Statement of Michael J. Ryan Great Plains Regional Director Bureau of Reclamation U.S. Department of the Interior Before the Senate Energy and Natural Resources Committee Water and Power Subcommittee Field Hearing – Sioux Falls, South Dakota May 27, 2008 Good afternoon Mr. Chairman and Members of the Subcommittee. My name is Mike Ryan and I am the Regional Director for the Great Plains Region for the Bureau of Reclamation. I am pleased to provide the Department of the Interior's views today on the status of major authorized rural water projects in the Great Plains Region, and separately, report on Reclamation's implementation of Title I of Public Law 109-451. Reclamation is proceeding with the design or construction of several rural water projects in the Great Plains region. Below is a summary on the status of the major projects under consideration by the Subcommittee today. While my testimony today includes specific reference to these major projects, I think it is important to note that the Great Plains Region has a total of six authorized rural water projects with an estimated remaining Federal cost of approximately $1.4 billion to complete these six projects. Finally, my statement concludes with a status on the newly authorized rural water program under development this year. Before discussing the individual projects, it is important to note that the Bureau of Reclamation allocates funding for its rural water projects based on objective criteria, which gave priority to projects 1) nearest to completion; and 2) that serve tribal needs. These projects also received funding based on amounts needed for ongoing work. The FY 2009 budget request reflects Reclamation's attempt to balance the many competing priorities for funding within the Federal Government and within Reclamation. Prior to the authorization of the “Rural Water Supply Act”, Congress authorized several individual rural water projects. Funding in the amount of $39 million is included in the FY 2009 President's budget request for some of these rural water projects, which are separate and distinct from any projects that may be authorized under the Act. Lewis & Clark The Lewis & Clark Rural Water System was authorized in the 106th Congress by P.L. 106-246. Construction activities began in 2004. The project has expended over $75 million, and was approximately 23 percent complete as of September 30, 2007. Funds have been used for preconstruction activities, including National Environmental Policy Act (NEPA) and National Historic Preservation Act compliance, Value Engineering studies, field data collection, and preparation of plans and specifications. Lewis & Clark has constructed 50 miles of the 61 mile main transmission pipeline in South Dakota, 8 miles of raw water pipeline and 9 miles of treated water pipeline in Iowa. Six wells were installed in the Mulberry Point Well Field with associated facilities and bank stabilization commencing this year. The Federal cost ceiling (FY 2008) is $362 million and the corresponding non-Federal cost-share is $100 million for a total project cost of $462 million. As of January 1, 2008, Federal appropriations totaled $101 million with a remaining Federal balance of approximately $261 million. When completed, Lewis & Clark will address regional concerns regarding the low quality, contamination vulnerability, and insufficient supply of existing drinking water sources throughout the project area. Currently, 20 existing water utilities are members of Lewis & Clark, which will eventually serve more than 300,000 people in South Dakota, Minnesota, and Iowa. Mid-Dakota Rural Water System The Mid-Dakota Rural Water System, P.L. 102-575, Title XIX, dated October 30, 1992, authorized the construction of the Mid-Dakota Rural Water System. The Mid-Dakota Rural Water System utilizes water pumped from an intake located on Oahe Reservoir. The project brings a dependable supply of good quality drinking water to more than 29,000 people and more than 600,000 head of livestock. More than 3,000 rural water users and 17 cities have paid good intention fees to be included in the system. A wetland component is included in the project and is being funded by a Federal grant. The Mid-Dakota project was completed in FY 2006. Total Federal cost of the project was $148 million. Mni Wiconi The Mni Wiconi Rural Water Supply Project was authorized under P.L. 100-516 and other authorizations to serve three Indian Reservations and one non-Indian sponsor in South Dakota. The Indian sponsors are the Oglala, Rosebud and Lower Brule Sioux Tribes and the non-Indian sponsor is West River Lyman-Jones. The sunset date for the project has been extended to the end of 2013. In addition to the annual construction costs, as facilities are completed additional funds are required to support Tribal operation and maintenance (O&M) activities, since P.L. 100-516 required that the operations and maintenance of the tribal components be a Federal obligation. The FY 2009 budget for construction is over $16 and $10 million for O&M. Mni Wiconi is one of two rural water projects included in the FY 2009 President's Budget Request. The Federal cost ceiling (FY 2008) is $452 million with a corresponding non-Federal cost-share of $17 million. As of January 1, 2008, Federal appropriations totaled $360 million with a remaining Federal balance of approximately $92 million. The project was approximately 74 percent complete as of September 30, 2007. The project will serve 40,000 on-reservation, as well as 12,000 off-reservation residents. The project was initially authorized for construction through 2003, based on projected appropriations. In 2002, the Act was amended to extend the sunset date to 2008 and to authorize an additional $58 million to cover costs not considered in the original authorization as well as the added administrative costs for a five year extension. Since the project was not completed by the amended date of 2008, Congress extended the sunset date again, this time to 2013 through enactment of P.L. 110-161. Northwest Area Water Supply Project (NAWS) The NAWS project is a component of the larger Garrison Diversion Unit. The rural water component in North Dakota was authorized by the Garrison Diversion Unit Reformulation Act of 1986. The authorizing legislation established two rural water components -- the State maintenance rehabilitation and improvement (MR&I) grant program and the Tribal MR&I program -- both of which have been under construction since the late 1980s. The Tribes included in the authorization are the Standing Rock Sioux, the Three Affiliated Tribes, the Spirit Lake Sioux, and the Turtle Mountain Band of Chippewas. The NAWS project is a component of the State MR&I addition to the Garrison Unit and when complete will deliver water from the Missouri River to communities and rural water systems in North Dakota located in the Hudson Bay Basin. Construction of NAWS began in April 2002, but was halted as a result of litigation filed by the Province of Manitoba, alleging that the environmental review under NEPA was insufficient. In response to that complaint, in March 2006 Reclamation initiated the preparation of an environmental impact statement (EIS). The focus of the EIS is to evaluate additional water treatment alternatives that could further reduce the risks of transfer of non-native species from the Missouri River Basin to the Hudson Bay Basin. Treatment would take place within the Missouri River Basin and two of the four alternatives would meet treatment goals recommended by the Province of Manitoba, Canada. Increased costs of the newly considered alternatives range from approximately $10 million to $90 million. The United States is responsible for both construction and operation and maintenance of the treatment plant. A Federally preferred alternative has not been identified in the draft EIS. The draft EIS was issued for a 60 day public review and comment in December 2007, which was later extended to March 26, 2008. Three public hearings were held to receive testimony from the public. All comments received will be considered in preparing the final EIS. At this time Reclamation anticipates completing the final EIS by the end of the calendar year. Upon completion of the final EIS a record of decision will be prepared. The authorizing legislation requires that the Secretary make a determination on adequate treatment to meet requirements of the Boundary Waters Treaty in consultation with the Environmental Protection Agency and the State Department. Reclamation will continue working with these agencies on a recommendation for a Secretarial determination that includes an appropriate treatment process. The Federal cost ceiling for the State component (FY 2008) is $461 million with a corresponding non-Federal cost-share of approximately $154 million. For this component of the project, as of January 1, 2008, Federal appropriations totaled $230 million with a remaining Federal balance of $231 million. The Federal cost ceiling for the Tribal component (FY 2008) is approximately $311 million with no non-Federal cost-share. From the same date, Federal appropriations for this component totaled $80 million with a remaining Federal balance of $230 million. The project was approximately 61 percent complete as of September 30, 2007. Perkins County The Perkins County Rural Water System Act of 1999, P.L. 106-136, dated December 7, 1999 authorized $15 million for the construction of the Perkins County Rural Water System (PCRWS). The PCRWS is a buried, pressurized pipeline distribution system that delivers treated drinking water to communities, rural residences and pasture taps in Perkins County, South Dakota. Perkins County is the second largest county (2,866 square miles) in South Dakota and is located in the northwest corner of the State. The area is characterized by widely separated towns and ranches. Groundwater has been the predominant water source, but many residents of the area haul water for domestic use because of inadequate quantity and poor water quality. The PCRWS will purchase treated water from the Southwest Pipeline Project (SWPP) in North Dakota and distribute that water to its customers through a network consisting of 515 miles of pipe, 5 booster stations, and 3 storage reservoirs. The SWPP was constructed as a feature of the Garrison Diversion Unit under the State MR&I program. The Federal cost ceiling (FY 2008) is over $24 million with a corresponding non-Federal cost-share of $8 million. As of January 1, 2008, Federal appropriations totaled approximately $14 million with a remaining Federal balance of approximately $11 million. The system was approximately 65 percent complete as of September 30, 2007. Fort Peck/Dry Prairie The Fort Peck Reservation Rural Water System Act of 2000 (P. L. 106-382) authorized $287 million (FY 2008) for the construction of the Fort Peck Reservation Rural Water System (FPRRWS). The Fort Peck Tribes (Tribes) and the non-Indian Dry Prairie Water Authority (DPWA) are the project sponsors. Public Law 106-382 authorizes the appropriation of the funds over a period of 10 years. Reclamation has a cooperative agreement with DPWA under the Federal Grants and Cooperative Agreements Act for the construction of the off-reservation portion of the system. Reclamation has a cooperative agreement with the Tribes under Title I of P.L. 93-638 for the construction of the reservation portion of the system and the water treatment plant and transfers funds each year through an annual funding agreement under that cooperative agreement. The Federal cost ceiling (FY 2008) is approximately $263 million with a corresponding non-Federal cost-share of $24.512 million. As of January 1, 2008, Federal appropriations totaled $48 million with a remaining Federal balance of approximately $215 million. The project was approximately 16 percent complete as of September 30, 2007. North Central Montana/Rocky Boys Regional Water System The Rocky Boys/North Central Montana Regional Water System Act, P.L. 107-331, dated December 13, 2002, authorized the construction of the North Central Montana Regional Water System, in coordination with the Chippewa Cree Tribe (Tribe) and the North Central Montana Regional Water Authority (Authority). The Rocky Boy's/North Central Montana Regional Water System will serve an estimated population of 43,000 at full build-out. Operation, maintenance, and replacement for the core and on-Reservation systems will be funded by a $20 million trust fund through Bureau of Indian Affairs appropriations. The non-Tribal systems will fund their operation, maintenance, and replacement separately without Federal assistance. The Federal cost ceiling (FY 2008) is $273 million with a corresponding non-Federal cost share of $36 million. As of January 1, 2008, Federal appropriations totaled approximately $15 million with a remaining Federal balance of approximately $258 million. The project was approximately 5 percent complete as of September 30, 2007. Rural Water Program I would now like to provide a status report on Reclamation's implementation of Title I of Public Law 109-451, the Rural Water Supply Act of 2006. In December 2006, the Rural Water Supply Act of 2006 (Act) was enacted and signed into law. Title I of this Act authorizes the Secretary of the Interior to create a rural water supply program (Program) to address rural water needs in the 17 Western United States. The intent of this program is to enable Reclamation to work cooperatively with rural communities across the West in a consistent manner to identify rural water supply needs and cost effective options for addressing those needs. Prior to enactment of this legislation, Reclamation had no authority to get involved -- early in the process -- in the analysis and development of solutions for meeting the potable water supply needs of rural communities in the West. We are working hard to implement this new Program in a timely manner. Title I of the Act requires Reclamation to: (1) develop programmatic criteria determining eligibility for non-Federal entities to participate in the Program and for prioritizing requests for assistance; (2) develop criteria for what must be included in both the appraisal and the feasibility studies that are to be completed under the Program, in terms of data, alternatives, and level of analysis; (3) complete an assessment of the rural water programs that exist in other Federal agencies to ensure that we are filling an unmet niche and to ensure that we coordinate with other agencies and leverage resources; and (4) complete an annual report of Reclamation's staff costs for carrying out the Act. The assessment also will include a report on the status of rural water projects that are already authorized for involvement by the Bureau of Reclamation. As we have begun to work on implementation of this Program, there was some confusion among some of our customers and stakeholders about the Program's scope. I would like to address that issue with the Committee. Title I of P.L. 109-451 authorized Reclamation to complete appraisal and feasibility studies for rural water projects in the 17 western states. It does not authorize the design and construction of those projects. The focus of the Program is to ensure that there is thorough analysis of rural water needs and options to address those needs through the completion of appraisal and feasibility studies that meet program criteria. As studies are completed, Reclamation is required to submit a feasibility report to Congress. In the report, the Secretary (through Reclamation) will make a recommendation as to whether the project is technically and economically feasible, and whether the project is in the Federal interest. Further, the report must make a recommendation on whether Congress should authorize Federal involvement in construction of the project. The report must also make a recommendation on the appropriate non-Federal share of construction costs, which must be at least 25 percent of the total construction costs. Reclamation is committed to working with its customers, states, tribes, and other stakeholders to find ways to balance and provide for the mix of water resource needs in the future to meet their responsibilities. While we expect great interest in this program, Reclamation will not be able to get involved in every project that is presented to us, as any efforts to implement projects under this program must compete with other Reclamation projects for finite resources. The Act envisioned the establishment of consistent and objective criteria to help make those choices. As such, before the Rural Water Program can be implemented, the Secretary (through Reclamation), must establish programmatic and eligibility criteria for participation in the Program and prioritization criteria to articulate how Reclamation will select projects to support. The Act further requires that we promulgate and publish the program's rules and criteria in the Federal Register. This is being done through a rulemaking process in accordance with the Administrative Procedure Act (APA). This APA process provides opportunities for public review, involvement and comment and Reclamation plans to closely adhere to these requirements. . We anticipate publishing the Rule in the Federal Register this year, and the President's FY 2009 budget request includes $1 million for administrative work for the program. That funding would allow us to begin to work with communities on study proposals and then begin to carry out and support studies that are selected based upon the programmatic and prioritization criteria. During our initial efforts to scope this Program, we have held conversations with various stakeholder groups throughout the West. Also, as part of the rulemaking process, we plan to hold public and tribal meetings to gather comments and answer questions. We will continue that outreach and dialogue throughout the process of implementing this new program. We see this program as an opportunity to provide a clearly defined process for Reclamation and rural communities throughout the West to work together to identify options for meeting potable water supply needs in a technically feasible, environmentally responsible, and cost effective manner. P.L. 109-451 gives Reclamation authority to review, evaluate, and make recommendations to the Congress regarding the feasibility of proposed rural water projects such as the ones discussed here today. With all of this work underway, we look forward to working closely with the large base of stakeholders on implementation. Thank you for the opportunity to appear today. This concludes my statement. I am pleased to answer any questions from the Subcommittee.