S. Rept. 116-133 - CLEAN WATER FOR RURAL COMMUNITIES ACT116th Congress (2019-2020)

                                                      Calendar No. 253
116th Congress     }                                    {       Report
                                 SENATE
 1st Session       }                                    {      116-133

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                 CLEAN WATER FOR RURAL COMMUNITIES ACT

                                _______
                                

                October 22, 2019.--Ordered to be printed

                                _______
                                

        Ms. Murkowski, from the Committee on Energy and Natural 
                   Resources, submitted the following

                              R E P O R T

                         [To accompany S. 334]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 334) to authorize the construction of the 
Musselshell-Judith Rural Water System and study of the Dry-
Redwater Regional Water Authority System in the States of 
Montana and North Dakota, and for other purposes, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                PURPOSE

    The purpose of S. 334 is to authorize the construction of 
the Musselshell-Judith Rural Water System and study of the Dry-
Redwater Regional Water Authority System in the States of 
Montana and North Dakota.

                          BACKGROUND AND NEED

    The Rural Water Supply Act (43 U.S.C. 2405) was enacted in 
2006 to authorize the Secretary of the Interior (Secretary), 
acting through the Bureau of Reclamation (BOR or Bureau), to 
work with rural communities and tribes to assess potable water 
supply needs, identify options to address those needs through 
investigations and studies, and recommend if a project should 
be authorized for construction. Further Congressional 
authorization is required for BOR to participate in or provide 
funding for the design and construction of a rural water 
project.
    Project sponsors have been working through the Bureau's 
rural water program to assess the feasibility of the Dry-
Redwater and Musselshell-Judith Rural Water Projects. The 
Musselshell-Judith Rural Water System is designed to provide 
drinking water to about 6,500 residents through the Central 
Montana Regional Water Authority. The population served by this 
project currently relies on low quality groundwater, drought-
sensitive surface supplies and, in some cases, hauled water. 
Water quality is also poor in the service area and 
concentrations of total dissolved solids, sulfates, iron, and 
manganese exceed secondary drinking water standards.
    The proposed Musselshell-Judith project would include a 
well field, four new buried water storage tanks, a pumping 
station, and distribution system. Over $3 million in Federal, 
State, and local funds have been spent on studies and planning, 
and in January 10, 2017, the Bureau of Reclamation Commissioner 
notified the Office of Management and Budget that the final 
feasibility report found the project to be feasible and met the 
criteria set forth in the Rural Water Supply Act.
    The Dry-Red Water Authority System would treat and deliver 
water to communities in Eastern Montana and North Dakota. 
Currently, individual municipal water systems, reliant on 
groundwater that is high in sodium, sulfates, and fluoride, 
serve residents in these communities and often do not meet 
primary drinking water standards without expensive treatment. 
At least one of these systems is also out of compliance with 
the Clean Water Act due to high levels of sodium and dissolved 
solids.
    The Dry-Redwater Regional Water Authority submitted a 
feasibility study to BOR for the Dry-Redwater Regional Water 
Authority System in 2012, but the Bureau found that the 
proposal did not meet economic feasibility requirements. That 
project would deliver water from the Fort Peck Reservoir and 
require construction of storage tanks, pump stations, and 
pipelines.
    The Dry-Redwater Regional Water Authority has been working 
to revise initial plans for the system since that time, but a 
project meeting BOR's feasibility criteria has not been 
reviewed or approved at this time. Because the Rural Water 
Supply Act has expired, further authorization is necessary for 
BOR to continue working with the Dry-Redwater Regional Water 
Authority to find a feasible project.

                          LEGISLATIVE HISTORY

    S. 334 was introduced by Senators Daines and Tester on 
January 16, 2019.
    Representative Gianforte introduced companion legislation, 
H.R. 967, in the House of Representatives on February 5, 2019, 
which was referred to the Natural Resources Committee.
    In the 115th Congress, Senators Daines and Tester 
introduced a similar measure, S. 685, on March 21, 2017. The 
Subcommittee on Water and Power held a hearing on S. 685 on 
June 14, 2017 (S. Hrg. 115-38). The Senate Committee on Energy 
and Natural Resources met in an open business session on 
October 2, 2018, and ordered S. 685 favorably reported with an 
amendment in the nature of a substitute and an amendment to the 
title (S. Rept. 115-373).
    Representative Gianforte introduced companion legislation, 
H.R. 5073, in the House of Representatives on February 20, 
2017, which was referred to the Natural Resources Committee.
    In the 114th Congress, Senator Daines introduced similar 
legislation, S. 1552, on June 11, 2015. The Subcommittee on 
Water and Power held a hearing on the bill on June 18, 2015 (S. 
Hrg. 114-399).
    The measure was also included in Title III of S. 2902, 
legislation introduced by Senators Flake, Barrasso, Daines, 
Heller, McCain, and Risch on May 9, 2016. The Subcommittee on 
Water and Power held a hearing on S. 2902 on June 18, 2016. The 
Committee on Energy and Natural Resources met in open business 
session on July 13, 2016, and ordered S. 2902 favorably 
reported with amendments.
    Representative Zinke introduced companion legislation, H.R. 
3867, in the House of Representatives on October 29, 2015, 
which was referred to the Natural Resources Committee.
    The Senate Committee on Energy and Natural Resources met in 
open business session on September 25, 2019, and ordered S. 334 
favorably reported.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in 
open business session on September 25, 2019, by a majority 
voice vote of a quorum present, recommends that the Senate pass 
S. 334. Senator Lee asked to be recorded as voting no.

                      SECTION-BY-SECTION ANALYSIS

Sec.1. Short title

    Section 1 sets forth the short title.

Sec. 2. Purpose

    Section 2 states the bill's purpose.

Sec. 3. Definitions

    Section 3 defines key terms.

Sec. 4. Musselshell-Judith Rural Water System

    Subsection (a) authorizes the Secretary to plan, design and 
construct the Musselshell-Judith Rural Water System in 
substantial accordance with the Musselshell-Judith Rural Water 
System Feasibility Report.
    Subsection (b) directs the Secretary to enter into a 
cooperative agreement with the Central Montana Regional Water 
Authority to provide Federal assistance in furtherance of 
subsection (a).
    Subsection (c) limits the Federal cost share to 65 percent 
of the total project cost and makes clear that such Federal 
cost share funds shall not be returnable or reimbursable. The 
subsection further outlines the allowable uses for Federal 
funds, prohibits Federal funding for the operation, 
maintenance, and replacement of the Musselshell-Judith Rural 
Water System, and specifies that title to the Musselshell-
Judith Rural Water System shall be held by the Central Montana 
Regional Water Authority.

Sec. 5. Dry-Redwater Feasibility Study

    Subsection (a) defines key terms for the section.
    Subsection (b) authorizes the Secretary, in consultation 
with the Dry-Redwater Regional Water Authority, to study the 
feasibility of constructing the Dry-Redwater Regional Water 
System. This subsection further states that the study must 
comply with BOR feasibility standards.
    Subsection (c) authorizes the Secretary to enter into a 
cooperative agreement with the Dry-Redwater Regional Water 
Authority to complete additional work to ensure that the study 
complies with BOR feasibility standards.
    Subsection (d) authorizes $5 million to carry out this 
section.
    Subsection (e) terminates the authority provided under this 
section five years after the date of enactment.

Sec. 6. Water rights

    Section 6 states that nothing in the Act preempts state 
water law or affects a State's authority to manage its water 
resources.

Sec. 7. Authorization of appropriations

    Section 7 authorizes $56,650,000 to be appropriated for the 
planning, design and construction of the Musselshell-Judith 
Rural Water System and authorizes the indexing of the 
authorized amount based on cost fluctuations after November 1, 
2014.

                   COST AND BUDGETARY CONSIDERATIONS

    The Congressional Budget Office estimate of the costs of 
this measure has been requested but was not received at the 
time the report was filed. When the Congressional Budget Office 
completes its cost estimate, it will be posted on the internet 
at www.cbo.gov.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 334. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 334, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 334, as ordered reported, authorizes $56,650,000 to be 
appropriated for the planning, design, and construction of the 
Musselshell-Judith Rural Water System in the State of Montana.

                        EXECUTIVE COMMUNICATIONS

    Executive views on S. 334 were not requested by the 
Committee. The testimony provided by the Department of the 
Interior at the June 14, 2017, hearing on S. 685, similar 
legislation, follows:

   Statement of Scott Cameron, Acting Assistant Secretary--Water and 
                Science, U.S. Department of the Interior

    Chairman Flake, Ranking Member King, and members of the 
Subcommittee, I am Scott Cameron, Acting Assistant Secretary 
for Water and Science at the Department of the Interior. Thank 
you for the opportunity to provide the views of the Department 
of the Interior (Department) on S. 685, the Clean Water for 
Rural Communities Act, which would authorize construction of 
the Dry-Redwater Regional Water Authority System and the 
Musselshell-Judith Rural Water System in the States of Montana 
and North Dakota.
    In the 114th Congress, Reclamation provided testimony on S. 
2902 and S. 1552, which contained language identical to S. 685. 
My testimony today will update Reclamation's previous 
statements on these projects to include recent events; however, 
the Department's position overall on funding has not changed 
from these earlier testimonies.
    Like the sponsors of this legislation, the Department 
supports the goals of encouraging a vibrant rural economy and 
ensuring safe, reliable sources of drinking water in Montana 
and North Dakota. Rural water projects help build strong, 
secure communities and are important to supporting the 
livelihood of local economies. Public Law 109-451, which 
expired September 30, 2016, authorized Reclamation to establish 
a Rural Water Supply Program to help rural communities and 
Tribes in the western United States analyze and develop options 
for meeting water supply needs through the completion of 
appraisal investigations and feasibility studies.
    While the Department acknowledges the important functions 
rural water projects offer to communities across the West, we 
have concerns with S. 685 as currently written. We request the 
opportunity to work with the Committee to adequately address 
our concerns, as identified below.
    The legislation authorizes construction of two separate 
projects and my statement will speak to each of those projects 
separately.
Dry-Redwater
    Section 4(a)(1) of S. 685 applies to the planning, design, 
and construction of the regional Dry-Redwater Rural Water 
Authority System in eastern Montana and a small service area in 
northwest North Dakota, and would authorize the Federal 
Government to provide up to 75 percent of the System's overall 
construction cost. Reclamation estimates that this 
authorization would amount to Federal appropriations of at 
least $200 million dollars. The Department last testified 
before this Subcommittee on legislation related to the Dry-
Redwater Project in May of 2016, and prior to that, in June 
2015, May 2011, and July of 2009. Since 2016, two things have 
occurred; the Dry-Redwater Regional Water Authority (Authority) 
changed their project plans from that provided in the initial 
study by adding the cities of Sidney and Glendive, Montana, to 
the Authority's service area which changed the population 
served from 15,000 to over 26,500; and secondly, Reclamation's 
authority to continue work on rural water appraisal and 
feasibilities studies under P.L. 109-451 expired. Reclamation 
did not receive a feasibility study that was evaluated and 
determined to be economically feasible for the new project 
envisioned by the Authority.
    The Department is concerned about language in the 
legislation authorizing a project for construction without a 
complete Feasibility Study. Specifically, the potential strain 
on Reclamation's budget that could come about from this 
authorization, the cost share requirement proposed in the bill, 
and the proposed use of power from the Pick-Sloan Missouri 
Basin Program (P-SMBP) for non-irrigation purposes are a 
problematic issues.
    In 2012, the Authority submitted a Feasibility Study to 
Reclamation for review. Upon initial review of the Feasibility 
Study, Reclamation was unable to identify a technically viable 
water supply alternative that presented a National Economic 
Development (NED) plan with net positive benefits to the 
nation. Reclamation informed the Authority that the Feasibility 
Study could not be supported as being financially or 
economically feasible under the requirements of Reclamation's 
Rural Water Supply Program. Consequently, there are significant 
review findings and recommendations that must be addressed to 
bring the Feasibility Study up to Reclamation's standards. 
Since project costs have not been fully developed by the 
Sponsor and reviewed by Reclamation, there is also the 
potential for this project to be financially unsustainable for 
the project sponsors.
    Because of the importance of this issue, a Reclamation 
Design, Cost Estimating, and Construction (DEC) review further 
evaluated the Feasibility Study in 2012 in order to provide an 
independent analysis. The estimated cost to address the DEC 
Report Findings and Recommendations in 2012 was in excess of 
$5.5 million. Neither Reclamation nor the Authority had 
sufficient funding to revise the Feasibility Study to address 
the DEC Report Findings. The authority for Reclamation to 
further review the feasibility study expired in 2016. In order 
to maintain their original service area and related project 
benefits, the Authority ruled out a scaled down approach.
    As a result of this decision, Reclamation entered into a 
Memorandum of Understanding (MOU) with the Authority on April 
27, 2015, with the objective of completing a summary report 
that documented the current status of the draft Feasibility 
Study and identified the additional level of effort needed to 
revise the Feasibility Study technically in order to meet the 
requirements of Reclamation's Rural Water Supply Program. 
However, before a final summary report could be completed, 
Reclamation's authority under the program expired and 
Reclamation was required to generate a Feasibility Study 
Concluding Report (Concluding Report) since the Feasibility 
Study was not completed. The Concluding Report was completed in 
September 2016 and provided an overview of the Feasibility 
Study up to the point of concluding it, and identified the 
reasons for ending the Feasibility Study. The Concluding Report 
provided findings that primarily due to the economics of the 
proposed alternative and the incomplete level of the 
Feasibility Study, Reclamation is not in a position to support 
the project as financially viable or able to verify that the 
total project cost estimate is economically sound.
    The Department is also concerned about the non-Federal cost 
share for the System. As stated above, S. 685 contemplates that 
the United States would fund 75 percent of the cost of 
constructing the System for the benefit of Montana citizens of 
Dawson, Garfield, McCone, Prairie, Richland Counties, and North 
Dakota citizens of McKenzie County. While this has been the 
cost share level proposed in other rural water projects enacted 
into law, it represents the maximum Federal cost share 
previously allowed under Title I of the Rural Water Supply Act 
of 2006 (PL 109-451, now expired), which included a requirement 
for a Feasibility Report that comprised an analysis of the 
sponsor's capability-to-pay and identified an appropriate 
contribution by the local sponsors.
    Section 5 of S. 685 authorizes the delivery of 1.5 
megawatts of P-SMBP pumping power to be used and delivered 
between May 1 and October 31 for the benefit of this System at 
the firm power rate. Section 5(b)(2)(A) of the bill requires 
that the System be operated on a ``not-for-profit basis'' in 
order to be eligible to receive power under those terms. 
Reclamation is not certain of the impact the bill's 
requirements could have on Western Area Power Administration's 
existing contractual power obligations. In addition to those 
concerns mentioned above, we have yet to verify whether or not 
water rights issues associated with the System have been 
adequately addressed.
    Reclamation's authority to continue work on rural water 
appraisal and feasibilities studies has expired. At this time, 
there is no general programmatic authority for continued work 
by Reclamation on rural water appraisal and feasibility 
studies. Reclamation's review of Dry--Redwater Authority's 
proposed system was conducted under the authority of the Rural 
Water Supply Act of 2006 (Title I of Public Law 109-451) and 
this authority expired on September 30, 2016. Reclamation 
generated a Concluding Report which provided an overview of the 
Feasibility Study up to the point of concluding it and 
identified the reasons for ending the study.
    If legislative authority is granted, we suggest System 
sponsors work with Reclamation to evaluate the System for scale 
and economic viability in an effort to refine the National 
Economic Development accounting such that the ratio of total 
benefits exceeds costs. The System should meet appropriate 
guidelines and be updated to include new infrastructure 
required to accommodate the large increase in population 
served. S. 685 allows the Authority to acquire property and 
existing systems. Details of these systems should be fully 
identified and incorporated into the new evaluation and the 
evaluation should incorporate recommendations from the DEC 
review or, if necessary, require a new DEC review be conducted. 
It should address all federal environmental compliance 
activities. There are substantial costs believed to be in the 
millions of dollars associated with these efforts that are 
outside of any costs projections previously considered. We also 
recommend that they work with the Western Area Power 
Administration and their contractors on the issues related to 
the System's pumping power needs.
Musselshell-Judith
    Section 4(a)(2) of S. 685 would authorize the planning, 
design, and construction of the Musselshell-Judith Rural Water 
System in central Montana and would authorize appropriations of 
75 percent of total project costs. Since the total estimated 
construction cost of the project is $87,102,000, Reclamation 
estimates that the total Federal contribution of 75 percent 
would equate to $65,327,000 (2014 dollars). While a 75 percent 
cost share level has been proposed in other rural water 
projects enacted into law, this represents the maximum Federal 
cost share previously allowed under the Rural Water Supply Act 
of 2006.
    In 2015, the Central Montana Rural Water Authority's 
(Authority) Musselshell-Judith Rural Water System Feasibility 
Study (Feasibility Study) was submitted to Reclamation for 
technical review under Public Law 109-451. The Department found 
the proposed project to be feasible and to meet the broad 
criteria of the program, however, the Department is concerned 
about our ability to fund even currently authorized rural water 
projects, and does not want to unreasonably raise expectations 
that new authorized projects would receive the desired federal 
funding.
Common Both Water Systems
    Section 7(b) of S. 685 addresses the cost indexing for the 
authorization of appropriations. As previously testified, 
Reclamation is not aware of a specific rationale for the 
differing indexing dates prescribed in the legislation. For the 
Dry-Redwater System, appropriations are to be indexed to 
January 1, 2008. For the Musselshell-Judith, the appropriations 
are to be indexed to November 1, 2014.
    Authorized rural water projects compete with a number of 
priorities within Reclamation's Budget, including aging 
infrastructure, Indian water rights settlements, environmental 
compliance, restoration actions, developing sustainable water 
supply strategies, and other priorities intended to address 
future water and energy related challenges.
    The Department has concerns about adding to the backlog of 
Reclamation's authorized rural water projects seeking Federal 
construction funding. Discretionary rural water funding has 
enabled Reclamation to make progress in promoting certainty, 
sustainability, and resiliency in support of basic drinking 
water needs of rural western communities. However, 
Reclamation's ability to make Federal investments that match 
on-the-ground capabilities has its limitations. Of 
Reclamation's six currently authorized rural water projects 
under construction or funded at some level today, all of the 
projects pre-date Title I of the Rural Water Supply Act of 2006 
(now expired). Authorizing additional rural water projects may 
delay rural water projects that are already under construction.
Conclusion
    The Department recognizes that the people who would be 
served by S. 685 have legitimate needs for better quality 
drinking water. We are concerned, given the past history and 
future prospects of funding for the rural water program, not to 
raise unreasonable expectations for future federal funding 
should this bill become law.
    That concludes my written statement. I am pleased to answer 
questions at the appropriate time.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by S. 334 as ordered reported.

                                  [all]