The St. Mary Diversion and Conveyance Works and Milk River Project Act Statement of Mike Ryan Regional Director, Bureau of Reclamation U.S. Department of the Interior Before Energy and Natural Resources Committee U.S. SenateS. 3563, The St. Mary Diversion and Conveyance Works and Milk River Project Act September 1, 2006 Mr. Chairman and members of the committee, my name is Mike Ryan, and I am the Regional Director of the Great Plains Region for the Bureau of Reclamation. I appreciate the opportunity to provide the Department of the Interior’s views on S. 3563, the St. Mary Diversion and Conveyance Works and Milk River Project Act of 2006. Let me say at the outset that Reclamation has worked extensively with the St. Mary’s Rehabilitation Working Group since its inception. We understand and share their concerns with the state of these facilities and also recognize the adverse consequences that would come with a failure of the system. Given the potential magnitude and costs of the challenges before us, we feel it essential that we proceed with caution in a step-wise and informed manner. This legislation has a number of components. First, it would authorize the Secretary of the Interior to study the feasibility and environmental impact of rehabilitating the St. Mary Diversion and Conveyance Works and other features of Reclamation’s Milk River Project in North Central Montana. Second, the legislation would authorize the rehabilitation and improvement of the St. Mary Diversion and Conveyance Works. Third, the legislation would authorize the creation of an emergency response plan and fund to use for emergency repairs should there be a catastrophic failure of the facilities prior to implementation of rehabilitation. Fourth, the legislation would require the Secretary to resolve all claims of the Blackfeet Tribe against the United States relating to the portions of the Milk River Project located within the exterior boundaries of the Blackfeet Reservation. Fifth, the legislation would authorize the Secretary to study the feasibility of implementing projects to improve the economic conditions of the Blackfeet Indian Reservation and also to determine the feasibility of rehabilitating the Blackfeet Irrigation Project. Finally, the legislation would authorize study of developing a Municipal, Rural and Industrial (MR&I) water supply project for the residents of the Fort Belknap Reservation and surrounding communities. Background The St. Mary Storage Unit of the Milk River Project, often referred to as “the lifeline of the Highline,” was authorized by the Secretary of the Interior on March 25, 1905 and constructed between 1905 and 1921. It was authorized as a single-purpose irrigation project, thus irrigators are responsible for the operation, maintenance, and replacement costs of the facilities. The St. Mary River provides about 50% of the Milk River Project’s water supply for 110,000 acres of irrigated land during normal years, but this percentage increases to approximately 90% during drought years. Three municipalities, two rural water systems, and the Bowdoin National Wildlife Refuge also rely on the Milk River Project for some or all of their water supplies. The St. Mary Diversion and Conveyance Works have a long history of service. In fact, these facilities have generally outlived their design life, as they have served the people of North Central Montana for almost one hundred years under severe climatic and geologic conditions. Federal Concerns The Department recognizes the importance of this Federal project in serving the people of Montana. In addition to the role the St. Mary Diversion and Conveyance Works plays in providing water for agriculture and municipal needs for the people of Montana, these facilities are also relevant to efforts to resolve the water rights claims of the tribes of the Blackfeet and Fort Belknap reservations, to conserve threatened and endangered species, to maintain and improve water quality, to promote power development and recreation, and to ensure implementation of the Boundary Waters Treaty of 1909. Recognizing these needs, the Department supports the parts of this bill that would provide authorization to carry out appropriate feasibility studies: for rehabilitation of the St. Mary Diversion and Conveyance Works; rehabilitation of prioritized Milk River Project facilities; for appropriate projects with the Blackfeet Reservation; and for a MR&I water supply system on the Fort Belknap Indian Reservation. The purpose of these studies would be to provide the Congress with a complete and comprehensive package of information upon which to build solutions for the water needs of North Central Montana. Typically, a 50-50 cost share among the federal government (50 percent) and local project beneficiaries is provided by legislation authorizing feasibility studies. The Department also supports the general concept of an emergency plan and fund to be used in the event of a catastrophic failure of the St. Mary Diversion and Conveyance Works prior to rehabilitation. The Department is concerned, however, with the legislation’s provision of investment authority for the Emergency Response Plan. Investing appropriations provides additional monies to finance a governmental purpose outside of the normal appropriations process. The Department has other concerns regarding the specific language contained in the legislation and we would appreciate the opportunity to work with the committee to address these concerns. The Department does not support authorization for construction of the rehabilitation and improvement of the St. Mary Diversion and Conveyance Works or other features of the Milk River Project. It would be premature for Congress to authorize this major project prior to completion of a feasibility report. It is of critical importance to decision makers that extensive analysis be done in compliance with Reclamation policy, practice and Executive orders, and also in compliance with other Federal laws and policies, including for example the Clean Water Act, the National Environmental Policy Act (NEPA), and the National Historic Preservation Act. The information generated from this analysis is essential to making informed decisions about the future of these facilities. In addition, outstanding water rights claims of the United States as trustee for the Blackfeet Tribe and Fort Belknap Indian Community are significant to the future of water management in the watersheds dealt with in this bill. The Department believes that pending the resolution of these claims, authorization of a rehabilitation plan for the Milk River Project as called for in this Act is premature. Parts of the Milk River Project facilities are located within the boundaries of the Blackfeet Reservation, and more importantly, the Blackfeet Tribe has asserted Federal reserved water rights to the water currently being delivered through the Milk River Project facilities. The Fort Belknap Indian Community also has asserted significant claims in these watersheds. Federal negotiating teams are currently working with both tribes and the Montana Reserved Water Rights Commission toward settlement of their water rights claims. The Department of the Interior remains committed to these ongoing settlement negotiations. For over 30 years, Tribes, States, local parties, and the Federal government have recognized that, when possible, negotiated Indian water rights settlements are preferable to protracted litigation over Indian water rights claims. In addition to defining the extent of tribal water rights, negotiations allow settlement parties to develop creative solutions to water use problems. The Department is concerned that passage of S. 3563 would negatively impact efforts to resolve water rights claims for the Tribes of the Blackfeet and Fort Belknap reservations. Although this bill requires the Secretary to consult with the State, the Blackfeet Tribe, and the Board for the Milk River Project regarding the selection of an alternative for rehabilitating the project, the bill does not ensure coordination between efforts to settle tribal water claims and the rehabilitation project. There is a risk of creating parallel and potentially conflicting tracks for negotiating rehabilitation and water management strategies. In negotiating Indian water rights settlements, the Federal government seeks settlements that resolve all outstanding water claims and achieve finality. The requirement in S. 3563 that the Secretary “shall resolve any land, water, environmental, and other claims of the Blackfeet Tribe against the United States relating to the portions of the Milk River Project located within the exterior boundaries of the Blackfeet Reservation” would effectively separate out some of the Blackfeet Tribe’s water-related claims against the United States for separate resolution from the Tribe’s other claims. This provision exacerbates the risk that this bill, rather than facilitating the resolution of existing Indian water rights claims, will complicate and slow the process of negotiating a comprehensive settlement. The Department also objects to language in S. 3563 imposing a legislative timeline on the Secretary of the Interior with respect to settling Indian water rights and other claims. The Secretary should have discretion to determine the scope and merit of the claims to be settled, as well as be given latitude to determine the sorts of solutions that fit within the abilities of the Department. A mandate to the effect that the “Secretary shall resolve any … claims” also suggests that the availability of federal funds and resources is unlimited. Need for Studies Prior to Authorization While the Department cannot support authorizing the rehabilitation of this project at this time, the Department supports studying rehabilitation of the St. Mary Diversion and Conveyance Works. The feasibility study would develop and analyze alternative means (starting with a screening of alternatives at an appraisal level of detail) for the rehabilitation of St. Mary storage and conveyance facilities; endangered species issues; Tribal water issues and interests; fish and wildlife resource issues; municipal water supply concerns; and international considerations related to the apportionment of the St. Mary and Milk Rivers. Reclamation believes that a feasibility report can be completed in 3 years, a timeline that allows for the necessary aspects of the planning process (engineering, hydrology, economic, environmental, cultural, Tribal and international considerations) to be incorporated. Until this is accomplished we believe that an informed determination of a project plan, project features and project costs is not possible, and therefore construction authorization at this time is premature. In the search for a comprehensive solution to the water and related issues in North Central Montana, the Department supports engaging the Tribes of the Blackfeet and Fort Belknap Indian Reservations in studies to identify implementable solutions to their water needs. These studies must be done in consultation with the Tribes and in coordination with ongoing efforts to negotiate comprehensive water rights settlements. We would like to work with the committee on setting some parameters on the appropriate scope and number of the projects to be studied. The Department agrees that the extent of infrastructure needs of the Milk River Project and the costs of rehabilitation must be made clear to the Congress, along with the extent and costs of other projects that could be of benefit to the Blackfeet and Belknap Tribes. The Department is concerned with some of the language contained in the legislation regarding these issues and we would again appreciate the opportunity to work with the committee and the Tribes toward mutually acceptable legislation. Federal Reimbursability/Repayment Concerns The project repayment terms identified in Section 3(b)(4) of S. 3563 depart from the accepted project repayment practice to a degree that creates a dangerous precedent for the extensive aging infrastructure needs throughout the West. This legislation requires the Federal government to cover the full cost of the “public benefits” of the project, and also pay for the vast majority of the traditionally reimbursable side of the ledger. The legislation identifies that 55 percent of the project costs will be Federal and 45 percent will be reimbursable. The legislation then assigns 75% of this reimbursable cost to the Federal Government. The Federal share therefore is at least 88.75%, not the 55% stated in subsection (4)(A)(ii). The legislation also caps non-reimbursable obligations at $25 million. The legislation should require the use of current Reclamation procedures for determining non-Federal cost-share that have been applied across the western states. Given the extensive infrastructure needs throughout the West, the Department believes S. 3563 would significantly impact Reclamation’s ability to address aging infrastructure and would appreciate the opportunity to work with the committee to refine these costs. We would further emphasize that the Department has a longstanding policy making local beneficiaries responsible for ensuring that project operation, maintenance, and replacement costs for facilities are met. This legislation could cost the Federal government over $160 million, while authorizing multiple feasibility studies that could, if implemented, cost the Treasury hundreds of millions more. In addition the potential Federal contribution to pending Indian Water Rights Settlements has not been addressed. At the same time, we recognize the importance of this project, and are committed to the most efficient use of Federal resources to assure its continued viability.