Water and Power Bills: S 1759

STATEMENT OF MICHAEL L. CONNOR,

COMMISSIONER, BUREAU OF RECLAMATION

U.S. DEPARTMENT OF THE INTERIOR

COMMITTEE ON ENERGY AND NATURAL RESOURCES

WATER AND POWER SUBCOMMITTEE

U.S. SENATE ON

S. 1759 WATER TRANSFER FACILITATION ACT OF 2009

NOVEMBER 5, 2009

I am Mike Connor, Commissioner of the Bureau of Reclamation. I am pleased to be here today to provide the views of the Department of the Interior (Department) on S. 1759, the "Water Transfer Facilitation Act." The Department supports S. 1759 with modification as explained below. Further analysis would help to determine the role that this bill could play in providing improved flexibility and efficiency for water management in the
Central Valley.

The Central Valley of California is experiencing a third year of drought which has strained the resources of both the State Water Project under the jurisdiction of the State of
California, and the Central Valley Project (CVP) operated by Reclamation.The prolonged drought has created severe hardship especially to farmers, farm workers, and related economies on the west side of the
San Joaquin River valley.The Department is cognizant of the need for creativity and flexibility in meeting the water demands of Californians served by the Central Valley Project. The Department supports facilitating the transfer of water from those areas having available water supplies to areas experiencing shortage to the extent that water transferred is not detrimental to the operations of the CVP, does not cause harm to third parties, and does not create adverse environmental consequences.

When they are done right, water transfers move water from willing sellers to willing buyers in transactions that can improve economic well-being, increase efficiency in water use, and protect against negative externalities.There are many situations where water transfers during periods of drought can be used to ensure that available water is used in areas where it is most needed, and S. 1759 is aimed at facilitating these efficient water transfers.We recognize the potential of voluntary water transfer as a mechanism to increase flexibility into our water management system and respond to changes in available water resources.However, we are also committed to implementing review processes for all water transfers that will effectively protect the broad range of interests that can be impacted by changes in water use.Our goals as a Department include ensuring efficient use of available water infrastructure as well as maintaining vibrant communities and protecting the environment.

Together with the California State Water Code, current Federal law in Section 3405(a)(1) of the Central Valley Project Improvement Act of 1992 (CVPIA) (Public Law 102-575, 106 Stat. 4709) prescribes those conditions under which CVP water is transferable.While the proposed legislation establishes that water transfers between and among specified South of Delta divisions are presumed to meet the historical and consumptive use requirements of subparagraphs (A) and (I) of section 3405(a)(1) of Public Law 102-575, the proposed legislation does not change the obligation of the Department to protect the public interest and the integrity of the CVP, and to otherwise act in accordance with the provisions of the CVPIA.To this end, if the proposed legislation is enacted, Reclamation will review its procedures and ensure that administrative guidelines are in place as necessary to assure that transfers of water continue to serve the overall public interest.Specifically, Reclamation will continue to ensure that transfers take place without significant adverse impacts to other water users, federal programs, Indian tribes, CVP operations, or the environment.We suggest that these guidelines be expressly incorporated into the items we report to Congress under Section 4(a) of the bill, under which Reclamation would submit reports to Congress on the status of efforts to help facilitate and improve the process for water transfers within the
Central Valley and water transfers between the CVP and the State Water Project.

Under the CVPIA and contract provisions, Reclamation must approve proposed water transfers and cannot approve transfers unless the transfer is consistent with
California water law.Transfers are on a willing buyer, willing seller basis, and Reclamation facilities can be used to deliver transferred water only when approved by Reclamation.Reclamation collects various charges, including operation and maintenance charges, incremental conveyance costs, and CVPIA restoration fund charges, together with the cost of service rates, as required by law from the entities that transfer the water (the transferors).Because of the diversity of CVP contractors and the many different scenarios under which water transfers take place, if S. 1759 were enacted there would probably be some financial impacts that Reclamation would only be able to fully calculate upon completion of a given transfer.For example, depending on the contract in place with specific CVP contractors, the legislation could generate additional revenue for the CVPIA restoration fund and for the San Joaquin River Restoration fund in some years in the Friant Unit of the CVP.In this area in 2008, Friant contractors could have transferred about 40,000 acre-feet to west-side CVP contractors in the San Luis Unit under the proposed legislation. The transferred water would have been subject to the CVPIA restoration fund charges (about $9) under Title X of Public Law 111-11, Section 10009(c)(1)(B), as well as Friant surcharges, resulting in additional revenues to the Restoration Fund.

If enacted, S. 1759 could strengthen Reclamation's ability to facilitate appropriate water transfers.We would note, additionally, that Reclamation already has a robust water transfer program.This year in the CVP, Reclamation has facilitated the transfer of over 600,000 acre feet of water by and among CVP contractors, as well as users of State Water Project water.This has been a record for the Reclamation since on average there are approximately 250,000 acre feet of transfers which are processed by the CVP and State Water Project. For figures specific to only the federal CVP, Reclamation has signed off on a total of 168 individual transfers totaling approximately 435,286 acre feet of federal contract water.All were accomplished within the accelerated water transfers program using programmatic environmental documentation.An additional 9,156 acre feet was transferred among
Sacramento Valley contractors using transaction-specific environmental documentation.

Separate from the transfer program, a large volume of water was delivered that was "rescheduled," or held over in storage, from the 2008 water year.Of the 337,307 acre feet of water rescheduled in San Luis Reservoir from 2008 into 2009, approximately 12,518 acre feet were eventually transferred, approximately 50,000 acre feet remains in San Luis, and the remainder was delivered to the party rescheduling it.Friant Division contractors rescheduled approximately 55,615 acre feet in Millerton Reservoir, and of that, 11,848 acre feet were transferred.Cross Valley Contractors rescheduled 6,063 acre feet of water from 2008, all of which together with 11,550 acre feet of 2009 contract supply was transferred to Westside contractors.These transfers were in addition to the accelerated transfers described above.

In addition to the suggested change to Section 4(a) above, the Department would also like to offer a few technical additions/corrections to the proposed legislation.A technical correction previously identified in House language would have corrected a long-standing erroneous reference in Section 3405(a)(1)(M) of Public Law 102-575 (106 Stat. 4709) from "countries" to "counties."We would suggest that the proposed Senate legislation incorporate that technical correction.Additionally, the Department suggests that the initial reporting in Section 4(a) be set at six months from the date of enactment to provide adequate time for meaningful information to be available to Congress.Accordingly, we suggest editing the reference in Section 4(b) to delete "Not later than July 15, 2010" and to call for Reclamation to update the report every 180 days after the date on which the initial report is submitted to Congress.

With regard to Section 3 of S. 1759, the Fish and Wildlife Service has confirmed that the Service could provide a programmatic biological opinion to Reclamation on water transfers if this is determined to be appropriate.The consultation process would begin with a request from Reclamation for consultation accompanied by a biological assessment that describes Reclamation's water transfer program and evaluates the potential effects of the program on listed and proposed species and designated and proposed critical habitat and determines whether any such species or habitat are likely to be adversely affected by the program. The Service could potentially expedite a programmatic biological opinion, subject to the availability of appropriations.

I would also like to note that Reclamation is currently working with the California Department of Water Resources in developing consistent evaluation criteria for a long-term, programmatic water transfer program designed to provide for water transfers from State and Federal contractors North of the Delta to contractors South of the Delta.These transfers will continue to be subject to the consumptive and beneficial use requirements in the State Water Code.

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