Statement of William E. Rinne

Acting Commissioner, Bureau of Reclamation

Before the

Subcommittee on Water and Power

Committee on Energy and Natural Resources

United States Senate

H.R. 4204

June 28, 2006

Madam Chairwoman and members of the Subcommittee, I am Bill Rinne, Acting Commissioner of the Bureau of Reclamation.  Thank you for the opportunity to appear before you today.  The Department supports H.R. 4204, a bill to transfer ownership of the American River Pump Station Project to Placer County Water Agency (PCWA) upon completion of construction.

The American River Pump Station replaces a permanent pumping plant constructed by PCWA in the late 1960’s on the North Fork of the American River.  The principal function of the original pumping plant was to convey water supply from PCWA’s Middle Fork Project to the Auburn Ravine Tunnel for use in Placer County, California. 

Reclamation initiated construction of Auburn Dam in 1967. Construction of the dam was authorized by the Act of September 2, 1965 (P.L. 89-161, 79 Stat. 615).  At the time construction of the dam was beginning, PCWA maintained a pumping station just upstream from the proposed dam site.  The pumping station could not remain in place during construction of the Auburn Dam. 

In lieu of condemnation by the United States, PCWA entered into a Land Purchase Agreement with Reclamation in 1972, transferring PCWA’s land and facilities in the American River canyon to the United States, but not their water rights.  The Land Purchase Agreement obligated Reclamation to deliver 25,000 acre-feet of Middle Fork Project water annually to PCWA until Auburn Dam was completed, at which time PCWA would divert all their water from the reservoir.   To fulfill this obligation under terms of the Land Purchase Agreement, every year since 1972 Reclamation has installed a temporary pump station each April.  The temporary facility remains in service until November when it is removed because of high winter flows that typically inundate the site. 

Construction of Auburn Dam was halted in 1975 and has yet to be resumed.   In the interim, Placer County has become increasingly urbanized.  Consequently, PCWA will soon require year-round access to its full water supply from the Middle Fork Project.  This demand substantially exceeds the capacity of the temporary facility.  In addition, installation and removal of the temporary pump station each year is becoming increasingly costly. 

Considering the circumstances, Reclamation and PCWA determined that a new permanent pumping plant was the best long-term solution for providing PCWA access to its water.  PCWA further determined that it had needs for a higher-capacity pump than Reclamation would be obligated to provide.  In 2003, Reclamation and PCWA entered into a cost-share agreement for the construction of a permanent pumping plant which stipulates that PCWA will pay all incremental costs of materials and construction necessary to enable the pumping plant to deliver water above the capacity negotiated to meet Reclamation’s obligations to PCWA and that title will be transferred to PCWA upon completion of the permanent pumping plant, currently scheduled for 2008.  The title transfer is contingent upon statutory authority, as provided in H.R. 4204. 

H.R. 4204 would not impact other Central Valley Project (CVP) water or power contractors.  The completed project will not be operationally or financially integrated with the CVP, nor will it provide benefits to other CVP water and power contractors. Georgetown Divide Public Utility District could potentially access water through agreements with PCWA.  Total costs for the completed project are projected to be approximately $55 million, and the cost share agreement provides that the Federal share for construction is approximately 70 percent.  Although the payment of fair market value is normally a requirement for transfer of facilities from Federal ownership, given the circumstance that Reclamation is responsible for the destruction of PCWA’s original pumping plant and obligated to provide equivalent water deliveries, and the expense of annually installing annual pump stations, the cost share agreement protects the interest of taxpayers in this case.  Transferring title will also relieve the Federal Government of the obligations and liabilities of operating and maintaining the facility.

That concludes my testimony. I am pleased to answer any questions.

Statement of William E. Rinne

Acting Commissioner, Bureau of Reclamation

U.S. Department of the Interior

Subcommittee on Water and Power

Committee on Energy and Natural Resources

United States Senate

S. 1965

June 28, 2006

Madam Chairwoman, members of the Subcommittee, I am Bill Rinne, Acting Commissioner of Reclamation for the Bureau of Reclamation.  I am pleased to provide the Department of the Interior’s views on S. 1965, legislation to authorize the Secretary of the Interior to convey certain buildings and lands of the Yakima Project in Washington to the Yakima-Tieton Irrigation District.  We support this legislation and thank the committee for considering it today.

The transfer proposed in S. 1965 is the culmination of a collaborative and cooperative process and should be a model for other districts and groups interested in title transfer.

What we experienced in this case, and what has made other title transfers successful, is that Reclamation and the non-Federal entities interested in title transfer followed a simple plan – identifying obstacles and dealing with them at the local or regional level before drafting legislation.

S. 1965 would authorize the title transfer of federally owned buildings and lands to the Yakima-Tieton Irrigation District.  Reclamation and the Yakima-Tieton Irrigation District have worked collaboratively and efficiently to lay the groundwork for this title transfer.  Thanks to the cooperative efforts of the District, the process has successfully addressed all the elements of Reclamation’s policy framework that guides our title transfers.

One of the Administration’s goals in title transfer is to protect the financial interest of the United States, that is, to make sure that the United States is no worse off financially following title transfer.  In this case, the full costs of the lands, buildings and facilities to be transferred have already been repaid pursuant to the district’s original repayment contract.  All the lands to be transferred under this legislation were acquired by Reclamation when the project was built.  Thus the original repayment contract incorporated their value together with the costs associated with the construction of the facilities and buildings.  There are no ongoing revenue streams associated with

these lands and facilities, and the value of all the assets has been repaid.   The district has fulfilled its repayment obligation under the contract and thus no payment is required.

On December 6, 2004, Reclamation and the District entered into a title transfer agreement for the federally owned facilities (Contract No. 5-07-10-L1658) which spells out the terms and conditions for this title transfer and which is the basis for the transfer of the facilities in the legislation.  Subsequently, Reclamation worked with the District and with Representative Hastings and Senator Cantwell on how to structure the legislation to authorize the implementation of the title transfer agreement. 

We believe that this title transfer will give the District more local control of buildings that were constructed for their use.  It will also eliminate the need for duplicative and unnecessary administrative obligations that exist for the District based on the fact that title to the buildings and associated properties is held by the United States.  For example, the District currently has to seek approval for utility work, building improvements, and similar activities by virtue of the fact that the buildings and properties are Federally owned.

For Reclamation, the title transfer will obviate the periodic facility reviews and processing of paperwork that currently consumes significant staff time.  

In summary, we support passage of S. 1965.  It is a good bill, a good title transfer, and reflects a cooperative and cost effective process that will provide a benefit to the District and to Reclamation.

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

Statement of William E. Rinne,

Acting Commissioner, Bureau of Reclamation

U.S. Department of the Interior

Before the

Subcommittee on Water and Power

Committee on Energy and Natural Resources

United States Senate

S. 2470

Southern Idaho Bureau of Reclamation Repayment Act

June 28, 2006

Madam Chairwoman and members of the Subcommittee, I am Bill Rinne, Acting Commissioner of the Bureau of Reclamation.  Thank you for the opportunity to provide the Administration’s views on S. 2470, the Southern Idaho Bureau of Reclamation Repayment Act.  The bill, which we support with some modifications, would authorize early repayment of obligations to the Bureau of Reclamation within the A&B Irrigation District of Idaho.

The A&B Irrigation District is the only district in the Minidoka Project that remains subject to the acreage limitation provisions of Federal reclamation law.  Under section 213 of the Reclamation Reform Act of 1982 (RRA), early repayment of a district’s construction costs is prohibited unless the district’s repayment contract with Reclamation included a provision allowing for early repayment when the RRA was enacted. 

At one time, over 50 districts in the Minidoka Project were subject to the acreage limitation provisions and many of those districts had an early repayment provision in their contracts.  In order to provide consistency for the landowners in the remaining district, we support S. 2470's approach to allow early repayment in A&B Irrigation District.  However, we recommend that the bill be amended in order to ensure consistency for all landowners within the project.

In general, early repayment authority in contracts is limited to landowners.  In other words, a district cannot pay out early; rather, each landowner can decide if his or her land should be paid out early.  It is Reclamation policy to require landowners who want to pay early to pay out all of their land in the subject district and not just a portion of their land.  This concept was included in the recently enacted “Southern Oregon Bureau of Reclamation Repayment Act of 2005,” which provided early payout authority for two districts in Oregon (Public Law 109-138).

As currently written, S. 2470 can be interpreted to provide the opportunity for landowners to pay out either all of their land in A&B Irrigation District or a portion of that land.  The latter is a benefit that other landowners who are subject to the acreage limitation provisions simply do not enjoy and would inject inconsistency into the administration of the acreage limitation provisions.  Early payout would accelerate the repayment of these project costs to the United States Treasury.  Where these repayment obligations are not accompanied by interest, early repayment has a net positive impact on overall repayment to the Treasury and we are highly confident that this will be the case under this bill.  However, we should note that a small number of landowners hold in excess of 960 acres and therefore pay full cost.  Since full cost has an interest component, if these landowners opt to pay out early, this could result in slightly lower repayment from those landowners.

We believe our concerns can be addressed with a simple revision to S. 2470 and we stand ready to provide revised language.  This concludes my testimony and I would be pleased to answer any questions you may have.

Statement of William E. Rinne

Acting Commissioner, Bureau of Reclamation

U.S. Department of the Interior

Before the

Subcommittee on Water and Power

Committee on Energy and Natural Resources

United States Senate

S. 2129

The American Falls Reservoir District #2 Conveyance Act

June 28, 2006

Madam Chairwoman and members of the Subcommittee, I am Bill Rinne, Acting Commissioner of the Bureau of Reclamation.  I am pleased to provide the Department of the Interior’s views on S. 2129, legislation to authorize the Secretary of the Interior to convey certain facilities, buildings and lands of the Gooding Division of the Minidoka Project in Idaho to the American Falls Reservoir District #2.  We support this legislation and thank the committee for considering it today.

The transfer proposed in S. 2129 is the culmination of a collaborative and cooperative process and should be a model for other districts and groups interested in title transfer.

What we experienced in this case, and what has made other title transfers successful, is that Reclamation and the non-Federal entities interested in title transfer followed a simple plan – identifying obstacles and dealing with them at the local or regional level before drafting legislation.

S. 2129 would authorize the title transfer of federally owned facilities, buildings, and lands to the American Falls Reservoir District #2.  The primary feature of the proposed title transfer is the Milner-Gooding Canal.  Reclamation and the American Falls Reservoir District #2 have worked collaboratively and efficiently to successfully address all the elements of Reclamation’s title transfer policy framework.

One of the Administration’s goals in title transfer is to protect the financial interest of the United States, that is, to make sure that the United States is in the same or better financial position following title transfer.  In this case, the full costs of all facilities, buildings, and acquired lands to be transferred, including the Milner-Gooding Canal, have already been repaid pursuant to the District’s amendatory repayment contract.  The District has also identified some withdrawn lands for which they would like to gain title and have agreed to pay the fair market appraised value for these lands.  There are no ongoing revenue streams associated with the facilities, buildings, and lands.   Because the District has fulfilled its repayment obligation under its contract, payment is required only for the additional withdrawn lands that the District has proposed for title transfer.

On October 3, 2005, Reclamation and the District entered into a title transfer agreement for the federally owned facilities (Contract No. 5-07-10-L1688) that spells out the terms and conditions for this title transfer and that is the basis for the transfer of the facilities in the legislation.  Subsequently, Reclamation worked with the District and the bill sponsors regarding how to structure the legislation to authorize the implementation of the title transfer agreement. 

We believe that this title transfer will give the District more local control of facilities that were constructed for its use.  The bill will also eliminate the need for duplicative and unnecessary administrative obligations that exist for the District because title to the facilities, buildings, and lands is held by the United States.  For example, the District currently has to seek approval from Reclamation for certain canal maintenance, utility work, and building improvement.

For Reclamation, the title transfer will eliminate the periodic facility reviews and processing of paperwork that currently consumes significant staff time.  In addition, with the proposed transfer of the Milner-Gooding Canal and other Gooding Division facilities to the District, Reclamation can improve public management of remaining dispersed properties by transferring specific parcels to other governmental agencies.  Accordingly, the legislation directs Reclamation to transfer title for specific smaller parcels to the National Park Service, the State of Idaho, and the City of Gooding, since those entities currently manage the relevant lands.  Regarding the transfer of 39.72 acres of land to the Idaho Department of Fish and Game, we note that existing law codified at 16 U.S.C. 667b authorizes the General Services Administration to transfer land to States for conservation purposes.  This authority has been used to transfer other Federal lands to State ownership. 

The title transfer also involves Reclamation relinquishing title for withdrawn lands to the Bureau of Land Management (BLM).  These associated transfers will place those properties more directly under the administrative control of the appropriate governmental entities and will allow Reclamation to better focus on its core mission of delivering water and power.  Further, Reclamation has worked closely with the National Park Service, the State of Idaho, the City of Gooding, and the BLM to craft the language that appears in the transfer agreement.  We look forward to continuing those close and cooperative relationships once this legislation has been adopted to implement the agreement in a timely manner.

In summary, we support passage of S. 2129.  It is a good bill, a good title transfer, and reflects a cooperative and cost effective process that will provide a benefit to the District and to Reclamation.

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

Statement of William E. Rinne

Acting Commissioner, Bureau of Reclamation

Before the

Subcommittee on Water and Power

Committee on Energy and Natural Resources

United States Senate

S. 2502

June 28, 2006

Madam Chairwoman and members of the Subcommittee, I am William Rinne, Acting Commissioner of the Bureau of Reclamation.  Thank you for the opportunity to testify on S 2502.  The Department supports S 2502.

The North Unit Irrigation District receives water from the Bureau of Reclamation’s Deschutes Project and the District’s privately developed Crooked River pumping plant in Oregon.  Over 900 small farm and ranch families in Oregon’s Deschutes Basin rely upon the District for the delivery of irrigation water.  Since the District’s formation a century ago, these families have shifted from dryland wheat to alfalfa hay, grass seed, garlic seed, and carrot seed, as well as raising cattle, sheep, horses, and other livestock.

In the mid-1950s, Reclamation and the District renegotiated the District’s repayment contract in accordance with section 7, subsection (a), of the Reclamation Project Act of 1939.  Pursuant to the Act of August 10, 1954, Congress approved the contract along with an authorization for the construction of Haystack Dam and regulating reservoir.  The contract established the maximum irrigable acreage that can receive Reclamation project water at 49,818 acres.

S. 2502 will resolve several limitations in the District’s contract, enabling the District to more efficiently manage its water supplies.  Because Congress approved the District’s contract, changes to the contract which are beyond the scope of the Contracting Officer’s authority must also be approved by Congress.

Oregon law requires irrigation districts that participate in a publicly financed “conserved water project” to dedicate a portion of conserved water resulting from the project to instream flows for fish, wildlife or other purposes (ORS 537.455 et seq.).  The District has self-financed over $8 million in conservation activities, and would like to consider participation in a publicly financed program.  Unfortunately, the underlying Project authorization and the District’s contract do not allow it to dedicate water to instream uses. S. 2502 amends the District’s contract so the District can comply with State law if it chooses to participate in a conserved water project.

A related change to the District’s contract would allow the District to deliver Deschutes Project water to families who are irrigating approximately 9,000 acres of land in the District with non-project water diverted by the District’s Crooked River pumping plant.  All of these lands are within the District’s present boundary, have been irrigated for decades, and have appurtenant water rights issued by the State, but they exceed the current contract’s ceiling of approximately 49,818 acres.  Using Deschutes Project water on these lands will allow the District to divert less Crooked River water and leave more water instream.

S. 2502 will benefit fish and wildlife by enabling the District to use less water from the Crooked River, and participate in State conserved water projects that return a portion of the conserved water to the Deschutes River.  The United States would also realize financial benefits in the form of accelerated repayment of Project construction costs through the annual participation of an additional 9,000 acres in Project repayment.  The District’s current contract is based on a variable repayment plan, which means that rather than paying fixed annual installments, the District’s annual payments vary based on factors such as crop production.  Thus it is difficult or impossible to predict when the District would pay out its contract if this bill is not enacted. This legislation not only increases the number of acres in Project repayment, but also requires the District to pay its remaining obligation of $6,649,371 in fixed annual installments.

The Administration also supports the language that this bill inserts at the end of the bill, in section 4 to be inserted into the underlying act.  This provision gives the Secretary the authority to renegotiate this contract upon mutually agreeable terms without having to have Congress approve of changes agreed upon between the District and the Secretary. This provision reflects the general rule that repayment contracts do not require Congressional approval. 

The legislation is specific to the District; it would not affect any other district in the Deschutes Project, their patrons, or any others in Oregon.  The District will continue to comply with all applicable state and federal laws including the Reclamation Reform Act of 1982.

On behalf of the Department, I would like to compliment the District on its proactive approach to addressing the water management issues it is facing, as well as obtaining the support of other interested parties in the local community.  We are pleased to support this legislation.

I am happy to respond to any questions.