Statement of Robert W. Johnson, Commissioner Bureau of Reclamation U.S. Department of the Interior Before the Committee on Energy and Natural Resources Subcommittee on Water and Power U.S. Senate Reclamation's Aging Infrastructure April 17, 2008 Mr. Chairman and members of the subcommittee, I am Robert W. Johnson, Commissioner of the Bureau of Reclamation. I am pleased to provide the Department of the Interior's perspective on Reclamation's asset management strategy as it relates to our aging water and power infrastructure. I will also discuss some of the reinvestment needs we have identified. Before I start, I would like to note that I have been a Reclamation employee for over 30 years, and am well aware of the challenges we face as a result of our aging infrastructure. Operating water facilities, whether aging or newly complete, brings with it many unknowns and engineering challenges. A recent example of these challenges is provided in the case of the Truckee Main Canal (TMC), near Fernley, Nevada. Early on the morning of January 5, 2008, a portion of the Truckee Canal embankment failed resulting in uncontrolled water releases into residential areas of the City, causing varying damage to 590 homes. The canal, operated and maintained by the Truckee-Carson Irrigation District under a contract with Reclamation, provides water to agricultural and wetland uses in the Fernley and Fallon, Nevada areas. At the location of the breach, the canal, built a hundred years ago, has earthen embankments and is unlined. After the breach, the District shut down the canal and placed a temporary earthen plug into the breach site to stem flows into the City. Concurrently with designing a permanent repair for the breach, Reclamation initiated several studies and investigations with the purpose of determining likely contributing factors to the failure, the condition of the remainder of the 31-mile long canal, the risks associated with resuming flows in the canal through the reach above the City, and the conditions under which deliveries might be resumed. The inspection of the remainder of the canal was conducted by teams, including members from the City, the District and the Corps of Engineers. A team of independent experts determined that the most likely contributing factor to the failure was rodent activity. During March, staged diversions into the canal were resumed beginning at 20% of the maximum canal flow with ramping allowed up to 45% of the maximum flow. Flows above 20% of the maximum are authorized only if the District meets specific requirements, such as development of emergency action, maintenance and facility improvement plans. Flows above 33% are allowed only after a special rodent control program has been carried out. Flows may not exceed approximately 45% of the maximum flow until a permanent fix is in place, such as an impermeable barrier on the city side of the canal protecting the City of Fernley. The staged flow restrictions are the direct result of the studies and investigations undertaken by Reclamation – designed to determine under what circumstances diversions could be resumed under safe and reliable conditions. It is important to recognize the extent of the damage caused by the failure, but it is also important to recognize that Reclamation was able to assemble the expertise necessary to evaluate the conditions under which flows might safely be resumed and develop a flow regime under which the District could resume restricted diversions within eleven weeks. It took an intensive, concerted effort by Reclamation and the District to achieve this result. The Reclamation contribution involved staff from the area and regional offices, together with staff in Reclamation's Technical Service Center. The TMC is over 100 years old. Given that Reclamation's first projects were started over 100 years ago, our employees and managing partners have done an incredible job of safely maintaining and protecting our infrastructure. In the aftermath of events on the TMC, Reclamation has initiated a new effort to ascertain where growth has occurred around canals, and where a similar condition may exist that could pose a threat to life or property. We intend to work with our operating partners to select representative canal reaches in urbanized areas within each of our five regions for special reviews to be conducted this year. This process will afford the opportunity to engage interested operating partners in the topics of asset management and addressing our aging infrastructure. While Reclamation's reach across the West is widespread, our employees take the safety of our facilities and the protection of our customers and surrounding communities very seriously. And, as a result, the vast majority of our infrastructure is in good working order. I am very proud of our record. In fiscal year 2009, Reclamation's Dam Safety Program plans to have corrective actions underway at six facilities across the west, and is requesting an increase of over $15 million above the amount appropriated in fiscal 2008 in the Dam Safety Program. Reclamation has also requested funds to study the need for potential corrective actions at other facilities. Reclamation's mission is to “manage, develop, and protect water and related resources in an environmentally and economically sound manner in the interest of the American public.” We are the Nation's largest wholesale water supplier, and the 348 reservoirs we administer have a total storage capacity of 245 million acre-feet of water. We bring water to more than 31 million customers and provide 20 percent of western farmers with water to irrigate 10 million acres of farmland. Reclamation is also the Nation's second largest producer of hydroelectric power, generating more than 40 billion kilowatt-hours of energy each year – equivalent to the energy provided by 80 million barrels of crude oil. In the 100 years since Reclamation's creation, the Federal government has invested almost $21 billion in original development costs for our facilities. The current cost to replace these assets would be many times that original development cost. Reclamation's core mission has remained constant since its inception, but the way we accomplish that mission has evolved. Today, we focus primarily on managing and maintaining our facilities to ensure their safe and effective operation while continuing to deliver water and power. In terms of actual operation and maintenance, Reclamation operates about one-third of its facilities, and the other two-thirds (primarily single-purpose irrigation facilities) are operated and maintained by non-Federal operating entities (e.g., water/power districts formed under state laws to provide service to a particular area or set of customers). Most of Reclamation's major dams, reservoirs, hydroelectric plants, and irrigation systems are 50 or more years old. A central point we would like to make is that a facility's age by itself is not the sole determinant of its viability – rather, facility condition is the central factor in predicting the long-term functionality and maintenance need of Reclamation assets. As part of Reclamation's oversight of constructed assets, we initiated a Facility Review Program in 1948 to assess the condition of assets constructed by Reclamation and operated and maintained by our non-Federal operating partners. These activities continue today and, in concert with a preventive maintenance philosophy and related oversight initiatives, have successfully extended the service life of many of our water and power facilities beyond original expectations. Reclamation has recently been taking steps to more accurately represent its inventory of assets in the Federal Real Property Profile (FRPP). Nevertheless, the aging of our infrastructure constantly presents new maintenance, replacement, and modification requirements. Similar to other agencies with aging infrastructure, Reclamation has a fiduciary duty to maintain services to its customers in a cost efficient manner and to meet other expectations, particularly environmental and endangered species management. While Reclamation and over 350 operating partners have for many years operated and maintained the infrastructure, the very nature of the aging process will inevitably lead to increased pressure on budgets and user rates to keep infrastructure service and reliability commensurate with past levels. As such, Reclamation and the operating entities anticipate a steady increase in infrastructure repair needs that will continue to grow over time. As part of Reclamation's asset management strategy, regular operation and maintenance activities under appropriated dollars will be managed in concert with other programs and activities addressed in our strategy to improve efficiency and effectiveness in funding rehabilitation and replacement needs. Improved technology will also offset many of these costs, as will innovative construction processes like the one occurring on the Joint Federal Project at Folsom Dam near Sacramento. Together with the U.S. Army Corps of Engineers, Reclamation is undertaking an historic effort to jointly construct features that will address both safety of dams concerns, as well as expand flood protection for the City of Sacramento. Separately, these two projects would cost over $2 billion and would take 15 years to complete, but by working together to design and construct features consistent with these two distinct activities, Reclamation and the Corps estimate that the joint project should cost half that much and be completed in half the time. Project construction is planned to proceed in phases by Reclamation and the Corps. Procedurally, Reclamation's Facility Maintenance and Rehabilitation Program identifies, schedules and prioritizes necessary rehabilitation work at reserved works. To fulfill these responsibilities, Reclamation provides designs and studies, purchases equipment and services, and provides the resources to support the overall maintenance and rehabilitation program. Project beneficiaries advance funds for annual O&M work performed by Reclamation. However, for many other facilities, rehabilitation and replacement needs may exceed available resources and could potentially increase the risk of service interruption or failure, as occurred early this year on the Truckee Main Canal. To fund this work, in cases where operating partners cover a portion of the O&M costs for reserved works, or the entire O&M costs on transferred works, the use of the entity's reserve fund is one of the first places we look for funding. However, these funds may not be contractually required nor sufficient to meet the amount needed for major rehabilitation and replacement work. Thus, long-term financing must often be obtained to fund such work, and arrangements are made with operating entities depending on the circumstances of a given project. West-wide, Reclamation currently estimates that approximately $3 billion will be required to rehabilitate, replace, and modify Reclamation assets under major rehabilitation and replacement programs in the future. This figure was derived from a very rough, field-level estimate of conceivable needs, and includes work under our Safety of Dams program, anticipated work on our water and power reserved works, and preliminary estimates for transferred works operated by our customers. From a programmatic perspective, much of this data is insufficiently reliable to serve as a basis for budgeting or long-term planning decisions. A substantial part of projected needs will be financed directly by our water and power customers and the sale of hydroelectricity. Some funds may need to come from appropriations, but the magnitude and timing of such funding needs is unknown. As noted above, those entities which contractually operate transferred works are also required to fund operation, maintenance, rehabilitation, and replacement work at their cost, and this amounts to at least $800 million of the $3 billion estimate. One of the challenges we face is the varying economic strength of our operating partners. For some of these partners, the cost-share requirements associated with the review and repair activities are simply beyond the means of the beneficiaries. The Administration has and will continue to be opposed to projects that are authorized without adequate cost controls and built-in accountabilities to ensure that the Federal government is not subject to undue costs. While circumstances for each project in need of review, rehabilitation or repair may be different, in order for projects to be sustainable, the non-Federal sponsors must be responsible for a fair share of project costs and, for facilities that are being operated and maintained by non-Federal entities, these entities must be accountable for maintaining the assets. Title II of the Twenty-First Century Water Works Act (P.L. 109-451) authorized loan guarantees for eligible projects. Currently, Reclamation is working on the proposed rules for implementing this program. Sound and reliable infrastructure is the core of Reclamation's mission. With the support of Congress, our customers, and other stakeholders, Reclamation will continue to assure the integrity and reliability of Federal water and power assets. This concludes my written statement. I would be pleased to answer any questions.