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Statement of John W. Keys, III, Commissioner
Bureau of Reclamation
U.S. Department of the Interior
Before the
Energy and Natural Resources Committee
Subcommittee on Water and Power
U.S. Senate
on
S. 247
Tumalo Water Conservation Project Act of 2005

July 12, 2005

Madam Chairman, I am John W. Keys, Commissioner of the Bureau of Reclamation. Thank you for the opportunity to testify on S. 247, the Tumalo Water Conservation Project Act of 2005.

S. 247 would authorize a project that would convert approximately 6 miles of open canal in the Tumalo Irrigation District (TID) into a pipeline. TID is not part of a Reclamation project, but it did have a repayment contract for rehabilitation of Crescent Lake Dam. The District satisfied its repayment obligation to the United States in 1998 and holds title to all project facilities. The Tumalo Water Conservation Project, known locally as the Tumalo Feed Canal pipeline, would conserve up to 21 cubic feet per second (cfs) of water for both agricultural and instream uses in Tumalo Creek in Central Oregon. While the Administration supports the aim of the TID to conserve water and to improve instream flows while not diminishing the amount of water available for agricultural uses, we cannot support the legislation as written.

S. 247 creates a system of credits for offsetting the required 50% non-Federal cost share. Credits would be given for TID expenses in project design, planning and construction, for water left instream after completion of the project, and for foregone revenue from reduced District assessments and head gate fees. Project sponsors have calculated that the credit system amounts to approximately $7.4 million of "contribution" to the project, including $5.4 million for the value of the conserved water, and $300,000 for the value of in-kind services. Federal guidelines found in the Code of Federal Regulations and OMB circulars only allow credit for the actual costs of certain in-kind services in calculating the cost share requirement for water conservation projects. These include items such as development of project designs, survey work, NEPA, ESA and cultural resource compliance costs, use of construction equipment and labor, and other activities that directly relate to project completion. The credit system proposed in S.247, section 3(b)(2)(B) does not meet these requirements.

The sponsors estimate that the total cost of the project is $14 million, and thus characterize their "contribution" as 50%. However, the U.S. is being asked to pay up to $14 million to construct the project, even though the legislation states that the Federal cost-share shall be 50%.

This concludes my written statement. I am pleased to answer any questions.