[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
H.R. 3981, ACCELERATED REVENUE, REPAYMENT, AND SURFACE WATER STORAGE
ENHANCEMENT ACT; H.R. 3980, WATER SUPPLY PERMITTING COORDINATION ACT;
AND DISCUSSION DRAFT, TO AMEND THE SECURE WATER ACT OF 2009
=======================================================================
OVERSIGHT HEARING
before the
SUBCOMMITTEE ON WATER AND POWER
of the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
Wednesday, February 5, 2014
__________
Serial No. 113-60
__________
Printed for the use of the Committee on Natural Resources
Available via the World Wide Web: http://www.fdsys.gov
or
Committee address: http://naturalresources.house.gov
U.S. GOVERNMENT PUBLISHING OFFICE
86-620 WASHINGTON : 2015
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COMMITTEE ON NATURAL RESOURCES
DOC HASTINGS, WA, Chairman
PETER A. DeFAZIO, OR, Ranking Democratic Member
Don Young, AK Eni F. H. Faleomavaega, AS
Louie Gohmert, TX Frank Pallone, Jr., NJ
Rob Bishop, UT Grace F. Napolitano, CA
Doug Lamborn, CO Rush Holt, NJ
Robert J. Wittman, VA Rauul M. Grijalva, AZ
Paul C. Broun, GA Madeleine Z. Bordallo, GU
John Fleming, LA Jim Costa, CA
Tom McClintock, CA Gregorio Kilili Camacho Sablan,
Glenn Thompson, PA CNMI
Cynthia M. Lummis, WY Niki Tsongas, MA
Dan Benishek, MI Pedro R. Pierluisi, PR
Jeff Duncan, SC Colleen W. Hanabusa, HI
Scott R. Tipton, CO Tony Caardenas, CA
Paul A. Gosar, AZ Steven A. Horsford, NV
Rauul R. Labrador, ID Jared Huffman, CA
Steve Southerland, II, FL Raul Ruiz, CA
Bill Flores, TX Carol Shea-Porter, NH
Jon Runyan, NJ Alan S. Lowenthal, CA
Markwayne Mullin, OK Joe Garcia, FL
Steve Daines, MT Matt Cartwright, PA
Kevin Cramer, ND Katherine M. Clark, MA
Doug LaMalfa, CA
Jason T. Smith, MO
Vance M. McAllister, LA
Bradley Byrne, AL
Todd Young, Chief of Staff
Lisa Pittman, Chief Legislative Counsel
Penny Dodge, Democratic Staff Director
David Watkins, Democratic Chief Counsel
------
SUBCOMMITTEE ON WATER AND POWER
TOM McCLINTOCK, CA, Chairman
GRACE F. NAPOLITANO, CA, Ranking Democratic Member
Cynthia M. Lummis, WY Jim Costa, CA
Scott R. Tipton, CO Jared Huffman, CA
Paul A. Gosar, AZ Tony Caardenas, CA
Rauul R. Labrador, ID Raul Ruiz, CA
Doug LaMalfa, CA Alan S. Lowenthal, CA
Jason T. Smith, MO Peter A. DeFazio, OR, ex officio
Bradley Byrne, AL
Doc Hastings, WA, ex officio
------
CONTENTS
----------
Page
Hearing held on Wednesday, February 5, 2014...................... 1
Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 5
Prepared statement of.................................... 7
McClintock, Hon. Tom, a Representative in Congress from the
State of California........................................ 2
Prepared statement of.................................... 3
Napolitano, Hon. Grace F., a Representative in Congress from
the State of California.................................... 4
Statement of Witnesses:
Ellis, Steve, Vice President, Taxpayers for Common Sense,
Washington, DC............................................. 16
Prepared statement on H.R. 3981 and Discussion Draft..... 19
Hurd, Chris, Circle G Farms, San Joaquin Valley Farmer and
Family Farm Alliance Board Member, Firebaugh, California... 22
Prepared statement on Discussion Draft................... 23
O'Toole, Patrick, President, Family Farm Alliance, Savery,
Wyoming.................................................... 8
Prepared statement on H.R. 3980.......................... 10
Somach, Stuart L., Attorney, Somach Simmons and Dunn,
Sacramento California...................................... 12
Prepared statement of H.R. 3981.......................... 14
Additional Material Submitted for the Record:
Bettner, Thaddeus, PE, General Manager, Glenn-Colusa
Irrigation District, Prepared Statement on H.R. 3981, H.R.
3980 and Discussion Draft.................................. 51
Bureau of Reclamation, Department of the Interior, Prepared
Statement on H.R. 3981, H.R. 3980 and Discussion Draft..... 41
LEGISLATIVE HEARING ON H.R. 3981, TO DIRECT THE SECRETARY OF THE
INTERIOR TO ALLOW FOR PREPAYMENT OF REPAYMENT CONTRACTS BETWEEN THE
UNITED STATES AND WATER USERS, TO PROVIDE SURFACE WATER STORAGE
ENHANCEMENT, AND FOR OTHER PURPOSES. ``ACCELERATED REVENUE, REPAYMENT,
AND SURFACE WATER STORAGE ENHANCEMENT ACT''; H.R. 3980, TO AUTHORIZE
THE SECRETARY OF THE INTERIOR TO COORDINATE FEDERAL AND STATE
PERMITTING PROCESSES RELATED TO THE CONSTRUCTION OF NEW SURFACE WATER
STORAGE PROJECTS ON LANDS UNDER THE JURISDICTION OF THE SECRETARY OF
THE INTERIOR AND THE SECRETARY OF AGRICULTURE AND TO DESIGNATE THE
BUREAU OF RECLAMATION AS THE LEAD AGENCY FOR PERMIT PROCESSING, AND FOR
OTHER PURPOSES. ``WATER SUPPLY PERMITTING COORDINATION ACT''; AND
DISCUSSION DRAFT, TO AMEND THE SECURE WATER ACT OF 2009 TO AUTHORIZE
THE SECRETARY OF THE INTERIOR TO IMPLEMENT A SURFACE WATER STORAGE
ENHANCEMENT PROGRAM, AND FOR OTHER PURPOSES.
----------
Wednesday, February 5, 2014
U.S. House of Representatives
Subcommittee on Water and Power
Committee on Natural Resources
Washington, DC
----------
The subcommittee met, pursuant to notice, at 10:01 a.m., in
room 1324, Longworth House Office Building, Hon. Tom McClintock
[Chairman of the subcommittee] presiding.
Present: Representatives McClintock, Lummis, Tipton,
Mullin, LaMalfa, Hastings, Napolitano, Costa, and Huffman.
Mr. McClintock. The subcommittee will come to order. The
Chair notes the presence of a quorum, which, under committee
rule 3(e), is two Members.
STATEMENT OF THE HON. TOM McCLINTOCK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. McClintock. The Subcommittee on Water and Power has
taken a great deal of testimony on what needs to be done to
break down the barriers that have stopped serious development
of new water storage. And this hearing begins the process of
distilling that testimony into practical legislation. We have
two bills and one discussion draft today to begin that process.
Droughts are not preventable. But suffering from droughts
is preventable. Water is abundant, but it is unevenly
distributed over time and space. We build dams to take water
from wet years so that it is available in dry ones, and we
build aqueducts to move water from wet areas to dry areas.
The poster child for California's failure to do so is the
Folsom Dam, the principal water storage for Sacramento and its
suburbs. One million acre-feet when full, it is now nearly
empty. Up-river from Folsom is the site of the Auburn Dam.
Half-built in the 1970s, and then abandoned in the first Jerry
Brown administration, it would have provided 2.3 million acre-
feet of additional storage. It would have generated 800
megawatts of clean and inexpensive electricity for the region
at a time when we are spending billions of dollars for levees
in the Sacramento Delta to protect against a 200-year flood.
Auburn, by itself, would have provided protection against a
400-year flood. That dam, by itself, could have stored enough
water to fill Folsom Lake nearly 2\1/2\ times.
Well, the first bill before us today, offered by Chairman
Hastings, should be a no-brainer. It simply allows for the
early payment of water contracts between water districts and
the Bureau of Reclamation in the same manner as one would
prepay a home loan. The cash-strapped Federal Treasury benefits
by an immediate infusion of cash, and the local districts are
relieved of long-term interest costs and the attendant
paperwork requirements. Right now, any district that wants to
do so must come to Congress. And, over the past decade, five
pre-payment bills have been signed into law for water districts
in Nevada, Utah, Idaho, Oregon, and California. Chairman
Hastings' legislation proposes to standardize this bipartisan
practice.
Second, I am pleased to join Congresswoman Cynthia Lummis
to present H.R. 3980, the Water Supply Permitting Coordination
Act. It comes from exhaustive testimony we took last year
concerning the cost-prohibitive and time-consuming duplication
of regulations and requirements by overlapping Federal agencies
when a district is trying to construct new water storage.
Under current law, districts must navigate a convoluted
permitting process for the construction of new storage, in
which a host of Federal agencies carry out a dizzying array for
permits, decisions, and approvals, each just disjointed from
the other, despite the fact that they are studying the same
project in the same location, and trying to evaluate the same
data.
To address this senseless bureaucracy, H.R. 3980 would put
in place a framework in which Federal agencies with permitting
responsibilities for the construction of new water storage must
work together, coordinate their schedules, share data and
technical materials, and make their findings publicly
available. The end result would be fewer delays, more efficient
use of taxpayer dollars, and, ultimately, more abundant water
supplies.
Finally, the subcommittee will consider a discussion draft
text offered by Chairman Hastings that would create a surface
water storage enhancement program for the construction of new
storage facilities and augmentation to existing facilities. The
dedicated revolving account created by this program is in
keeping with the Beneficiary Pays principle, and will, for the
first time in a long time, recommit the Bureau of Reclamation
to its core mission of providing abundant water supplies for
multiple use.
These bills are intended to advance the theory that we can
once again return to the policy of abundance. More water
storage equals more water for a plethora of beneficiaries,
including the environment. I am pleased to welcome our
witnesses here today from the Family Farm Alliance, who will
speak to this urgent need, and have been instrumental in
providing input for these bills.
For years, we have been told that water conservation is the
answer to our problems. Well, water conservation is critically
important in managing a major drought, but it does not add to
supply. What we are now discovering is that, by confusing
conservation with supply, we have no way to cope with a major
drought. If this current crisis teaches us anything, it must be
that there is no substitute for adding supply. And these bills
begin to restore this process for a new generation that is
sadder and wiser for the mistakes of their predecessors.
[The prepared statement of Mr. McClintock follows:]
Prepared Statement of the Honorable Tom McClintock, Chairman,
Subcommittee on Water and Power
The Subcommittee on Water and Power has taken a great deal of
testimony on what needs to be done to break down the barriers that have
stopped serious development of new water storage, and this hearing
begins the process of distilling that testimony into practical
legislation. We have two bills and one discussion draft today to begin
that process.
Droughts are not preventable. But suffering from droughts is
preventable. Water is abundant, but it is unevenly distributed over
time and space. We build dams to take water from wet years so that it
is available in dry ones, and we build aqueducts to move water from wet
areas to dry areas.
The poster child for California's failure to do so is the Folsom
Dam, the principle water storage for Sacramento and its suburbs. One
million acre feet when full--it is now nearly empty. Up-river from
Folsom is the site of the Auburn Dam. Half-built in the 1970s and then
abandoned in the first Jerry Brown administration, it would have
provided 2.3 million acre feet of storage. It would have generated 800
megawatts of clean and inexpensive electricity for the region. At a
time when we are spending billions of dollars for levees in the
Sacramento Delta to protect against a 200-year flood, Auburn by itself
would have provided protection against a 400-year flood.
That dam by itself could have stored enough water to fill Folsom
Lake nearly 2\1/2\ times.
The first bill before us today offered by Chairman Hastings should
be a no-brainer. It simply allows for the early payment of water
contracts between water districts and the Bureau of Reclamation in the
same manner as one would pre-pay a home loan. The cash-strapped Federal
treasury benefits by an immediate infusion of cash and the local
districts are relieved of long-term interest costs and the attendant
paperwork requirements. Right now, any district that wants to do so
must come to Congress, and over the past decade, five prepayment bills
have been signed into law for water districts in Nevada, Utah, Idaho,
Oregon and California.
Chairman Hasting's legislation proposes to standardize this bi-
partisan practice.
I am pleased to join Congresswoman Cynthia Lummis to present H.R.
3980, the Water Supply Permitting Coordination Act.
It comes from exhaustive testimony we took last year concerning the
cost-prohibitive and time consuming duplication of regulations and
requirements by overlapping Federal agencies when a district is trying
to construct new water storage.
Under current law, districts must navigate a convoluted permitting
process for the construction of new storage in which a host of Federal
agencies require a dizzying array or permits, decisions, and
approvals--each disjointed from the other--despite the fact that they
are studying the same project, in the same location, and trying to
evaluate the same data.
To address this senseless bureaucracy, H.R. 3980 would put in place
a framework in which Federal agencies with permitting responsibilities
for the construction of new surface water storage projects must work
together, coordinate their schedules, share data and technical
materials, and make their findings publicly available. The end result
would be fewer delays, more efficient use of taxpayer dollars, and
ultimately, more abundant water supplies.
Finally, the subcommittee will consider discussion draft text
offered by Chairman Hastings that would create a surface water storage
enhancement program for the construction of new storage facilities and
augmentation to additional facilities. The dedicated revolving account
created by this program is in keeping with the beneficiary-pays
principle, and will, for the first time in many years, recommit the
Bureau of Reclamation to its core mission of providing abundant water
supplies for multiple-use.
These bills are intended to advance the long-neglected objective of
returning to the policy of abundance. More water storage equals more
water for a plethora of beneficiaries, including the environment.
I'm pleased to welcome our witnesses here today from the Family
Farm Alliance who will speak of this urgent need and have been
instrumental in providing input on these bills.
For years, we've been told that water conservation is the answer to
our problems. Water conservation is critically important in managing a
major drought--but it does not add supply. What we are now discovering
is that by exhausting conservation measures in wet years, we have no
latitude to manage a drought when it comes. If this current crisis
teaches us anything, it must be that there is no substitute for adding
supply, and these bills begin to restore this process for a new
generation that is sadder and wiser for the mistakes of their
predecessors.
______
Mr. McClintock. With that, I yield to the gentlelady from
California, the Ranking Member Mrs. Napolitano, for 5 minutes.
STATEMENT OF THE HON. GRACE F. NAPOLITANO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mrs. Napolitano. Thank you, Mr. Chairman, and I welcome our
first hearing of the new year.
The bills we are hearing today have a common theme:
increasing our water supplies, to which we have no objection.
And we welcome this hearing. The legislation being vetted,
however, only looks at one side of the water issue: surface
storage. It doesn't look at ground water, it doesn't look at
efficiencies, water recycling, desalination, education, et
cetera.
It also attempts to pay for new storage through pre-
payment, a debt owed to the government on projects built over
50 years ago. Even if this process is allowed, it is unclear
that they would take the option to pre-pay their debt, given
the 40 years interest-free--I would say subsidized--free
repayment period.
If we are looking for solutions to our water problems, and
for certainty for our communities, then we must have full
consideration of all our options, including underground
storage, aquifer, or other alternatives like conservation,
desalination, recycling, et cetera. These bills do not account
for any other option, except for surface storage.
The Majority want to argue that the environmental
regulations have hindered construction of new facilities in the
West. There is a bigger issue here, from moving from study to
construction, and that is cost. Even if you move from study to
construction, how can you guarantee these communities the
billions of Federal appropriated dollars, given our budget
deficits, that is necessary for construction? The prepayment
legislation seeks to solve this. But, again, it is still
unclear whether there is enough interest from irrigators to
offset the $2 billion this legislation allows.
The water solutions presented today will not create new
water for decades to come, and the cost will be exorbitant.
Water managers have already realized they cannot wait to
compete for the limited Federal dollars, or the 10 to 20 years
or more it will take to construct a facility before one drop of
water is realized. They need to solve their problems now.
For some communities that include surface storage, like
Contra Costa District, Los Vaqueros Project, or the self-funded
Metropolitan Water District's Diamond Valley Reservoir. Los
Vaqueros' 60,000-feet construction is expected to be completed
this spring, on time, on budget, and no litigation. Water
managers are looking for projects that have limited Federal
involvement that can produce water, I mean real water, wet
water, on a faster scale.
This can also be seen in 53 water recycling projects
Congress has authorized, and since 1992 has created 680,000
acre-feet of water in California alone. That means title 16,
gentlemen.
New storage, when appropriate, is not impossible.
California is at 5.6 million acre-feet in new ground water and
surface water storage in the last 20 years. In this
environment, not all of the water needs in the West can or
should be met by new storage, dams or bigger dams. New storage
is not always the right answer or the only answer. And the same
can be said of water recycling. We must learn to conserve,
educate, store, and do all of the above.
If we were serious about creating more water, we should not
discriminate between one solution or another. All solutions
include recycling, the conservation, desalination, the brackish
water, education of our general public, et cetera. They should
all be on the table. We must review all methodology, all new
technology, anything we can, and work with all parties to
achieve a goal of more real, wet water.
Thank you, Mr. Chairman, and I yield back.
Mr. McClintock. The Chair is now pleased to recognize the
distinguished Chairman of the Natural Resources Committee, Doc
Hastings of Washington State.
STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
Mr. Hastings. Thank you very much, Mr. Chairman. And,
again, thank you for the courtesy of allowing me to testify at
this subcommittee hearing.
Today's hearing represents a major step in advancing the
need for new water storage. For generations, legendary
facilities like the Grand Coulee Dam in my State, have
impounded water for multiple uses. Deserts became the most
productive farm land in the world. Communities, rural and urban
alike, sprouted up because of abundant water supplies and
renewable hydropower. Cold water flows for downstream fisheries
became year-round, rather than seasonal. Ravaging flood cycles
were tamed, and water-based recreation allowed boats to enjoy
all of our western waters. These are just some of the benefits
of water storage.
I have often talked about how existing facilities have been
undermined by litigious groups, judicial activism,
environmental regulations not scientifically justified, and
bureaucracy run amok. That remains today. One can only look at
what is happening in California. When I lived in California as
a young man, the Central Valley and the State water projects
played a major role in making California the Golden State.
Now, the State is in the midst of an unparalleled and
emergency drought situation. The lack of rainfall has caused
this calamity, but it has been exacerbated by Federal
regulatory actions that place the needs of a 3-inch fish over
people. This is not only heartbreaking for those about to lose
their livelihoods, but it is also an avoidable travesty. And if
it can happen in California, it can happen anywhere, even in my
Pacific Northwest.
In my Central Washington State district, the Yakima Valley
is the poster child for needing new surface storage.
Conservation plays an important part in meeting our water needs
in the valley, but farmers, communities, and environmental
needs demand that we create new water. And, time and again, the
numbers alone dictate the need for new storage. From day one, I
have supported efforts to build new storage in the Yakima
Basin, and I commend and continue to urge forward the current
integrated plan that is currently underway.
However, for new and expanded storage reservoirs to become
a reality in the Yakima Valley and elsewhere in the West, there
must be a sea-change in how the Federal Government reacts to
new storage. The current paralysis-by-analysis approach must be
streamlined. And we, as policymakers, must find innovative ways
to reinvest in storage, while adhering to the Beneficiaries Pay
Rule.
That is exactly what these bills before us do today. I have
taken the lead in sponsoring two of these positive solutions.
The first would provide for a voluntary early repayment for
existing water Federal obligations--or Federal water
obligations by water users, and the investment of these funds
into a new account to be used explicitly for new and expanded
water storage capacity.
The second is a discussion draft that would dedicate a
portion of existing authorized funding for the Bureau of
Reclamation into a dedicated account for more storage. These
bills complement each other, and both are aimed at the same
goal: identifying new sources of funds for new storage. In
these fiscal times, it is going to require creativity and new
ideas to achieve water solution. This is true not just for more
storage, but also for the corresponding commitments to habitat,
efficiency, fisheries, and other identified priorities.
And the third bill, offered by the subcommittee Chairman,
Mr. McClintock, provides another new common-sense solution to
help solve the challenge of new water storage by streamlining
Federal red tape and empowering the Bureau of Reclamation to
facilitate timely completion of regulatory requirements.
Now, I realize that there are many who have reservations
about these bills, and they are entitled, of course, to have
their views. But simply saying no, and believing that the
status quo--that is simply not the answer to meet our growing
needs of the West.
Without a doubt, conservation of our existing resources is
a must. But it is not a panacea. We cannot conserve our way to
prosperity when we lose water to the ocean and don't have any
water to recycle. We need to create more water storage capacity
in the Yakima River Basin, California, and other areas
throughout the West, not divvy up every increasingly scarce
resources in times of changing weather patterns and growing
human and species needs.
We have the power to continue our progress, and that is the
purpose of these three bills, to further build upon the premise
of capturing water in wet times to provide for dry times.
[The prepared statement of Mr. Hastings follows:]
Prepared Statement of The Honorable Doc Hastings, a Representative in
Congress From the State of Washington
Thank you, Chairman McClintock, for holding this important hearing.
Today's hearing represents a major step in advancing the need for
new water storage.
For generations, legendary facilities like the Grand Coulee Dam
impounded water for multiple uses. Deserts became the most productive
farmland in the world. Communities--rural and urban alike--sprouted up
because of abundant water supplies and renewable hydropower. Cold water
flows for downstream fisheries became year-round rather than seasonal.
Ravaging flood cycles were tamed and water-based recreation allowed
boats of all kinds to enjoy our western waters. These are just some of
the benefits.
I've often talked about how our existing facilities have been
undermined by litigious groups, judicial activism, environmental
regulations not scientifically justified and bureaucracy run amok.
That remains today. One can only look to what's happening in
California. When I lived in California as a young man, the Central
Valley and State Water Projects played a major role in making
California the Golden State. Now, the State is in the midst of an
unparalleled and emergency drought situation. The lack of rainfall has
caused this calamity but it has been exacerbated by Federal regulatory
actions that place the needs of a 3-inch fish over people.
This is not only heartbreaking for those about to lose their
livelihoods, but it's also an avoidable travesty. And, if it can happen
in California, it can happen anywhere--even in the Pacific Northwest.
In my Central Washington State district, the Yakima Valley is a
poster child for needing new surface storage. Conservation plays an
important part of meeting water needs in the Valley, but farmers,
communities and environmental needs demand that we create new water.
And, time and again, the numbers alone dictate the need for new
storage. I commend the efforts underway in the region to move forward
on new storage.
However, for new and expanded storage reservoirs to become a
reality in the Yakima Valley and elsewhere in the West, there must a
sea-change in how the Federal Government reacts to new storage. The
current paralysis-by-analysis approach must be streamlined and we, as
policymakers, must find innovative ways to re-invest in storage while
adhering to the ``beneficiaries pay'' rule. That's exactly what these
bills before us do today.
Without a doubt, conservation of our existing resources is a must,
but it's not a panacea. We cannot conserve our way to prosperity when
we lose water to the ocean or don't have any water to recycle. We need
to create more water supplies, not divvy up ever-increasingly scarce
resources in times of changing weather patterns and growing human and
species needs.
I realize some may have reservations about these bills and they are
entitled to their views. But, ``No'' and believing in the status quo
are not answers to meet the growing needs of the West.
We have the power to continue our progress and that's the purpose
of these bills--to further build upon the premise of capturing water in
wet times to provide for dry times.
Thank you.
______
Mr. Hastings. With that, Mr. Chairman, I thank you for the
courtesy, and yield back.
Mr. McClintock. Good, thank you. If there are no other
opening statements by Members, we will move right to the
testimony. I think all of you have been before the subcommittee
before, you know how the lighting system works, and you know
that your testimony in full will be printed in the record, and
that you are limited to 5 minutes, as timed by the lights.
And now I would like to introduce the gentlelady from
Wyoming, Mrs. Lummis, to introduce our first witness.
Mrs. Lummis. Thank you, Mr. Chairman. It is very much my
pleasure to welcome Pat O'Toole from Savery, Wyoming, to the
hearing today. Before the hearing, Pat and I were visiting, and
he said, ``Do you know that you served in the Wyoming
legislature with my father-in-law, George Salisbury and/or me
for 16 years?'' And it was--Pat became a father and I became a
mother within just a few days of each other in 1985, when we
were in the Wyoming legislature together. And, of course, our
children are now adults, and we are very proud of them.
And I can tell you that George Salisbury, Pat's father-in-
law and I, and Pat and I, since the 1970s, have been working on
water issues, and working arm in arm and hand in hand. And what
is so wonderful about States and families is George Salisbury
and Pat O'Toole are devout Democrats. And, of course, I am a
devout Republican. Water transcends partisan politics, it
transcends regions, it transcends the kinds of issues that
divide us here in Congress.
So, I am a little surprised to hear a hearing, like, on
water, of all things, this precious, important resource that
starts on a bit of a partisan tone. Water should not be a
partisan issue. And I am so proud to have Pat here today. He
has worked on enormously important issues involving the
Colorado River drainage his entire adult life in a practical,
pragmatic, smart way. His input and that of the Family Farm
Alliance has aided our efforts to draft water storage
legislation, and I look forward to hearing his testimony.
Welcome, Pat.
STATEMENT OF PATRICK O'TOOLE, PRESIDENT, FAMILY FARM ALLIANCE,
SAVERY, WYOMING
Mr. O'Toole. Thank you, Mrs. Lummis and Chairman McClintock
and Ranking Member Napolitano. It is really a pleasure for me
to be here. This committee has been very friendly to the Family
Farm Alliance and to us working together for many years. And it
is so exciting to see this bill as an opportunity to look at
what we have all experienced, as ranchers and farmers.
I will tell you that part of the motivation right now for
me being in DC--not only this hearing, but many of my friends
from California are here--the Family Farm Alliance has a
monthly conference call and an annual meeting. And in all those
years that I have been involved, I have never felt the raw
emotion that I feel now for my good friends from California.
And they are in dire straits. Because, in reality--and my own
personal experience reflects this--we really stopped doing the
infrastructure and the planning for America for a couple or
three decades, and it is time to reinvigorate that process.
It is, in some ways--I talked to my wife this morning, it
is 18 below, we have some snow on the Upper Colorado River. And
yet, when I see the pictures of the grazing lands and the
farmlands in California--I took a tour last fall of the Central
Valley and the San Francisco Bay area. I am looking at the kind
of planning that needs to happen to make not just California,
but all of the West, the reservoir of rural growth that it has
always been.
I serve on several different boards. One is called AGree,
and it is an 8-year process of looking at our food supply. The
fact that we have to almost double our food supply over the
next 40 years is never going to go away. We recognize that the
numbers are just so persuasive. And the American part of that
is crucial. And the ability to store water is crucial to that
process.
You know, my personal experience is that it took 14 years
to permit a project in our valley that was crucial to us. And
it was built in 2 years, and resulted in--in the 1990s, during
a drought--of late water coming to our ranchers and farmers so
that they could have late-season irrigation. But what it also
did is created fisheries that we now have taken a value that is
so beautiful and productive. And what we have found is a
balance in our watershed, working together in both the
conservation side and the production side. But the time it
takes to permit projects is unconscionable.
And so, the bill anticipates a process where the Federal
system will work together. And what I saw, personally, as a
member of the Wyoming legislature and a proponent of a project
in our valley is that multiple bites of the apple by the
Federal system took so much time that our project, which
initially was a 50,000 acre-foot project became a 25,000 acre-
foot project. It was half the size it needed to be the day it
was built. And we all know that. We are now working on a second
project with the Wyoming water development people to look at
the upper part of the valley.
And in our particular case, and our family's case, it is
going to benefit not only our irrigation, but our fishery. And
I think that there is a revolution going on in the West right
now. Watershed groups are forming everywhere through the Family
Farm Alliance, which represents irrigators from the 17 States.
It is just remarkable, how people are coming together in a very
non-partisan way that shows the balance of the future, and that
we realize that single-purpose dams aren't appropriate. We all
know that. But the Federal system hasn't moved fast enough to
take advantage of that opportunity, and I think this bill is a
great first step to begin that process.
And I will tell you that I am so proud my daughter, Meghan,
who is on our conservation district board, spoke to the
National Association of Conservation Districts the day before
yesterday in California, talking about how a watershed can come
together and do multiple things.
The ability to understand how important the storage
component is I have heard over and over and over again
throughout the West. Strategic, small storage is going to be
anticipated by every watershed that comes together to work
together. The process from the Federal system has to be able to
anticipate that. Because if we don't, the costs are
astronomical, in terms of 5 years, 10 years, 15 years from the
time of agreement to go forward.
And so, I welcome this bill, and the Family Farm Alliance
will be here to help you in any way to go forward. Thank you so
much.
[The prepared statement of Mr. O'Toole follows:]
Prepared Statement of Patrick O'Toole, President, Family Farm Alliance,
Savery, Wyoming
h.r. 3980--water supply permitting coordination act
Chairman McClintock, Ranking Member Napolitano and members of the
subcommittee:
Thank you for the opportunity to appear before you to discuss the
``Water Supply Permitting Coordination Act'', legislation that provides
a critical first step toward addressing current regulatory and
bureaucratic challenges that many times will delay or even halt the
development of new water supply enhancement projects in the Western
United States. My name is Patrick O'Toole, and I serve as the president
of the Family Farm Alliance. The Alliance advocates for family farmers,
ranchers, irrigation districts, and allied industries in 17 Western
States. The Alliance is focused on one mission--to ensure the
availability of reliable, affordable irrigation water supplies to
western farmers and ranchers.
My family operates a cattle, sheep and hay ranch in the Little
Snake River Valley on the Wyoming-Colorado border. I am a former member
of Wyoming's House of Representatives and I served on the Federal
Government's Western Water Policy Review Advisory Commission in the
late 1990s. I currently serve on the Advisory Committee for AGree, an
initiative that brings together a diverse group of interests to
transform U.S. food and agriculture policy so that we can meet the
challenges of the future. I also served for 2 years on a Blue Ribbon
Panel intended to provide leadership for a project to support the
development of the Natural Resource Conservation Service's [NRCS]
Program and Policy Statement as a part of the process mandated by the
Resource Conservation Act [RCA].
Probably most pertinent to the focus of today's hearing is my
personal experience in working with envisioning, designing, permitting,
and finally building new water storage projects in the West. I was
directly involved with one project that has already been built, and I
am currently working with government agencies, conservation groups, and
other stakeholder interests to advance another water storage project in
my home State of Wyoming.
Family Farm Alliance members rely on the traditional water and
power infrastructure built over the last century to deliver irrigation
water supplies vital to their farming operations. Our membership has
been advocating for new storage for over 20 years, and we have provided
specific recommendations to Congress and the White House on how to
streamline restrictive Federal regulations to help make these projects
happen. Water conservation and water transfers are important tools for
improving management of increasingly scarce water resources. However,
our members believe these demand-management actions must be balanced
with supply enhancement measures that provide the proper mix of
solutions for the varying specific circumstances in the West.
Regardless of cause, climate variability is one critical factor
that underscores the need to develop new water storage projects in the
Western United States. There are several reports \1\ that suggest
existing reservoirs will not be capable of safely accepting the
earlier, more intense snowmelt that has been predicted for many western
watersheds. A report released in 2006 by the State of California
predicted that climate change would result in a drastic drop in the
State's drinking and farm water supplies, as well as more frequent
winter flooding. The report suggested that warmer temperatures will
raise the snow level in California's mountains, producing a smaller
snowpack and more wintertime runoff. This means more floodwaters to
manage in winter, followed by less snowmelt to store behind dams for
cities, agriculture, and fish. Water resources experts in other parts
of the West also realize that new surface water storage projects may be
necessary to capture more snowmelt or more water from other sources.
---------------------------------------------------------------------------
\1\ Including: California Climate Change Center, 2006--Our Changing
Climate--Assessing the Risks to California, Summary Report. Tanaka et
al. 2007, Climate Warming and Water Management Adaptation for
California. Department of Civil and Environmental Engineering,
Department of Agricultural and Resource Economics, University of
California, Davis. May 3, 2007 Testimony Submitted on Behalf of The
Western Governors' Association to U.S. House Committee on Science and
Technology.
---------------------------------------------------------------------------
Some western water managers believe there will likely be a ``rush''
to re-operate existing multi-purpose water storage projects to restore
some of the lost flood protection resulting from the changed hydrology
associated with climate change. These projects were designed to provide
a certain level of flood protection benefits that will be reduced
because of more ``rain-induced flood'' events. There will be a call to
reduce carryover storage and to operate the reservoirs with more flood
control space and less storage space. If this is done, it will even
further reduce the availability and reliability of agricultural and
urban water supplies.
Further, many water users are located upstream of existing
reservoirs. These users must then rely on direct or natural flows that
are primarily fueled by snowmelt. In the Rocky Mountain West, snowmelt
traditionally occurs over several months during the onset of the
irrigation season, and thus the snowpack can be referred to as a type
of water storage. Since conveyance systems are never 100 percent
efficient, water is diverted, conveyed and spread on the land in excess
of the net irrigation demand. This surplus returns to the stream and
recharges groundwater aquifers, which augments water supplies for all
users located downstream from the original diversion. It also supports
valuable habitat used by migrating waterfowl. If more runoff were to
occur during warm cycles in winter before the onset of the irrigation
season, this not only would impact water supply availability to these
producers by decreasing the storage capacity usually provided by the
tempered melting of the snowpack, but would also impact the utility
associated with the return flows from their irrigation practices. As
the snowpack is reduced by early melting, this reduced storage capacity
must be replaced by new surface water storage just to stay on par with
our currently available water supplies.
As you are all aware, actually developing new storage projects is
much easier said than done. I testified before this subcommittee 2
years ago about the permitting challenges I encountered in building the
Little Snake Supplemental Irrigation Supply Project (High Savery
Project) in Wyoming. That project was built in less than 2 years, but
took more than 14 years to permit. My experience with the High Savery
Project showed me that cooperative efforts are important for moving
projects through the National Environmental Policy Act [NEPA] and other
permitting processes. On the High Savery Project, the lead Federal
agency wasted a great deal of time making decisions on the project and
at times seemed unable to make decisions. These delays not only
postponed the project, they resulted in wasted time and money. I
believe that State agencies (in my case, the Wyoming Water Development
Commission, or WWDC) and local project sponsors should become
cooperating agencies in the NEPA process if possible and if not, should
be allowed to serve on the project NEPA interdisciplinary team. The
bill provides for inclusion of States, at the State's discretion, at
sec. 3(c). We believe the effect of this provision would be to provide
equal footing for State agencies with all Federal agencies, including
contributions to and evaluation of the unified environmental document
(which includes NEPA) at sec. 3(b)(4).
Establishing working relationships with the agencies involved in
the NEPA process and permitting is important to keep projects on
schedule and to avoid costly delays and disagreements. It is impossible
to eliminate all problems associated with permitting dam and reservoir
projects, but good cooperation and communications between agencies and
groups, with an understanding of each participant's expectations, will
help in problem resolution. The primary reason the High Savery Dam was
permitted and constructed is the persistence and perseverance of the
Savery-Little Snake Water Conservancy District and the residents of the
valley. The sponsor's and the State's staying power prevailed in the
end.
Clearly, the existing procedures for developing additional water
supplies need to be revised to make project approval less burdensome.
By the time project applicants approach Federal agencies for permits to
construct multi-million dollar projects; they have already invested
extensive resources toward analyzing project alternatives to determine
which project is best suited to their budgetary constraints. However,
current procedure dictates that Federal agencies formulate another list
of project alternatives which the applicant must assess, comparing
potential impacts with the preferred alternative. These alternatives
often conflict with State law. We appreciate that this subcommittee had
explored opportunities to expedite this process and reduce the costs to
the project applicant.
For these reasons, the Family Farm Alliance supports the ``Water
Supply Permitting Coordination Act, which authorizes the Secretary of
the Interior to coordinate Federal permitting processes related to the
construction of new surface water storage projects on Department of the
Interior and Department of Agriculture lands and to designate the
Bureau of Reclamation as the lead agency for permit processing. This
``one-stop shop'' bill is a concept we have long advocated for. We
support the current bill, and appreciate the provisions in sec. 5(a)
that ensure the ``cooperating'' Federal agencies, some with very
different mission statements from the Bureau of Reclamation, must
actually buy into the process and work with the lead agency to
accomplish the goals and purpose of the legislation by directing strict
adherence to the project schedule established by the lead agency
(Reclamation), including the coordination of all Federal agency reviews
under sec. 4(a)(3). The bill, in sec. 3(a) also provides broad
authority and responsibility to the lead Federal agency to coordinate
all Federal reviews related to a project. We believe this definition
includes Fish and Wildlife Service responsibilities under the
Endangered Species Act [ESA]. Under this definition, all facets of an
ESA review would be included (biological assessments, incidental take
statements, and section 10 permits, and likely section 7 consultations
as well). We ask that additional clarity may be provided on inclusion
of ESA related processes by adding the word ``consultation'' to the
bill language.
Another concern relates to the high costs of environmental review.
These types of reviews are expensive and often can be beyond the reach
of most water associations. For example, the State of Wyoming via the
WWDC would likely become a cooperating agency under this bill. The WWDC
typically conducts many environmental, hydrologic feasibility studies/
analyses to make certain that the project being studied has a good
chance of successfully navigating the NEPA/permitting process. We
recommend that provisions be made within the bill whereby Reclamation
accepts sound scientific/technical studies for review whenever
submitted by the applicant. These analyses could be incorporated in
Reclamation's review and subsequently reduce review time and costs when
complying with NEPA and other Federal environmental law/regulations.
Finally, we recommend that the bill include language with specific
reference to non-Federal State and local projects that could be
integrated with the operation of federally owned facilities. We want to
ensure Reclamation is the lead agency in the case of permitting a non-
federally built storage project that has a direct Federal nexus with a
Reclamation project--i.e. Sites Reservoir (California)--where it will
be integrated into the Central Valley Project operations but (as
proposed by the local Joint Power Authority) remain a non-federally
developed and owned facility.
The Family Farm Alliance will continue to work with Congress and
other interested parties to build a consensus for improving the Federal
regulatory and permitting process. A major reason the Alliance
continues to push for improved water storage and conveyance
infrastructure is not to support continued expansion of agricultural
water demand (which is NOT happening in most places), but to mitigate
for the water that has been reallocated away from agriculture toward
growing urban, power, environmental and recreational demands in recent
decades. If we don't find a way to restore water supply reliability for
western irrigated agriculture through a combination of new
infrastructure, other supply enhancement efforts, and demand
management--our country's ability to feed and clothe itself and the
world will be jeopardized. Thank you again for this opportunity to
testify before the subcommittee, and I stand ready to answer any
questions you may have.
______
Mr. McClintock. The Chair is pleased to recognize Mr.
Stuart Somach, Attorney at Somach, Simmons and Dunn, based in
Sacramento, California.
Welcome back.
STATEMENT OF STUART L. SOMACH, ATTORNEY, SOMACH, SIMMONS, AND
DUNN, SACRAMENTO, CALIFORNIA
Mr. Somach. Thank you, Mr. Chairman and Mrs. Napolitano,
members of the committee. I apologize for my voice; I had some
vocal chord surgery about 2 weeks ago, and it just takes time
to heal. So I hope you can hear me as I address you.
My law practice focuses on water and environmental law, and
in particular, it focuses on reclamation law, and always has. I
have been practicing for about 35 years, and I practice in
California, Nevada, Oregon, Arizona. I have represented the
State of Arizona, and I currently represent the State of Texas,
all on matters related to reclamation and reclamation law.
I have reviewed all the legislation, and I think all of it
is good, and I think it is appropriate, and I think that, in
some form, that type of legislation needs to move forward.
I actually, parenthetically, noted Mrs. Napolitano's
statement about Los Vaqueros Reservoir. That construction is
actually on a second phase of the reservoir enlargement. I did
all of the environmental permitting, the water rights, I
negotiated the reclamation contracts associated with Los
Vaqueros, and I agree that is a perfect example of the kind of
project that can be done and can move forward. I do remember,
however, that funding of that project was a significant issue.
The first phase was funded primarily through bonds. Subsequent
phases have also included bond money and also money that came
from the Federal Government in the context of CALFED monies.
And I think that the bill that I am most interested in
right now, which is Mr. Hastings' H.R. 3981, has a provision, I
think, that will assist in what I believe to be one of the most
significant impediments to single-purpose projects funded
locally, and that is, quite frankly, the significant problems
with the cost of funding that, unlike Metropolitan, smaller
districts, particularly in the North, don't have the kind of
base that will allow for the type of rates that could repay
those types of loans. So that the alternative to having the
Federal Government or the State government come in and pay for
these facilities is to have some kind of a loan program at
lower, perhaps, interest rates in order to facilitate the
construction of those projects while still allowing repayment.
The early repayment provisions of H.R. 3981 I will tell you
I have been personally interested in since I represented the
Bureau of Reclamation in the late 1970s. It always seemed to me
peculiar that there was no provision for early repayment. When
I mentioned to my wife that I was going to be testifying here,
and what I was going to be testifying to, she--and the Chairman
mentioned the no-brainer quality of the early repayment
provision--she was just astounded when I told her that,
actually, you can't repay Reclamation loans. And her view--my
view, quite frankly--is that early repaying a non-interest loan
to the Federal Government has got to be a good deal. And
critics of the so-called subsidy--and I don't want to get into
that right now--but the easiest way to eliminate the so-called
subsidy is to have people early repay.
And people will early repay. And, in fact, there is a
history of that. And I note in my written testimony that I was
very much involved in what became the Southern Oregon Bureau of
Reclamation Repayment Act of 2005, and that came out of the set
of facts that it was not unique to southern Oregon. It was a
situation where one of my clients wanted to go public, and were
told by their bonding entities that, because of SEC
regulations, they would have to disclose all of the reporting
requirements and limitations associated with reclamation law.
And luckily, we were able to work through legislation that
allowed for the early repayment in that case. And I will say
that the early repayment was not insignificant. This entity
owned lands in three Reclamation districts in southern Oregon.
And the total amount of money that they came out of pocket for
in order to early repay was $250,000, a quarter of a million
dollars, which could then be shifted, under this legislation,
as seed money for a storage fund.
This redirection of Federal dollars is also something I had
been involved with. That was how we resolved, in Arizona, the
dispute with the Federal Government, by redirecting dollars
from repayment to other facility payment. Thank you very much.
[The prepared statement of Mr. Somach follows:]
Prepared Statement of Stuart L. Somach, Attorney, Somach Simmons and
Dunn, Sacramento California
h.r. 3981--accelerated revenue, repayment, and surface water storage
enhancement act
Mr. Chairman and members of the committee, my name is Stuart L.
Somach. I am an attorney with the law firm of Somach Simmons & Dunn,
located in Sacramento, California. We represent clients in California,
Arizona, Texas, Oregon and Nevada on a variety of issues and matters,
including those involving water and the environment. I have testified
before this committee, and other House and Senate committees, on
numerous issues and legislation, including hearings dealing with the
Coordinated Operations Agreement, the Endangered Species Act, the
Central Valley Project Improvement Act, and various versions of so-
called ``CALFED'' legislation. I also worked on legislation, which
became the Southern Oregon Bureau of Reclamation Repayment Act of 2005
(Pub. L. 109-138). That legislation deals with issues similar to those
that are presented in the instant legislation. Most recently, on June
4, 2012, I testified before this committee on a predecessor to the
current legislation.
Prior to entering private practice in 1984, I represented the
United States and the United States Bureau of Reclamation, first as an
attorney within the Solicitor's Office in Washington, DC, and in
Sacramento, and then as an Assistant United States Attorney and a
Senior Trial Attorney within the United States Department of Justice.
This representation included both transactional work, such as
negotiation of Reclamation contracts, providing legal advice on the
interpretation of various aspects of and questions about Reclamation
law, as well as working on and advising the Bureau of Reclamation on
``regulatory'' compliance matters, including matters associated with
the Reclamation Reform Act of 1982 [RRA]. My work in the United States
Attorneys Office and with the Department of Justice involved
representation of the United States in litigation involving the Bureau
of Reclamation and Reclamation law.
Since entering private practice I have represented clients west-
wide on a wide variety of issues associated with Reclamation law. This
has included transactional work, as well as providing legal advice on
various aspects of Reclamation law, including compliance with the
provisions of the RRA. I have also litigated a great number of cases
involving Reclamation law. For example, I intervened on the side of the
United States on behalf of Reclamation Contractors West-wide in an
attempt to defend the Bureau of Reclamation's rules and regulations
implementing the RRA. I also represented clients before the Ninth
Circuit Court of Appeals and the United States Supreme Court in Orff v.
United States of America, Case No. 03-1566, which dealt with
significant aspects and provisions of Reclamation law. I also
represented the Central Arizona Water Conservation District in a
significant piece of litigation challenging the way the Reclamation law
was being applied to the Central Arizona Project [CAP]. Fundamental to
that litigation and to its resolution was the CAP's repayment
obligation and the allocation of funds once those dollars were repaid
to the United States.
I am currently lead counsel for the State of Texas in an Original
Action in the United States Supreme Court. State of Texas v. State of
New Mexico and State of Colorado, No. 141 Original. That litigation
involves the 1938 Rio Grande Compact and the Rio Grande Reclamation
Project.
Matters dealt with in H.R. 3981 ``Accelerated Revenue, Repayment,
and Surface Water Storage Enhancement Act'' have been of long-standing
interest to me. How repayment is accomplished and the underlying policy
issues associated with the repayment obligation are fairly fundamental
to Reclamation law. I last grappled with these issues in 2004-2005 on
behalf of clients in southern Oregon who wanted to take their business
``public'' through stock offerings.
The business involved the growing and selling of ``gift fruit.''
Most of the fruit orchards were irrigated with non-Federal water, but
some fields were located within irrigation districts that received
water from Bureau of Reclamation facilities (or facilities that had
been enlarged by the Bureau of Reclamation) and were thus subject to a
repayment obligation and all of the reporting and other requirements of
the RRA. The clients did not understand Reclamation law and, more
importantly, because of the various SEC regulations, most, if not all,
of the RRA requirements would need to be disclosed as part of the stock
offering. The clients were advised that these disclosures would cause
the stock to be under-valued because they held out the potential for
those with large holdings to be forced to fill out the RRA repayment
forms. This was complicated by the potential of institutional buyers
holding stock in other companies that were subject, in some way, to
Reclamation law and the reality that stocks are bought and sold every
day and the impossibility of attempting to keep up with the reporting
requirements under those circumstances.
In attempting to resolve this problem I exhausted every possible
administrative remedy. Some within Reclamation were very helpful, but
in the end they could not provide a solution. As a consequence, we
worked on a legislative solution that ultimately was enacted in
Southern Oregon Bureau of Reclamation Repayment Act of 2005 (Pub. L.
109-138). That legislation, of course, provided for early repayment by
districts or individuals within districts of their repayment
obligations. This, then, allowed relief from many provisions within the
RRA, including the reporting requirements which were plaguing my
clients.
At the time we were assisting in the development of Public Law 109-
138, I argued that the provisions should not be limited to southern
Oregon, but should be applied on a west-wide basis. For various reasons
not at all related to the question of repayment, there was a great deal
of resistance to this broader effort. Because my clients had very real
and immediate needs, I did not press the issue, and we were able to
obtain needed relief through Public Law 109-138.
Since that time I have represented numerous clients affected by the
various reporting requirements associated with the RRA. In my view,
these requirements add burdens that increase operating and other costs
without, in most cases, providing a material benefit to anyone. In one
example, when a landowner and the United States had entered into a
water right settlement contract, RRA requirements were triggered
because 600 acre feet of water out of an in excess of 50,000 acre feet
of ``settlement'' contract water were denominated as reclamation
project water. The ability to early repay the dollars associated with
these 600 acre feet of water would greatly benefit the landowners
involved and provide relief from many of their RRA obligations.
I believe that reform of the repayment provisions of Reclamation
law is needed and is good policy. In this context, for the most part,
the United States has already expended the capital costs for Federal
reclamation projects and facilities. In most cases those expenditures
were made decades ago. Moreover, the irrigation component of these
repayment obligations are interest free. Indeed, there has been a great
deal of criticism about this so-called ``subsidy.'' While I could spend
pages explaining and supporting the policy decisions behind this
``subsidy,'' the fundamental reality is that if the Reclamation
Contractor is able to ``pre-pay'' or ``early pay'' its capital
reimbursement obligation, this ``subsidy'' is eliminated. For any
number of reasons, therefore, early payment should be facilitated and
encouraged. H.R. 3981 ``Accelerated Revenue, Repayment, and Surface
Water Storage Enhancement Act,'' of course, does this.
I also believe that the provisions of H.R. 3981 ``Accelerated
Revenue, Repayment, and Surface Water Storage Enhancement Act,'' that
deal with the establishment of a Water Storage Account are good
additions to the bill. I do not think that any rational person can
argue that additional surface water storage is not needed in the West.
The water that would have been available from additional water storage
facilities would certainly be of great value in California right now.
In addition to the obvious environmental issues that need to be
addressed in developing new surface water storage, issues associated
with costs and financing loom large as impediments to putting these
facilities online. Providing funding through what is, in essence, the
recycling of Federal dollars, is an efficient way to begin to tackle
this problem. Proceeding in this manner, among other things, allows
non-Federal entities to obtain financing for water storage projects
without the need for the United States to appropriate new Federal
dollars for this purpose. It also insures that dollars that were once
invested to assist in water development continue to work for that
purpose.
This type of funding mechanism is not new. I was involved in a
similar re-direction of repayment dollars associated with the Central
Arizona Project (Arizona Water Settlements Act of 2004, Pub. L. No.
180-451, 118 Stat. 3478) which has worked very well and has served to
advance broad public policy goals, again without the need to
appropriate new dollars for this purpose.
The provisions of H.R. 3981 ``Accelerated Revenue, Repayment, and
Surface Water Storage Enhancement Act'' take into account numerous
important aspects of Reclamation law in an appropriate fashion. Among
these are:
Allows for the conversion of certain contracts that are or
are in the nature of ``water service contracts'' to
``repayment contracts.'' The use of water service
contracts, as opposed to repayment contracts, is, for
example, common in the Central Valley Project. It is of
note that most, if not all, of these water service
contracts provide for their conversion to repayment
contracts. However, these contractual provisions provide no
practical way for this to occur. The draft legislation
provides this needed detail.
Adds the concept of ``accelerated repayment'' or
``repayment'' without penalty to the early full payment of
the repayment obligation.
Captures mechanisms for the collection of capital costs
incurred after the date of the contract or appropriate
``rate schedule'' on an expedited basis up to $5,000,000,
with alternate means to insure repayment of amounts in
excess of $5,000,000.
Eliminates the benefit of power revenues to those who
proceed under the provisions of this legislation.
Allows the Contractor to determine how best to pre-pay, if
it uses alternate financing mechanisms to do so.
Insures that the early or accelerated prepayment will not
affect the repayment obligations of any other Contractor or
any other obligations among or between the United States
and Contractors.
Provides an adjustment in case this is needed once a
project's ``final cost allocation'' is completed.
Insures continued compliance with Reclamation law and
relevant RRA requirements, but eliminates various
limitations and requirements, including the reporting
requirements of the RRA.
Insures that all costs, including operation and
maintenance costs, properly payable but not otherwise
captured in the prepayment or accelerated payment, remain
an obligation that must be fulfilled by the Contractor.
Provides that prepayment dollars be redirected and
deposited into a Surface Water Storage Account to fund or
provide loans for the construction of surface water
storage.
Allows for cooperative agreements between the Secretary
and water users' associations to facilitate funding and
construction of surface water storage, thereby providing
needed flexibility with respect to surface water storage
development.
Provides for repayment of the dollars loaned from the
Surface Water Storage Account back into that account so
that these funds can be used again for the purpose of
facilitating financing for surface water storage projects.
I believe all of these provisions to be appropriate. Enactment of
this legislation will provide a comprehensive means for those who
desire early repayment to do so. It, of course, also avoids the
``piecemeal'' legislative process that has been used in the past. It
also provides a mechanism to assist in the financing and development of
surface water storage without adding new Federal budget related
pressures.
I appreciate the opportunity to testify here today and would be
happy to answer any questions you might have now, or to provide
additional information if requested.
______
Mr. McClintock. Thank you, Mr. Somach. The Chair is next
pleased to recognize Mr. Steve Ellis, Vice President for
Taxpayers for Common Sense, based in Washington, DC.
STATEMENT OF STEVE ELLIS, VICE PRESIDENT, TAXPAYERS FOR COMMON
SENSE, WASHINGTON, DC
Mr. Ellis. Thank you. Good morning, Chairman McClintock,
Ranking Member Napolitano, members of the subcommittee. Thank
you for the invitation to testify on the Accelerated Revenue,
Repayment, and Surface Water Storage Enhancement Act, and the
subcommittee's discussion draft to create a surface water
storage enhancement program. I am Steve Ellis, Vice President
of Taxpayers for Common Sense, a national, non-partisan budget
watchdog.
And, before I begin, Chairman McClintock, we may disagree a
little here, but TCS appreciates your strong leadership that
you have exhibited in tackling wasteful subsidies, and we look
forward to working with you on that again in the near future.
The first half of H.R. 3981 is virtually identical to a
committee discussion draft that I testified on in June 2012.
The issues that I raised at that time, both positive and
negative, remain today. In fact, the Government Accountability
Office is studying some of those issues. And when that
assessment is released--hopefully in the next couple of
months--some questions regarding the number of potential
contractors benefiting from this legislation will be answered,
and there will be case studies of prepayment deals that have
already occurred, such as the one that Mr. Somach discussed.
I would like to concentrate my testimony on issues
presented by the new surface water storage programs created in
H.R. 3981, and the discussion draft. But, before going to that,
I would like to make some brief, overarching comments about
Congress revisiting Reclamation water contracts and accelerated
repayment legislation.
We agree that Congress should take a fresh look at the
underlying contractual relationships between Federal taxpayers
and the recipients of water from Federal reclamation projects
across the 17 Western States. This century-old goal of using
subsidized water projects and other means to encourage
settlement and development of arid western lands has been met
and exceeded. But current epic drought conditions in California
underscore the challenge created by these century-old
subsidies, and the questionable policy perpetuating them.
The connection between the price of a commodity like water
and the level of demand and efficiency of use of such a
commodity is based on--based relative pricing is well
documented. It is time for Congress to examine whether taxpayer
subsidies should be ended in favor of more market-based
pricing, where prices would represent the true cost of
developing and delivering water supplies, and send price
signals that encourage efficiency and use west-wide.
On the accelerated repayment legislation, we are concerned
about the one-size-fits-all approach. Past legislation
addressing project prepayment has involved a congressional
judgment regarding project-specific changes. This legislation
abdicates congressional oversight, leaving the decision
regarding repayment changes entirely in the hands of water
users. For larger projects, this might lead to a confusing
variation among the water recipients in a single project or
unit of a project.
Congress, in 1982, expressly prohibited accelerated
prepayment of capital, since it could undo the policy goal of
preventing large-scale operations from gaining access to fully
subsidized water. The Reclamation Reform Act of 1982 included
numerous pricing reforms to protect taxpayers, discourage
large-scale operations from receiving subsidies intended for
small farms, encourage increased water conservation, and
increase revenues to the government. H.R. 3981 would undo the
accelerated prepayment prohibition, while failing to protect
the taxpayer or mitigate this dramatic change in Federal law.
A few questions should be answered. How will projects be
operated, going forward? Does this draft contemplate a
permanent commitment to water delivery to existing contractors
without renegotiation of key contract terms? Specifically, what
happens to the negotiation of water quantity terms as shorter-
term water service contracts become permanent contracts, simply
by conversion and prepayment.
Again, I am not against this legislation specifically, I
just want--think there are some important questions that the
Congress needs to address.
As I noted earlier, the major difference between the
current accelerated repayment legislation and the discussion
draft from 2012 is this creation of the surface water storage
enhancement program and reclamation surface storage account,
which is also the subject of the discussion draft legislation
that is being considered at this hearing. Together, these
provisions would direct a portion of the revenue from
prepayment of contracts and $400 million a year for 5 years
into a separate, non-appropriated account in the Reclamation
fund.
Taxpayers for Common Sense strongly opposes this approach
to funding water storage projects. Especially with the country
running deficits in excess of $500 billion and more than $17
trillion in debt, no spending should simply be put on
autopilot. Furthermore, the drafts again fall into the trap of
requiring repayment in accordance with existing reclamation
law. Any investments in new water storage projects should be
structured to not subsidize water use based on the 1902
reclamation model.
In addition, aside from general-purpose statements, neither
piece of legislation establishes any criteria or metrics to
evaluate what projects should be prioritized for construction.
These bills require no mandated cost benefit analysis, no
directions or limitations on what the Bureau can consider. As
drafted, this account appears to be little more than a slush
fund for the administration, a $2 billion slush fund--a more
than $2 billion slush fund, in fact.
Water storage projects should be subject to vigorous
administrative and congressional oversight. TCS has long
advocated that Congress establish a prioritization system with
criteria and metrics that would objectively determine what
projects should be authorized and funded. With this type of
system, Congress could hold the administration accountable,
adjust the metrics and criteria necessary, and not cede power
to the administration or relapse into ear-marking funds on the
basis of political muscle, rather than project merit.
Taxpayers for Common Sense supports investing in our
country's infrastructure in a targeted, prioritized way. We
urge the committee to re-evaluate the legislation and address
the issues and questions raised today.
Thank you. And again, thank you for the opportunity to
testify on this legislation. I would be happy to answer any
questions you might have.
[The prepared statement of Mr. Ellis follows:]
Prepared Statement of Steve Ellis, Vice President, Taxpayers for Common
Sense, Washington, DC
h.r. 3981--accelerated revenue, repayment, and surface water storage
enhancement act and a discussion draft of legislation creating surface
water storage enhancement program
Good morning Chairman McClintock, Ranking Member Napolitano,
members of the subcommittee. Thank you for the invitation to testify on
the Accelerated Revenue, Repayment, and Surface Water Storage
Enhancement Act, which would enable certain Reclamation water
contractors to accelerate repayment of their existing Bureau of
Reclamation contracts. I will also comment on the subcommittee's
discussion draft to create a Surface Water Storage Enhancement Program.
I am Steve Ellis, Vice President of Taxpayers for Common Sense, a
national non-partisan budget watchdog.
With one notable exception, the accelerated repayment legislation
is virtually identical to a committee discussion draft that I testified
on in June 2012. The issues that I raised at that time--both positive
and negative--remain true today. In fact, the Government Accountability
Office is studying some of those issues and when that assessment is
released--hopefully in the next couple of months--some questions
regarding the number of potential contractors benefiting from this
legislation will be answered and there will be case studies of
prepayment deals that have already occurred.
The notable exception and the discussion draft legislation creating
a Surface Water Storage Enhancement Program present a new set of
questions. But before going to that, I would like to make some
overarching comments about Congress revisiting Reclamation water
contracts and comments on the accelerated repayment legislation.
revisiting reclamation water contracts
With regard to the overarching question, we agree that Congress
should take a fresh look at the underlying contractual relationships
between the Federal taxpayers and the recipients of water from Federal
Reclamation projects across the 17 Western States. As Taxpayers for
Common Sense and numerous government agencies and outside experts have
frequently observed, the heavily subsidized Reclamation program has
often led to unintended impacts in the management and use of scarce
western water supplies. Those impacts extend far beyond the impacts on
the Federal treasury, which have also exceeded anything that could have
been contemplated at the creation of the program more than a century
ago.
It is amply clear that the policy justifications initially provided
to launch the Bureau back in 1902, and even those used to justify
various revisions of the Reclamation program in more recent decades,
have often ceased to make sense under modern conditions. For example,
it is entirely clear that the goal of using subsidized water projects
and other means to encourage settlement and development of arid western
lands back in the early 1900s has been met and exceeded. California,
for instance, has more than 30 million residents, a large and vibrant
agricultural industry, and one of the largest economies in the world.
Perpetuating Federal taxpayer subsidies for California agribusiness
based on the original Reclamation model ignores 100 years of history
and today's reality of water shortages and Federal deficits. And to the
extent that the legislation under consideration today could be taken to
lock-in the water allocations made by existing contracts, that 100-
year-old thinking could determine California's water use for centuries.
Current conditions in California underscore the challenge created
by these century-old subsidies, and the questionable policy of
perpetuating them. California is suffering from a drought of historic
proportions. Water availability is so limited that the State Water
Project, which runs parallel to Reclamation's Central Valley Project,
has announced that it will be able to make no water deliveries this
year. When anything, be it water or widgets, is this scarce,
subsidizing its use makes little economic sense. Market forces will
normally lead to price increases and reduced use--creating new
subsidies or perpetuating old ones will simply lead to increased demand
and distorted allocation.
The time has come to reexamine the interest subsidy, and other
intended or unintended subsidies, embedded in the Federal reclamation
program. Water scarcity in the arid West and the likelihood of further
shortages are driving numerous changes in State and local water policy.
The connection between the price of a commodity like water and level of
demand and efficiency of use of such a commodity based on relative
pricing is well documented. It is time for Congress to examine whether
taxpayer subsidies should be ended in favor of more market-based
pricing, where prices would represent the true costs of developing and
delivering water supplies and send price signals that encourage
efficiency in use west-wide.
accelerated repayment
On the accelerated repayment legislation, we are concerned about
the one-size-fits-all approach to complicated issues that vary from
water service contractor to water service contractor. Past legislation
addressing subsidies and project prepayment has involved a
congressional judgment regarding universal rules that would affect all
Reclamation project subsidies, or project-specific changes. This
legislation creates a system that abdicates congressional oversight
leaves the question of the breadth of repayment changes entirely in the
hands of water users, who could opt in. For larger projects this might
lead to a confusing variation among the water recipients in a single
project or unit of a project.
Apart from this basic policy question, the legislation provides
pluses and minuses for the taxpayer. At the most basic level, taxpayers
would be receiving their repaid cash sooner. In my testimony from last
Congress, I also noted that the bill appears to eliminate an outdated
and often-criticized subsidy by which power customers have cross-
subsidized irrigation based on a perceived ``inability to pay'' by
those irrigation users. This old loophole in the Reclamation program
allowed costs to be shifted away from those receiving valuable
irrigation water, instead of requiring them to conserve more, transfer
some of their water supplies to other purchasers, or otherwise make
necessary adjustments so they can repay their allocated costs. On
closer reading of the language in the current draft, the outcome rests
on what cost allocation is stated in the contract--this should be
clarified to state simply that no power subsidy will be allowed.
One the other hand, the bill completely fails to eliminate the
largest and most broadly criticized subsidy of all: the interest-free
repayment of the capital investments. In fact, rather than finally
collecting interest from irrigators who have overly benefited from this
huge subsidy program, the discussion draft appears to lock in this
subsidy permanently. It then compounds the subsidy by reducing the
amount to be repaid by calculating it based on ``net present value,''
as if the loan program had represented true market-based financing by
private sector entities and had not already provided major benefits to
recipients. Considering that most water contractors are local water
districts entitled to Federal interest-free financing, the taxpayers
will end up subsidizing them again through tax-free bonds if they
finance the lump-sum prepayment.
The bill appears to offer various other benefits to water
contractors, such as permanently waiving all Federal acreage
limitations intended to limit taxpayer subsidies for large
agribusinesses. The Reclamation program was initially intended to
benefit small family farms of 160 acres or less. After numerous
documented abuses of that limit Congress expanded the limit to 960
acres in the 1980s, while insisting on firmer enforcement and higher
water prices to farms above that size. This draft would eliminate the
acreage limit altogether for those opting for pre-payment.
Congress in 1982 expressly prohibited accelerated prepayment of
capital, since it could completely undo the policy goal of preventing
large scale operations from gaining access to fully subsidized water.
The Reclamation Reform Act of 1982 [RRA] included numerous pricing
reforms to protect taxpayers, discourage large scale operations from
receiving subsidies intended for small farms, encourage increased water
conservation, and increase revenues to the government. The proposed
legislation would undo the accelerated prepayment prohibition while
failing to include any corresponding reforms to compensate or otherwise
protect the taxpayer or mitigate this dramatic change in Federal law.
Finally, in the case of municipal and industrial Reclamation
contracts where some modest interest rates have been charged over the
past several decades, it is not completely clear how the ``net present
value'' formulation in the bill will handle the interest charges that
would otherwise be paid. As we read the legislation, some of that
interest that would otherwise have been paid to the government could be
lost. In addition, for the largest and therefore wealthiest of the farm
operations in the Reclamation program, those who were required by
Congress in 1982 to start paying interest charges for all water
delivered above the 960 acres, the prepayment of capital costs and
elimination of all acreage limits could mean that the taxpayers
permanently forgo those interest payments. The large-scale operations
would get to keep their full supply of subsidized water, and the
intended protections for smaller businesses with less than 960 acres
would be removed permanently without any countervailing benefits or new
protections.
At the June 2012 hearing, I raised several questions that should be
answered before the accelerated repayment legislation should move
forward. Some or all of these may be answered in the ongoing GAO study,
and I would encourage the committee to get the benefit of their insight
before moving this legislation forward. The questions I raised were:
How many projects in the Reclamation Program would be
affected? Under Reclamation law, water is most often
delivered to irrigators under section 9(d) contracts, which
include terms to repay allocated project costs (without
interest) or under section 9(e) contracts, which provide
water based on the cost of service on an interim basis
before project completion. The bill refers to ``water
service contracts'', which is a term of art in Reclamation
law and is defined in the draft bill to refer only to
section 9(e) of the 1939 Reclamation Act (i.e. for
irrigation water). But only a limited number of Reclamation
projects actually use 9(e) contracts instead of the more
widespread 9(d) repayment contracts.
What will be the likely effect of the bill on the Central
Valley Project in California? The CVP is the largest
Reclamation Project and the site of some of the largest
farms and biggest subsidy controversies in the program. But
it also has one of the largest concentrations of 9(e)
contracts. Would the bill enable 9(e) contractors to
convert to 9(d) contracts, accelerate payment of capital,
and buy their way out of all acreage limitations by taking
advantage of current commercial borrowing rates that are at
all-time lows?
How will projects be operated going forward? Does this
draft contemplate a permanent commitment to water delivery
to existing contractors without renegotiation of key
contract terms?
Specifically, what happens to the negotiation of water
quantity terms if shorter-term water service contracts
become permanent contracts simply by conversion and
prepayment? In the CVP, the Reclamation program is faced
with over-appropriated rivers and intense competition for
supplies. When contracts expire, the government has the
opportunity to reduce the quantity term of the new renewal
contracts and, in fact, the Bush administration did just
that when some of the CVP contracts expired in recent
years. But when will such right-sizing of contract amounts
occur if there is no such negotiation for renewal contracts
and instead existing contracts are simply converted to
permanent agreements? While the ``reasonable use''
requirements of Federal and State law allow such
reductions, the Bureau of Reclamation rarely (if ever) has
used that authority to reduce the quantity term in an
existing contract.
surface water storage enhancement program
As I noted earlier, the major difference between the current
accelerated repayment legislation and the discussion draft from 2012 is
the creation of the Surface Water Storage Enhancement Program and the
Reclamation Surface Storage Account, which is also the subject of the
discussion draft legislation that is being considered at this hearing.
Together, these provisions direct a portion of the revenue from
prepayment of contracts and $400 million per year for 5 years into a
separate non-appropriated account in the Reclamation Fund. Taxpayers
for Common Sense strongly opposes this approach to funding water
storage projects.
Any revenue generated by pre-payment of contracts should be
returned to the Treasury and should be subject to congressional
oversight and appropriation. Especially with the country running
deficits in excess of $600 billion and a more than $17 trillion debt,
no spending should be simply put on auto-pilot. Furthermore, the drafts
again fall into the trap of requiring repayment in accordance with
existing Reclamation law. Any investments in new surface water storage
projects should be structured to not subsidize water use based on the
1902 reclamation model.
In addition, aside from general purpose statements, neither piece
of legislation establishes any criteria or metrics to evaluate what
projects should be prioritized for construction. There is no mandated
cost-benefit analysis, and no direction or limitations on what the
Bureau could consider. As drafted this account appears to be little
more than a slush fund for the administration. A more than $2 billion
slush fund.
Water storage projects should be subjected to vigorous
administrative and congressional oversight. After a feasibility study
recommendation, Congress should make the decision whether or not to
authorize the projects and then whether to appropriate funds for them.
TCS has long advocated that Congress establish a prioritization system
with criteria and metrics that would objectively determine what
projects should be authorized and funded. With this type of system
Congress could hold the administration accountable, adjust the metrics
and criteria as necessary, and not cede power to the administration or
relapse into earmarking funds on the basis of political muscle rather
than project merit.
Taxpayers for Common Sense supports investing in our country's
infrastructure in a targeted, prioritized way. We urge the committee to
re-evaluate the legislation and address the issues and questions raised
today. Again, thank you for the opportunity to testify on this
legislation and I would be happy to answer any questions you might
have.
______
Mr. McClintock. All right, thank you for your testimony.
The Chair is next pleased to introduce Mr. Chris Hurd of Circle
G Farms from Firebaugh, California, to testify. Welcome to
Washington.
STATEMENT OF CHRIS HURD, CIRCLE G FARMS, FIREBAUGH, CALIFORNIA
Mr. Hurd. Good morning, and thank you so much, Chairman
McClintock, Ranking Member and members of the committee, and
all of you that have gathered. I bring a message today from my
family farm. I come to talk about the hardship in California. I
come to endorse the storage, the proposed bill that we have
before us. And I come to lay at your need for leadership in
fixing discretionary changes in the existing law and helping us
continue to survive in the West.
I am a fourth-generation family farmer on the west side of
the San Joaquin Valley in California, farming almonds,
pistachios, row crops. I am entirely operating under the
Central Valley Project for 32 years. My wife and three sons and
I are involved heavily in it, daily. Today I represent the
Family Farm Alliance, as does Pat O'Toole, my friend, which is
a grassroots organization with one mission: that is to keep the
water going, secure and affordable, to western farms and
ranches.
H.R. 3980 would go a long way to helping us secure some
additional storage, flexibility for the future. And we strongly
support that. Storage is what built the West, but it has been
skewed from its original intent. Certainly Congressman Hastings
put it very well, that things have changed. Maybe we need to
review those thoughts.
In California, we have a current drought, but we have had
them before, such as 1977, 1978, and a 5-year drought in 1987
to 1992. Now, the last 25 years have seen layers of regulations
taking our contracted water off of the land. We started last
year, 2012, 2013, with above-average storage. But that system
was operated to drain the water for fish and water-quality
issues. Today there is no water in California in the system
storage. And, even if it rains, it won't help us if the
regulatory crisis isn't fixed, and the system is to be run with
human imbalance consideration.
We cry out for the leadership needed, non-partisan.
Thousands of us California farmers have invested millions of
dollars in conservation. Family farms, 5,000, 10,000 of us out
there, are working the land to stay in business. We are aware
of the conservation, we live it day to day.
The water bill on my ranch has gone, in 5 years, from $300
an acre to $1,800 an acre. The months of July, August, and
September see 10 to 15 truckloads a minute going by my ranch,
which borders Interstate 5, carrying grapes, almonds,
pistachios, onions, garlic, row crops, 300,000 to 400,000 tons
every 24 hours, feeding the world from safe, reliable food that
we are producing.
Certainly our country must be proud of our production,
which equates to the U.S. consumers only spending 7 to 8
percent of their disposable income for food, while our
neighbors overseas are spending 20, 30, and 40 percent for
their food supply.
Hardship abounds in California right now. Most irrigation
districts are facing a zero allocation for 2014. Schools are
closing. My wife, a reading specialist, was laid off of a small
community school, and the school was closed. Vendors are going
broke. Tens of thousands of people are unemployed at the
moment. There are food lines forming. This is not a reality
show; this is happening.
Federal agencies implementing ESA and the Clean Water Act
must be held accountable, under the law, to help move more
water. The cavalier attitude of the agencies implementing the
ESA is ruining the West, currently. Are we so arrogant or
foolish that we think depression, mass unemployment, and food
shortages cannot happen in this country again, that we will
always be able to produce the food, enough food for an
exploding population? Maybe we should ask our parents or
grandparents, who helped build the current systems that we so
enjoy.
Bluntly, I will say this. Putting ideology and partisanship
ahead of public service is failure. California needs its
elected representatives in Congress to provide the leadership,
show courage and vision, and fix the problem now. Is the United
States going to be a viable Ag producer in a volatile world, or
not? Stop the bickering and serve the people now. Thank you,
and I would appreciate any questions. I stand ready to speak
with you. Thank you.
[The prepared statement of Mr. Hurd follows:]
Prepared Statement of Chris Hurd, Circle G Farms, San Joaquin Valley
Farmer and Family Farm Alliance Board Member, Firebaugh, California
discussion draft, to amend the secure water act of 2009
Chairman McClintock, Ranking Member Napolitano and members of the
subcommittee:
Thank you for the opportunity to appear before you to offer
comments on the importance of water storage projects and related
legislation intended to provide new opportunities to develop these
projects. My name is Chris Hurd, and I serve on the board of directors
of the Family Farm Alliance. The Alliance advocates for family farmers,
ranchers, irrigation districts, and allied industries in 17 Western
States. The Alliance is focused on one mission--to ensure the
availability of reliable, affordable irrigation water supplies to
western farmers and ranchers.
Water users represented by the Family Farm Alliance use a
combination of surface and groundwater supplies, managed through a
variety of local, State, and Federal arrangements, to irrigate
productive agricultural lands in the West. For the most part, however,
many of our members receive their primary irrigation water supplies
from the Bureau of Reclamation (Reclamation). In essence, we are
Reclamation's customers. western family farms and ranches of the semi-
arid and arid West--as well as the communities that they are
intertwined with--owe their existence, in large part, to the certainty
provided by water stored and delivered by Reclamation projects. That is
why we support the discussion draft bill under consideration today that
would amend the Secure Water Act of 2009 to authorize the Secretary of
the Interior to implement a surface water storage enhancement program,
and for other purposes.
I am a managing partner of Circle G Farms in California's San
Joaquin Valley. My 1,500 acre family farm operation produces almonds,
pistachios and row crops. I graduated from Cal Poly San Luis Obispo in
1972 with a degree in mechanized agriculture. I am president of the San
Luis Water District and a long-time board member of the Family Farm
Alliance. My wife Anne and I have three sons.
The increasingly complex Federal regulatory structure, and the
increasingly expensive and protracted processes which this structure
encourages, makes obtaining and sustaining water supplies increasingly
difficult for both agricultural and municipal users alike. For the
farmer or rancher, the current Federal water allocation and
reallocation schemes in some areas of the West often create chaotic
economic conditions, a sense of disillusionment and resignation, and
uncertainty. Nowhere is the uncertainty of water supplies greater than
where I live, in California's San Joaquin Valley (Valley) from the
Federal Central Valley Project [CVP].
Severe water shortages caused by the combination of Federal
fisheries restrictions and drought on water supplies to the western
side of the Valley forced hundreds of thousands of acres of farmland to
be fallowed in 2009. University of California experts estimate that the
combined effects of these restrictions on the water supply have cost
Central Valley agriculture nearly $1 billion in lost income and more
than 20,000 lost jobs. In 2009, water users that depend on the Federal
Central Valley Project [CVP] received only 10 percent of the water they
contracted to receive, the lowest allocation in the history of the
project. We have calculated that without these Federal restrictions,
the allocation would have been 30 percent. The U.S. Department of the
Interior increased the allocation of water for south-of-Delta CVP
agricultural water service contractors in 2010 to a whopping 25 percent
of our contract. Last year, that same allocation was 20 percent of our
contract. This year, even if we end up with average hydrologic
conditions this winter, we face a ZERO allocation, and implementation
of Federal laws such as the Endangered Species Act [ESA] and Clean
Water Act [CWA] is a primary reason for this grim scenario.
Certainty in western water policy is essential to the farmers and
ranchers I represent, and that is why a suite of water conservation
practices, improved water management, water transfers, and other demand
reduction mechanisms must be balanced with proactive and responsible
development of new water infrastructure. New storage projects must be
part of that mix, and creative ways to finance those projects are
needed.
Title II of the Rural Water Supply Act of 2006 (Pub. L. 109-451)
authorized a loan guarantee program for rebuilding and replacement
costs of water infrastructure within Reclamation that would leverage a
small amount of appropriated dollars into a large amount of private
lender financing available to qualified Bureau-contractor water
districts with good credit. In other words, the Congress has given the
authority to Reclamation to co-sign a loan to help their water
contractors meet their contract-required, mandatory share of rebuilding
and replacement costs of federally owned facilities. Given this
scenario, it is incredible that Reclamation loan guarantees, a long-
awaited critical financing tool for water users across the West, are
now being held up because of incorrect interpretations of Federal
policy by the Office of Management and Budget [OMB].
The Family Farm Alliance will continue to work with Reclamation and
OMB to implement this program and to investigate opportunities to
develop similar loan guarantee programs that can help fund new water
infrastructure projects. We stand ready to work with the committee and
will look for its support as we work with the administration to find
ways to leverage funding to meet even more needs for both aging and new
water infrastructure projects.
The discussion draft bill provides another creative financing
mechanism. It would amend the Secure Water Act of 2009 to authorize the
Secretary of the Interior to implement a surface water storage
enhancement program. Such a program does not exist today, yet demand
for new sources of water from storage has grown tremendously over the
past two decades. The bill would authorize the Secretary to construct
surface water storage and to enter into cooperative agreements with
water users associations for the construction of surface water storage
that would benefit agriculture and other water-dependent sectors of the
economy in the West. This draft bill would establish in the Treasury of
the United States an account to be known as the `Reclamation Surface
Water Storage Account' which would be used to pay for surface water
storage projects over a 4-year period using a total of $400,000,000 of
revenues that would otherwise be deposited in the Reclamation fund. By
making these funds available for investment in new surface water
storage projects, to be repaid over time, the growing needs for new
water supplies in the West could be met while protecting the jobs and
communities so dependent on water for their very existence.
We support this discussion draft bill, although additional detail
would improve it. One of the areas that require further clarification
include the terms of repayment, and the manner in which projects would
be selected and how funds are allocated. Also, the bill is not clear on
who would get funding support and on what basis the Federal agency can
or will determine who receives said support. Possibly, the bill could
direct the Bureau of Reclamation to develop a proposal on how they
would administer funding and loans made available by the bill, working
with the contractors and storage project proponents, and report back to
Congress on a final set of program policies and guidelines within a set
period of time.
As a side note, the Board of Directors of the Family Farm Alliance
in 2005 launched an aggressive and forward looking project that pulled
together a master data base of potential water supply enhancement
projects from throughout the West. While many of these supply
enhancement projects include projects like canal lining and piping,
reconstruction of existing dams, and regional integrated resource
plans, the report also identifies some potentially beneficial new
multipurpose surface storage projects. The benefits from these projects
include providing certainty for rural family farms and ranches,
additional flows and habitat for fish, and cleaner water and energy. We
would be happy to utilize this tool to assist the subcommittee in
developing a quick assessment that might provide a sense of which
proposed storage projects in West are ready to apply for this funding,
and how far the anticipated funding amounts would stretch. While making
up to $400 million available to build new projects is a great start,
realistically we may be only able to fund a few new projects. But, we
believe this is a significant beginning toward advancing new surface
water storage projects in many areas of the West.
People like me who live and work on the west side of the San
Joaquin Valley have disproportionately borne the costs associated with
actions under the Endangered Species Act [ESA] to protect fish species
that occupy the Sacramento-San Joaquin River Delta. These costs are
astounding. And they extend well beyond the farmer's gate. These costs
extend to our local communities--impacting the tax base, unemployment
and social support programs--all the way to the consumer in the form of
higher prices for food. The bill, by allowing for the expansion of
surface storage by financing the construction of new water storage
projects, could reduce these high costs associated with reallocating
water away from agriculture and municipal needs by restoring certainty
to critical irrigation and city water supplies and meeting
environmental needs in the process.
For instance, the costs for water supplied by the Bureau of
Reclamation to irrigate orchards on my farm near Firebaugh over the
last 5 years have grown from $300 per acre to $1,800 per acre, per
year. We are facing a potential ZERO water allocation this year. For a
farmer trying to make business decisions, some of which may implicate
family, farmworkers, neighbors and community for the next 30 years,
this is an impossible situation. It's the kind of thing that leads to
extreme financial and emotional stress felt by farmers who don't know
if they will still be in business in 5 years. It becomes harder and
harder to simply hang on when our most important input, our irrigation
water, has become the biggest unknown in our farming operations.
Some of the real costs of these decisions are on the people in our
community: Schools are closing, vendors are going broke, tens-of-
thousands of workers are unemployed, food lines are forming, and family
relationships are strained. In my situation, eight people who would
otherwise be employed now don't have work because I could not hire them
due to the lack of water. That may not seem like much, but mine is one
of almost 4,000 farms in the San Joaquin Valley suffering from chronic
water supply shortages due in part to Mother Nature this year, but also
due to regulatory decisions made by the Federal agencies in previous
years. In big cities, maybe these numbers aren't considered important,
but in our small, rural, often disadvantaged communities, where one of
four workers is unemployed, they are vital. Towns, once thriving, are
now shells.
Will this discussion draft bill help my farm this year? No, it will
not; but we must consider how many droughts we need to go through
before our ability to grow our Nation's food supply is imperiled beyond
repair. We must start managing water in California (and across the
Western United States) to meet the future needs of humans and their
communities, and not just the environment. That includes better
managing our current water supplies for multiple needs (including
agriculture), and by developing new storage projects that will allow
the greater flexibility we will need to meet the challenges of a
drought year like this one in the future. It also means applying the
Federal discretion allowed by the Federal Endangered Species Act [ESA]
and other Federal laws in a way that maximizes water supply for human
uses without imperiling species. The ESA was also not intended to avert
environmental disaster by creating other disasters. The ESA is a
reality, but the manner in which it is being applied is not utilizing
any of the flexibilities inherent to the act, or in consideration of
the collateral human disasters that are being caused through such
Federal decisionmaking. Lawmakers and policymakers must use their
leadership positions to help give agency implementers the tools to
understand that it's not all just about mathematics and science, that
there are truly human costs associated with their decisions. We believe
there is flexibility built into the ESA that must employed in
situations like ours that do the least harm to our communities.
Are we so arrogant or foolish that we think depression, mass
unemployment and food shortages cannot happen here again; that we will
always be able to produce enough food for an exploding global
population? Maybe we should ask our grandparents and our parents, whose
hardships led to the foresight to build our existing reservoirs, canal
systems and other infrastructure we enjoy today, and upon which our
quality of life depends, whether or not these costs are justified. Our
generation must step up and continue to develop our water resources to
better meet our future needs, including those of our environment, and
this water storage discussion draft bill would go a long way in helping
us in that endeavor. Thank you for the opportunity to testify today,
and I would stand for any questions the subcommittee may have.
______
Mr. McClintock. Thank you for your testimony. We will now
move to questions of witnesses. Each of the Members is also
bound by the 5-minute limit. And I will begin with Mr. O'Toole.
You mentioned that, on a dam in your neck of the woods, it
took 14 years to go through the paperwork process, and only 2
years to actually construct the dam. Did I hear that correctly?
Mr. O'Toole. Yes, sir, that is accurate.
Mr. McClintock. What does that do to the cost of the dam?
Mr. O'Toole. Well, as I said in my testimony, not only did
the costs increase appreciably, but the project itself went
from 50,000 to 25,000 acre-feet. And so, to meet the Federal
specifications that I think you are addressing in this bill in
a much more user-friendly way, where the State actually can
build what it needs to build, it is not only a money cost, it
is a time cost.
And, as I said in my testimony, the ability, as soon as it
was built, to have those irrigators be able to have late water
in a drought was just crucial, and at the same time maintaining
a vibrant fishery. So, I think that the answer to your question
is it is a money deal.
In Wyoming, we created--let me expand just a little bit. We
had two 50,000 acre-foot reservoirs that are still authorized
in Congress that were not funded. And that was in the 1970s
that changed. So the 14 years doesn't include all that time.
Mr. McClintock. Well, as I said, we have a 2.3 million
acre-foot dam in Auburn----
Mr. O'Toole. Yes, sir.
Mr. McClintock [continuing]. That was federally authorized,
and was actually half constructed before it was canceled in the
mid-1970s, during that same period when our public policy
shifted from one of abundance to one of shortage and rationing.
We are just told that the costs are prohibitive on these
projects now. And I look at the Hoover Dam and all the other
magnificent dams during the Roosevelt years. They weren't cost-
prohibitive. The cost of construction has not increased to a
point where it is cost-prohibitive, so something else is going
on. Is that the regulatory burden that is now attached to these
dams?
Mr. O'Toole. Chairman McClintock, that is absolutely
accurate. And what we have found is that the process is so
expensive to go--as I said earlier, the bit of the apple. It is
multiple bites of the apple by the agencies. And so, not only
do you go through one process with Fish and Wildlife, EPA,
Corps of Engineers, and others, you do that multiple times. So
your bill and the bill that is anticipated by this committee
would change that----
Mr. McClintock. So that is the difference, then, is that in
those days, when we were constructing these massive reservoirs,
we didn't have to go through the costly and time-consuming
paperwork that is now required by the modern bureaucratic
state, and the result was these dams were not only cost-
effective, they were magnificently cost-effective, and
producing a cornucopia of benefits, not just water, but also
hydroelectricity, flood control, and recreational resources
down through generation after generation. And that is what this
generation has now blocked by its bureaucracy. Is that
accurate?
Mr. O'Toole. Yes, sir. And I would tell you that the
anticipation of use of water is the envy of the world.
Mr. McClintock. By the way, I am told that private
financing would not be a problem for constructing new dams, if
there was some degree of certainty, and if the money wasn't
bled away by a multi-year, sometimes multi-decade, process of
bureaucratic delay. They say, ``Look, these dams store a lot of
water.'' That is a very valuable thing to do. They generate
lots of hydroelectricity; that is very valuable. They provide
flood control to entire regions, and they produce magnificent
recreational resources, all of which are valuable. And
investments would not be a problem, if there was some certainty
in the process. Is that accurate?
Mr. O'Toole. Yes, sir, Mr. Chairman. And I will tell you
that Representative Lummis was in the Wyoming legislature when
they created a concept of funding renewables--water,
government, education, wildlife--with non-renewables. And that
funding mechanism is the State's money. That was what was so
frustrating. It was the State's water, the State's money. And
this 14-year process was just--it was very antagonistic, and it
was not correct. And I think what you are anticipating is a
much more user-friendly process.
Mr. McClintock. Thank you. Mr. Ellis, however we may
disagree on the details of financing, wouldn't it be a good
idea to bring these costs down by streamlining the regulatory
process?
Mr. Ellis. Well, Mr. Chairman, I am not an expert on the
regulatory process, and that is why my testimony concentrated
on the other bills. But my understanding is that your bill is
being based on----
Mr. McClintock. But your organization is based on the
claim--usually quite well-honored--that you want to reduce
unnecessary government costs.
Mr. Ellis. Yes, absolutely, and----
Mr. McClintock. Wouldn't you think it is a good idea to
reduce unnecessary government costs in the construction of
these facilities, however they might be financed?
Mr. Ellis. Absolutely, Mr. Chairman.
Mr. McClintock. Thank you. The Chair recognizes Mrs.
Napolitano for 5 minutes.
Mrs. Napolitano. Thank you, Mr. Chair, and it is good
information.
You know, you may think I am not for farms, and I am not
for storage. I am. It has been one of the hallmarks of sitting
on this committee for 16 years, is that we need to find a way
to work collaboratively. You are right. Put politics aside. But
when we don't get a bill until last week to be able to
determine what is in it, I don't call that working on a
bipartisan basis, so that we can be able to look at what is
being proposed and how it is being proposed.
So, there are many things I could tell you, but my time
will be running low. So, Mr. Somach, you mentioned the surface
water storage. And we are really talking about dams, right?
Mr. Somach. Yes.
Mrs. Napolitano. Right. Which is something that my Chairman
has been advocating for as many years as he has been in
Congress, that I know of. Can you give me, just very quickly,
just a synopsis, the approximate cost of building dams, small,
medium, or large, just a offsite figure? How much time would it
take to site, obtain permits, build a dam? How long before one
drop of water is stored? How long before it is filled? And how
long before one drop of water can actually be realized for
farms?
Mr. Somach. Let me give you an example----
Mrs. Napolitano. Quickly, please.
Mr. Somach [continuing]. We are working on right now, and
that is Sites Reservoir. If you compare what it will take if
that is proceeded through, in terms of a Federal project built
by the Federal Government, going through all the Federal
regulations--and that process started way back because that was
identified as a CALFED reservoir----
Mrs. Napolitano. Quickly, sir.
Mr. Somach [continuing]. You are looking at 2025 before you
would be ready to construct, and then 5 years of construction.
If we were able to cut through all of that stuff, we are
looking at a timeline that takes us into the teens, so that by
2025 we could be swimming in that reservoir, we can be drinking
water from that----
Mrs. Napolitano. And the cost?
Mr. Somach. The cost of those reservoirs will be in the
billions of dollars.
Mrs. Napolitano. Right. And then we have the issues of
being able to discuss openly and transparently what actually
are the roadblocks, what are the things that the farms and the
coalitions can give to us to be able to say to Bureau of
Reclamation, Army Corps, whoever, ``These are things that need
to be taken care of and need to be taken care of
expeditiously.''
Mr. Somach. I could give you a list right now for----
Mrs. Napolitano. Yes, I know, I know. But I am just saying
these are things we don't talk about here, OK? These are the
things that do not go into the record.
Mr. Somach. We could be as specific----
Mrs. Napolitano. Would you submit into the record, sir?
Mr. Somach. I would absolutely submit it for the record.
Mrs. Napolitano. Thank you, sir. The other questions, sir,
to Mr. Ellis, is you make the point that in 1902, when the West
was formed, it was to attract farmers to the West to be able to
feed people. The policies advocated for include 40-year
repayments for any facility with 0 percent interest, which are
out of date. Do you agree taxpayers should continue to
subsidize a zero percent loan?
Mr. Ellis. No, we don't. I think that times have changed.
And, actually, that has changed, especially after the Central
Valley Project Improvement Act, and some of the changes. But,
clearly, we need to be moving toward more pricing water
appropriately. And I am very sympathetic to the----
Mrs. Napolitano. Yes.
Mr. Ellis [continuing]. What is going on in the drought,
and everything else, but I think these are important ways to
move forward.
Mrs. Napolitano. Mr. O'Toole, I congratulate you. My
understanding is you have a very efficient methodology you have
undertaken for years. And congratulations. So we talk about
recycling water runoff, and yes, you have done a lot. So has
southern California. We have been rying to get weaned off of
imported water for the last almost three decades, and we are
succeeding in that.
But you mentioned before this committee--some time before,
the conservation and efficiency efforts you and others in your
State have undertaken. And today we are only finding the
mechanism for surface storage. And my concern--not only is the
cost, the time--it is not going to produce water tomorrow that
is so desperately needed. But the conservations, shouldn't we
look at funding other conservation methods as going to be
effectively more--deliver more wet water sooner?
Mr. O'Toole. Ms. Napolitano, I agree so much with what you
said in your opening statement about the tools in the toolbox
have to be varied. What I have found in my own personal
experience is that, as you watch these watershed groups come
together, which are made up of ranchers, farmers,
conservationists, municipalities, they understand that is one
of the main tools. But there are other tools.
I have worked in my own career on cleaning water. I spoke
in Los Angeles this year on the need for other types of
technology. It is going to be a whole toolbox that we have to
have. And what I think--and my experience is that this one is
one of the easiest, and it is one of the most difficult to
achieve. All of the toolbox has to be----
Mrs. Napolitano. And I agree with you, sir. It just takes a
lot more time to be able to bring all those facts out. Thank
you.
Mr. O'Toole. Yes, ma'am.
Mr. McClintock. Mrs. Lummis?
Mrs. Lummis. Thank you, Mr. Chairman. I might comment I
have never thought about water as being a commodity. I think
about water as being an absolute necessity. My body is mostly
made out of water, and I don't think of myself as a commodity.
Mr. Hurd, California currently has one of the lowest
snowpack precipitation levels on record. California's
precipitation levels 2 years ago were so high that reclamation
was allowed to turn water out of dams in northern California.
Is that true?
Mr. Hurd. That is correct, ma'am.
Mrs. Lummis. If additional storage had been in place, would
some of the water that was turned out, would it have been
available for capture, increasing storage water?
Mr. Hurd. Yes, it would. And some of it would be there
right now for usage by this State.
Mrs. Lummis. So, it would allow for higher water
allocations this year, at a time when it is needed----
Mr. Hurd. Yes, ma'am.
Mrs. Lummis [continuing]. Had it been stored back then.
Mr. Hurd. Depending upon the way the system had been run.
Mrs. Lummis. Mr. O'Toole and Mr. Hurd, what will western
agriculture look like in 20 years, if new storage isn't built?
Mr. O'Toole. Well, our experience--and, again, I refer to
the 17 States that the Family Farm Alliance deals with--we all
know that in some aquifers there is a depletion. We all know
that we are in a climate variable State. We see our neighbors,
you know--absolute survival is happening.
And when I listened to some of the testimony yesterday, and
the meetings we had here on the Hill, there are people with
permanent crops that, this year, if they do not have water,
they will start tearing those permanent crops out. That just
tears your heart out, because you know, Representative Lummis,
just as I do, those are people, those are families, those are
multi-generational, heartbreaking experiences. And we are going
to see more of that if we don't allow ourselves to plan for the
future with all the tools in the toolbox.
Mrs. Lummis. Mr. Hurd?
Mr. Hurd. My comment is part of what my testimony was, in
that the exploding population here and globally is depending
upon us to feed them. And we have to have water as the tool to
do that.
We are smart enough, I feel, that we have already shown the
conservation, the technology, the mindset to continue to
improve and deliver that food. Yes, the West, 20 years from
now, will look different. But God help us if we are not smart
enough to seize the moment. And that moment is the water, as
the underlying blood of all of us.
Mrs. Lummis. Mr. Hurd and Mr. O'Toole, will conservation
alone meet the West's water needs?
Mr. O'Toole. You know, it is a really interesting matrix.
And I told you, the committee, that I did a tour of California,
and many of the Family Farm Alliance members use the most
efficient water usage drip irrigation in the history of the
world. The Israelis come to California to learn how to do
irrigation. So in some places, conservation is appropriate.
I also serve on a group called the Intermountain Joint
Venture, which was the Western States' migratory bird group
that oversees, through the States, how we maintain our
populations of birds. And they have come out with a study that
indicates that upper flood irrigation in the upper valleys of
the West is why the bird populations are the highest they have
been in 50 years.
And so, you have to look at each individual. But, you
mentioned my father-in-law. He had a saying. He said that
resources are too important to manage generically; they must be
managed specifically. And what that means is you go watershed-
by-watershed, and understand what is the appropriate
technology, what is the appropriate storage, and what is the
appropriate conservation.
Mrs. Lummis. I was in Israel just last week, and a big
water project, Red Sea-Dead Sea, is being contemplated to
provide water to Jordan. And the Israelis and the Jordanese are
working together on this, because of the precious needs of
water for Jordan that Israel is willing to help with.
So, even in the land where Isaac, King David, walked, Jesus
walked, water issues and water storage issues are critically
important right now. We should learn from not only our biblical
predecessors, but from the people who are living there now,
about the importance of storage and cooperating.
Mr. Ellis, I am curious about Taxpayers for Common Sense.
Does the Sierra Club fund Taxpayers for Common Sense?
Mr. Ellis. No, ma'am.
Mrs. Lummis. Who does?
Mr. Ellis. We get money from charitable contributions from
individuals and charitable foundations. We don't take any money
from the government, we don't take any money from unions, we
don't take any money from corporations.
Mrs. Lummis. And so the Pew Charitable Trust, for example?
Mr. Ellis. No, ma'am.
Mrs. Lummis. Can you name some?
Mr. Ellis. The McKnight Foundation was one. There is
Carnegie, you know, so there is a variety of different
charitable foundations.
Mrs. Lummis. My time is up. Thank you, Mr. Chairman.
Mr. McClintock. Mr. Costa?
Mr. Costa. Thank you very much, Mr. Chairman and members of
the subcommittee. My colleague from Wyoming's comments about
her recent visit to the Holy Land reminds me of a couple
thoughts. One, California and the West is going to need
rainfalls of biblical proportions if we are going to get past
these dry periods, which are catastrophic. And I am also
reminded of another quote from the Bible, ``Blessed are the
peacemakers, for they shall inherit the world.'' And we need
some peacemakers today in California to, as Mr. Hurd indicated,
to use some common sense and work together on a bipartisan
basis.
I consider myself one of those peacemakers. As difficult as
this is, being at ground zero, where we have farm communities,
farmers, and farm workers that have, not only in 2009 and 2010,
experienced horrific conditions--and I am talking about levels
of 40 to 48 percent--but now, with 13 percent of our snowpack,
seemingly looking at perhaps the worst drought that we have
experienced since 1977, and perhaps a mega-drought, I mean, it
is going to be bad, not only for my area, but for the entirety
of California.
And I would hope, for those of us who would like to figure
out where the middle ground is, that we use this crisis to
understand that we have been kicking this can down the road way
too long. We have a broken water system in California. The West
has other, similar, related issues, but we have a broken water
system designed for 20 million people and the farms that are
the most productive anywhere in the world, that are the most
water-efficient anywhere in the world, and that pay some of the
highest prices for water that any comparative farming
operations do anywhere in the country.
And for the life of me, I can't understand why we have this
attitude sometimes that pits the farmer against our urban, our
environmental constituencies. I mean I remember the movie,
``Oklahoma,'' where the farmer and the cattleman had a fight,
but this is nuts. We need farmers and we need our urban
constituencies, and we need to work together. And when you deny
any region of California, or any region of this country, the
ability to have water reliability, it makes absolutely no
sense, whatsoever, to me. And that has been part of what this
fight has been about in California for decades. This is a new
one, by the way. I can tell you where all the political fault
lines lie in California. They are deep and they are historic.
And it is high time we put them aside.
Now, on this legislation--and I will get off my soapbox
here--that we are looking at, Mr. Somach, you have been around
here for a long time. I think this accelerated revenue
repayment efforts for surface water enhancement is something
that there is plenty of precedent for, right?
Mr. Somach. Correct. There is precedent. The early
repayment, there is precedent. Other specific pieces of
individual legislation that have occurred over the period of
time, and the redirection of funds, there is also precedent for
that. Certainly the San Joaquin River restoration legislation
in California is an example. And, as I said in my testimony,
the Arizona Water Rights Settlement Act was a very big----
Mr. Costa. Well, and the drainage settlement thing that we
are looking at----
Mr. Somach. Correct.
Mr. Costa [continuing]. Would offer a repayment. I mean
there is a whole lot of precedent. This is good legislation,
and I think we need to work on it.
In terms of coordinating the Permitting and Coordination
Act, let me make this local. And I don't know, Mr. Hurd, if you
want to comment. And, Mr. O'Toole, let me thank you and the
Family Farm Alliance, and some of your board members. We
appreciate the good work you do, and the advocacy you provide.
I am looking at Shasta, I am looking at Sites, I am looking
at Los Vaqueros, I am looking at Temperance Flat, I am even
looking at the seismic issues we are dealing with in the San
Luis Reservoir as being opportunities to increase capacity.
Should the Bureau fulfill their commitment this year and
complete the studies on Shasta and Temperance Flat? I know the
Sites is being handled more by the State.
How far off are we, then, from determining when we could
begin an effort on construction? And I know my time has run
out.
[No response.]
Mr. Costa. Can I get the questions answered, Mr. Chairman?
Mr. McClintock. Yes, sure, just very briefly.
Mr. Costa. Sure.
Mr. Hurd. I don't have an exact number, Jim. But however,
the importance of it can't be emphasized enough. And the
ability to move forward on these projects, instead of just
putting on the shelf----
Mr. Costa. I mean this is long term, of course, as we know.
Mr. Hurd. Sure.
Mr. Costa. That is not going to deal with our current--Mr.
Somach?
Mr. McClintock. We are going to do another round of
questions.
Mr. Costa. OK.
Mr. McClintock. But in deference to the other Members----
Mr. Costa. All right.
Mr. McClintock [continuing]. I would like to move along, if
we can.
Mr. Tipton?
Mr. Tipton. Thank you, Mr. Chairman, and I would like to
echo some of Congressman Costa's statements in regards to
water, that this shouldn't be a partisan issue. Everybody likes
to eat and be able to have crops to be able to grow. And this
is something that, as Americans--Mr. Hurd, you had noted, in
terms of the importance of being able to feed America, and to
be able to feed the world.
In 1960, the census in the country showed that we had about
130 million Americans. Our last census showed we have well over
300 million Americans. That means we are going to have to be
able to have the water for them not only to be able to bathe,
but to be able to grow the crops for them to be able to eat.
And probably on the conservation end of it, we do need to be
able to have that common-sense, all-of-the-above approach.
But it also means that we are going to have to be able to
store more water. And we need--I come from a headwater State.
If we step back just a couple of years ago now, in Colorado,
the Colorado River, as I drove past it, and the Animas River,
the San Juan and San Miguel Rivers, driving through there, were
running high in late August, because of the great snowpack. We
have different seasons, different times when we are going to be
able to have those opportunities to be able to capture that
water, and we need to be able to take advantage of that. But we
have some challenges, I think, that many of you, in your
testimony, are certainly speaking to.
Mr. O'Toole and Mr. Hurd, could you describe, just briefly,
what are the most important hurdles in moving a new storage
project forward?
Mr. O'Toole. Well, Mr. Tipton, the hurdles are the funding.
In Wyoming, for example, we have adequate funding to do the
construction on our own, although, as I mentioned, our valley,
which is--half of it is in your district and half of it is in
Representative Lummis's district--we had two projects that are
federally authorized that could still be constructed, with
funding. But the State of Wyoming has its own funding. The next
step is going into the Federal system.
And the Endangered Species Act clearly has made an impact
on the analysis of the process, and I think--let's be blunt.
The experience with the delta smelt in California is really
almost the worst case scenario of what can happen with using
that act in a way that was never anticipated. So I----
Mr. Tipton. Could you maybe clarify and just remind me?
Because when you brought up the ESA, we also have NEPA, Clean
Water Act, a variety of different regulatory processes that are
out there. How long was the permitting portion of this to be
able to get to that stage to where it is ready to go and you
just need the financing?
Mr. O'Toole. In our case it was 14 years.
Mr. Tipton. In 14 years.
Mr. O'Toole. Yes.
Mr. Tipton. The Chairman had noted it a little bit earlier.
Has that driven up the costs?
Mr. O'Toole. Well, I think it--as I said, it doubled the
cost and halved the project. So it had a----
Mr. Tipton. Doubled the cost of the project. Can you
describe for me what type of coordination was going on between
those different agencies to be able to try and accelerate a
good end, having water to be able to grow crops and to be able
to have use for our cities?
Mr. O'Toole. Mr. Tipton, I attended many of those meetings,
some in Denver with the EPA, some in Cheyenne, with the Corps
of Engineers, some with the Fish and Wildlife Service. And what
I found was there was very little coordination. It was really
individual agencies responding. And there was a--as you know,
there was a philosophy over the last couple decades of not
doing storage.
Mr. Tipton. No coordination that is going on----
Mr. O'Toole. None----
Mr. Tipton. Increasing costs----
Mr. O'Toole. Virtually none, whatsoever.
Mr. Tipton. Family Farm Alliance, Mr. Hurd, maybe you can
comment quickly, as well. Is that a good way to run a business?
Mr. Hurd. Well, respectfully, sir, I will tell you the
numerous numbers of projects that are identified are certainly
important, but think of one thing. Everything stops at the
delta, where I live and we farm. Right next to where I live,
there are thousands of acres in the Grasslands Water District
for wildlife refuges. They are sitting dry right now, today.
Los Angles Metropolitan Water District receives over about 15
to 20 percent of their supply through the same canal systems
that I irrigate my farm. So it is not that we are isolated,
farmer fighting farmer. This is the whole State, as Mr. Costa
represents.
So, the decisionmaking on some of these funds to fund a
particular project really should also be focused on a very
tough issue of the delta. We, in the Ag sector, have been
willing to step forward to--$15 to $18 billion to build the
DHCCP project for conveyance. And yet, we get absolutely no
assurance that, once the project would be built, we would get
any more appreciable water. Is the bank going to loan me money
and, for my grandchildren to pay if we build a project and
there is no water to run through it? Let's have some direction.
Let's have some guidance, sir.
Mr. Tipton. Great, thank you. We are going to have another
round, Mr. Chairman?
Mr. McClintock. Yes, we will, sir.
Mr. Tipton. Thank you.
Mr. McClintock. Mr. Huffman?
Mr. Huffman. Thank you, Mr. Chair, and thanks to the
witnesses for traveling to be with us, and for your testimony.
I think the drought that we are talking about is of great
concern to all of us. And sometimes, when we discuss this in
this body, the media and others get the perception that it is
about one part of California, or about one sector of
California, and it is really not. I will tell you, representing
about a third of the California coast, the north coast, I have
areas in my district that are hit every bit as hard or harder
than some of the most dire situations that we have heard
described today and that we have heard described in other
narratives about the San Joaquin Valley.
So, we should just stipulate, I think, at the outset, that
we are all concerned about this drought, and that wherever you
are in California, with a few happy exceptions, there is a lot
of pain going on, and a lot of angst about how we are going to
get through the summer. I have three decent-sized
municipalities that, if it doesn't rain significantly, are
going to run out of water in about 2 months. That is a big
deal. They don't have other water they can buy, they don't have
other water they can find. It is over for them. And you can't
really fallow municipalities. So this is a bad situation, and I
take it very seriously.
But I am also mindful of the experience in Marin County in
the last really scary, critical drought, 1976/1977. In the
immediate aftermath of that there was a feeling that we needed
to do something to protect against that in the future, that
surface storage should be part of the mix, and we built a dam
called Soulajule that made everybody feel pretty good because
they built a dam. But it hasn't provided any water since,
because it wasn't in a good location, it didn't really
operationally fit within the system. And, frankly, after
several decades of finally paying off the debt from that
project, Marin is looking for other sources of water, because
that didn't help us. It won't even really help us with any
water this year, in the most critical drought year of record.
So, I think we should be very careful. There may have been
a time in California water when you built it first and then
asked questions. I think it was Harvey Banks that said that
about the State water project back in the day. That may have
worked when you had a lot of low-hanging fruit in California,
projects that you knew were going to generate large amounts of
yield, projects that had financing in place, that had partners.
But I don't think those are the times we are in right now.
And we need to remember that none of the surface storage
projects we are talking about here today will help us in this
drought. They may not even help us in the next drought. They
may be two or three droughts from now before they could even
help, if they were finally brought online, because they just
take too long to plan, construct, and finance--finance should
probably be before construct in that sequence.
So, I think we have to aim carefully before we shoot. And,
in that regard, I am curious about these north-of-delta surface
storage projects, because one of the problems we are grappling
with--have been for years--is the carrying capacity of the Bay
Delta. How much water can be sustainably extracted and exported
from that system without crashing the system? And we are having
a robust debate about that in California.
There continue to be proposals to maintain record-high
levels of exports, which the scientists have told us cannot be
sustained, that we will simply run into more and more conflicts
and litigation. And, ultimately, we need to accept the fact
that we are going to need to export less from the delta, not
more, in the future. That, I would argue, is one of the
fundamental premises of the California water package of 2009.
And so, my question, Mr. Somach--or, perhaps, to others--
is, if we are possibly facing a future where less water is
exported from the delta, rather than more, do we run the risk
that investing billions of dollars in new surface storage north
of delta could create the equivalent of the Soulajule Reservoir
that was constructed in Marin County, a big, shiny, new dam
that everybody feels good about, but you can't move the water
and integrate it into the system and operate it in a way that
gives value for that investment?
Mr. Somach. No, not at all. In fact, focusing on just
environmental needs, just--let's forget about any export
needs--one difference between now and the 1977 drought, for
example, is there is 1.2 million acre-feet of outflow that is
required that wasn't required in 1977. Where does that water
come from in a year like that, if we don't have above-the-delta
storage?
The Fish and Wildlife Service and the National Marine
Fisheries Services are saying they want to hold back in Shasta
this year 1.7 million acre-feet for a cold-water pool. That
didn't exist in 1977. If that occurs this year, where does that
water come from if we don't have additional storage?
Mr. Huffman. I am almost out of time, but have you
calculated--what would the yield of Sites be, Mr. Somach?
Mr. Somach. The yield itself is 500,000 acre-feet and, used
in conjunction with Oroville, Shasta, and Folsom, it will
increase upstream storage by another 500,000 acre-feet. So you
are talking----
Mr. Huffman. OK, thank you----
Mr. Somach [continuing]. About a million acre----
Mr. Huffman. If I can sneak in one last question.
Mr. McClintock. Well, you can on the next round.
Mr. Huffman. Very good, thanks.
Mr. McClintock. In fact, you can sneak in several in the
next round if you are brief in your opening comments.
[Laughter.]
Mr. McClintock. Mr. LaMalfa?
Mr. LaMalfa. Thank you, Mr. Chairman. I appreciate the time
and for everybody traveling here today to be on this panel.
You know, it is an interesting argument here. But any time
you have a project that you can store water in, you have more
water. You have available water for some purpose. So I can't
believe that if we build projects somewhere, enhance existing
projects, that with additional water, whatever that yield is,
that someone will not find a place to use it.
So, as we see with our shortage--I look at it as buckets.
The more buckets you have that have stored and been filled to
capacity when we have plenty of rain, the longer you can draw
up on it. If you have--instead of 4 gallons of distilled water
in your garage, if you have 6, you have more water that will
last longer. So it just seems like common sense that you build
as many as you can in a State that needs more.
But the difficulty is--Sites Reservoir, which is pretty
close to my neighborhood, has been talked about, not just for
the last 20 years, but, really, in concept, for 50 or 60 years.
It makes you wish that back in the day, when things were easy
to build, they just built everything, and we would still be
enjoying these benefits. You know, California, the crisis we
are talking about for urban areas, for Ag, even for
environmental use that we are seeing, we haven't even talked
about hydropower. I don't know where the electricity is going
to come from a little bit later in the year.
The issue is that we need to build it while the sun shines.
When we have flush years we don't talk about water any more.
This is the year we really need to get the public's attention
and move these projects forward as much as possible. So the
biggest impediment hasn't been, really, the financing; it has
been the confidence of the people that would finance that we
can build a project. It comes right back to the red tape.
So, Mr. O'Toole, I would like to touch base with you on
that. You noted that the conflicting requirements from Federal
agencies, State agencies, and the time that it takes to do
that, what do you think that is really doing--I mean with
regards to Sites or any of the other ones--in cost, in time,
lost opportunity? What does that look like? If you want to,
emphasize that a little bit more.
Mr. O'Toole. I had mentioned earlier, Representative, that
I did a tour of California last fall, and went into the Bureau
of Reclamation offices near the San Luis project, and saw the
vision of what the Bureau of Reclamation had in California. I
had no idea that the Shasta Dam was built with the anticipation
of raising 200 feet. There is--reservoir was anticipated that,
if we hadn't gone through a multi-decade let's-not-do-anything
phase, we would have them today. And I think that is the beauty
of this vision of the bill, is to make the system user
friendly.
And it is really a question of commitment. Is your
commitment to the long term, or is your commitment to the short
term? And my experience has been--the State of Wyoming just did
a study, the Governor did a 2-year study. What did it come out
and say? More storage. The Governor of Idaho last week got a
multi-million-dollar appropriation from the legislature to do
more storage, to raise some projects.
So, I think the policymakers on the local levels are
understanding how important this question is. And, again, I
appreciate your committee looking at a solution.
Mr. LaMalfa. What do you think, with the extended studies,
what are we learning that we don't already know, either from
previous projects--what new information are we turning up that
is really going to be helpful to the public interest that we
don't already know?
I mean, we toured Sites Reservoir just a few years ago,
when I was in the State Assembly. And the representative, I
think he was from DWR, said, ``If you can't build it here,
environmentally, you can't build it anywhere.'' What are we
learning with these extended studies that study it, seemingly,
to death?
Mr. O'Toole. The Family Farm Alliance did an analysis with
the Bureau of Reclamation a few years ago on the potential
storage, and there are many sites that are ready to go. All
they need is a go-forward. So I think that there is more to
learn. In my watershed, we identified a few new places that we
think, down the road, are going to be appropriate.
Mr. LaMalfa. No, I am speaking of the environmental
studies, not the engineering of where they would go. It just
seems that they are used as tools to block projects from moving
forward.
Mr. O'Toole. I think, in the worst case scenarios, they
have. But I will tell you in sort of the new world where you
have to have the buy-in of everybody to get any projects done,
the understanding of hydrology has been expanded, the
understanding of wildlife benefits has been expanded. The
purpose and need is the crucial analysis by the Government as
to why you build. Expanding that understanding is how we are
going to get things done faster in the future.
Mr. LaMalfa. OK, thank you. Going back to the biblical
reference here, I think this bill, H.R. 3980, could actually be
like Moses parting the red tape to get the job done here.
[Laughter.]
Mr. LaMalfa. So----
Mr. McClintock. Thank you.
Mr. LaMalfa [continuing]. Mr. Chairman, I yield back.
Mr. McClintock. We are going to go to a second round. And I
will begin.
There was a criticism raised earlier that these bills were
just introduced last week and are moving very fast. I would
point out that this subcommittee conducted painstaking hearings
all through last year on these subjects. The details of these
measures were all meticulously fleshed out at the time. And, in
fact, those hearings were the genesis of these bills. So the
details should not come as a surprise to anyone who followed
the hearings last year.
The other point that was raised that I just want to mention
in passing is that, well, these big projects, they just take
too long to construct, it is not going to help in the current
crisis--which is true, it will help to prevent future crises--
and I am reminded of the story of General de Gaulle, who wanted
to plant some oak trees at his headquarters. And when he was
informed, well, oak trees will take many, many years before
they grow to maturity, his response was, ``Well then, you
shouldn't waste any more time, should you?'' And that is
exactly the stage that we are at right now.
Mr. Ellis, you objected to Federal financing. And I assume
that is because--even though it is a loan payback by the
beneficiaries, your objection is that it is a below-market-rate
loan and, therefore, represents a subsidy to those
beneficiaries. Is that, essentially, the--really, the
objection?
Mr. Ellis. Yes, sir, in a nutshell.
Mr. McClintock. But you don't object to the general
position that the beneficiaries should pay to redeem these
loans through their purchases of water and power; the only
question is at what rate.
Mr. Ellis. Right. And then, also, with at least the way the
system is set up in the way the two bills interact, is that
there are going to be cases of where people are paying back
their projects, and then that is cross-subsidizing or going
over to another project. And part of our major concern is that
it is moving outside of the congressional appropriation and
authorization process.
Mr. McClintock. And also, I assume, because of the prices,
if they are left alone, send accurate signals to people of the
actual cost of these various forms of water delivery, so that
people can then make rational choices as to how much they buy,
and at what rates.
Mr. Ellis. Yes, Mr. Chairman.
Mr. McClintock. OK. Well, now, we are told that
desalination is an important measure that we need to move
forward. I have had a lot of people come up to me and say,
``Well, why don't we just go to desalination?''
And my response to that is, ``Well, that is great, if you
don't mind $1,000-a-month household water bills''. But, of
course, the desalination bills that are being proposed here are
not reflecting the actual price. That is all being handed over
to the taxpayers. They wouldn't dare actually present the price
to consumers of this water. Would you object to such bills?
Mr. Ellis. Certainly we have concerns, yes. I mean,
basically, in a nutshell, we are coming down to dollars and
cents. That is what we are concerned about. And we are here to
represent the taxpayers. And so, our concern is that water be
priced appropriately, and that it recommend that those avenues
be pursued.
Mr. McClintock. So desalination----
Mr. Ellis. And it is----
Mr. McClintock. So desalination should also be subject to
the Beneficiary Pays principle, so that people get accurate
price signals?
Mr. Ellis. Yes.
Mr. McClintock. Would that apply also to title 16
recycling, which is entirely paid for by taxpayers?
Mr. Ellis. I have to say I am not familiar with the
program, Mr. Chairman, to answer that appropriately.
Mr. McClintock. So we would agree that, basically, all of
our water projects ought to reflect the actual price of those
projects. The only question in contention, from your point of
view, is whether the loans are actually being repaid at market
rates.
Mr. Ellis. Yes, sir. The only other exception is both the
Corps projects and with Bureau projects there is this ability-
to-pay provisions that are in the law, and I think are
appropriate, because, as Congresswoman Lummis said, water is
essential to life. But, yes, in a nutshell, yes, sir.
Mr. McClintock. Mr. O'Toole, we heard Los Vaqueros
mentioned. That is 60,000 acre-feet, I believe, was the figure.
Would it surprise you that simply raising the spillway at the
Exchequer Dam of Lake McClure in California would yield an
additional 70,000 acre-feet of water?
Mr. O'Toole. I am not familiar with the project, but I
think the Pathfinder in Wyoming is being raised, as we speak.
And that raising of projects, whether it be Shasta or
Pathfinder or others, are all going to take an existing project
to an increased----
Mr. McClintock. My point is raising the spillway 10 feet at
the Exchequer Dam is 70,000 acre-feet of additional water
storage. And we are running into a lot of opposition from the
other side because it requires adjusting a wild and scenic
river boundary to conform to the pre-existing FERC boundary.
Does that surprise you, that a State in which such a
controversy can arise is now wanting for water?
Mr. O'Toole. I have to tell you nothing surprises me any
more in the water world. But I think efficiencies are where we
are trying to get to, yes.
Mr. McClintock. Thank you. Mrs. Napolitano?
Mrs. Napolitano. Thank you, Mr. Chair. Mr. Ellis, could you
explain the ability-to-pay provision, and how does this affect
repayment, and who makes up the difference?
Mr. Ellis. Well, from our perspective, at least on the
payment--well, in the Corps, they have never even used the
ability-to-pay, I have to admit. I am not as familiar in the
Bureau of Reclamation, I just know that it exists.
But, from our perspective, it generally--yes, the user
should be repaying for the project, and they should be paying
with interest, and the water should be priced appropriately,
because that is going to send the market signal to
conservation, into wise and appropriate use.
Mrs. Napolitano. Thank you. Then the Majority makes the
fiscal argument that allowing for prepayment pays back the
taxpayers sooner. Do you think the issue of prepayment only
involves money?
Mr. Ellis. Well, it is interesting. It is one of the things
that Mr. O'Toole indicated that his--I think it was your
father-in-law that said that these projects need to be managed
specifically. And so, one of our concerns is about this sort of
blanket, one-size-fits-all approach to prepayment, rather than
having the negotiated approaches that Mr. Somach had discussed,
and what I under the GAO are looking at. So that is another
issue there, as well.
Mrs. Napolitano. Thank you. And to Mr. Somach, I kind of
have--I am sorry, Mr. Ellis, I am looking back at my notes--we
have not really spoken to the issue of evaporation, climate
change, and the increase in temperature that has--really is
playing havoc with our above-ground storage or canals and
rivers. If it continues to increase, how will we be able to
store more water above ground?
And, added to that is, have we looked at how we can remove
sediment from some of the dams and some of the areas of, say,
holding water for recharge of aquifers?
Mr. Ellis. These are all areas that--it is going to become
an increasing challenge, going forward, with the issues around.
You know, evaporation and these type of things. And so, yes,
Congresswoman Napolitano, these are going to be challenges that
have to be addressed.
And the other thing is that there is a lot of talk about
building more dams. I mean, part of the reason why--everywhere
isn't a good dam site, which was indicated by Mr. Huffman's
testimony, or comments. And so, that is one of the things that
is happening, we are having fewer and fewer good dam sites, we
are having fewer and fewer buckets, good buckets that are
available, as Mr. LaMalfa was talking about. And so, I think
that is going to be one of the challenges, going forward, in
identifying where is adequate storage or other needs.
Mrs. Napolitano. Thank you. Yes, and I do agree with Mr.
LaMalfa. We need to sit and really go over the different types
of programs that we talk about but never really listen to, and
how do we address the future, and how do we get all the
agencies to start talking to each other and to those affected.
And how do we listen to all of them with--instead of just 5
minutes and you are gone. And we don't have the ability to re-
rationalize and be able to put two and two together and work
bipartisan on this issue that is so critical for all of the
United States, not just the Western States, and certainly not
only California.
There are many other questions I would like to ask, but I
think I would like to put them on the record and send them to
you. But one of the things that I would like to ask Mr.--not
Mr. Chairman, but--that our discussion should be for all
storage. It should have started over a decade, maybe even two
decades ago. And you are right, we are way behind, because we
had plentiful in precipitation. But our discussion on water
will continue on the Floor today.
But we all are in consensus, believe it or not. We are in
drought. The West is in drought. And we just need to look at
all options, not just one. And yes, we do need storage, above
ground, below ground, we need all of the above. But it has got
to be in a bipartisan solution. You need to help us on that.
How can we reach out to you, and have you input to us
recommendations that are going to be viable for us to discuss
on the Floor and with our agencies, and start not necessarily
saying--holding them accountable, but starting to ask the
questions, ``What are you doing to help our communities?'' And
just getting the agencies to coalesce, getting our folks to be
able to cut on the regs, figure out how do we expedite things
that are going to bring about the solutions that we all need.
And, with that, I would like to submit for the record the
Bureau of Reclamation statement on this bill, on both of them,
H.R. 3981 and H.R. 3980--were received this morning.
Mr. McClintock. I believe that is already part of the
record, but without objection.
[The information submitted for the record by Mrs.
Napolitano follows:]
Prepared Statement of the Bureau of Reclamation, Department of the
Interior
h.r. 3981--accelerated revenue, repayment and surface water storage
enhancement act, h.r. 3980--water supply permitting and coordination
act, and a discussion draft, to amend the secure water act of 2009
Chairman McClintock and members of the subcommittee, the following
statement represents the initial review of the Department of the
Interior (Department) and Bureau of Reclamation (Reclamation) on the
three bills. All of these bills were only presented to the Department 1
week ago, and the Department has not had adequate time to conduct an
in-depth analysis and develop detailed, thorough testimony.
The Department has expressed concern to the committee that short
notice of the hearing on multiple new bills would deprive the
Department and the administration the opportunity to provide testimony
containing thorough analysis of the language. The Department may
provide additional views on this legislation after conducting further
analysis.
H.R. 3981--Accelerated Revenue, Repayment and Surface Water Storage
Enhancement Act
H.R. 3981 contains language to authorize pre-payment of outstanding
construction cost obligations, and also authorizes the conversion of
water service contracts to repayment contracts. In general, Reclamation
supports legislation authorizing the pre-payment of repayment
contracts, and has done so before this subcommittee.\1\ Below is some
background on Reclamation's initial reaction to legislation authorizing
pre-payment, and our interpretation as to the effect of the bill.
---------------------------------------------------------------------------
\1\ H.R. 818 testimony May 12, 2011; H.R. 5666 testimony July 27,
2006; H.R. 4195 testimony November 9, 2005.
---------------------------------------------------------------------------
As background, we note that specific statutory authorization for
accelerated repayment is not required in all cases involving
construction costs that are allocated to irrigation. The Reclamation
Reform Act of 1982 [RRA] subsection 213(c) specifies that no authority
is provided for lump sum or accelerated repayment of construction
costs, except for repayment contracts that provide for lump sum or
accelerated repayment that were in effect as of the enactment of RRA.
Therefore, Reclamation and the Congress have interpreted current law to
require water contractors to obtain additional statutory authority to
make accelerated repayments of construction costs allocated to
irrigation, except for those contracts already in effect as of the
RRA's enactment, or for contracts otherwise exempt from the provisions
of the RRA. As written, the bill would primarily benefit irrigation
contractors on Reclamation's Central Valley Project based on the number
of water service contracts connected with the Project. For municipal
and industrial water service contracts, additional statutory authority
may not be necessary for conversion of municipal and industrial water
service contracts to repayment contracts, or for pre-payment of
outstanding obligations, depending upon the circumstances applicable to
each case. With this background, Reclamation can foresee some concerns
with equity in implementation of the draft H.R. 3981 as currently
written, specifically related to the contract conversion authority
provided in the bill. While contract conversion legislation has been
implemented for certain Reclamation project units (e.g., the San
Joaquin River Restoration Settlement Act, 2009), the general concern is
that this legislation proposes a broad, Reclamation-wide, ``one-size-
fits-all'' approach, while the unique aspects of most Reclamation
projects argue for a more case-by-case approach to accommodate the
nuances of each project and its contracts.
For example, there are instances where contract conversions would
be in direct conflict with existing statutory law applicable to the
Reclamation project in question. On the Colorado River Storage Project
[CRSP], enforced contract conversions required under the language of
the draft bill would likely conflict with section 5 of the CRSP Act,
which establishes very specific requirements for the collection and
disposition of revenues from various project elements into funds
specific to that comprehensive, multi-purpose project. Section 5 of the
CRSP Act specifically directs where all project revenues are to be
distributed. The bill language would change that arrangement, impacting
the funding for the project.
Where longstanding pricing systems and/or negotiated payment
agreements are in place, those could be completely disrupted by the
mandates of this legislation (again, CRSP being a good example). In
other cases there is ongoing litigation associated with existing water
service contracts that would be further complicated by the
legislation's mandate that conversions be granted ``upon request of the
contractor''. Providing this authority to be used at the Secretary's
discretion would likely address many of these concerns. Another concern
with the bill is that in many cases it would be very difficult to
determine the appropriate construction repayment obligation within the
proposed 30-day timeframe envisioned by this legislation. Water service
contracts often are entered into because a final repayment obligation
associated with various project purposes has not yet been determined.
Many projects operate under an interim rather than final cost
allocation, and therefore only an initial determination of an
appropriate repayment obligation could be made within the compressed
period allowed under the bill. On projects with several contractors,
pay off dates may vary from one contractor to the next (no guidance is
provided by the legislation), which would complicate the determination
of the appropriate payment amount.
There are other concerns with the financial and discounting
language in the bill, which require additional analysis. In particular,
the offer of a discounted repayment in section 2(a)(2)(A) may have
implications for revenues to the Treasury, and raises questions as to
fairness given the contractors who have already pre-paid their
obligations under different allowances. For example, similar
legislation in the San Joaquin River Restoration Settlement Act of 2009
(section 10010) provided for prepayment on the basis of the outstanding
obligation, not the net present value of that obligation. Combined with
the discounting at \1/2\ the Treasury rate provided in this same
section, this could amount to double-discounting of outstanding
repayment obligations. It is also unclear why the Treasury rate
specified in the legislation is the 20-year rate. OMB Circular A-129
suggests that, for discounted prepayments, a current market yield on
Treasury securities of comparable maturities should be applied.
Finally, while section 2(e) of the bill diverts receipts generated to a
new account, the legislation has no cost-recovery provisions for the
staff time and expenses that would be incurred by Reclamation in
accommodating the accelerated repayment determinations, and in
developing and executing the new contracts.
Section 2(e) and the remainder of the legislation create a
``Surface Water Storage Enhancement Program'' to be funded with
receipts generated from prepayment of contracts ``to fund or provide
loans for the construction of surface water storage.'' Authority for
cooperative agreements with water users associations is provided, and
funds would be available without appropriation for a variety of storage
projects identified in section 2(e)(5). Without any accompanying
offset, we believe this provision would increase direct spending and
would score under existing Pay-As-You-Go [PAYGO] provisions.
Furthermore, while the administration welcomes and supports efforts to
efficiently maintain water assets, any proposals should result in the
most efficient long-term use of the available Federal and non-Federal
funds and be consistent with Federal budgetary requirements.
Reclamation is proud of its history constructing the surface water
storage projects that are central to life in the West and our national
economy. What is rarely considered in the political discussion of
surface storage are the realities of project repayment and market
conditions associated with building large dams today. In February of
2012, Reclamation testified before this subcommittee at a hearing
titled ``Water for Our Future and Job Creation: Examining Regulatory
and Bureaucratic Barriers to New Surface Storage Infrastructure.'' As
stated at that hearing, the most frequent reasons for fewer large
surface storage projects being built today center around economics or
an inadequate potential water market associated with the given
facilities. In other cases, environmental, safety or geologic
challenges came to light during a project's development, and rendered
construction, completion or operation unfeasible. Local opposition
sometimes contributed, leaving the facilities ``on the books'' awaiting
further action, but with external events and new priorities passing
them by. This legislation devotes significant new resources to the
prospective construction of new surface water storage. But the
underlying economic issues that prevent projects from being built--the
difficulty of repayment--are unchanged by this bill. Reclamation's
focus has instead been on meeting the challenge of rehabilitating the
existing, aging, water and power infrastructure on which western
economies depend. We would be glad to work with the subcommittee on
this important aspect of the debate surrounding new surface water
storage. However, we believe that any potential revenues from
accelerated repayment of outstanding contractor obligations should be
repaid to the Treasury or Reclamation Fund to fulfill the project
beneficiaries' obligations to the taxpayers who originally financed
these projects.
h.r. 3980--water supply permitting and coordination act
H.R. 3980 directs the Secretary of the Interior to coordinate
Federal and State permitting processes related to the construction of
new surface storage projects on lands managed by Interior and the U.S.
Department of Agriculture [USDA]. Section 3 of the bill would establish
Reclamation as the lead agency for all reviews, analyses, permits and
other requirements necessary for construction. A series of deadlines
and timelines are mandated for notifying and consulting with
cooperating agencies, completing environmental reviews, and determining
project schedules. While nothing in the bill would facilitate more
regular Federal funding for any of these activities, the bill does
allow for contributed funds from non-Federal entities. However, section
6(c) of the bill would prohibit use of any contributed funds for ``a
review of the evaluation of permits'' by the Reclamation Regional
Directors in the region in which qualifying projects would be built.
This legislation raises several concerns. In section 2(4) the
definition of ``cooperating agency'' leads to confusion and is
inconsistent with established regulations and judicial interpretations.
For example, it is inconsistent with the definition under NEPA and its
implementing regulations which identify Federal, tribal, State, and
local governmental entities as potential cooperating agencies and
further allow those governmental entities with subject matter expertise
to be designated cooperating agencies. In section 6(c) and throughout
the bill, it is unclear what public policy problem would be addressed
by the bill. Under the National Environmental Policy Act, the Economic
and Environmental Principles and Guidelines for Water and Land Related
Resources (P and G's), existing regulation and other laws, there is
already ample basis for review of projects and coordination among
Federal agencies involved in water supply planning. We do not know of
any Reclamation or USDA-sited surface water storage projects that have
been denied construction because of delays associated with project
review or permitting, or shortcomings in communication among
Reclamation, USDA, or any other State or Federal partners. Rather, as
stated above and in prior testimony at the 2012 hearing, project
economics and the pricing and repayment challenges in the potential
markets where projects would be built are the primary reasons for some
projects being authorized but not constructed. If nothing else, this
bill reduces the time necessary to establish the merits of projects
and, in some ways, could make favorable recommendations for project
construction less likely.
An additional problematic aspect of the bill is that it establishes
Reclamation as the lead agency for permitting for storage projects on
Interior and USDA administered lands. Since those lands exist in all 50
States, this would put Reclamation in a significantly expanded role of
administering the permitting process for activities outside the 17
Western States where Reclamation has typically had jurisdiction.
draft bill--to amend the secure water act of 2009
H.R. _____ (Discussion Draft) would amend the Secure Water Act to
create a new ``surface water storage enhancement program'' within the
Department, funded for 5 years with $400 million per year in receipts
that under current law would be deposited in the Reclamation Fund.
These are revenues that would otherwise flow to the U.S. Treasury, but
which would, under the draft bill, be made available for construction
of surface water storage projects without appropriation. This provision
would increase direct spending by $2 billion and score under existing
PAYGO provisions. Construction could be funded with these revenues
``exclusive of any Federal statutory or regulatory obligations relating
to any permit, review, approval or other such requirement.'' Section
1(b) of the bill would add language to the Secure Water Act defining
``any non-Federal facility used for the surface storage and supply of
water resources'' eligible for construction funding.
We recognize that this is a ``discussion draft'', and would be glad
to engage in further discussion with the subcommittee on the bill. We
believe that spending on surface-storage projects should reflect
consideration for the economic return to the Nation. We would like
additional clarity on the meaning of several phrases in the bill, and
have questions as to how Reclamation would establish eligibility for
funding under the proposed program. We would be glad to work with the
subcommittee to explore these issues further. In conclusion, the Bureau
of Reclamation has a long history of constructing, managing and
operating surface storage for the benefit of the arid West, and where
projects make environmental and economic sense, will continue to pursue
surface storage as one of many options to meet water demands in the
West.
______
Mrs. Napolitano. And, with that, I yield back the time.
Mr. McClintock. Mrs. Lummis?
Mrs. Lummis. Thank you, Mr. Chairman. Mr. Somach, regarding
the benefits of prepayment, Chairman Hastings' bill, why would
an irrigation district want to give up an interest-free loan,
when they would have to replace it with a loan that has an
interest payment? What is the benefit of doing that? Obviously,
it is not financial.
Mr. Somach. No, it is not financial. It has a little bit to
do with the--and we use the word a lot here--red tape. The
example that I gave you in the Oregon situation, in fact, they
didn't go out and refinance, they pulled money out of their
pocket, so to speak. That $250,000 was not financed, it was
simply paid as an early repayment.
The other example I gave in my written testimony is a
current situation that I am dealing with, where I have a
settlement contractor on the Sacramento River, and its
settlement contract is for about 50,000-plus acre-feet of
water. And because of the peculiarities of the way the
settlement contract read, 600 acre-feet out of the 50,000-plus
acre-feet is denominated as Federal project water. That Federal
project water requires the land owners to report all of their
land holdings westwide on an annual basis. And it has,
actually, as a practical, plain, old practical matter, just
wreaked havoc, in terms of what they have to do annually.
And, moreover, every time they buy a piece of property
elsewhere in the entire Western United States, they have to
kind of ripple through because of this 600 acre-feet of water.
The ability to just simply early pay that 600 acre-feet has
very practical ramifications.
I also note that what it does is it relieves one of some of
the more burdensome or onerous provisions of the Reclamation
Reform Act. But that policy actually comes out of the
Reclamation Reform Act itself, because if they just were to pay
this out in the normal and ordinary way, once repayment took
place, all of those burdensome requirements would fall away by
operation of the Reclamation Reform Act. So that all we are
talking about here is accelerating, through early repayment,
what would have happened in any event. So it is not a----
Mrs. Lummis. Thanks, Mr. Somach. I appreciate it.
Mr. O'Toole, now I am flipping back to the other bill. In
your view, does State involvement in permitting need to play a
stronger role? And should State findings and data be part of
the overall review process?
Mr. O'Toole. Representative Lummis, the State participation
is crucial. I think you know the Wyoming Water Development
process is multi-year involvement in these processes right now.
In our valley we are looking at an appropriation last year from
the legislature to begin the planning process, and it is
absolutely crucial. That is where the information is, and the
motivation.
And I might just say that part of the process, as it is
now, is that essentially the Federal Government gets to decide
which of the priorities--there may be several priorities that
the State has identified, and the Federal Government gets to
identify. Often that isn't the right place. And so, I think the
knowledge at the State level is crucial to make these things
work.
Mrs. Lummis. Following up on that, do you believe that
allowing non-Federal governmental entities to financially
contribute to the coordinated permitting process should be
acceptable for all water users, and not just for, for example,
San Francisco, as was supported by the previous House Majority
party?
Mr. O'Toole. Representative Lummis, I am not that familiar
with that process, but I know that Wyoming and Colorado spent a
tremendous amount of money in the permitting process. I mean it
is--that is the responsibility that they have to make the
process work. Otherwise, it wouldn't happen.
Mrs. Lummis. For each of you, if water is treated solely as
a commodity, what is the likely human response to a shortage,
if it is completely commoditized, and you have to pay for water
to have water, regardless of its price?
Mr. O'Toole. I will just use the example right now in the
Eastern Slope of Colorado. Oil and gas can pay $3,200 an acre-
foot for water. And the result of that is farmers out of Fort
Collins, for example, cannot afford to compete.
The resource is going to be more competitive. I sit on the
Bureau of Reclamation's group that is looking at the Colorado
River right now. And the unfortunate reality is that Ag is the
reservoir for growth, for energy, for all the other needs for
the environment. And I testified earlier that we are expected
to produce more food, not less. And there is a conundrum there.
Mr. McClintock. Thank you. I am going to have to cut it off
there. If you have additional testimony, by the way, you will
be invited to provide it for the committee for the record.
Mr. Costa?
Mr. Costa. Thank you, Mr. Chairman. Mr. Somach, let's
continue where we were, and you were about to answer my
questions with regards to the progression of the completion of
the studies for High Shasta, for Temperance Flat, and Sites--as
I understand it, it is kind of in a different category----
Mr. Somach. Well, Sites also is having a Federal
feasibility study completed.
Mr. Costa. Right. This year?
Mr. Somach. It won't be completed this year. The other two
should be completed this year.
Mr. Costa. This year?
Mr. Somach. Yes.
Mr. Costa. That is what I have been told. Upon the
completion of the study, then, our next step would be to
determine the financing?
Mr. Somach. No, see, I think that that is part of the
problem with the process that has gone on. There will be a
determination of the cost benefit, you know----
Mr. Costa. Analysis.
Mr. Somach [continuing]. Analysis of those projects. The
projects, the way they have been analyzed by the Federal
Government, have been analyzed in the normal and ordinary
construct of the way the Federal Government visualizes these
things. So, as a consequence, what you have is a set kind of
project. They go through this long feasibility study. At the
end they determine whether or not the project they studied was
feasible.
Whereas, if you are Los Vaqueros. So, if you are any one of
these other projects----
Mr. Costa. Which would be expanded for a second time.
Mr. Somach. Well, and the point I am trying to make,
though, is simply if you look at those from the needs
perspective--in other words, rather than formulaically
analyzing the feasibility of the project, take a look at what
is really needed out of a project, and construct that as part
of your feasibility analysis. Then what you can do is tell
whether or not you simply have a project that meets the needs
that you are trying to meet, whether people can afford that.
And that doesn't get done.
So, what happens is, after you get these Federal
feasibility projects done, and you determine nobody can afford
them, because they analyze the wrong thing, then you have to
start all over again to try to figure out what people can
afford.
Mr. Costa. Well, when we get those studies completed this
year, then we will be able to make a determination where we
are, to your point.
Mr. Somach. Exactly. And I think that is what will come out
of those things. It takes way too long to get these feasibility
studies done in the first place. There is too much drift in the
process. It is not that doing the studies are bad, it is that
it just simply takes way too long, it soaks up so much in the
way of dollars that the projects escalate in cost beyond
anything that anyone rational----
Mr. Costa. Well, I mean, High Shasta is not new. Everyone
kind of--even some of my environmental friends suggest that it
is one of the better bangs for the buck. But, we get a
completed study there, we talk about $1 billion for the cost of
the level that they are talking about increasing the size of
the Shasta Dam. You don't have to move the freeway, you don't
have to move the railroad track. It seems like we ought to be
able to focus on some big projects, as a result of this crisis.
Mr. Somach. And particularly with the Shasta or anything
that is relying upon Upper Sacramento Valley water, like Shasta
does, is climate change is actually something that works very
conducively with those types of facilities, because Shasta is
already a rain-driven, not a snow-driven reservoir.
Mr. Costa. Right. And that is going to change the whole
operation of both the State and Federal projects, as we better
understand the changes in climate and we see, potentially, a
receding snowpack that obviously is going to make a broken
water system in California even more difficult to provide the
water for every region of the State that needs that water.
It seems to me that Doc Hastings' legislation is something
that we ought to look on and maybe use Shasta's completion of
the feasibility study as a pilot project for where we can move
ahead and try to maybe fix a process that clearly, in my
opinion, is broken.
Let me just end on this note, and it is a statement. And I
worry a lot about the sustainability of the planet, I worry a
lot about the sustainability of our Nation. Last year, we
clicked 7 billion people. And by the middle of this century, we
are going to have 9 billion people on this planet. And the
notion that the climate is changing, we are, I think most of
us, are aware of. How we provide water for our urban
communities, at the same time to try to do our best to protect
the environment--I mean Peter Moyle said that this effort to
maintain a lot of native species in California with temperature
changes may be all for nought 80 years from now.
And how do we maintain the food, the food production that
is--we take for granted? We simply take the production of food,
whether it is in California or anywhere in America, for
granted. And therein lies our problem.
Mr. McClintock. All right, thank----
Mr. Costa. That is a comment, not a question.
Mr. McClintock. Mr. Tipton.
Mr. Tipton. Thank you, Mr. Chairman. And, Mr. O'Toole, just
to kind of follow up, we talked a lot about regulatory process,
the costs that are being associated. In your view, does State
involvement in permitting need to play a stronger role, and
some of the advice for the people on the ground, in terms of
some of the processes to move forward with these projects?
Mr. O'Toole. Yes, sir, Mr. Tipton. And, as you know, the
law of prior appropriation gives the priority to the States in
the West. And their participation is the crucial participation.
What they are trying to do is develop their legal allocations
in a system that really deflects the power of the States in
favor of sort of other visions. And it has not been--the
reality is--reality has shown us what that meant. It means we
are not getting projects done. So, I think you are absolutely
right.
Mr. Tipton. Great. And, Mr. Somach, I would like to maybe
have you expand just a little bit. When we have been talking
about prepayment of loans, I did happen to write down when you
visited with your wife and--probably always taking good advice,
early repayment of interest loan has to be able to be a good
deal.
But let's talk about, for just a moment, if you would, some
of the collateral benefit of that. Would that help attract
private investment?
Mr. Somach. Yes. I don't think there is any question. In
other words, if the problem--there are a number of reasons why
someone would look toward early repay. So then, now, the flip
side is, are there benefits that ripple out from that?
Well, if you are complaining about the subsidy, the subsidy
ends. And then, if you are looking toward the privatization, or
moving the capital aspects of this out into the financial
markets, it, of course, then expands that out there, where
people are going to start looking at stability, taking a look
at the underlying investment that is being talked about. And I
think that is a positive thing, not a negative thing, in any
way, shape, or form.
Mr. Tipton. Great. When you get a lot of moving parts, as
many of you have already noted, in terms of a lot of different
policies--and just kind of curious. I noted yesterday that
Secretary Vilsack, Department of Agriculture, is going to be
coming out with seven regional climate hubs. One of them
happens to--apparently, going to be based in Colorado.
I haven't heard of it, we haven't had any contact out of
the Secretary's office or the Department of Agriculture, but it
is going to be impacting, apparently, with some consultation--
sounds nice on the surface--they are going to assess local
climate risks, such as drought, wildfire, and then develop
plans for dealing with them, such as improved irrigation
techniques.
Has the Family Farm Alliance been contacted by--this sounds
like policy coming out of the Federal Government right now.
Have you been contacted by the Department of Agriculture in
regards to these climate zone hubs?
Mr. O'Toole. We have not, as an organization. Although I
will tell you that we wrote a paper on climate in 2007 that
anticipated a lot of these discussions, the need for
adaptability and flexibility. And I will just tell you on a
personal note, as a permittee on both the National Forest and
the BLM, they have now sent us letters saying that climate will
be a part of every decision that goes forward. We can't
understand what that means. I think, in reality, it will mean a
slower process, rather than a more flexible process. That is my
personal observation.
Mr. Tipton. Well, we have--actually, this is a complete
side note--we have a Protecting Our Water Rights Act to make
sure that the Federal Government--you just noted about the BLM
and the Forest Service, where they have tried to appropriate
actual water rights in our State and the Western States, simply
by Federal fiat, to take those waters from our local
communities.
And this is something that, if you would, sir, through your
organization, we would love to be able to hear Mr. Hurd--you
happen to be a real farmer, real rancher--to be able to get
some actual feedback coming in as you hear about another policy
coming out of Washington. Because, I don't know about you, but
a lot of times I just don't get the warm fuzzies when I hear
that the Federal Government is here to help me, that we need to
be able to have policies that are streamlining the process, as
we look at Doc Hastings' bill, the Chairman's bill, to be able
to actually make a process that is actually going to work, to
be able to look out the windshield and anticipate the needs not
only of our Ag communities, but our urban centers, as well.
We can streamline it, we can make it more cost effective to
be able to achieve. But another government program, another
government regulation, coupled with the lack of coordination
that we see, seems to be a stumbling block, rather than a
stepping stone to the success that I think that we would like
to be able to see.
So, gentlemen, thank you for your testimony. I yield.
Mr. McClintock. Mr. Huffman?
Mr. Huffman. Just a limited defense of big, bad government,
in light of my friend's comments. The wonders of western
reclamation and all of the agriculture and water delivery and
all that, that was all government. Right? Anybody disagree that
none of that would have happened without a big, huge government
program?
[No response.]
Mr. Huffman. I think we need to remember some context when
we fall into some of the old talking points around here.
And one of the talking points that we hear most often in
the Natural Resources Committee is sort of the wonders of
fracking and oil and gas extraction.
So, Mr. O'Toole, I want to thank you for acknowledging one
of the darker sides of all of the Kool-Aid that has been drunk
around here on fracking, and that is there is an awful lot of
water involved, and it sounds like, in Colorado, the price of
some of that water may be driven up beyond the ability of
agriculture to compete for it, which doesn't surprise me, and I
think, in some ways, may be a preview of what California could
face, as we see more and more proposals to expand fracking.
So your point was useful for a point that I wanted to
continue in discussion with Mr. Somach, and that is there is a
price point beyond which agriculture has a hard time competing,
in terms of purchasing water. I think we all know that. I think
we all acknowledge that urban water agencies--desalination was
brought up--$1,000 or $2,000 per acre-foot, some urban water
agencies are willing to say, with their eyes wide open, ``We
need water so badly that we are willing to do that.'' And in
some ways, that is the ultimate beneficiary pays situation, it
is a very transparent, non-subsidized decision when that is the
way it works. Water can fetch a pretty high price when it gets
scarce. But I am not aware of anybody in agriculture that is
paying, on any kind of a regular basis, at least, $1,000 or
$2,000 an acre-foot.
And so, Mr. Somach, I guess my question for you is, really,
shouldn't we kind of flip this study process around a little
bit? Shouldn't we identify the users out there in agriculture
who are willing to pay a certain amount of money per acre-foot,
and then go out and start looking for projects that can be
brought in at that price point, perhaps with some partnership
and cooperation with the Federal Government? But shouldn't that
price point be driving the exploration, instead of the other
way around?
Because all of the initial dollar-per-acre-foot numbers I
have, at least, seen--and maybe you can correct me if you know
of other information--but it has been way more than anybody
that I know of in agriculture has ever been willing to pay on a
sustained basis.
Mr. Somach. Yes. Well, let me say three things about that.
Number one, that was, in fact, the point I was trying to make,
in part, when I was addressing Mr. Costa's comments, is that
feasibility studies need to take a look at what people can pay
and what people want. And if what comes out of that is just too
expensive, then you shouldn't proceed with a project that
people can't pay for.
I do think, though, that--because I also agree that
providing Federal loans, Federal dollars, is not a bad thing;
that is a good thing, because it is a broad, public benefit--
but those things help offset some of what would be the higher
cost.
Second point I want to make is that, while agriculture
can't necessarily compete across the board, the competing
needs--and let's call those urban needs--are not necessarily so
large that agriculture and urban needs can't be accommodated.
And I think the best example of that is the fact that water and
water rights--this is something I mentioned yesterday--have
always been alienable, which means they can be transferred,
they can be sold on a temporary basis, to move from where there
is surplus--for example, at times, certainly not this year, but
at times, from the Sacramento Valley down into either other
agricultural areas, or down into southern California--and I
think those are good things that need to happen, and they help
address this issue that you are raising, in terms of
affordability of water.
Mr. Huffman. Just in the limited time I have left, I see
that there is an assumption. Putting aside the concerns that
the Bureau of Reclamation may have about the accelerated
prepayment, and assuming that could be worked out, but the
assumption is that it is about $400 million a year that could
be created as a revenue source if this worked.
Can anyone speak to what that assumes? Does that assume all
Central Valley project water contractors are opting to prepay?
What level of uptake is required to get to that very
significant revenue stream? And--yes?
Mr. Ellis. Mr. Huffman, as I read the bill, it is actually
the prepayment--so the conversion of the contracts--that is in
excess of what is in the discussion draft, which is $400
million per year for 5 years. So it is additive, on top of
that. But if the discussion draft, working with Chairman
Hastings' bill was actually enacted, that is the way it would
work. So it is actually more--that is just gravy, if you would,
on top of this $2 billion slush fund.
Mr. Huffman. Thank you, Mr. Chair. I was just curious where
that money comes from.
Mr. McClintock. And the opportunity exists for Members to
submit additional questions, and for the witnesses to provide
additional testimony in writing to be part of the record.
I want to thank our witnesses and our Members for a very
interesting discussion on this subject. The hearing record is
going to be open for 10 days in order for additional questions
to be submitted and answers to be received. And, if there is no
further business before the committee, without objection, the
subcommittee stands adjourned.
[Whereupon, at 11:50 a.m., the subcommittee was adjourned.]
[Additional Material Submitted for the Record]
Prepared Statement of Thaddeus Bettner, PE, General Manager, Glenn-
Colusa Irrigation District
legislative hearing on h.r. 3981, h.r. 3980, and discussion draft to
authorize a surface water storage enhancement program
Chairman McClintock and members of the subcommittee, I am Thaddeus
Bettner, the General Manager of the Glenn-Colusa Irrigation District
[GCID], the largest irrigation district in the Sacramento Valley and
the third largest irrigation district in the State of California. I
appreciate the opportunity to provide GCID's perspective on the issue
of how the Federal Government can help address the challenge of
building new water supply projects in the Western United States.
GCID covers approximately 175,000 acres in Glenn and Colusa
Counties, and is located about 80 miles north of Sacramento. Our
district contains a diverse working landscape including a variety of
crops such as rice, tomatoes, almonds, walnuts, orchards, vine seeds,
cotton, alfalfa, and irrigated pasture. Just as important, we convey
water to three Federal wildlife refuges totaling more than 20,000
acres, and also deliver water to more than 50,000 acres of seasonally
flooded wetlands. GCID is a Sacramento River Settlement Contractor and
diverts water directly from the Sacramento River through the largest
flat plate fish screen in the world. GCID's Settlement Contract was
first entered into in 1964 and it resolved disputes with the United
States related to the seniority of GCID's rights over those of the
United States and, in fact, allowed the U.S. Bureau of Reclamation
(Reclamation) to obtain water rights from the State Water Resources
Control Board for the Central Valley Project. GCID's water rights
originated with a filing in 1883 for 500,000 miner's inches under 4
inches of pressure, one of the earliest and largest water rights on the
Sacramento River. Other Sacramento River Settlement contracts were also
entered into among water right holders on the Sacramento River and
Reclamation.
Notwithstanding the seniority of our water rights on the Sacramento
River, the greatest water infrastructure challenge we face is in
securing new storage. The pressures on our water infrastructure
continue to grow each year from changed hydrology associated with the
climate change, population growth and new demands for water for the
environment. In this context, I want to focus on three issues: (1) why
we need additional storage in the Sacramento Valley; (2) the importance
of streamlining the environmental review processes related to the
construction of new surface water storage projects as provided for in
H.R. 3980; and, (3) the need for additional Federal support for Federal
and non-Federal surface water storage projects as provided for in the
discussion draft authorizing the Secretary of the Interior to implement
a surface water storage enhancement program.
the importance of storage
New storage is vitally important to GCID and all of northern
California because the Federal Central Valley Project [CVP], which our
water diversions are intertwined with, and the State Water Project have
both lost water supply yield and operational flexibility. That yield
and flexibility has eroded over time due to increased contractual
obligations and increased water demands to meet the needs of endangered
species and the State and Federal refuge system. And, in periods of
severe drought like the one we are experiencing now, the lost water
supply yield and operational flexibility is only compounded.
We do not need much in the way of additional water supplies in the
Sacramento Valley, but without new storage, the pressure on our
existing water supplies will continue to grow. The State's population
continues to increase and the reallocation of water to environmental
uses is expanding. This reality continues to play itself out,
especially given that no new investments in the development of
additional water supply or storage have occurred. For water users north
of the Delta, in the area of origin, the ever-increasing demand for
water, coupled with no new storage, represents a threat to the vitality
of irrigated agriculture in the Sacramento Valley, our local
environment including the protection of the Pacific Flyway, and our
groundwater system which sustains our rivers, creeks and streams. A
strong agricultural sector and healthy environment depend heavily upon
a certainty of water supply. Disrupt that certainty, allow the strain
on existing water supplies to persist, and investments in agriculture
will not be as readily forthcoming. That lack of investment translates
into a dim future for agriculture and continued instability in water
supplies, which will threaten the economic health of the State as a
whole.
h.r. 3980
As I have shared with the committee before, the greatest obstacles
to completing the Sites Project, the CALFED North-of-the-Delta
Offstream Storage [NODOS] project currently being carried out by the
California Department of Water Resources [DWR] and Reclamation, in
partnership with local interests, are the convoluted planning and
environmental review processes.
While part of the delay is certainly due to the complexities
associated with multiple State and Federal agencies being involved in
the project, other delays are attributable to shifting environmental
requirements. For example, delays in completing the Sites project
environmental review process are attributable in part to changes in
operational conditions described in the Central Valley Project
Operations Criteria and Plans [OCAP] Biological Opinions [BOs] in 2004/
2005 and then again based upon a Biological Opinion from U.S. Fish and
Wildlife Service regarding the Delta Smelt issued in 2008. In both
instances, DWR and Reclamation had to go back and remodel the project,
based on the revised BOs. As Reclamation's Mid-Pacific Regional Office
noted in a letter to ``Interested Parties'' in May 2009, ``Changes are
continuing so rapidly that our studies and reports are not keeping
pace.''
This new information did not, in fact, change the fundamentals of
the project. The fundamentals of the project remained sound, but the
process stalled further increasing costs and further delaying the
availability of the many benefits a Sites Reservoir will provide.
H.R. 3980 seeks to address many of the challenges we have faced in
trying to move the Sites project forward by establishing a lead agency
to coordinate all Federal environmental reviews related to a surface
water storage project and directing that a schedule be established and
strictly adhered to by Reclamation for the completion of all
environmental review processes. While H.R. 3980 only applies to
projects on Department of Interior and Department of Agriculture lands,
I encourage the committee to consider expanding this directive to cover
projects, like the Sites project, that are now expected to be
constructed by non-Federal entities in cooperation with Reclamation and
other Federal agencies on non-Federal lands.
H.R. 3980 makes a significant contribution to efforts to make the
permitting and environmental review process for water supply projects
more efficient and effective, and I look forward to working with the
committee to identify other measures that will help streamline the
Federal planning and environmental review processes further.
discussion draft--surface water storage enhancement program
I strongly endorse the committee's efforts to identify ways the
Federal Government can provide financial support to new surface water
storage projects west-wide. The discussion draft proposes to establish
a new Surface Water Storage Enhancement Program that would provide
financial support to both Federal and non-Federal surface water storage
projects alike. The inclusion of non-Federal water users is
particularly important to the Sites Joint Powers Authority, which, as I
have discussed with the committee in the past, was formed in August of
2010 for the sole purpose of establishing a public entity to design,
acquire, manage and operate Sites Reservoir and related facilities to
improve the operation of the State's water system.
Those of us in the Sites JPA believe we can complete the planning,
design and construction of a Sites project in no less than half the
time and at less cost than would be required if the project were to
constructed as a traditional Reclamation project. And, as the current
drought highlights, we do not have time to waste. This facility, if it
is going to be built, needs to be constructed quickly and efficiently,
and having the ability to compete for the Federal financial support
that would be available through the Surface Water Storage Enhancement
Program would be greatly beneficial and allow Sites to move forward on
an expedited basis.
Thank you for the opportunity to submit this testimony, and I
greatly appreciate the subcommittee's proposals to streamline the
environmental review processes and support the construction of new
surface water storage.
[all]