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Water Challenges Facing Southwest States

Remarks Delivered By:
John W. Keys, III, Commissioner, Bureau of Reclamation
Arizona Agri-Business Council
Tempe
May 20, 2005


Water Challenges Facing Southwest States

On this day in 1862, President Abraham Lincoln signed the Homestead Act into law and made western lands available to farmers. The Homestead Act was a key step in the settlement of the West and showed the importance of agriculture to the nation.

Next month, we will celebrate President Theodore Roosevelt's signing of the Reclamation Act 103 years ago. The signing of the Reclamation Act was another example of the national importance of agriculture. Agriculture remains a vital part of our national economy today.

One thing that has always been clear in agriculture is the necessity of working together to meet challenges. Some of the challenges have changed since those early years, but the need to work together has remained constant.

I will speak today about some of the significant challenges that the Southwest faces - primarily, the growing competition for water - and about what Reclamation is doing to work with you in meeting them.

Progress on Colorado River

We have made good progress over the past several years in gaining more certainty for water users in the Colorado River Basin. And we have done this in a fair way that respects state water laws. The States have shown strong leadership in addressing some of the ongoing situations facing the West, and I expect this leadership to continue.

We reached the Quantification Settlement Agreement in late 2003, which enables California to meet its water needs while respecting the rights of the other basin states.

Last December, President Bush signed the Arizona Water Settlements Act of 2004. The Act settles the claims of the Gila River Indian Community, it protects existing water uses within Arizona, and it provides funding mechanisms that will facilitate implementation. The Act also provides settlement of longstanding operational and financial issues on the Central Arizona Project and clarifies specific rights to Project water.

The Act also provides more certainty regarding water delivery contracts during prolonged drought. The settlement really helps everyone to know the rules of the road for future Central Arizona Project operations.

Just last month, we celebrated the Multi-Species Conservation Program Agreement. This is an agreement among more than 50 partners from Arizona, California, and Nevada. It looks out over 50 years to reduce conflict and uncertainty. It is the most innovative ESA compliance program on any river system in the nation, and a proud achievement.

The implementation of these agreements will be one of the challenges facing the Southwest. But these agreements stand as examples of what can be accomplished by partners working together.

I want to say how lucky we are to have the team in place at Interior that we do. Secretary Norton knows more about water issues than any other Secretary I've worked with in 38 years at Reclamation. Her leadership has brought people together and been instrumental in progress that we've made so far.

We face challenges within the Upper and Lower Basins, between the Upper and Lower Basins, and between Mexico and the United States. At Interior, we use Secretary Norton's 4C's as a guide to decision-making: Conservation through cooperation, communication, and consultation.

The 4C's has provided a good framework to get things done, and I look for the progress to continue.

When I came to Washington four years ago, the leadership team headed by Secretary Norton examined the federal role in water management. At Reclamation, this led us back to a focus on our core mission: First, concentrating on delivering water and generating power, and doing what it takes to get that done; and, second, looking to the future, to anticipate problems before they develop.

"Getting it done" means addressing changing water needs. And "looking to the future" means facilitating the development of ways that can stretch our water supplies. Appropriations

President Bush's proposed fiscal year 2006 budget request was released in February, and the request for Reclamation is $946.7 million.

We have been talking for a while about flat budgets. This amount is less than flat. This Administration is striving to serve the public in a fiscally responsible way, so flat and reduced budgets are something we're going to have to expect.

The 2006 budget enables us to meet the West's need for water and power, and, at the same time, it works toward the goal the President mentioned in his State of the Union address - to cut the deficit in half by 2009 while maintaining the nation's dynamic economy.

Tight budgets mean that we may not be able to do all the things that people have come to expect. It comes back to the question of core mission.

This budget reflects our priority of delivering on our core mission. It supports critical investments. The 2006 budget proposal devotes substantial resources to the security and safety of dams and other facilities.

Another major focus is on aging infrastructure - this work will enable Reclamation to increase the reliability and efficiency of our water and hydropower facilities.

The average age of an operating Reclamation project is approaching 50 years. Some projects are as old as 90 years. The aging of these structures significantly increases annual operation and maintenance costs, putting a burden on water users when major rehabilitation is required.

Legislation One thing we are doing to meet the challenge of aging infrastructure is to assess the feasibility of a program for the Secretary of the Interior to offer loan guarantees to our contracting entities. This program, in concept, would guarantee lenders up to 90 percent of the total loan amount for long-term rehabilitation of federal projects.

Loan guarantees are an important focus for us, because we need to get money to those who have to do the work.

We are also pursuing a number of other legislative items in this Congress.

We are seeking permanent authority to authorize the Water 2025 Challenge Grants and cooperative agreements for the Water Conservation Field Services program.

We are hopeful for rural water legislation this session. Rural water remains a high priority for us at Reclamation and for Secretary Norton. The President's 2006 budget request assumes that a rural water bill will be passed.

We have been working very closely with Senators Domenici and Bingaman'the Chair and Ranking Member of the Senate Energy and Natural Resources Committee - to develop a cost-effective program that addresses this very serious need.

We had significant progress on legislative proposals during the last Congress. One piece of legislation that is crucial to Reclamation's work is the Safety of Dams cost ceiling adjustment.

The bill does three things: First, it increases the appropriation ceiling for this program overall so that we can complete important Safety of Dams projects over the next ten years -- as we identify them -- instead of having to increase the ceiling case by case; second, it increases the threshold for required reporting to Congress on fixes; third, it puts the project beneficiaries, the water districts, at the table while the safety fixes are being designed. This way, water users will have a voice in holding down costs--such input may help find more effective solutions to safety of dams problems.

Drought

The most dramatic challenge to western water management the past six or seven years has been the drought.

We have been fortunate in some parts of the West to have had good precipitation, and I frequently hear the question: Is the drought over?

A couple quick answers are "No" and "We don't know."

I could say, "No" - because even with above normal precipitation, it will take several years to refill the system West-wide.

And I could say, "We don't know" - because no one knows if the trend of recent years has turned.

The news has been good in the Colorado River Basin this water year: We are projecting 108 percent runoff. A good year this year coupled with a good next year - this isn't certain, but we're hoping for the best - would bring Lake Powell and Lake Mead to equal volumes by September 2006.

Based on the hydrology, Secretary Norton decided early this month not to adjust releases from Lake Powell.

But even when we are fortunate enough to get precipitation, it doesn't mean that we are out of trouble.

Despite the years of record drought, the storage system initiated by our predecessors is doing an amazing job of keeping us out of crisis. Without this storage, we would be in deep trouble.

We continue to look at the possibility of new storage. The 2006 budget proposal includes the first-time request for CALFED funding, and we are exploring the possibility of new storage.

Storage is complicated, however. There are significant environmental and economic issues involved.

When we think about what future dams might look like - probably not much different on the outside. But the days of the large-scale, federally funded project are probably behind us. I didn't say that there would be no more dams - just not single-purpose projects funded completely by the federal government.

We believe that the most effective and immediate approach to water management is to stretch the supplies that we already have. This goes for drought years and normal years alike.

Droughts come and go in the West; regardless of drought, competition for water is going to increase. Our biggest fear is that, when droughts break, existing supplies will not be enough to meet demand. This situation is already a reality in many Western river basins.

But numerous opportunities exist where water supplies can be managed more efficiently, water markets can be developed, collaborative solutions can be found, and new technologies can be researched.

The Bush Administration's approach to funding water initiatives has been to leverage federal money by identifying the areas where scarce fiscal resources can provide the greatest benefit and then working with our partners in those areas.

To promote innovative solutions and meet the needs of farms, cities, and the environment, President Bush emphasizes Cooperative Conservation. Rather than imposing solutions from the outside, we think partnering to support local efforts is the more effective path.

Cooperative Conservation engages and encourages the people who are most affected by resource management decisions to take the lead in seeking sustainable solutions to complex problems.

Water 2025

One of our most successful partnership efforts to address the changing water needs of the West is Secretary Norton's Water 2025 initiative. Water 2025 sets the goal of preventing future water crises while continuing to provide reliable water and power across the West right now.

The West is the fastest-growing area of our nation. What were once primarily agricultural areas now are some of the largest metropolitan centers in the country, driving a robust and multi-faceted economy.

We want to prevent ineffective crisis management, which pits neighbor against neighbor.

The heart of our Water 2025 initiative is the Challenge Grant program, which Secretary Norton launched last year here in Arizona.

This 50-50 cost-share program enables Reclamation to partner with local decision-makers and focus resources where they can make the greatest impact. Last yearâ's Challenge Grant projects received federal grants of $4 million. The projects will return almost $30 million in on-the-ground water delivery system improvements. That is a return greater than 7 times the investment.

Last year, two Arizona projects received Challenge Grants.

The Gila Gravity Main Canal Board received a grant of $284,000 for construction of a flume at the canal head to measure flow more accurately. The flume has already been completed (200-feet long, 96-feet wide, 14-feet deep). Some additional canal work must be done before it is watered up. Irrigation flows were maintained during the project through the construction of a bypass.

The Yuma County Water Users received a grant of $246,000 to replace six canal checks. Three were replaced this past winter - the Gardenhire, Edwards, and Henry - and the remaining three will be replaced next winter. Modernization of these checks and the installation of an automated control system, which is well under way, will significantly improve water management.

For 2005, Congress provided $19.5 million for Water 2025, and $10 million of that is dedicated to the Challenge Grant program.

This year we received 117 proposals requesting a total of $35.5 million in federal assistance. The proposed projects offered more than $115 million in water delivery system improvements across the West.

Secretary Norton just announced initial selections a couple weeks ago.

The proposal of the Yuma County Water Users Association was one of the initial selections. The Association proposes to seal nearly 6 miles of canals with concrete to reduce seepage losses and increase water delivery efficiencies. This project is estimated to save more than 7,500 acre-feet of water annually. The total project cost is $2 million, including a Water 2025 contribution of $300,000.

In his 2006 budget request, President Bush proposed $30 million for Water 2025. This is more than 50 percent above the amount appropriated by Congress last year.

We are very excited about the promise of this program and have made a few changes to this year's program. A new tool that we have added is the opportunity for Systems Optimization Reviews.

This tool enables irrigation and water districts and other water delivery authorities to partner with Reclamation to analyze their delivery systems and provide recommendations to optimize these systems for efficiency in water management.

We also initiated the Challenge Grant Program for Western States.

Eligible applicants include state government entities with water management authority. Irrigation and water districts are not eligible, but may partner with eligible state applicants.

A total of $1 million in Federal funding is available for award. We expect to select 4 to 5 projects in late summer or early fall.

Conclusion

Earlier, I mentioned the President's philosophy of Cooperative Conservation. I believe that cooperation is essential for us to work our way through the challenges we face in the West. We are continuing to work with the Basin States to develop shortage criteria in anticipation of future droughts. I am optimistic that with the continued leadership shown by the leaders in the Basin States, we can find - and implement - solutions that ensure stability within the Basin and continued productive use and management of the Colorado River.

I certainly hope - and believe - that this Basin, and those who rely on the Colorado River can find solutions that will avoid some of the crises we've seen on the Klamath, Columbia and Rio Grande rivers.

We need to prepare for the possibility now - not wait until it happens. And we have to decide - do we say to our neighbors, "I'll use as much as I want, and the heck with you"?

I don't think so. The West has always exemplified the spirit of cooperation. Those early homesteaders worked together and made possible what we have available today.

We have made significant progress by working together. We at Reclamation value the partnerships we have - we wouldn't be able to do our work without you.

And we look forward to working with you to create even greater progress in the days ahead.