. Four rural water systems and seven 
communities in southeast South Dakota are part of the Lewis & Clark 
project, as well as nine cities and rural water systems in southwest 
Minnesota and northwest Iowa. The 20 members and three states have 
prepaid over $153 million, which represents 99.7 percent of the non-
federal cost share.
    Rock Rapids is one of the eleven Lewis & Clark members that just 
began receiving water on July 30. Rock Rapids will be receiving water 
and will have to pay higher than expected water rates because we will 
be paying the entire cost to operate the treatment plant. In the 
meantime, because of the delays cities and rural water systems that are 
not connected have had to spend money they did not plan to on 
infrastructure improvements. To date, the members have spent a combined 
$9.3 million, which is on top of what they pre-paid for the Lewis & 
Clark project itself.
    Lewis & Clark is critically important to the quality of life and 
economy of the tri-state region. Rock Rapids Municipal Utilities 
strongly urges Congress to pass S. 3385. The sooner Lewis & Clark is 
completed, the better. Thank you again for your leadership on this 
important legislation.
                                 ______
                                 
 Statement of Roger Lamp, President of the Board, Lincoln County Rural 
                           Water System, Inc.
    On behalf of Lincoln County Rural Water System,Inc.,thank you for 
your leadership on S.3385,the Authorized RuralWater Projects Act. We 
applaud your efforts to complete the seven Bureau of Reclamation 
ruralwater projects that have been languishing for years due to the 
lack of federal funding. Completing these projects as quickly as 
possible will benefit the taxpayers by avoiding inflationary price 
increase,as well as realizing the economic development benefits of 
towns and ruralwater systems having enough water to attract and expand 
businesses and industries. Not to mention the quality of life benefits 
by having a dependable source of high quality drinking water.
    As part of the Senate Energy & Natural Resources hearing on July 31 
regarding S.3385, please accept this letter as part of the testimony in 
strong support of S.3385. Four rural water systems of which Linoln 
County Rural Water is one of them, and seven communities in southeast 
South Dakota are part of the Lewis & Clark project, as well as nine 
cities and rural water systems in southwest Minnesota and northwest 
Iowa. The 20 members and three states have prepaid over $153 million, 
which represents 99.7 percent of the non-federal cost share.
    Eleven of the 20 Lewis & Clark members just began receiving water 
on July 30. lincoln County Rural Water was fortunate to be one of the 
Lewis & Clark members receiving water. However, because federal funding 
the last two years has not even kept up with inflation,under the 
current federal funding levels the project would never be completed. 
This would leave the remaining nine members high and dry,while the 
members who are receiving water will continue to pay higher than 
expected water rates because they are paying the entire cost to operate 
the treatment plant. Because of the drought in our area, the lewis & 
Clark project is needed more than ever. Due to delays these cities and 
rural water systems that are not connected have had to spend money they 
did not plan to on infrastructure improvements. To date,the members 
have spent a combined $9. 3 million, which is on top of what they pre-
paid for the Lewis & Clark project itself. Lewis & Clark is critically 
important to the quality of life and economy of the tri-state region. 
Lincoln County Rural Water strongly urges Congress to pass S. 3385. The 
sooner Lewis & Clark is completed the better. It is time for the 
federal government to live up to it's part of the bargain.
    Thank you again for your leadership on this important legislation.
                                 ______
                                 
   Statement of Mary McClung, Finance Officer, City of Harrisburg, SD
    On behalf of the City of Harrisburg, South Dakota, thank you for 
your leadership on S. 3385, the Authorized Water Projects Completion 
Act. We applaud your efforts to complete the seven Bureau of 
Reclamation rural water projects that have been languishing for years 
due to the lack of federal funding.
    Please accept this letter as part of the testimony in strong 
support of S. 3385. Our water system is part of the Lewis & Clark 
project. Lewis & Clark members and the three states have prepaid over 
$153 million, which represents 99.7 percent of the non-federal cost 
share. The City of Harrisburg is one of eleven of the 20 Lewis & Clark 
members that began receiving water on July 30, 2012.
    The federal funding the last two years has not even kept up with 
inflation, and under the current federal funding levels the project 
will never be completed, thereby leaving the remaining nine members 
high and dry. Many cities and rural systems have had to spend millions 
on infrastructure improvements on top of what that they pre-paid for 
the Lewis & Clark project because of these delays. Even though the City 
of Harrisburg is currently receiving water it is crucial that the 
project is fully completed because until it is the eleven members will 
be paying for the o/m of the facility through our water rates at a 
higher rate.
    Completing projects such as Lewis & Clark as quickly as possible 
will benefit the taxpayers by avoiding inflationary price increases as 
well as the economic development benefits of towns and rural water 
systems having enough water to attract and expand businesses and 
industries. Not to mention the quality of life benefits by having a 
dependable source of high quality drinking water. The sooner Lewis & 
Clark is fully completed the better. Thank you again for your 
leadership on this important legislation.
                                 ______
                                 
Statement of DL Sanders, Chief Counsel to the New Mexico State Engineer
    Chairman Bingaman, Ranking Member Murkowski and Members of the 
Committee, my name is DL Sanders and I serve as the Chief Counsel to 
the New Mexico State Engineer. I regret not being able to appear in 
person to present oral testimony in strong support of S. 3385, the 
Authorized Rural Water Projects Completion Act (Act). The Act will 
resolve some of the most critical potable water supply issues in the 
Western United States and those specifically impacting the seven 
Eastern New Mexico Water Utility member entities.
    Mr. Chairman, this bill is important to two of New Mexico's rural 
water projects. My comments are limited to completion of the Eastern 
New Mexico Rural Water System (System) as it is critical to sustaining 
the population of Eastern New Mexico. As you know, Mr. Chairman, the 
water levels in New Mexico's portion of the Ogallala Aquifer continue 
to decline at a rate that threatens the area's potable water supply. 
The only viable alternative is this rural water system.
    By way of a brief history, the Canadian River Compact apportioned 
the surface waters of the Canadian River among the States of New 
Mexico, Texas, and Oklahoma in 1950. The compacting States provided for 
the storage of water. Accordingly, in 1955, the New Mexico Legislature 
authorized the New Mexico Interstate Stream Commission to investigate 
the potential for construction of a Dam to impound a portion of New 
Mexico's share of Canadian River water. This investigation ultimately 
led to the construction of Ute Dam which was completed in 1964.
    In 1963, while the Ute Dam was under construction, the predecessor 
organization that evolved into the Eastern New Mexico Water Utility 
Authority (Authority) was formed by the municipalities of Tucumcari, 
Clovis, Portales, Elida, Roswell and Artesia. Today, the member 
entities of the Authority remain steadfast in their support of the 
completion of the System as it offers the only water supply alternative 
to the groundwater of the Ogallala Aquifer that is in rapid decline. 
Only through increased funding, as proposed by this bill, will 
Authority members be assured of not running out of water before the 
System is fully constructed.
    Since 1958, the United States has been a partner with New Mexico in 
the construction of Ute dam and the System. With respect to the System, 
the majority of funding, more than $25 million, has come from the State 
of New Mexico and the Authority's members.
    This legislation is vital for Eastern New Mexico to establish a 
sustainable and renewable supply of water and assure its socio-economic 
future. A sustainable supply of water is critical to the economy of 
Eastern New Mexico that is dependent on a diverse number of industries 
such as dairy, large-scale food production and processing, ethanol 
refining, a critical military presence at Cannon Air Force Base and 
colleges and universities.
    The completion of the System offers Eastern New Mexico the only 
viable means to overcome its most significant challenge: a lack of 
renewable water supply. Because Eastern New Mexico communities rely 
solely on the Ogallala Aquifer, Authority members invest millions of 
dollars per year to develop adequate production capacity to meet 
existing demand to replace existing pumping capacity as it continues to 
decline.
    I understand that each of you have heard time and again just how 
critical some project is to a particular state, nevertheless there are 
some that truly are a little more critical than some others and I 
believe this is one. I cannot emphasize enough just how critical 
completion of this System is to ensure a reliable uninterrupted water 
supply for the Authority's members, the military, and the economy of 
Eastern New Mexico.
    I would like to include the statement that the state of New Mexico 
continues to support the Jicarilla Apace Tribe's rural water project 
that also will benefit from passage of this bill.
    Mr. Chairman, thank you for championing this effort and please know 
the State of New Mexico stands in strong support of S. 3385 and the 
State Engineer will gladly assist you in moving this important 
legislation through Congress. This concludes my written testimony.
                                 ______
                                 
    Statement of Rod Spronk, Chairman, Lincoln Pipestone Rural Water
    On behalf of Lincoln Pipestone Rural Water (LPRW), thank you for 
your leadership on S. 3385, the Authorized Rural Water Projects Act. We 
applaud your efforts to complete the seven Bureau of Reclamation rural 
water projects that have been languishing for years due to the lack of 
federal funding. Completing these projects as quickly as possible will 
benefit the taxpayers by avoiding inflationary price increases, as well 
as realizing the economic development benefits of towns and rural water 
systems having enough water to attract and expand businesses and 
industries. Not to mention the quality of life benefits by having a 
dependable source of high quality drinking water.
    As part of the Senate Energy & Natural Resources hearing on July 31 
regarding S. 3385, please accept this letter as part of the testimony 
in strong support of S. 3385. Our neighboring rural water system, Rock 
County Rural Water District, is part of the Lewis & Clark project, as 
well as the communities of Worthington and Luverne. They, LPRW, and 
sixteen other members and three states have prepaid over $153 million, 
which represents 99.7 percent of the non-federal cost share. Eleven of 
the twenty Lewis & Clark members just began receiving water on July 30. 
However, because federal funding the last two years has not even kept 
up with inflation, under the current federal funding levels, the 
project would never be completed, thereby leaving the members in 
Minnesota high and dry. In the meantime, because of the delays, these 
cities and rural water systems have had to spend money they did not 
plan to on infrastructure improvements. To date, the four Minnesota 
members have spent $3.3 million, which is on top of what they pre-paid 
for the Lewis & Clark project itself.
    Although Minnesota is known as ``the Land of 10,000 Lakes,'' the 
glaciers missed southwest Minnesota. The lack of water has caused 
ethanol plants and dairies to be turned away. A large pork processing 
plant in Worthington bas wanted to expand for over ten yems, but cannot 
because of the lack of water. This has an adverse impact on the pork 
producers in the region.
    Lincoln Pipestone Rural Water strongly urges Congress to pass S. 
3385. The sooner Lewis & Clark reaches southwest Minnesota, the better. 
Thank you again for your leadership on this important legislation.
                                 ______
                                 
Statement of Chris Udall, Executive Director, Agri-Business Council of 
                        Arizona, Inc., Mesa, AZ
    On behalf of the membership of the Agri-Business Council of Arizona 
(ABC), I want to extend our support of S. 3385, the Authorized Rural 
Water Projects Completion Act. Focusing attention on quality water 
supplies for rural communites, agribusiness and Tribes throughout the 
west and in particular, Arizona, are extremely important priorities for 
our members.
    ABC serves as Arizona's Reclamation Representative to the National 
Water Resources Association (NWRA). We appreciate our association with 
NWRA which provides the opportunity to work collectively on water 
issues of importance throughout the west such as S. 3385. We also 
support the Bureau of Reclamation's efforts to provide quality water 
supplies and delivery infrastructure throughout the west.
    Please let us know how we can assist further in moving S. 3385 
toward passage in the Senate and beyond.
                                 ______
                                 
            Statement of Roger Vis, Mayor, City of Hull, IA
    The City of Hull, as a member of the Lewis and Clark Regional Water 
System, would like to thank you for the introduction of S. 3385, the 
Authorized Rural Water Projects Act. Economic development is not 
possible without an adequate water supply and the City of Hull 
appreciates your efforts in securing funding to complete the seven 
Bureau of Reclamation's existing rural water projects.
    The 20 members and three states have pre-paid over $153 million, 
almost 100% of the non-federal cost share. Passage ofS. 3385 will 
greatly improve the ability of the federal government to fulfill its 
commitment.
    The City of Hull is the epitome of the kind of economic benefits a 
completed Lewis and Clark System can provide a community. In 2007, the 
City of Hull successfully recruited a cheese and whey facility to 
locate in Hull. The promise of a future secure water source (Lewis & 
Clark) was one of the major reasons the facility chose the City of 
Hull. The facility employs over 125 individuals and over 2.5M pounds of 
milk (300,000 gallons) are processed daily. Future expansion, including 
the addition of 45 jobs, is currently being discussed and the City of 
Hull is competing against other locations, including Canada, for the 
expansion. At the present time, the City would not be able to 
accommodate the future water needs of the expansion, and we are unable 
to afford the millions of dollars it would take to build the additional 
infrastructure needed.
    Again, thank you for your foresight in seeing the benefit of 
completing the existing rural water projects. Hull strongly urges 
Congress to pass S. 3385.
                                 ______
                                 
Joint Statement of Dennis Walstra, Mayor, and Murray Hulstein, Lewis & 
        Clark Vice-Chairman, and Sioux Center Utilities Manager
    The City of Sioux Center, Iowa, as members of the Lewis & Clark 
Regional Water System would like to thank you for introduction of S. 
3385, the Authorized Rural Water Projects Act. We appreciate your 
efforts to have a bill passed which complete the seven Bureau of 
Reclamation rural water projects, which are unable to be completed due 
to lack of federal funding. Sioux Center realizes that these projects 
are important to their local economies, providing jobs, and allowing 
for economic development. As you know, completing these projects as 
quickly as possible also avoids inflationary increases and allows us to 
meet our growing needs.
    As part of the Senate Energy and Natural Resources Committee 
hearing on July 31 regarding S. 3385, please accept this letter as part 
of the testimony in strong support of S. 3385. Lewis & Clarks executive 
director, Troy Larson, indicated in his testimony that the 20 members 
and three states have pre-paid over $153 million which represents 99.7% 
of the non-federal cost share. These payments indicate our commitment 
to this project and we respectfully request the federal government 
fulfill its commitment of its cost share as soon as possible. We 
believe passage of S. 3385 will enhance the federal government's 
ability to meet its commitment.
    The recent drought in the area has magnified the need for Lewis & 
Clark. On July 30, 11 of the 20 Lewis & Clark members began receiving 
water. Almost immediately, members were taking much more water than 
anticipated due to heavy demand and decreasing supplies. Those of us 
not connected to Lewis & Clark also need this critical source. We are 
forced to invest in infrastructure which would not be needed should 
Lewis & Clark be completed.
    Sioux Center sees Lewis & Clark as a critical component to our 
quality of life and to economic development in our area. We also see 
Lewis & Clark as a critical contributory towards the economic viability 
of the tri-state region. Sioux Center strongly urges congress to pass 
S. 3385. Thank you again for introduction of this bill.
                                 ______
                                 
Statement of Scott Wynja, City Manager, City of Sheldon, and Lewis and 
                        Clark Board of Directors
    On behalf of the City of Sheldon, Iowa a member of the Lewis and 
Clark Regional Water System, thank you for your leadership on S. 3385, 
the Authorized Rural Water Projects Act. We applaud your efforts to 
complete the seven Bureau of Reclamation rural water projects that have 
been languishing for years due to the lack of federal funding. 
Completing these projects as quickly as possible will benefit the 
taxpayers by avoiding inflationary price increase, as well as realizing 
the economic development benefits of towns and rural water systems 
having enough water to attract and expand businesses and industries. 
Not to mention the quality oflife benefits by having a dependable 
source of high quality drinking water.
    As part of the Senate Energy & Natural Resources hearing on July 31 
regarding S. 3385, please accept this letter as part of the testimony 
in strong support of S. 3385. The City of Sheldon is a member of the 
Lewis and Clark Regional Water System project. Other members of Iowa 
including Hull, Sioux Center, Sibley and Rock Rapids are also members 
of the system. They and the other members and three states have prepaid 
over $153 million, which represents 99.7 percent of the non-federal 
cost share. Eleven of the 20 Lewis & Clark members just began receiving 
water on July 30. However, because federal funding the last two years 
has not even kept up with inflation, under the current federal funding 
levels the project would never be completed, thereby leaving the 
members in Iowa high and dry. In the meantime, because of the delays 
these cities and rural water systems have had to spend money they did 
not plan to on infrastructure improvements and have missed out on many 
lost economic development opportunities.
    The City of Sheldon, Iowa strongly urges Congress to pass S. 3385. 
The sooner Lewis & Clark reaches northwest Iowa, the better. Thank you 
again for your leadership on this important legislation.

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