69–010 

Calendar No. 675 

110TH CONGRESS REPORT " ! SENATE 2d Session 110–323 

BUREAU OF RECLAMATION SITE SECURITY COSTS ACT 

OF 2007 

APRIL 10, 2008.—Ordered to be printed 

Mr. BINGAMAN, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R.1662] 

The Committee on Energy and Natural Resources, to which was 

referred the Act (H.R. 1662) to authorize the Secretary of the Interior to seek limited reimbursement for site security activities, and 

for other purposes, having considered the same, reports favorably 

thereon without amendment and recommends that the Act do pass. 

PURPOSE OF THE MEASURE

The purpose of H.R. 1662 is to amend the Reclamation Safety of 

Dams Act of 1978 to authorize improvements for the security of 

dams and other facilities. 

BACKGROUND AND NEED

In the aftermath of the terrorist attacks on September 11, 2001, 

the Bureau of Reclamation embarked on a program of site security 

measures at multi-purpose federal dams. These measures involved 

both facility fortifications and increased use of guards and patrols. 

Since implemented, there has been an ongoing issue related to 

whether Reclamation or the beneficiaries of Reclamation projects 

should pay for site security measures. 

Reclamation distinguishes security-related capital costs for facility fortifications from operation & maintenance (O&M) costs associated with increased guards and patrols. Since implementing its enhanced site security measures, Reclamation has treated its capital 

investments as nonreimbursable since the fortifications are responding to risks not anticipated when the projects were authorized and constructed. With respect to security-related O&M costs, 


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Reclamation initially classified these costs as non-reimbursable to 

allow water and power customers time to plan for increased costs 

in their budgets. Now, however, Reclamation views these costs as 

fully reimbursable based on project cost allocations. 

Notwithstanding Reclamation’s position, Congress subsequently 

intervened and limited Reclamation’s ability to seek reimbursement for security-related O&M costs. In FY 2005, Congress instructed Reclamation not to begin the reimbursement process. In 

FY 2006, at Congress’ request, Reclamation limited reimbursement 

to approximately 50% of overall O&M costs. In its FY 2007 budget 

request, Reclamation proposed reimbursement of $18.9 million by 

water and power customers of security-related O&M costs. H.R. 

1662 would resolve the issue of repayment for site security costs by 

expressly allocating specific costs for reimbursement while 

classifying other costs as non-reimbursable. 

LEGISLATIVE HISTORY

H.R. 1662 was introduced on March 23, 2007 by Representative 

Grace Napolitano and referred to the Committee on Natural Resources. Representatives Jim Costa, Barbara Cubin, Trent Franks, 

Rau ́l Grijalva, Doc Hastings, Wally Herger, Cathy McMorris Rodgers, George Radanovich, and Rick Renzi are co-sponsors. Under 

suspension of the rules, H.R. 1662 passed the House of Representatives on December 4, 2007, and was referred to the Committee on 

Energy and Natural Resources in the Senate. 

A companion measure, S. 1258, was introduced by Senator Cantwell on May 1, 2007, and referred to the Committee on Energy and 

Natural Resources. Senators Hatch, Wyden, Allard, and Smith are 

co-sponsors. The Subcommittee on Water and Power held a hearing 

on S. 1258 on July 26, 2007. (S. Hrg. 110–152.) At its business 

meeting on January 30, 2008, the Committee on Energy and Natural Resources ordered H.R. 1662 favorably reported. 

COMMITTEE RECOMMENDATION

The Committee on Energy and Natural Resources, in open business session on January 30, 2008, by voice vote of a quorum 

present, recommends that the Senate pass H.R. 1662. 

SECTION-BY-SECTION ANALYSIS

Section 1 provides the short title of the Act. 

Section 2 provides that the capital costs for physical fortifications 

to address security needs at Bureau of Reclamation facilities shall 

be non-reimbursable. 

Section 3(a) limits the Secretary of the Interior to allocating 

$18,900,000 annually (indexed for inflation) as site security-related 

reimbursable operation and maintenance costs under Reclamation 

law. 

Section 3(b) specifies how reimbursable site security costs allocated as part of the Central Valley Project of California shall be 

collected by the Secretary. 

Section 4(a) authorizes the Secretary to develop policies and procedures to provide for payment of reimbursable site security costs. 

Section 4(b) directs the Secretary, upon identifying the need for 

a site security measure, to provide project beneficiaries with writVerDate Aug 31 2005 05:57 Apr 12, 2008 Jkt 069010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR323.XXX SR323

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ten notice of the need and requirements associated with the measure. 

Section 4(c) requires the Secretary to consult with project beneficiaries regarding project-specific site security measures. 

Section 4(d) requires the Secretary to consider cost containment 

measures recommended by project beneficiaries. 

Section 4(e) requires the Secretary to report annually to Congress 

on current and future site security actions. 

Section 5 specifies that the level of project-specific Reclamation 

security costs that existed prior to September 11, 2001, shall remain reimbursable. 

COST AND BUDGETARY CONSIDERATIONS

The following estimate of costs of this measure has been provided 

by the Congressional Budget Office: 

H.R. 1662—Bureau of Reclamation Site Security Costs Act of 2007 

Since the terrorist attacks of September 11, 2001, the Bureau of 

Reclamation has enhanced security at its dams and associated facilities. The costs of those security measures fall into two general 

categories: capital costs, including improvements to physical infrastructure, and operation and maintenance (O&M) costs, such as increasing the number of guards and patrols at the dams and facilities. Under current law, entities that purchase water and hydroelectric power associated with the operation of those dams and facilities must reimburse the bureau for a portion of its O&M costs. 

H.R. 1662 would limit the total amount of security-related O&M 

costs that such entities would pay to $18.9 million a year, adjusted 

annually for inflation. The bureau expects to charge the entities no 

more than that amount, adjusted for inflation, over the next 10 

years under current law. Thus, CBO estimates that enacting the 

legislation would have no significant impact on the budget. 

H.R. 1662 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

impose no costs on state, local, or tribal governments. 

The CBO staff contact for this estimate is Tyler Kruzich. This estimate was approved by Teresa Gullo, Deputy Assistant Director 

for Budget Analysis. 

REGULATORY IMPACT EVALUATION

In compliance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee makes the following evaluation 

of the regulatory impact which would be incurred in carrying out 

H.R. 1662. The bill is not a regulatory measure in the sense of imposing Government-established standards or significant economic 

responsibilities on private individuals and businesses. 

No personal information would be collected in administering the 

program. Therefore, there would be no impact on personal privacy. 

Little, if any, additional paperwork would result from the enactment of H.R. 1662, as ordered reported. 


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CONGRESSIONALLY DIRECTED SPENDING

H.R. 1662, as reported, does not contain any congressionally directed spending items, limited tax benefits, or limited tariff benefits as defined in rule XLIV of the Standing Rules of the Senate. 

EXECUTIVE COMMUNICATIONS

The testimony provided by the Bureau of Reclamation at the 

Subcommittee hearing on July 26, 2007 on companion measure, S. 

1258 follows: 

STATEMENT OF LARRY TODD, DEPUTY COMMISSIONER, POL- ICY, ADMINISTRATION AND BUDGET, BUREAU OF REC- LAMATION, DEPARTMENT OF THE INTERIOR

Mr. Chairman and Members of the Subcommittee, I am 

Larry Todd, Deputy Commissioner of the Bureau of Reclamation. I am pleased to be here today to present the Department of the Interior’s views on S. 1258, legislation to 

amend the Reclamation Safety of Dams Act and redirect 

reimbursable costs for dam safety activities. The Department opposes S. 1258, as introduced. 

S. 1258 would make major changes to the process and 

revenues used by Reclamation to secure its facilities resulting in a loss of receipts to the Treasury. This proposed 

legislation addresses two components of Reclamation’s site 

security program: 1. capital investment (mainly facility fortification) and 2. operation and maintenance (O&M), which 

consists mainly of guards and patrol functions. Currently, 

Reclamation treats security-related capital investment as 

non-reimbursable costs, and security-related O&M expenses as project costs subject to reimbursement based on 

project cost allocation. S. 1258 would change this methodology, eliminating the distinction between capital investment and O&M costs so that Reclamation would be required to treat 85% of the capital investment and O&M security costs as non-reimbursable, while the remaining 15% 

would be recovered from the reimbursable project purposes. 

Reclamation understands that the impetus for this legislation is concern over increased security related costs incurred for all Federal facilities after September 11, 2001. 

However, our agency has been and remains committed to 

working with our customers and with Congress to ensure 

fair, consistent and efficient policies related to the treatment of these costs. The Department does not believe that 

the changes instituted under S. 1258 would be a positive 

step in this direction. 

As explained in reports submitted by Reclamation to 

Congress in May 2005 and February 2006, Reclamation 

distinguishes capital costs of security-related fortifications 

from security-related O&M costs. Since the beginning of 

increased security levels in fiscal year 2002, Reclamation 

has treated security-related capital investment as non-reimbursable. From fiscal year 2002 through the end of fiscal 

year 2007, for example, Reclamation will have funded over 


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$66 million in fortification costs, none of which has been 

passed on to customers. 

Treatment of post-9/11 O&M (guard and patrol) costs 

has been different, however. Early on, when security was 

increased at Reclamation facilities immediately after 9/11, 

Reclamation took the position that while these are clearly 

O&M costs, until a stable budget pattern emerged, and 

until customers had sufficient time to make the necessary 

adjustments to their planning and budgets, these costs 

should be non-reimbursable. Therefore, from FY 2002 

through FY 2004, Reclamation’s budget proposals called 

for post-9/11 security-related O&M costs to be treated as 

nonreimbursable. 

However, in its FY 2005 and all subsequent budget proposals, Reclamation returned to the pre-9/11 practice of 

treating security-related O&M costs as reimbursable by 

project allocation. Report language which accompanies the 

FY 2005 Energy and Water Development Appropriation, 

however, directed Reclamation not to begin reimbursement 

in FY 2005, and additionally, provide a report to Congress 

on the delineation of planned reimbursable costs. Later, 

Congress’ FY 2006 appropriations report language limited security-related O&M reimbursement to $10 million out of 

total costs of $20.9 million in FY 2006. 

Reclamation’s FY 2007 budget proposal anticipated total security-related O&M guard costs of $20.9 million. Of that 

amount, $2 million is allocated to non-reimbursable project 

purposes and requires appropriations. Reclamation anticipated full reimbursement of the remaining $18.9 million, 

of which approximately $11.6 million is in up-front funding 

not requiring appropriations, and approximately $7.3 million would be repaid to the Treasury and requires appropriations. However, because a Continuing Resolution in FY 

2007 left unanswered the reimbursement amounts for the 

current fiscal year, Reclamation has moved to collect $14.5 

million as a mid-point between the $10 million cap in FY 

2006 and the full $18.9 million we expect to be reimbursable in FY 2008. 

Under S. 1258, instead of the $18.9 million future annual reimbursement Reclamation currently anticipates, 

Reclamation would instead receive only 15% of roughly 

$33.1 million in total security-related O&M guard and fortification costs, or at most, about $5 million each year depending upon the structure of repayment. This would result in an additional financial burden to the United States 

of about $13.9 million per year in reduced reimbursement. 

Up-front funding would be reduced by approximately $9.7 

million annually and Reclamation would need additional 

appropriations in order to carry out planned security activities. 

Reclamation believes this legislation could bring unintended results for Reclamation water and power customers. While the change to 15% reimbursement of security-related O&M costs would benefit some customers, the 

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able security-related capital costs would work to the detriment of customers in projects where future capital fortification expenditures are planned. Water and power customers of projects whose security fortifications were lower 

in priority and therefore not completed prior to the bill’s 

enactment would be particularly disadvantaged. Furthermore, Reclamation would be required to collect these costs 

under multiple repayment contracts that could extend as 

long as 50 years. 

Indeed, what is less certain are the future costs for facility fortifications that Reclamation’s water and power customers would absorb as reimbursable. The total cost of internally-approved fortifications for FY 2007 and future 

years is $35.4 million ($78.8 million minus the $43.4 million that was spent through FY 2006), and this figure does 

not include potentially significant additional fortification 

activities still under study. Under S. 1258, 15% of these 

fortification costs would become reimbursable by customers. 

Reclamation has met with its customers frequently in 

the past several years on this issue, and we understand 

and share our contractors’ desire for stable, predictable security assessments. We recognize that certainty, accountability, and transparency are important in the financing of 

this program. However, we believe that the site security 

program is now sufficiently established, and the benefits to 

contractors is sufficiently clear, so that reimbursable costs 

for our customers are adequately quantified, fairly allocated and understood in the ratepaying community. 

Reclamation is interested in working with the subcommittee to address its customers’ concerns in the administration of the security program. However, S. 1258 does 

not provide a workable solution to address those concerns. 

Mr. Chairman, this concludes my testimony. I am pleased 

to answer any questions the subcommittee may have. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, the Committee notes that no changes in existing law are made by the bill H.R. 1662, as ordered reported. 

Æ 


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