Water Bills: S 637

Statement of Michael L. Connor, Commissioner

Bureau of Reclamation

U.S. Department of the Interior

Before the

Subcommittee on Water and Power

Committee on Energy and Natural Resources

U.S. Senate

S. 637

July 23, 2009

Madam Chairwoman and Members of the Subcommittee, I am Mike Connor, Commissioner of the Bureau of Reclamation (Reclamation).I am pleased to provide the views of the Department of the Interior (Department) on S. 637, legislation authorizing construction of the Dry-Redwater Regional Water Authority System in the State of
Montana.The Administration has significant concerns with this bill that we want to work with Congress to address.

S. 637 would authorize the planning, design, and construction of the Dry-Redwater Regional Water Authority System (System) in eastern
Montana and would authorize appropriations of at least $115 million for the System. The bill would require that the Federal government pay for 75 percent of the project's overall cost.

The Department concurs in the need for a safe and reliable water supply for the citizens of eastern
Montana, but we have a number of concerns with the legislation.In particular, the Department is concerned about the strain on Reclamation's budget, the cost share requirement proposed in the bill, the accuracy of existing cost estimates, and the proposed use of project use power from the Pick Sloan Missouri Basin Program (PSMBP) for non-irrigation purposes.

Of Reclamation's eight authorized rural water projects, six are in Reclamation's Great Plains (GP) region and are currently being constructed in the Dakotas and
Montana.All of these projects pre-date Public Law 109-451, which authorized the Secretary of the Interior to create a rural water supply program to address rural water needs in the 17 western States. Within the GP region, more than 236,750 people are presently being served by the six partially completed projects (approximately 38,750 on Indian reservations and 198,000 off reservations).The fiscal year (FY) 2010 rural water project construction request is $64 million.This includes $15.3 million for the operation and maintenance of tribal systems and $47.7 million for construction. In addition, the Department of the Interior allocated $200 million to these rural water projects with funding from the American Recovery and Reinvestment Act of 2009.The remaining construction ceiling for these six projects totals over $1.2 billion.

In view of these existing authorizations, the Department is concerned about the non-Federal cost share for the System. S. 637 contemplates that the United States would fund 75 percent of the cost of constructing the system for the benefit of Montana citizens of Dawson, Garfield, McCone, Prairie, and Richland Counties, and North Dakota citizens of McKenzie County.While this has been the cost share level proposed in other rural water projects enacted into law, it represents the very maximum Federal cost share allowed under the Rural Water Supply Act of 2006 (Public Law 109-451), which includes a requirement for a Feasibility Report that includes an analysis of the sponsor's capability-to-pay and identifies an appropriate contribution by the local sponsors.

Reclamation has not reviewed and is not in a position to verify the accuracy of the cost estimates upon which appropriations are authorized in S. 637. Before being asked to consider a request for authorization or funding of a feasibility study, Reclamation typically has had an opportunity to conduct at least appraisal-level analysis of a project. This practice is confirmed in Section 106(a) of the recently enacted Rural Water Supply Act of 2006.

Section 5 of S. 637 authorizes the delivery of Pick Sloan Missouri Basin Program "project use" pumping power to be used and delivered for the benefit of this project at the firm power rate.The bill requires that the project be operated on a "not for profit basis" in order to be eligible to receive power under those terms.The bill is silent as to whether this authorization provides for seasonal power vs. year-round power.The legislation should specify in order for Reclamation and the Western Area Power Administration to know how much preference pumping power from PSMBP will be available to the system during the non-irrigation season in order to meet existing contractual obligations.

In addition to those concerns mentioned above, we have yet to verify whether or not water rights issues associated with the project have been adequately addressed.Without an opportunity to thoroughly review the proposed project at an appraisal or feasibility study level, we are not in a position to verify that other technical issues do not also exist.We would like to suggest that the project sponsors work with Reclamation's Great Plains Regional Office and the Montana Area Office to complete appraisal and feasibility-level studies consistent with the Rural Water Supply Act of 2006 prior to an authorization for construction.

That concludes my statement.I would be pleased to answer any questions.