Oversight Field Hearing: Committee On Natural Resources U.S. House of Representatives

EVAPORATING PROSPERITY: HOW
FEDERAL ACTIONS ARE DRIVING

UP WATER AND POWER COSTS,
THREATENING JOBS AND LEAVING
ARIZONANS HIGH AND DRY
OVERSIGHT FIELD HEARING

BEFORE THE
SUBCOMMITTEE ON WATER AND POWER

OF THE
COMMITTEE ON NATURAL RESOURCES

U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
Monday, June 4, 2012, in Phoenix, Arizona
Serial No. 112-115

Printed for the use of the Committee on Natural Resources
(
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COMMITTEE ON NATURAL RESOURCES

DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democratic Member
Don Young, AK
John J. Duncan, Jr., TN
Louie Gohmert, TX
Rob Bishop, UT
Doug Lamborn, CO
Robert J. Wittman, VA
Paul C. Broun, GA
John Fleming, LA
Mike Coffman, CO
Tom McClintock, CA
Glenn Thompson, PA
Jeff Denham, CA
Dan Benishek, MI
David Rivera, FL
Jeff Duncan, SC
Scott R. Tipton, CO
Paul A. Gosar, AZ
Raul R. Labrador, ID
Kristi L. Noem, SD
Steve Southerland II, FL
Bill Flores, TX
Andy Harris, MD
Jeffrey M. Landry, LA
Jon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV
Dale E. Kildee, MI
Peter A. DeFazio, OR
Eni F.H. Faleomavaega, AS
Frank Pallone, Jr., NJ
Grace F. Napolitano, CA
Rush D. Holt, NJ
Raul M. Grijalva, AZ
Madeleine Z. Bordallo, GU
Jim Costa, CA
Dan Boren, OK
Gregorio Kilili Camacho Sablan, CNMI
Martin Heinrich, NM
Ben Ray Lujan, NM
Betty Sutton, OH
Niki Tsongas, MA
Pedro R. Pierluisi, PR
John Garamendi, CA
Colleen W. Hanabusa, HI
Paul Tonko, NY
Vacancy
Todd Young, Chief of Staff

Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democratic Staff Director
David Watkins, Democratic Chief Counsel
SUBCOMMITTEE ON WATER AND POWER

TOM McCLINTOCK, CA, Chairman
GRACE F. NAPOLITANO, CA, Ranking Democratic Member
Louie Gohmert, TX
Jeff Denham, CA
Scott R. Tipton, CO
Paul A. Gosar, AZ
Raul R. Labrador, ID
Kristi L. Noem, SD
Doc Hastings, WA, ex officio
Raul M. Grijalva, AZ
Jim Costa, CA
Ben Ray Lujan, NM
John Garamendi, CA
Edward J. Markey, MA, ex officio
(II)
CONTENTS
Page
Hearing held on Monday, June 4, 2012 .................................................................

Statement of Members:
Gosar, Hon. Paul A., a Representative in Congress from the State of
Arizona ...........................................................................................................
Prepared statement of ...............................................................................
McClintock, Hon. Tom, a Representative in Congress from the State
of California ...................................................................................................
Schweikert, Hon. David, a Representative in Congress from the State
of Arizona ......................................................................................................
Statement of Witnesses:
Griffin, Hon. Gail, State Senator, Arizona State Senate, Hereford,
Arizona ...........................................................................................................
Groseta, P. Andrew, President, Arizona Cattle Growers Association,
Cottonwood, Arizona .....................................................................................
Horseherder, Nicole, Dine, To Nizhoni Ani, Black Mesa, Arizona ..............
Jones, Tom, Chief Executive Officer, Grand Canyon State Electric
Cooperative Association, Inc., Tempe, Arizona ...........................................
Mendoza, Hon. Gregory, Governor, Gila River Indian Community,
Sacaton, Arizona ...........................................................................................
Reeve, Hon. Amanda A., State Representative, District 6, Arizona House
of Representatives, Phoenix, Arizona ..........................................................
Sullivan, John F., Associate General Manager & Chief Resources
Executive, Salt River Project Agricultural Improvement and Power
District, Phoenix, Arizona ............................................................................
Von Gausig, Hon. Doug, Mayor, City of Clarkdale, Arizona .........................
(III)
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OVERSIGHT FIELD HEARING IN PHOENIX,

ARIZONA, ON EVAPORATING PROSPERITY:
HOW FEDERAL ACTIONS ARE DRIVING UP
WATER AND POWER COSTS, THREATENING
JOBS AND LEAVING ARIZONANS HIGH AND
DRY.
Monday, June 4, 2012
U.S. House of Representatives
Subcommittee on Water and Power
Committee on Natural Resources
Phoenix, Arizona
The Subcommittee met, pursuant to call, at 10 a.m., House

Hearing Room 3, Arizona State Capitol, 1700 West Washington
Street, Phoenix, Arizona, Hon. Tom McClintock [Chairman of the
Subcommittee] presiding.
Present: Representatives McClintock and Gosar.
Also present: Representative Schweikert.
Mr. MCCLINTOCK. The House Subcommittee on Water and Power
will come to order.
Welcome to all of you. I am Congressman Tom McClintock of
California. I am Chairman of the Water and Power Subcommittee.
I have come to visit our Colorado River water. Thats a joke.
No, I actually
Mr. SCHWEIKERT. Did you notice the dead look?
Mr. MCCLINTOCK. Well, it is a little sore on our side of the border
as well. But actually we were
VOICE. The sound system, please, we cant hear you. Can you fix
the sound system?
Mr. MCCLINTOCK. How is that?
VOICE. Yes.
Mr. SCHWEIKERT. It was actually very funny what you missed.
Mr. MCCLINTOCK. But I am not going to repeat it for fear that
I will get the same reaction.
Actually, we are here at the request of Arizona Congressmen
Paul Gosar, David Schweikert, and their Republican colleagues
from Arizona. We are meeting here today on a hearing entitled
Evaporating Prosperity: How Federal Actions Are Driving Up
Water and Power Costs, Threatening Jobs and Leaving Arizonans
High and Dry.
I first ask unanimous consent that Mr. Schweikert be allowed to
sit on the Subcommittee and participate in the hearing. Without
objection?.
Dr. GOSAR. No objection.
Mr. MCCLINTOCK. So ordered.
(1)
2
To begin todays hearing, I would like to defer to our
distinguished colleague, Congressman Paul Gosar, for a few introductions.
Dr. GOSAR. First of all, I would like to thank the Honor Guard
from Casa Grande from the VFW Post 1677 for their service to our
country. This is an honor to have them here with us today.
I would like to take a moment to introduce each of the members:
First of all, Mr. Bill Zimmer, a Vietnam veteran, served from
1968 to 1969 and comes to us from the home of the U.S. Army
TACOM Life Cycle Management Command in Warren, Michigan;
Mr. Gary Erickson, a Vietnam War Marine Corps veteran who
served from 1966 to 1967 and hails from the City of Lakes, Minneapolis, Minnesota; Mr. Bill Reed, Vietnam War Army veteran
who served in 1968 during the Tet Offensive. He comes to us from
Big Sky Country, Billings, Montana; and last but not least, Mr.
Bradley Hazel, an Iraqi War Marine Corps veteran who served in
Iraq from 2003, 2004, and 2005, and is a Purple Heart recipient.
He is an Arizona guy from Wildcat Country in Tucson.
Let me welcome all you distinguished guests.
[An honor proceeding was held.]
[whereupon, the Pledge of Allegiance was recited.]
Mr. MCCLINTOCK. Be seated. Thank you, Mr. Gosar.
We will now begin with five-minute opening statements beginning with mine.
STATEMENT
OF
THE
HON.
TOM
McCLINTOCK,
A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF
CALIFORNIA
Mr. MCCLINTOCK. Todays hearing, as I said, is convened at the

request of Congressman Gosar and his Arizona colleagues to hear
testimony on Federal policies that are causing increasing scarcity
and skyrocketing prices of water and electricity in the southwestern United States.
One aspect is a concerted effort from the left to close the Navajo
Generating Station. Another is the memo by the Secretary of
Energy that would force consumers to bear staggering rate increases to subsidize the Lefts ideological fascination with wind and
solar power. Yet another is Federal land management policies of
benign neglect that are impeding water deliveries and causing uncontrolled overgrowth of our public resulting in catastrophic
wildfires.
The radical Left wants to close the coal-fired Navajo Generating
Station and replace it with wind and solar power. Coal is one of
the cheapest and most reliable forms of energy available to us
while solar is the most expensive. Indeed, in more than 170 years
since the invention of solar panels, we have not yet invented a
more expensive way of producing electricity. Thats why the Left
wants to hide its true cost to consumers through their taxes and
through other peoples electricity bills.
One of the Democratic witnesses invited today calls wind and
solar reliable. In fact, at a moments notice a passing cloud bank
or sudden calm can drop generation to zero. Electricity grids collapse unless the amount of power put into the system constantly
matches the amount drawn from it. So consumers end up paying
3
to keep conventional plants at constant standby to replace the lost
power at a moments notice.
Because of the low output of wind and solar and the distance the
electricity must often be conveyed, existing AC transmission systems must be replaced with extremely expensive, special high-tension direct current lines to accommodate them.
A generation ago, the objective of our Federal water and power
policy could be summed up in a single word, abundance. This policy
laid a foundation for the prosperity of the southwest and literally
made Arizona bloom from the desert.
But beginning in the 1970s, a radical and retrograde ideology
began to seep into our public policy. It abandoned abundance as
our objective and replaced it with the rationing of shortages.
A few months ago, the Administration boasted that it would,
quote, increase available water supply in the western United
States by 730,000 acre-feet. But they werent talking about increasing our water supplies, they were talking about reducing
human consumption by that amount.
In todays testimony, a Democratic witness touts negawatts, electricity we dont use, as if it added to our capacity. The future they
are planning is one where families are encouraged, threatened,
and, if need be, forced to reduce consumption through higher water
and electricity bills, higher taxes and fines, and intrusive government regulations.
Ironically, they see nothing wrong with spilling millions of gallons of water from the Glen Canyon Dam and sacrificing enough
electricity to power a million homes a year to simulate spring
floods. But they are aghast that a family might actually prefer a
toilet that works or light bulbs that dont give them headaches.
I find the future advocated by the environmental Left to be indescribably dreary and depressing. It is a future of increasingly severe government-induced shortages, higher and higher electricity
and water prices, massive taxpayer subsidies to politically well connected companies, increasingly severe wildfires, and a permanently
declining quality of life for our children, who will be required to
stretch and ration every drop of water and every watt of electricity
in their dimly lit, sweltering, and parched homes.
I see a different future for our nation. I see an era of clean,
cheap, and abundant electricity. I see great new reservoirs to store
water in wet years to assure abundance in dry ones. I see a future
in which families can enjoy the prosperity that abundant water and
electricity provides, and the quality of life that comes from that
prosperity. I see a nation whose children can look forward to a
backyard garden, a family swimming pool, affordable air conditioning in the summer and heating in the winter, brightly lit
homes and cities, and abundant and affordable groceries from
Americas agricultural cornucopia.
These are two very different visions of America, and a choice
must be made, not just by this Subcommittee or this Congress, but
by the American people, over which vision guides our nation into
the future.
And with that, I will yield back my two seconds and recognize
my colleague from Arizona, Mr. Gosar.
[The prepared statement of Mr. McClintock follows:]
4
Statement of The Honorable Tom McClintock, Chairman,
Subcommittee on Water and Power
Todays hearing is convened at the request of Congressman Paul Gosar and his
Arizona colleagues to hear testimony on Federal policies that are causing increasing
scarcityand skyrocketing pricesof water and electricity in the Southwestern
United States.
One aspect is a concerted effort from the Left to close the Navajo Generating Station. Another is the memo by the Secretary of Energy that would force consumers
to bear staggering rate increases to subsidize the Lefts ideological fascination with
wind and solar power. Yet another is federal land management policies of benign
neglect that are impeding water deliveries and causing uncontrolled overgrowth of
our public lands resulting in catastrophic wild fires.
The radical left wants to close the coal-fired Navajo Generating Station and replace it with wind and solar power. Coal is one of the cheapest and most reliable
forms of energy available to us while solar is the most expensive. Indeed, in the
more than 170 years since the invention of solar panels, we have not yet invented
a more expensive way of producing electricity. Thats why the Left wants to hide
the true cost to consumers through their taxesand other peoples electricity bills.
One of the Democratic witnesses calls wind and solar reliable. In fact, at a moments notice a passing cloudbank or a sudden calm can drop generation to zero.
Electricity grids collapse unless the amount of power put into the system constantly
matches the amount drawn from it. So consumers end up paying to keep conventional plants at constant stand-by to replace the lost power at a moments notice.
Because of the low output of wind and solar and the distance the electricity must
often be conveyed, existing AC transmission systems must be replaced with extremely expensive special high-tension direct-current lines to accommodate them.
A generation ago, the objective of our federal water and power policy could be
summed up in a single word: abundance. This policy laid a foundation for the prosperity of the Southwest and literally made Arizona bloom from the desert.
But beginning in the 1970s, a radical and retrograde ideology began to seep into
our public policy. It abandoned abundance as our objective and replaced it with the
rationing of shortages.
A few months ago, the Administration boasted that it wouldquote...increase
available water supply...in the western United States by 730,000 acre feet. But
they werent talking about increasing our water suppliesthey were talking about
reducing human consumption by that amount. In todays testimony, a Democratic
witness touts negawattselectricity we dont useas if it added to our capacity.
The future they are planning is one where families are encouraged, threatened
and, if need be, forced to reduce consumption through higher water and electricity
bills, higher taxes and fines and intrusive government regulations.
Ironically, they see nothing wrong with spilling millions of gallons of water from
the Glen Canyon dam (and sacrificing enough electricity to power a million homes
for a year) to simulate spring floods. But they are aghast that a family might actually prefer a toilet that works or light bulbs that dont give them headaches.
I find the future advocated by the environmental Left to be indescribably dreary
and depressing. It is a future of increasingly severe government-induced shortages,
higher and higher electricity and water prices, massive taxpayer subsidies to politically well-connected companies, increasingly severe wildfires and a permanently declining quality of life for our childrenwho will be required to stretch and ration
every drop of water and every watt of electricity in their dimly lit, sweltering, and
parched homes.
I see a different future for our nation: I see a new era of clean, cheap and abundant electricity. I see great new reservoirs to store water in wet years to assure
abundance in dry ones. I see a future in which families can enjoy the prosperity that
abundant water and electricity provides; and the quality of life that comes from that
prosperity. I see a nation whose children can look forward to a backyard garden,
a family swimming pool, affordable air-conditioning in the summer and heating in
the winter, brightly lit homes and cities and abundant and affordable groceries from
Americas agricultural cornucopia.
These are two very different visions of America, and a choice must be madenot
just by this sub-Committee or this Congress, but by the American people, over
which vision guides our nation into the future.
5
STATEMENT OF THE HON. PAUL A. GOSAR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA
Dr. GOSAR. Well, first of all, I would like to thank Chairman

McClintock for making the trip to Arizona and holding todays
hearing. I strongly believe House Committees should periodically
come out to Members home states and hear straight from the
horses mouth the struggles our constituents are faced with on a
day-to-day basis. Todays testimonies will provide our Committee
firsthand accounts of the grave impacts that the Federal Governments actions are having on Arizonas economic and ecological
health, and the information collected will prove invaluable in our
fight to restore common sense to Federal natural resources policy.
I would also like to thank my colleague Congressman David
Schweikert for being here. Over the past year and a half, David
has been a staunch ally as we have tackled the far-reaching resources issues facing our state. Additionally, he has emerged as a
prominent voice on the House Financial Services Committee, fighting for pro-market solutions to our state and countrys foreclosure
problems and advocating for policies that will help encourage job
growth and economic expansion.
Arizona, like many states across the west, is facing the brunt of
the Obama Administrations misguided policies. Nowhere is this
more true than in the natural resources realm. One does not have
to look far to see the struggles our constituents are experiencing.
Last year nearly 1 million acres of Arizonas forests burned, one
of the worst fire seasons in the states history. This year has not
been much better. Since last April, over 45,000 acres of forest in
Arizona have been destroyed by wildfires. The largest one was the
Sunflower Fire, which burned over 17,000 acres. The second largest, the Gladiator Fire, was 16,240 acres, and it injured eight people, destroyed six homes, and forced the evacuation of three communities.
Arizonans are tired of being victims of avoidable wildfire conditions. It is clear that the current process under existing Federal
law of planning, studying, consulting, litigating, appealing, and collaborating are failing us and our forests. These fires kill endangered species, destroy habitats, and pollute our air and waterways
more than any human activity. Additionally, they cost Federal Government millions of dollars in immediate fire response and many
millions more in restoration and rehabilitation.
We must first remove bureaucratic red tape, reform forest health
policy, and put a stop to endless litigation that stymies important
forest projects. The Wallow Fire proved that stewardship projects
and grazing projects are just what we need.
I have introduced legislation, the Catastrophic Wildfire Prevention Act, which will streamline the review process and allow the
U.S. Forest Service to utilize the emergency provisions of existing
regulations so that our forests could be maintained and provide for
economic opportunities for rural communities.
I am also encouraged by the recent announcement that the Four
Forest Restoration Initiative, known as 4-FRI, will move forward.
I hope litigation will not slow its success. These stewardship
projects restore the environment, improve public safety, and put
6
people back to work. Proactively treating our forests is the only
way to go forward.
As I travel throughout my congressional district, I am frequently
asked about the future of the Navajo Generating Station. Whether
it is a farmer in Pinal County, a member of the Navajo Nation employed at the plant, or just the everyday citizen concerned about
our states water security, everyone expresses concern about the potential job loss and economic impacts of proposed EPA mandates on
the Navajo Generating Station.
For those who do not know, this unique facility provides over 90
percent of the power for the Central Arizona Project, or CAP, which
is the largest supplier of renewable water in the state, and supports over 80 percent of Arizonas population and economic activity.
Additionally, the sale of the plants excess power is critical to the
Federal Governments ability to uphold previously enacted and future Native American water settlements. In short, it is a vital and
irreplaceable piece of our states short and long-term water and
power security whose impact stretches to nearly every citizen of
our state.
Last year this Committee held a hearing in Washington specifically on this issue, underscoring the importance of the facility. I
look forward to hearing more information from some of our witnesses and remain steadfast in my efforts to ensure this vital asset
does not become a victim of misguided policies or junk science.
I would be remiss if I didnt mention one other issue that our
Committee just recently began delving into that have vast impacts
throughout your state.
On March 16th, 2012, the Secretary of Energy issued a memorandum for power marketing administrators. This memo, commonly referred to as the Chu Memorandum, has created a great
deal of concern among those who rely on Power Marketing Administrations, or PMAs, for affordable and reliable energy.
The Secretarys memo directed the PMAs to act in areas involving transmission expansion, renewable energy, energy efficiency
and cyber security. And they are all laudable goals, goals that on
the surface I support. In fact, I have strongly advocated for the expansion of transmission on this Committee. However, I believe the
Secretarys means of these goals, the Chu Memo, would implement
a top-down approach that could most certainly impose greater costs
and risks that outweigh benefits and could force national directives
that could supersede or conflict with existing PMA statutory authority.
I have recently led a letter in Congress respectfully urging the
Secretary to pursue meaningful collaboration with stakeholders, including ratepayers and Congress, prior to moving forward with
these new initiatives. Currently that letter has been signed by over
140 U.S. Senators and congressmen, ranging from Chairman
McClintock to Congressman Jim McDermott of Washington, prominent Democrat in the House.
Additionally, the House Appropriations approved a policy rider
introduced by Congressman Denny Rehberg of Montana and supported by Arizona Democrat Congressman and Energy and Water
Subcommittee Ranking Member Ed Pastor barring the Secretary
from implementing the Chu directive. It is clear Members from
7
both sides of the aisle are concerned about how the Chu Memorandum will be implemented. Hopefully todays discussions will
continue the debate and enhance the Committees ability to exercise its oversight authority on this important public power issue.
In conclusion, Arizona has strong and innovative leaders. Working together, we have found a number of solutions that will put
Arizonans back to work. Arizona can be a national model for economic recovery driven by sustainable resource development. The
Federal Government just needs to get out of the way.
And I thank the Chairman for allowing me to speak.
Mr. MCCLINTOCK. You are very welcome. And you owe the Committee one minute, 18 seconds, which I will put on your tab.
[The prepared statement of Dr. Gosar follows:]
Statement of The Honorable Paul A. Gosar, a Representative
in Congress from the State of Arizona
First, I would like to thank Chairman McClintock for making the trip to Arizona
and holding todays hearing. I strongly believe House committees should periodically
comes out to its members home states and hear straight from the horses mouth
the struggles our constituents are faced with on a day-to-day basis. Todays testimonies will provide our committee first-hand accounts of the grave impacts the federal governments actions are having on Arizonas economic and ecological health,
and the information collected will prove invaluable in our fight to restore common
sense to federal natural resources policy.
I would also like to thank my colleague Congressman David Schweikert for being
here. Over the past year-and-a-half, David has been a staunch ally as we have tackled the far-reaching resources issues facing our state. Additionally, he has emerged
as a prominent voice on the House Financial Services Committee, fighting for promarket solutions to our state and countrys foreclosure problems and advocating for
policies that will help encourage job growth and economic expansion.
Arizona, like many other states across the west, is facing the brunt of the Obama
Administrations misguided policies. Nowhere is this more true than in the natural
resources realm.
One does not have to look far to see the struggles our constituents are experiencing. Last year, nearly one million acres of Arizonas forests burned, one of the
worst fire seasons in our states history. This year has not been any better. Since
late April, over 45,000 acres of forest in Arizona have been destroyed due to
wildfires. The largest one was the Sunflower Fire which burned over 17,000 acres.
The second-largest Gladiator Fire was 16,240 acres and it injured eight people, destroyed six homes, and forced the evacuation of three communities.
Arizonans are tired of being victims of avoidable wildfire conditions. It is clear
that the current process, under existing federal law, of planning, studying, consulting, litigating, appealing, and collaborating are failing us and our forests. These
fires kill endangered species, destroy habitats, and pollute our air and waterways
more than any human activity. Additionally, they cost the federal government millions of dollars in immediate fire response and many millions more in restoration
and rehabilitation
We must remove bureaucratic red tape, reform forest health policy, and put a stop
to endless litigation that stymies important forest projects. The Wallow Fire proved
that stewardship projects and grazing works, we just need more of it. I have introduced legislation, the Catastrophic Wildfire Prevent Act, which will streamline the
review process and allow the U.S. Forest Service to utilize the emergency provisions
of existing regulations, so that our forests could be maintained and provide economic
opportunities for rural communities. I am also encouraged by the recent announcement that the Four Forest Restoration Initiative, known as 4FRI, will move forward. I hope litigation will not slow its success. These stewardship projects restore
the environment, improve public safety, and put people back to work. Pro-actively
treating our forests is the only way forward.
As I travel throughout my Congressional District, I am frequently asked about the
future of the Navajo Generating Station. Whether its a farmer in Pinal County, a
member of the Navajo Nation employed at the plant, or just the everyday citizen
concerned about our states water security, everyone expresses concern about the potential job loss and economic impacts of proposed EPA mandates on the Navajo Generating Station. For those who do not know, this unique facility provides over 90
8
percent of the power for the Central Arizona Project (CAP), which is the largest supplier of renewable water in the state, and supports over 80 percent of Arizonas population and economic activity. Additionally, the sale of the plants excess power is
critical to the federal governments ability to uphold previously enacted and future
Native American water settlements. In short, it is a vital and irreplaceable piece
of our states short and long-term water and power security, whose impacted
stretches to nearly every citizen of our state.
Last year, this committee held a hearing in Washington specifically on this issue,
underscoring the importance of the facility. I look forward to hearing new information from some of our witnesses and remain steadfast in my efforts to ensure this
vital asset does not become a victim of misguided policies and junk science.
I would be remiss if I did not briefly mention one other issue that our committee
just recently began delving into that would have vast impacts throughout our state.
On March 16, 2012, The Secretary of Energy issued a Memorandum for Power
Marketing Administrators. This memo, commonly referred to as the Chu Memorandum has created a great deal of concern among those who rely on Power Marketing Administrations (PMAs) for affordable and reliable energy.
The Secretarys memos direct the PMAs to act in areas involving transmission expansion, renewable energy, energy efficiency, and cyber securityall laudable
goalsgoals that, on the surface, I support. In fact, I have strongly advocated for
the expansion of transmission on this committee. However, I believe the Secretarys
means of these goals, the Chu Memo, would implement a top-down approach that
could most certainly impose greater costs and risks that outweigh benefits and could
force national directives that would supersede or conflict with existing PMA statutory authority.
I have recently led a letter in Congress respectfully urging the Secretary to pursue meaningful collaboration with stakeholders, including ratepayers and Congress,
prior to moving forward with these new initiatives. Currently, that letter has been
signed by over 140 U.S. Senators and Congressman ranging from the Chairman
McClintock to Congressman Jim McDermott of Washington, a prominent Democrat
in the House. Additionally, the House Appropriations Committee recently approved
a policy rider, introduced by Congressman Denny Rehberg of Montana and supported by Arizona Democrat Congressman and Energy and Water Subcommittee
Ranking Member Ed Pastor, barring the Secretary from implementing the Chu directives. It is clear members from both sides of the aisle are concerned about how
the Chu Memorandum would be implemented. Hopefully todays discussions will
continue the debate and enhance the committees ability to exercise its oversight authority on this important public power issue.
In conclusion, Arizona has strong and innovative leaders. Working together, we
have found a number of solutions that will put Arizonans back to work. Arizona can
be a national model for economic recovery driven by sustainable resource development. The federal government just needs to get out of the way.
Thank you again everyone for being with us here today. It is great to see so many
constituents in the crowd who have traveled into town from all stretches of rural
Arizona to take part in todays hearing. Together, we are going to get our country
back on track.
Mr. MCCLINTOCK. I am very pleased to introduce my colleague

from Arizona, Mr. Schweikert.
STATEMENT OF THE HON. DAVID SCHWEIKERT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA
Mr. SCHWEIKERT. Well, I will make it up by being fairly short.

And, Mr. Chairman, thank you for being here. And I see many
friends out there.
You know, this is sort of coming home. Think of it. 21 years ago
I was sitting in this chair and part of the conversation we are
about to have is the same one we were having 21 years ago. But
at that time, we actually had a partner in the Federal Government.
And then in 1993, I will tell you, I believe it turned hostile. And
I remember actually those of us in leadership going back to Washington, D.C. To lay our claim and our story of we are from the
desert, do you understand how we live, how things work, and basi-
9
cally looking at blank faces and then were ushered out of the meeting because we were from a small state that had not voted for that
administration. And I believe that same sort of hostility is still
woven within the bureaucracy.
What you are doing here today is incredibly important. And this
is not theater. This is actually we need to tell our story. In my 16
months back in D.C., I have learned they really have no understanding how the west works. They have no understanding how
vast our territories are, the infrastructure that we have struggled
and bled to build, and how that infrastructure running through the
top part of the state is vital to what is happening in the southern
part of the state. We need to tell our story. But it is not only for
those of us here to tell our story why this is crucial, why these policies, why the bureaucracy can be so devastating to our future. But
we also, for those of us in these urban areas, lets face it, a lot of
our brothers and sisters on the other side of this building here in
the Grand Imperial State of Maricopa CountyOK, that was
funnyhave no understanding of the economic threats that are
functionally coming through the bureaucracy to the state and to
our future growth. And to each of you here, it is not only understanding your testimony, understanding your vision of what you
see happening, we have to tell the story. We have to get this information out, because, if not, I believe the bureaucracies are going
to do some very, very bad things to the future of the southwest.
And, Mr. Chairman, with that, I yield back.
Mr. MCCLINTOCK. Thank you.
[The prepared statement of Mr. Schweikert follows:]
Statement of The Honorable David Schweikert, a Representative
in Congress from the State of Arizona
Well, Ill make it up by being fairly short. Mr. Chairman, thank you for being
here. I see many friends out there. This is sort of coming homethink of this
twenty-one years ago I was sitting in this chair and part of the conversation were
about to haveis the same one we were having twenty-one years ago. But at that
time, we actually had a partner in the federal government. And then in 1993, I will
tell you, I believe it turned hostile. And I remember those of us in leadership going
back to Washington DC to lay our claim and our story, Were from the desert, do
you understand how we live, how things work?and basically looking at blank faces.
Then we were ushered out of the meeting because we were from a small state that
had not voted for that administration and I believe that same sort of hostility is
still woven within the bureaucracy. What youre doing here today is incredibly important. This is not theater. We need to tell our story. In my sixteen months here
in DC Ive learned they really have no understanding of how the west works. They
have no understanding how vast our territory is. The infrastructure we have struggled and bled to build. And how that infrastructure running through the top part
of the state is vital to whats happening in the southern part of the state. We need
to tell our story. But its not only for those of us here to tell our storywhy this
is crucial, why these policies, why the bureaucracy can be so devastating to our futurebut we also for those of us in these urban areas. Lets face it, a lot of our
brothers and sisters on the other side of this building here in the Grand Imperial
State of Maricopa CountyOK that was funnyhave no understanding of the economic threats that are functionally coming through the bureaucracy to the state to
our future growth. And for each of you here, it s not only understanding your testimony, understanding your vision of what you see happening. We have to tell the
story. We have to get this information out because if not I believe the bureaucracies
are going to do some very, very bad things to the future of the southwest and Mr.
Chairman with that, I yield back.
10
Mr. MCCLINTOCK. Before I recognize todays witnesses, I would
urge those in attendance to submit their own testimony for the
record since we are limited in terms of how many witnesses we can
hear today. You can do so by filling out your thoughts on the paper
at the table or please see a staff member on how to submit comments electronically. Your input is very important to us.
We will now hear from our panel of witnesses. Each witness
written testimony will appear in full in the hearing record. I would
ask each witness to keep his or her oral statement to five minutes
as outlined in our invitation letter under Committee Rule 4A.
I also want to explain how our timing lights work. When you
begin to speak, our clerk will start the timer. A green light will appear. At that time you have all the time in the world, or at least
four minutes. After four minutes a yellow light will appear. And at
that time you should start talking very, very fast. And after five
minutes the red light will come up. Now, the red light means that
we have all stopped listening, so you might as well stop talking.
But we welcome any additional testimony you might want to submit for the record. And if there is any consolation, all the Members
are bound by that same five-minute rule. Apparently somebody figured out a long time ago that five minutes is about the maximum
attention span of a Member of Congress.
So with that, I will recognize The Honorable Gregory Mendoza,
Governor of the Gila River Indian Community from Sacaton,
Arizona to testify.
STATEMENT OF THE HON. GREGORY MENDOZA, GOVERNOR,
GILA RIVER INDIAN COMMUNITY, SACATON, ARIZONA
Governor MENDOZA. Good morning, Chairman McClintock.

Thank you for the opportunity to address the Subcommittee today.
I am Gregory Mendoza, the Governor of the Gila River Indian
Community. We are an Indian Nation of over 20,000 members located south of Phoenix metropolitan area.
The Community sees the issue before you today from the vantage
point of the largest customer of Central Arizona Project, or CAP,
water. Critical to the Communitys economy, the Navajo Generating Station plays an integral role in delivering Colorado River
water to central and southern Arizona through CAP and meeting
Federal trust responsibilities under the Communitys 2004 water
settlement.
Should the cost of emission controls at NGS make CAP water
unaffordable, the Communitys water rights would be significantly
diminished and it would suffer significant economic hardship. As
we previously testified before this Subcommittee, this result would
be especially troubling given the clear history of my people and the
Gila River.
During the May 24, 2011 hearing, we expressed our concerns
about the potential consequences for the Community that could
occur if EPAs Best Available Retrofit Technology, or BART, determination at NGS requires selective catalytic reduction, or SCR.
After that hearing, the Community actively engaged with the EPA,
the Department of the Interior, and the Department of Energy in
order to express the Communitys concerns in a government-to-government capacity. In addition, the community took the proactive
11
steps of hiring an economist to determine the possible economic impacts on the Community under the different BART scenarios at
NGS.
Our study confirmed the Communitys worst fears, that EPAs
BART determination, without a mitigation plan, would devastate
the Communitys agricultural economy and undermined our water
settlement.
NGS supplies approximately 95 percent of the power to deliver
the CAP water to the Community. Our study looked at a number
of BART scenarios and how they would increase the cost of CAP
water. The study also looked at what BART may do to decrease the
future revenue generated from the fund created to reduce the Communitys cost of obtaining and using its CAP water allocation.
All told, if SCR is installed at NGS, without a mitigation plan,
we estimate that the total monetary loss to the Community
through 2044 would be over $757 million. If the NGS shuts down,
our total monetary loss would be over 2 billion. We have provided
our study to EPA and the Interior.
More importantly, during the Community consultation sessions
with DOI and EPA, both acknowledge that NGS is unlike any
other electrical generating facility in the southwest because of its
importance to many tribal economies. We believe this acknowledgment by DOI and EPA requires that a BART decision at NGS include a pragmatic plan to mitigate the negative impact BART
would have on tribal economies. Indeed, in EPA Administrator
Jacksons February 16, 2012, letters to Secretary Salazar and Secretary Chu, she expressed a desire to find a creative solution with
respect to BART at NGS. We applaud such an approach.
In an effort to be a part of the solution, the Community has provided to EPA, DOI, and DOE a preliminary proposal for the development of a solar facility located on the Gila River Indian Reservation. The revenues from this solar facility would be used to offset
the impacts caused to all CAP settling tribes due to increases in
the cost of CAP water caused by BART.
The Community is open to other viable solutions as well, but we
believe that any proposed BART will need to include a mitigation
plan that all stakeholders can support.
At the end of the day, we ask the United States to keep its word
and not to take action that would negatively affect the economy
and cultures of CAP tribes and the United States trust responsibility to those and other tribes and rights specifically bargained for
and granted for Federal legislation.
Thank you for the opportunity to be heard.
Mr. MCCLINTOCK. Good. Thank you, Governor Mendoza.
[The prepared statement of Governor Mendoza follows:]
Statement of The Honorable Gregory Mendoza, Governor,
Gila River Indian Community
My name is Gregory Mendoza and I am Governor of the Gila River Indian Community. The Community is an Indian Nation located south of Phoenix, Arizona, encompassing 372,000 acres and with over 20,000 tribal members. On behalf of the
Community, I want to thank the Subcommittee for its continued interest in this
issue that could have a very profound effect on all water users in the State of
Arizona. In particular, I want to thank the members of the Arizona delegation for
their support and efforts to have Congress take an active oversight role to ensure
that the detrimental effects of the proposed environmental measures for the Navajo
12
Generating Station (NGS) are taken into account by the EPA before it seeks to implement them.
The Community last testified on this matter on May 24, 2011, at which time we
informed the Subcommittee that the Community agreed to settle its water rights
claims based upon the promise that affordable Central Arizona Project (CAP) water
would be available to the Community on a long term basis. Congressional approval
of the Arizona Water Settlements Act of 2004 (AWSA) codified that promise and
made the Community the largest customer of CAP water in the State of Arizona.
Because of this promise, the EPAs decision must be consistent with the legal rights
granted under AWSA, and the United States, including the EPA, must uphold its
trust obligation to ensure the Communitys access to affordable annual deliveries of
CAP water.
In our May 24, 2011, testimony the Community conveyed its concerns about the
potentially catastrophic consequences for Arizona Indian tribes, especially for the
Community, that could occur if EPA requires Selective Catalytic Reduction (SCR)
as the Best Available Retrofit Technology (BART) for NGS. EPAs BART determination for NGS has the potentialunlike any other Clean Air Act determination that
we are aware ofto profoundly affect the economy and culture of the Community
and all other similarly situated Arizona tribes with water rights settlements, the
United States trust responsibility to these tribes, and rights specifically bargained
for and granted in Federal legislation.
Since the Subcommittees May 24, 2011, hearing the Community has been actively engaged with the EPA, the Department of Interior (DOI) and the Department
of Energy (DOE) to express the Communitys concerns in a government-to-government capacity, provide data regarding the economic impact of different BART scenarios, and offer possible solutions to mitigate the negative impacts of BART on
CAP settling tribes. Further, during the later part of 2011 DOI and DOE collaborated in a report conducted by the National Renewable Energy Laboratory (NREL).
The NREL report was intended to inform EPA of the impacts of the different BART
scenarios. As part of this study NREL gathered data from Arizona tribes to determine the impact on tribal economies.
In an effort to better inform NREL, DOI and EPA the Community engaged Harvey Economics to determine the economic impact the different BART scenarios
would have on the Community. The Harvey Economics study confirmed the Communitys fears that BART, without a mitigation plan, would devastate the Communitys
agricultural economy and undermine the carefully balanced water settlement in
AWSA.
The NREL and Harvey Economics study confirmed that BART could have a profound negative impact on tribal economies in Arizona. Moreover, during the Communitys consultation sessions with DOI and EPA, both acknowledged that NGS is
unlike any other electrical generating facility in the Southwest because of its importance to many tribal economies. In our opinion this acknowledgement by DOI and
EPA requires that any proposal to ensure visibility in our national parks and wilderness areas include a pragmatic plan to mitigate the negative impact BART would
have on tribal economies. Indeed, in Administrator Lisa Jacksons February 16,
2012, letters to Secretary Salazar and Secretary Chu, the EPA expressed a desire
to find a creative solution with respect to BART at NGS.1
The Community has been encouraged by the engagement and support it has had
from the DOI in particular, and heartened by the Federal acknowledgement that
NGS was unique and needed a creative solution. In response to this news the Community began to explore a possible mitigation plan that would allow NGS to stay
open, meet Clean Air Act standards for haze in the northern Arizona region and
lessen the impact of BART on CAP settling tribes. This plan was shared with DOI,
EPA and DOE officials in March and April 2012 and will be discussed below.
1. BARTs Economic Impact on the Community
When I took office I also took on a solemn trust to protect the water rights for
which we had fought so long to obtain. From the beginning of time, the entire life
and identify of our people, the Akimel Ootham or the River People, involved the
Gila River. We drank from the river, irrigated our farms, fished for food and depended on the River for many spiritual ceremonies. At the beginning of the 1900s,
farmers upstream of from our lands diverted nearly all the water from the Gila
River, depriving the Community of water to support the Communitys agricultural
economy, and causing dramatic and detrimental changes to our diet, lifestyle, economy, culture and spiritual well-being.
1 Attachment 1, February 16, 2012 letters from EPA Administrator Lisa Jackson to Secretary
of Interior Kenneth Salazar and Secretary of Energy Dr. Steven Chu.
13
The Community began fighting for its water rights in the early 1930s, and finally
in 2004 Congress approved the Communitys settlement of its claims to water. This
settlement was at the time the largest Indian water rights settlement in United
States history. The Communitys settlement was enacted as law in the AWSA. In
the settlement approved in the AWSA, the Community agreed to waive its claims
to additional water from the Gila River in exchange for the promise of long-term
affordable CAP water. The use of CAP water to fulfill the entitlements of the Community to Gila River water is an essential component its settlement.
The Communitys settlement allocates 311,800 acre feet of CAP water to the Community each year, making the Community the single largest CAP contractor. The
Communitys settlement, through the AWSA, also provides funds to subsidize the
costs of delivering CAP water to the Community, and to construct, operate and
maintain the facilities necessary to allow the Community to fully utilize our allocated water. The AWSAs funding mechanism is a fund, entitled the Lower Colorado
River Basin Development Fund (Development Fund), which pays annually the fixed
operation, maintenance, and replacement charges associated with the delivery of
[CAP] water held under long-term contracts for use by Arizona Indian tribes. One
of the sources of revenue for the Development Fund to pay these costs for CAP settling tribes is the sale of surplus power generated from NGS.
NGS supplies approximately 95% of the power to deliver the CAP water to the
Community and other CAP customers. Requiring NGS to install and operate SCR
technology as BART will both significantly increase the cost of CAP water and decrease the future revenue generated for the Development Fund. These two impacts
will substantially undermine the benefits that the Community specifically bargained
for and relied upon in agreeing to settle our water claims and claims against the
United States.
In an effort to determine how the different BART scenarios would impact the cost
of CAP water the Community hired Harvey Economics in August 2011 to complete
an economic impact study. Harvey Economics looked at different BART which included Low Nox Burners (LNB), Selective Non-Catalytic Reduction (SNCR), SCR,
SCR plus Baghouses, and NGS closure. On November 16, 2011, Harvey Economics
completed draft findings related to the possible BART scenarios.2 The draft report
was based on the information about BART technologies available at the time. Harvey Economics updated its report on February 28, 2012.3 On March 15, 2012, Harvey Economics provided another update to its report that included revised assumptions provided by the NGS operator regarding average cost of capital for all NGS
owners.4 The findings of the final report are summarized as follows.
a. Increased Cost of CAP Water
As the largest CAP contractor the Community will be impacted by the increased
cost of CAP water more than any other entity in the State. LNB have already been
installed at NGS. This means that the Community is already facing increased CAP
water costs for environmental mitigation measures at NGS.5 If SCR were installed
at NGS the increase in direct costs for CAP water for the Community alone would
increase by $35.4 Million over this same period. If the NGS were shut down the
Communitys CAP costs would increase by nearly $290 Million.6
Given that the Communitys agricultural enterprises operate on small margins
large increases in CAP water would jeopardize the viability of the Communitys irrigated agriculture. Loss of Community cropland would result in loss of Community
member employment, personal income and hundreds of millions of dollars of Federal
investment into the Communitys irrigation infrastructure.
b. The Revenue to the Lower Colorado River Basin Development Fund will be Substantially Reduced by the Increased Cost of SCR
Revenue from the sale of excess NGS power is to be used to supplement the Development Fund. A determination by EPA to impose SCR as the BART would substantially increase the cost of excess NGS power, essentially eating away any potential profit from such sales, thereby eroding over $60 Million of estimated revenues
that the Community and other CAP settling tribes counted on to enable the Development Fund to subsidize CAP water delivery at least through 2044.7 Not only does
2 Attachment
3 Attachment
4 Attachment
2, November 16, 2011 letter from Edward F. Harvey to Linus Everling.

3, February 28, 2012 letter from Edward F. Harvey to Linus Everling.
4, March 15, 2012 letter from Edward F. Harvey to Linus Everling [hereinafter
Final Report].
5 Final Report at 27.
6 Id.
7 Id.
14
this impact the Communitys settlement, the loss of the revenue from the sale of
excess NGS power threatens the continued viability of all current Indian water
rights settlements in Arizona, and jeopardizes the ability of the United States to settle with other Tribes in on-going water rights settlement negotiations. If the NGS
was shutdown Harvey Economics estimated that reduce revenues to the Development Fund from the sale of surplus NGS power would be nearly $500 Million.8
c. Total impact to the Community.
Should the cost of emissions controls at NGS render CAP water unaffordable, the
Communitys water rights would be significantly diminished and the Community
would suffer significant economic hardship. For example, if SCR is installed at NGS
without a mitigation plan Harvey Economics estimates that the total monetary loss
to the Community through 2044 would be over $757 Million.9 If the NGS shut down
total monetary loss would be over $2 Billion.10
Such monetary loss would be comparable to the original wrongs done to the Community when non-Indian farmers upstream on the Gila River illegally diverted the
flows of the River to the point that it stopped running. The uniqueness of NGS dictates that any EPA rulemaking be coupled with a mitigation plan to ensure that
the economies of Arizona tribes are not undermined.
2. NREL Study
Although the NREL study did show substantial increase to CAP water costs it underestimated the impact of the proposed BART implementation scenarios on the Development Fund and made some assumptions that were very different than in the
Harvey Economic Study.
The scenarios adopted for the NREL report mostly overlap with the Harvey Economic study. NREL included scenarios of SNCR, SCR, SCR plus Baghouses, and
NGS closure in various chapters of the report. NREL did not include a LnB alternative, which Harvey Economics did.
For example, SNCR capital costs and operating cost assumptions in the NREL report are substantially different than in the Harvey Economics study. NREL assumes
capital costs of about $7 Million, whereas Harvey Economics assumes capital costs
of about $20 Million. Further, Harvey Economics Operation & Maintenance costs
are also $8.4 Million per year versus $4.3 Million per year, under the NREL report.
Whereas the NREL report data sources were not apparent; Harvey Economic obtained its SNCR information from the plant operator, SRP.
Capital and operating cost assumptions for SCR, under the NREL report, are almost exactly the same as those in the Harvey Economic study. Both costs were
drawn from the Sargent and Lundy study. However, NREL provided a range of
costs for SCR, including both the National Park Service estimates of capital and operating costs and the figures from the Sargent and Lundy reports.
The largest discrepancy was the NRELs estimated impacts on the Development
Fund. Because the impacts on the Development Fund were estimated improperly,
the important, negative effects on the Community and the other CAP settling tribes
from reduced monies into the Development fund were missed.
This shortcoming is explained by the incorrect assumption in the NREL report related to the relationship between the cost of NGS power generation and the price
of NGS surplus power. NREL assumes the cost and price which existed at the time
of their study would continue over the long term. In fact, costs of NGS power have
recently been high due in part to spiking coal prices (nearly double nationwide since
2000), and a depressed market price for power due to economic conditions, among
other factors.
For example, the NREL impact estimates on the Development Fund assume that
the current NGS surplus power sales price will stay at current levels. The current
market ranges between $19 per megawatt-hour (MWH) off-peak to $35MWH onpeak. This is compared with the market price five or so years ago when power was
selling for $40$45 for MWH power off-peak, $80 per MWH on-peak. Because the
NREL study fixed in place the cost and price of NGS surplus power, the negative
effects of the BART scenarios on the Development fund are not apparent. However,
projecting even a return to more normal market conditions, much less power price
escalation over the long term, would reveal the diminished revenues to the Development Fund from the proposed BART scenarios.
Why is this important to the Community and the other CAP Indian tribes? A primary purpose of the Development Fund is to pay the tribal portion of CAP fixed
8 Id.
9 Id.
10 Id.
15
operations, maintenance and replacement costs for CAP water. If the Development
Fund cannot pay those obligations, then the Community and other CAP settling
tribes would be obligated to do so, which would result in a tripling of CAP water
costs at current rates. Such an increase would render CAP water use by the Community and other tribes to be infeasible.
3. United States Recognition that NGS is Unique
In its meetings with both DOI and EPA the Community was encouraged that that
there was a recognition that the NGS facility is unique due to the Bureau of Reclamations partial ownership of the facility, and the dual purposes to provide economic development opportunities to the Navajo Nation and Hopi Tribe, and provide
energy to deliver CAP water to central Arizona for use by tribes and other non-Indian water users. Federal officials also acknowledged that because of NGS unique
nature BART implementation would require a creative thinking so as to minimize
the negative economic impact on tribes.
In February Administrator Jackson sent letters to Secretary Chu and Secretary
Salazar asking for agency collaboration to work toward a clean energy future with
respect to NGS and CAP tribes The Community applauds this suggestion for two
reasons. First, it is an acknowledgement that EPAs BART determination at NGS
requires a pragmatic approach because of the Federal trust responsibility to tribes.
Second, the Community believes that over time the source of the Development Fund
needs to be separated from NGS and NGS as a power source for delivery of CAP
needs to be minimized because the Federal government has a conflict with respect
to its trust responsibility to tribes affected by NGS. On one hand, the United States
needs to support the Navajo Nation in increasing the coal and lease revenue at
NGS. This benefits the Navajo Nation but increases the price of CAP energy, which
the United States has an interest in keeping low for CAP settling tribes.
This inherent conflict can be mitigated if CAP energy and the source of Development Funds are decoupled from NGS over a long period of time. Further, the Community believes that alternative energy sources should be cleaner in order to avoid
future negative impacts of energy regulation, and that CAP tribes should have more
direct involvement in the source of subsidies that may be necessary to mitigate the
impact of BART.
To our knowledge, the meeting suggested by Administrator Jackson has not yet
come to pass. The Community urges these agencies to work more actively to provide
a solution. To assist them in this effort, the Community has provided all three agencies with its own thoughts on how to mitigate the negative impacts of BART.
4. Community Proposed Solution
The Community has provided to EPA, DOI and DOE a preliminary proposal for
the development of a solar facility located on the Gila River Indian Reservation
(Reservation), the revenues from which would be used to offset the impacts caused
to CAP settling tribes due to increases in the cost of CAP water that are over and
above reasonable expectation of baseline increases in the CAP energy costs. The facility would be located on the Communitys Reservation, but the revenues would be
used to reduce the CAP energy charges for all CAP settling tribes using their CAP
entitlements under congressionally approved water settlements.
The proposed facility would be expected to produce at least 20MW of solar power
a year. The size of the facility would increase if the agreed upon impact and benefits
from early transition to renewable energy-based subsidies are deemed sufficiently
large to justify them.
The Community has identified two locations on Reservation that could serve easily as the site for such a facility. The Community has undertaken, with others, a
preliminary feasibility analysis of the proposed site, including the cost and engineering work necessary for inter connecting the site to the SRP network.
All net revenues from the facility would be deposited in a special account dedicated to payment of the CAP Energy Charges actually charged to CAP settling
tribes during any given year. The account would be held by a suitable entity for purposes of distribution of these net revenues annually. Some of the benefits of such
a proposal:
Support from CAP Settling Tribes for an agreement on BART at an appropriate level.
Acceleration of the transition from a coal-based subsidy to a renewable source
of subsidy.
Combining the interests of tribes in the generation of a subsidy with the interests of the intended beneficiaries of that subsidy, avoiding the conflict of
trust responsibilities that currently exist at NGS.
16
The Community provided this proposal in an effort to be part of the solution. We
are open to other viable solutions as well and believe that any proposed BART will
need to include a mitigation plan that all stakeholders can support.
Conclusion
Once again, the Community appreciates the Subcommittees continued oversight
of this critical issue. The timing of this hearing is critical as the EPA moves toward
the preliminary BART determination in the coming weeks.
Mr. MCCLINTOCK. I now recognize The Honorable Gail Griffin,

Arizona State Senator from Hereford, Arizona, to testify.
STATEMENT OF THE HON. GAIL GRIFFIN, SENATOR,
ARIZONA STATE SENATE, HEREFORD, ARIZONA
Ms. GRIFFIN. Thank you, Mr. Chairman and Honorable Members

of the Subcommittee on Water and Power.
First I would like to talk about a situation in the Town Too
Tough to Die, Tombstone, Arizona.
In May of 2011, the Monument Fire engulfed approximately
223,000 acres of the Coronado National Forest. 70 homes and home
structures were destroyed and peoples lives were disrupted forever. Following the fires, our monsoons occurred and further destruction to additional properties occurred.
Tombstones water infrastructure is located in the Coronado National Forest. And they support the adequate safe drinking water
and fire suppression. Tombstones water rights date back 130 years
and prior to the designation of land by the Forest Service. Huge
mudslides forced boulders, some the size of Volkswagens, to tumble
down the mountainsides, crushing Tombstones water lines and destroying reservoirs, shutting off Tombstones main water source.
Arizona Governor Jan Brewer declared a state of emergency for
the town. Tombstone proceeded to take reasonable action to repair
their century-old Huachuca Mountain water infrastructure. They
initially, initially were allowed to use mechanized equipment to repair two of Tombstones 25 catchments.
The Forest Service has denied any further use of mechanized
equipment and motorized vehicles that had been used to maintain
the water system for decades. The Forest Service has stated that
Tombstone can only use hand tools and nonmechanized equipment
to restore their springs and infrastructure. I am told that wheelbarrows are too mechanized. Horses, mules, and shovels are permitted.
The whole Town of Tombstone is at risk. Should a fire occur,
Tombstone is gone, destroyed, history. Tombstone does not have
enough water to fight a major fire. The people in Tombstone deserve better than to have a Federal agency block their rights to restore their water.
Congress established the Forest Service in 1905 to provide quality water and timber for the nations benefit. The Forest Service
was originally structured to properly manage forests for multiple
uses and for the benefit of the renewable resources such as water,
forage, recreation, and production. The Forest Services motto is:
Caring for the land and serving the people. They have done neither
in this case.
17
Unlike the national parks, which were created primarily to preserve natural beauty and unique outdoor recreation, the founders
of early national forests envisioned them as working forests with
multiple objectives. Quote, no national forest shall be established,
except to improve and protect the forest within the boundaries or
for the purpose of securing favorable conditions of water flows and
to furnish a continuous supply of timber for the use and necessities
of citizens of the United States, unquote, the Organic Administration Act of 1987.
The forest service is supposed to accomplish the protection of
management of our natural resources on National Forest lands.
The proper management of our lands would produce jobs and a
healthy environment and we would not be experiencing the catastrophic fires raging through this country. Please do not allow the
Federal Government to acquire any more land. They have proven
they cant take care of what they have now.
In another matter, the Bureau of Land Management submitted
a stunning ultimatum to the State of Arizona and the Department
of Water Resources to stop development in Cochise County near
the San Pedro National Conservation area. This development in Sierra Vista has been on the drawing board for over six years and
includes a water treatment plant capable of allowing 4 million gallons of water to be recharged into the aquifer each day. In spite
of this, BLM claims that the project should not be permitted because its sufficient water supply is not legally available.
The agencys letter and the choice of words, legally available, has
chilling implications for all residents, property owners, and property rights advocates, as well as the entire country, claiming the
sufficient water for the development is physically available but legally the property is to the Federal Government. This Administration is signaling its determination to control water, not only in the
San Pedro River, but anywhere near it.
The additional comments are included in your package. And I see
the yellow light on. So I would refer you to the maps that I have
brought.
And if we could have the one on the right turned around, what
you see in the red and white map, what is in white is all Arizona
has in private hands. The Arizona Farm Bureau in 1997 did an
analysis. And that little yellow map, if it was all consolidated in
one location, thats what it would look like. They have determined
that less than 13 percent of Arizona is in private hands. The one
on the left, if you flip the whole map over, shows you what the
Arizona Geological Survey hasyeah, turn the paper completely
around. Yeah, the board, turn the board around.
This shows Arizonas oil and gas potential. And if you take a look
at the locations of where the Federal Government has frozen our
natural resources, that tells the story right there.
We have, we have formed a study Committee this session to
identify in each county how much land is in private hands, how
much land is tax exempt, and how much land is in conservation.
So our tax base is being eroded by Federal regulations.
Thank you.
[The prepared statement of Ms. Griffin follows:]
18
Statement of The Honorable Gail Griffin, State Senator,
District 25, State of Arizona
Chairman Congressman McClintock and Honorable Members of your Subcommittee on Water and Power:
Thank you for being here today and your willingness to listen and hopefully take
action on what you hear at this hearing.
My name is Gail Griffin and Im the State Senator for District 25 which incorporates portions of five Arizona counties. I represent two thirds of Arizona border
communities. Im here today to talk about issues of great concern to my constituents
and the State of Arizona.
First, I would like to talk about the situation of the Town to Tough to Die,
Tombstone, Arizona.
In May 2011 the Monument Fire engulfed approximately 222,954 acres in the
Coronado National Forest. Seventy homes and structures were totally destroyed and
peoples lives disrupted forever. Following the fires, our monsoons occurred and further destruction to additional properties occurred.
Tombstones water infrastructure is located in the Coronado National Forest
which supports both adequate safe drinking water and fire suppression. Tombstones
water rights date back 130 years prior to any designation of land by the Forest
Service.
Huge mudslides forced boulders, some the size of Volkswagens, to tumble down
mountainsides crushing Tombstones water lines and destroying reservoirs, shutting
off Tombstones main water source.
Arizona Governor, Jan Brewer, declared a State of Emergency for the town.
Tombstone proceeded to take reasonable action to repair their century-old Huachuca
Mountain water infrastructure. They initially were allowed to use mechanized
equipment to repair two of Tombstones 25 catchments.
The Forest Service has denied any further use of mechanized equipment and motorized vehicles that had been used to maintain their water systems for decades.
The Forest Service has stated that Tombstone can only use hand tools and nonmechanized equipment to restore their springs and infrastructure. Wheel barrels
are too mechanized; horses, mules and shovels are permitted.
The whole town of Tombstone is at risk. Should a fire occur, Tombstone structures
could be history. . .gone. Tombstone does not have the water to fight a major fire.
The people of Tombstone deserve better than to have a federal agency block their
rights to restore their water!
Congress established the Forest Service in 1905 to provide quality water and timber for the Nations benefit. The Forest Service was originally structured to properly
manage for multiple uses and for benefit of our renewable resources such as water,
forage, recreation and production. The Forest Services motto is, caring for the land
and serving people. They have done neither in this case.
The Forest Service is supposed to accomplish the protection and management of
our natural resources on National Forest lands. The proper management of our
lands would produce jobs and a healthy environment and we would not be experiencing the catastrophic fires raging through this country. Please do not allow any
more federal acquisition of land. They have proven they cant take care of what they
have.
In another matter, the Bureau of Land Management submitted a stunning ultimatum to this State of Arizona (Department of Water Resources) to stop a development in Cochise County near the San Pedro National Conservation Area. This development in Sierra Vista has been on the drawing board for over six years and includes a water treatment plant capable of allowing four million gallons of water to
be recharged into the aquifer each day. In spite of this, the BLM claims that the
project should not be permitted because, a sufficient water supply is not legally
available.
The agency letter and its choice of wordslegally availablehas chilling implications for all residents, property owners and property rights advocates as well as the
entire country by claiming the sufficient water for the development is physically
available, but legally the property of the federal government. This administration
is signaling its determination to control the water not only in the San Pedro River
but anywhere near it as well.
This blatant attempt to steal Arizonas water begins a new chapter in decades of
struggles over property rights and water rights in Cochise County and the State of
Arizona. To allow the federal government to usurp a persons property and water
rights and thereby taking their freedoms to use their property is unacceptable. Certainly, this is not the kind of government our Founders envisioned when they crafted our Constitution, with property rights as one of its core principles.
19
Both of these situations address water issues for our local communities. Its not
enough to put in place regulations and restrictions on property and water rights but
the additional layers of unreasonable regulations on air standards will also cripple
electricity providers. Costs will skyrocket and people will not be able to afford the
standard of living they desire.
In my district that borders Mexico we have to deal with tires burning in landfills
across the border. Arizona is a desert and we have wind and dust storms that are
Acts of God and out of our control. The one size fits all policies that are expected
from the Environmental Protection Agency and other federal agencies/departments
do not work here. We in Arizona know how to properly manage our lands, our
water, our air and our lives. State authority and states right are being usurped by
federal agencies.
We respectfully ask that you allow us to define our future and allow us to properly manage our lands, water, energy and air. Please look at the maps in your package and here displayed. Arizona has less than 13% of our lands in private property.
Look at the map where oil and gas potential is. Most of the natural resources are
buried in federal regulations.
Thank you for allowing me to testify before you today and thank you for being
here and listening to our frustrations.
Mr. MCCLINTOCK. By the way, Senator, you might find it interesting to note that the District of Columbia, with all of its government buildings, its sprawling mall, monuments, and parks, the
Federal Government owns 25 percent of the land area of Washington, D.C. Thank you for the testimony.
The Chair is now pleased to welcome Representative Amanda
Reeve from Arizonas District 6 here in Phoenix to testify. I wont
welcome you since you are already here.
STATEMENT OF THE HON. AMANDA A. REEVE, DISTRICT 6
REPRESENTATIVE, ARIZONA HOUSE OF REPRESENTATIVES,
PHOENIX, ARIZONA
Ms. REEVE. Thank you, Mr. Chairman and members of the

Arizona congressional delegation who requested this field hearing.
I want to thank you for this opportunity to appear before you today
to discuss with you the concerns regarding the impact the Federal
actions are having on the State of Arizona.
I understand the purpose of this hearing is to provide you with
a firsthand account as to how the actions taken by the Federal
Government threaten Arizonas water security and affordable
power supply. It is my experience that our greatest threat to these
areas of interest is actually tied to our states air quality. Having
spent the past two years working with Arizona Department of Air
Quality, ADEQ, on significant air quality issues, I have become
very familiar with the challenges imposed by the regulations pertaining to regional haze, particulate matter, and the Clean Air Act
in general, and the very significant impact that they have on our
water security and power supply.
In the May 12, 2012, letter addressed to Chairmen Hastings and
McClintock from several Arizona congressional delegates, a considerable amount of focus was put on the Navajo Generating Station
near Page, Arizona, because it is in jeopardy of shutting down due
to the potential implementation of certain Federal regulations. The
Regional Haze Rule is at the heart of the situation. And NGS is
not the only power plant at risk. In fact, Cholla power plant near
Joseph City, Arizona and the Four Corners power plant located
near Farmington, New Mexico are also uncertain of their future as
20
a result of the Regional Haze Rule. All three of these plants are
uncertain about their future due to the Environmental Protection
Agencys, EPAs, Regional Haze Rule and what constitutes Best
Availability Retrofit Technology, or BART.
ADEQ is challenging EPA on regional haze jurisdiction and emission control technologies. Under Section 169A and B of the Clean
Air Act, certain states have until 2064, Arizona being one of them,
to attain natural visibility conditions to Class I Federal areas
through means and procedures established in a State Implementation Plan, or SIP, as crafted by the state. Arizona submitted its regional haze SIP in December 2003 and continued to amend and update it until January 2009.
Having not received approval or disapproval, but having received
some comment, Arizona, in February 2011, submitted a new regional haze SIP, which EPA has yet to rule on. Meanwhile, several
environmental organizations filed a lawsuit against EPA for not
acting more expeditiously in addressing regional haze. In an effort
to reach an agreement with the environmental groups, EPA began
having settlement meetings with them but did not invite the potentially impacted states to join the negotiations.
In December 2011, Arizona filed a request to intervene in the
lawsuit. And while we were successful with that request, it still did
not secure us a seat at the negotiation table. On March 30th, 2012,
EPA entered into a consent decree for final approval by the court.
Arizona filed a memorandum in opposition to entry of consent decree on April 10th, 2012, citing that the imposition of a regional
haze FIP, Federally implemented plan, on the state, as stipulated
in the consent decree, is not authorized in accordance with Section
110(c)(1) of the Clean Air Act.
In order for EPA to promulgate a FIP, it first has to find that
Arizona failed to submit a regional haze SIP, or that Arizonas SIP
failed to satisfy the minimum criteria for a complete regional haze
SIP under Section 110(k)(1) of the Clean Air Act, or it had to disapprove of Arizonas regional haze SIP, none of which occurred.
If EPA is allowed to promulgate a FIP without just cause, then
they are effectively undermining our state primacy as established
in the Clean Air Act. Furthermore, EPA, and not the state, will dictate what BART will be imposed on facilities, such as the three
aforementioned power plants, to control emissions contributing to
regional haze.
ADEQ and EPA fundamentally disagree on what constitutes as
BART. According to ADEQ, low NOx burners and over fire air technologies, both of which NGS recently had installed, are adequate
emission controls. While EPA has not made an official decision regarding BART, we do believe that it will require facilities to retrofit
with the selective catalytic reduction, SCR, technologies, which is
far more costly than those technologies of which ADEQ approves.
ADEQ states that studies of the SCR technologies do not provide
sufficient evidence that it is superior or more effective in reducing
emissions and improving visibility.
It is clear that EPA has the potential of causing irreparable
harm to Arizonas water security, power supply, and economy
should it actually impose a regional haze FIP. Furthermore, their
21
actions in this particular situation are undeniable encroachment
upon our state primacy as guaranteed under the Clean Air Act.
Again, I thank you for this opportunity to discuss these important issues with you. And with that, I am available for questions.
Mr. MCCLINTOCK. Great. Thank you very much, Representative.
[The prepared statement of Ms. Reeve follows:]
Statement of The Honorable Amanda Reeve, State Representative,
Arizona House of Representatives
Mr. Chairman, members of the subcommittee, and members of the Arizona Congressional Delegation whom requested this field hearing, I want to thank you for
this opportunity to appear before you today and discuss with you the concerns regarding the impact that federal actions are having on the State of Arizona.
I am Amanda Reeve, State Representative, currently of Legislative District 6; and
I am the Chair of the Arizona House Environment Committee, and a member of the
House Energy & Natural Resources Committee.
I understand the purpose of this hearing is to provide you with first-hand accounts as to how the actions taken by the federal government threaten Arizonas
water security and affordable power supply. It is my experience that our greatest
threat to these two areas of interest is actually tied to our States air quality. Having spent the past two years working with the Arizona Department of Environmental Quality (ADEQ) on significant air quality issues, I have become very familiar with the challenges imposed by the regulations pertaining to regional haze, particulate matter, and the Clean Air Act (CAA); and the very significant impact they
have on our water security and power supply.
In the May 12, 2012 letter addressed to Chairmen Hastings and McClintock from
several Arizona Congressional Delegates, a considerable amount of focus was put on
the Navajo Generating Station (NGS) near Page, Arizona, because it is in jeopardy
of shutting down due to potential implementation of certain federal regulations. The
Regional Haze Rule is at the heart of this situation, and NGS is not the only power
plant at risk. In fact, Cholla Power Plant near Joseph City, Arizona; and the Four
Corners Power Plant located near Farmington, New Mexico are also uncertain of
their future as a result of the Regional Haze Rule.
NGS was constructed in the early 1970s and includes three coal-fired units with
a total net output of 2,250 megawatts. It is operated by the Salt River Project
(SRP) on behalf of six owners. The plant provides power to millions of homes and
businesses in the Southwest. It provides over 90 percent of the power for Central
Arizona Project (CAP), which is the largest supplier of renewable water in the
state and supports over 80 percent of Arizonas population and economic activity.
NGS employs over 500 people, and the Kayenta Mine, which supplies coal to NGS,
has over 400 employees. So, the economic benefit to Northern Arizona, alone, is very
significant. The state, as a whole, experiences substantial broader economic benefits.
For example, according to a recent study, Arizona State University estimated that
the NGS and the Kayenta Mine will account for over $20 billion in Gross State
Product over the next 30 years, and contribute to over 3,000 jobs statewide each
year.
The Cholla Power Plant, commissioned in 1962, includes four coal-fired units with
a total net output of 995 megawatts. Arizona Public Service (APS) owns three of
the units, while the fourth and largest unit is owned by PacificCorp (PAC). Approximately 400 people are employed at the plant; and McKinley Mine, which supplies the coal to Cholla, employs over 300 people. Cholla provides power to Arizona,
Nevada, California, New Mexico and the Pacific Northwest.
The Four Corners Power Plant, commissioned in 1963, includes five coal-fired
units that generate a total net output of 2,040 megawatts. This plant is also mostly
operated by APS, employs over 580 people, of which nearly 80 percent are Native
American, and provides power to about 300,000 households in New Mexico, Arizona,
California, and Texas. Navajo Mine, which supplies the low-sulfur coal to this plant,
employs over 900 people, of which about 65 percent are Native American.
All three of these plants are uncertain about their future due to the Environmental Protection Agencys (EPA) Regional Haze Rule and what constitutes Best
Available Retrofit Technology (BART). The situation is more complicated for NGS,
because the plants lease and right-of-way agreements are set to expire in 2019. If
the additional emissions controls are required before the lease and right-of-way
agreements are extended, owners would need to decide whether to gamble on making large capital investments without the certainty of knowing if the lease and
agreements are extended thereby allowing the plant to maintain operations.
22
The Regional Haze Rule is a secondary standard meant to improve visibility in
Class I areas. It is not a health based primary standard intended to reduce emissions for public health. Equally true, it is not intended to force the implementation
of the most stringent available controls measures. In the late 1990s, NGS installed
wet limestone scrubbers in a landmark settlement with environmental interests at
a total cost of $420 million and voluntarily installed low-NOx burners and separated
over fire air technology (LNB/SOFA) on the three units that reduces nitrogen oxide
emissions by 40 percent. That installation was completed last year at a cost of $45
million.
The reason that these three power plants are uncertain of their future is because
ADEQ is challenging EPA on regional haze jurisdiction and emission control technologies. Under Sections 169A & B of the CAA, certain states have until 2064 to
attain natural visibility conditions to Class I Federal areas through means and procedures established in a State Implementation Plan (SIP) as crafted by the State.
Arizona submitted its Regional Haze SIP in December 2003 and continued to amend
and update it until January 2009. EPA did not give approval, nor provide feedback
on the SIP until January 2009 when it made the determination that parts of the
plan were incomplete. In February 2011, Arizona submitted a new Regional Haze
SIP, which EPA has yet to rule on. Meanwhile, several environmental organizations
filed a lawsuit against EPA for not acting more expeditiously in addressing regional
haze. In an effort to reach an agreement with the environmental groups, EPA began
having settlement meetings with them, but did not invite the potentially impacted
State to join the negotiations.
In December 2011, Arizona filed a request to intervene in the lawsuit; and while
we were successful with that request, it still did not secure us a seat in the negotiations. On March 30, 2012, EPA entered into a consent decree for final approval by
the court. Arizona filed a Memorandum In Opposition to Entry of Consent Decree
on April 10, 2012, citing that the imposition of a Regional Haze FIP on the State,
as stipulated in the Consent Decree, is not authorized in accordance with Section
110(c)(1) of the CAA.
In order for EPA to promulgate a FIP, it first has to find that Arizona failed to
submit a Regional Haze SIP, or that Arizonas SIP failed to satisfy the minimum
criteria for a complete Regional Haze SIP under Section 110(k)(1) of the CAA, or
it had to disapprove of Arizonas Regional Haze SIP, none of which occurred. If EPA
is allowed to promulgate a FIP without just cause, then they are affectively undermining our State primacy as established in the CAA. Furthermore, EPA, and not
the State, will dictate what BART will be imposed on facilities, such as the three
aforementioned power plants, to control emissions contributing to regional haze.
ADEQ and EPA fundamentally disagree on what constitutes as BART. According
to ADEQ, Low-NOx burners and over fire air technologies, both of which NGS
recently had installed, are adequate emission controls. However, EPA is requiring
that facilities retrofit with selective catalytic reduction (SCR) technologies, which
is far more costly than those technologies of which ADEQ approves. ADEQ states
that studies of the SCR technologies do not provide sufficient evidence that it is superior or more effective in reducing emissions and improving visibility.
It is clear that EPA has the potential of causing irreparable harm to Arizonas
water security, power supply, and economy should it actually impose a Regional
Haze FIP. Furthermore, their actions in this particular situation are an undeniable
encroachment upon our State primacy as guaranteed under the Clean Air Act.
Again, I thank you for this opportunity to discuss these important issues with
you; and with that, I am available for questions.
Mr. MCCLINTOCK. I now recognize The Honorable Doug Von

Gausig, Mayor of Clarkdale, to testify.
STATEMENT OF THE HON. DOUG VON GAUSIG,
MAYOR, CITY OF CLARKDALE, ARIZONA
Mr. VON GAUSIG. Thank you, Mr. Chairman, and thank you to
the members of the Committee for allowing me to testify today. I
am Doug Von Gausig. I am the Mayor of Clarkdale, Arizona, which
is up in the Verde Valley about 100 miles north of where we are
right now. And I am also the president of the Arizona League of
Cities and Towns; although, I am representing my town specifically.
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As the Mayor of Clarkdale and as a current president of the
Arizona League of Cities and Towns, I strongly advocate increasing
the amount of renewable energy that is produced and consumed by
our states cities and towns.
Because we know the value of renewable energy, in my Town of
Clarkdale, we have several initiatives underway that are designed
to create the kind of environment that will be attractive to developers of renewable energy projects. We are also investigating the
creation of a renewable energy park which would bring renewable
energy developers to Clarkdale. And we are currently exploring the
implementation of community solar projects, solar farms some call
them, that will bring the benefits of solar energy to a wider, more
inclusive portion of our population.
I am aware, however, that these efforts by me and my town are
not enough to spur the kind of renewable energy projects that could
truly become game changers for my town as well as for northern
Arizona. What we need now is a reliable, 21st century transmission
grid designed to carry renewable energy, and all electrons, throughout the west. We currently do not have that transmission system
in Arizona or the southwest, and I believe that much of what the
Department of Energy has proposed in its memorandum covering
power management agencies like WAPA would help renovate our
transmission system and get it in shape to build more renewables
in the west, create a secure electrical system that can withstand
unexpected events, and bring greater prosperity to towns like
Clarkdale.
It is noteworthy that many of the reforms that have been proposed by the Department of Energy in its memorandum are things
that Arizonas regulated utilities like Arizona Public Service Company have been implementing for years, and doing so without
much difficulty. In fact, energy efficiency and transmission upgrades for renewable energy are both encouraged by the Arizona
Corporation Commission. I ask myself why, if the private sector
can get this done under the supervision of state public utility commissions, why cant the Federal power utilities, under the guidance
of Congress and DOE, do the same thing.
I believe that the failure to modernize the grid will also stand
in the way of Arizonas efforts to become the solar energy capital
of the world, an objective that has been stated many times by Republican and Democratic leaders alike in our state, including most
notably Arizonas Republican Governor, Jan Brewer. The cost of
doing nothing will ultimately harm ratepayers by preventing our
utilities from balancing their energy portfolios with diverse sources
of energy, including renewables. It is also notable that in large,
that large rate increases have not resulted from the efforts of companies like APS to modernize the grid, build renewables, and implement energy efficiency practices. Arizona Public Service has
been able to do all of these things while keeping rates competitive.
From a job creation standpoint, a healthy, reliable transmission
system that is capable of interconnecting new energy projects while
maintaining quality electrical service is of importance to mayors
and other local elected officials. Arizona this year ranked third in
the Nation for job creation from solar energy and was third in the
Nation for the total amount of solar rooftops installed. We can
24
climb even higher in those rankings, but only if we have the modern transmission system that allows us to do so.
Ratepayers will be the beneficiary of the DOEs efforts to encourage PMAs to improve energy efficiency. Energy efficiency is something that we have promoted and implemented in Arizona for almost a decade now, primarily because we know that conserved
energy is the cheapest form of energy. In 2010 the Arizona Corporation Commission, comprised of a majority of Republicans,
passed the nations most ambitious energy efficiency resource
standard. This 22 percent EERS standard will save Arizona ratepayers an estimated $9 billion over the course of the next few decades because we will not need to build a single new base-load capacity plant until 2030 as a result of improving our cost effective
energy efficiency.
Finally, virtually every public opinion poll that has been taken
in Arizona in the last five years shows overwhelmingly that
Arizonans want more renewable energy, not less. Republicans and
Democrats alike are in favor of solar energy, and solar has become
increasingly popular all across the state, even in the most conservative corners. In fact, the community that is growing the fastest in
terms of installed solar rooftops is Sun City, hardly a liberal
stronghold.
The point is this is not a political issue but it is about Arizonas
long-term ability to meet the growing energy demand in the most
practical, efficient, and economical way. I urge you to support the
DOEs efforts to modernize the PMAs, including WAPA.
Thank you much, very much once again for allowing me to testify.
Mr. MCCLINTOCK. Thank you, Mr. Mayor.
[The prepared statement of Mr. Von Gausig follows:]
Statement of The Honorable Doug Von Gausig, Mayor, Clarkdale, Arizona
I am pleased to offer this testimony to the House of Representatives Natural Resources Committees Subcommittee on Water and Power.
As the Mayor of Clarkdale, Arizona and as the current President of the Arizona
League of Cities and Towns, I am a strong advocate of increasing the amount of
renewable energy that is produced in and consumed by our states cities and towns.
Utility-scale renewable energy projects benefit not only each and every resident of
my town, because they are a clean and reliable source of energy, and will ultimately
become a stabilizing and lowering force on utility rates by diversifying the fuels that
are used by utilities to create energy. We also know in Clarkdale that renewable
energy projects can be a boon to economic development, by bringing much needed
new tax revenues into our city, and potentially, new jobs.
Because we know the value of renewable energy, in Clarkdale we have several
initiatives underway that are designed to create the kind of environment that will
be attractive to the developers of renewable energy projects. We have investigated
the possibility of creating a renewable energy park or zone in Clarkdale, which
would bring renewable energy developers to Clarkdale, and we have looked at the
possibility of doing community solar projects in my town, in which buildings could
be aggregated, solarized and net metered, making solar even more affordable for the
town and its taxpayers. This kind of aggregate metering development can lower the
cost of solar installations by more than one-third and make the benefits of solar energy available in neighborhoods where it was previously impractical.. The residents
of Clarkdale have time and time again told their elected leaders that they expect
these kinds on initiatives on renewable energy, they support them, and they want
to see more of them.
I am aware, however, that the efforts taken by me and my town are not enough
to spur the kind of renewable energy projects that could truly be game changers for
Clarkdale, as well as for northern Arizona. What we need the most is a reliable,
21st century transmission grid that is designed to carry renewable energy, and
25
frankly, all electrons, throughout the West. We currently do not have that transmission system in Arizona or in the Southwest, and I believe that much of what
the Department of Energy has proposed in its memorandum covering the Power
Management Agencies, or PMAs would help get our transmission system in the
shape needed to build out renewables in the West and bring greater prosperity to
towns like Clarkdale.
More specifically, the memorandum, written by Secretary Chu on March 12, lays
out several initiatives that would modernize Power Marketing Administrations
(PMAs) like the Western Area Power Authority, which owns and operates several
transmission lines that run through my county. According to that memo, the DOE
has taken the modest step of asking the PMAs to consider modernizing their rate
designs to promote energy efficiency; actually move forward with implementing several programs that would spur new transmission that Congress itself gave the
PMAs years ago; improve coordination with other grid operators; and provide
WAPA greater ability to govern its own expenditures, making it easier for the agency to conduct critical repairs and upgrades to its system. While the details of how
the PMAs are to move forward are unclear and stakeholder participation as part
of that plan is essential, I believe these measures are efficient reasonable, and similar to the kinds of reforms and governance improvements that cities and towns
across America have had to make to remain competitive and solvent. I also understand that the leaders of both WAPA and the Bonneville Power Authority have stated they can comply with the DOEs requests and that they intend to do so.
While much of the transmission system in the West is operated by investor-owned
utilities, a very significant portion of the transmission system in my state is operated by the Western Area Power Authority. WAPA is particularly important in rural
portions of Arizona, where it often serves as the backbone infrastructure for other
utilities, and runs through areas that are ideal for new renewable energy projects.
It is my understanding that WAPA transmission lines have not been modernized in
many years, and certainly are not vigorous or plentiful enough to allow for renewable energy developers to get their projects online, and get those electrons moving
throughout the Southwest.
As the mayor of a town in Arizona, I regularly interact with members of the
Arizona Corporation Commission, the body of government that oversees Arizona
utilities, and I often interact with the utilities themselves. I do find it noteworthy
that many of the reforms that have been proposed by the Department of Energy in
its memorandum are things that regulated utilities in Arizona like the Arizona Public Service Company (APS) have been implementing for years, and without much
difficulty. In fact, energy efficiency, transmission upgrades for renewable energy, to
name just two, are regularly approved and encouraged by the Arizona Corporation
Commission for the utilities they regulate. And this is not unique to Arizona. Investor-owned utilities across the West have been investing in the future by investing
in energy efficiency and new transmission for more than a decade. You have to ask
yourself the question: if the private sector can get it done, under the supervision
of state Public Utility Commissions, why cant these federal power utilities, under
the guidance of Congress and the DOE? I was encouraged to see the DOE finally
take steps to reform the Power Marketing Administrations, and pretty disheartened
when I learned that some members of this Congressional Committee are fighting
them on actions the rest of the electricity sector have already undertaken and the
market has dictated.
I know some on this Committee believe that the Department of Energys plans
will somehow cause rate increases for customers. There is no doubt that building
new infrastructure will cost money. But I would ask you to consider the much higher cost of NOT building new transmission and NOT repairing and replacing a transmission system that badly needs it. The costs of not modernizing WAPA and the
other PMAs includes the risk of future power outages, and even blackouts that
could affect not just the town of Clarkdale, but the entire Western grid, and our
economies. The cost of not modernizing the grid also prevents new energy projects
from coming online, which will harm the ability of towns like mine to carry through
on our plans to build a more sustainable energy environment while bringing in new
jobs. Failure to modernize the grid will stand in the way of Arizonas efforts to become the solar energy capitol of the world, an objective that has been stated many
times by Republican and Democratic leaders alike, including most notably Arizonas
Republican Governor Jan Brewer. The cost of not modernizing, will, I believe, also
ultimately harm ratepayers by preventing our utilities from balancing their energy
portfolios with multiple sources of energy, including renewables.
Moreover, large rate increases have not resulted from the efforts like Arizona
Public Service Company to modernize its grid, build renewables, and implement energy efficiency. APS has been able to do all of these things while keeping its rates
26
competitive. In fact, as I discuss below, the energy efficiency efforts by APS and
other electric utilities in Arizona will save our states ratepayers billions of dollars
over the next two decades. If WAPA fails to change its rate structures to allow that
kind of energy efficiency, it stands to reason that this too will be a cost of not modernizing WAPAs system.
From a policy standpoint, allowing the Western Area Power Authority to fall further and further behind other utilities would represent a hurdle to our states ability
to meet its objectives under our Renewable Energy Standard. As you may know, like
36 other states, Arizona has set out a plan for our utilities to produce or procure
a certain percentage of our overall energy supplies from renewable sources, like
solar and wind. In Arizona, under the RES established by the Arizona Corporation
Commission, we must meet 15 percent by 2025 renewables, and having a reliable
transmission grid will be critical to meeting the objectives under Renewable Portfolio Standards, not just here but all across the West.
From a job creation standpoint, a healthy, reliable transmission system that is capable of interconnecting new distributed energy projects while maintaining quality
electrical service is of importance to mayors and other local elected officials. Indeed,
it is not lost on us that Arizonas Renewable Energy Standardand the solar
projects it has spawned so faris credited with helping to bring companies like
Solon, Suntech, First Solar, Rio Glass, and many others, to our state. Arizona this
year was third highest in the nation for job creation related to solar energy, and
was third in the nation for the total amount of solar installed. We can climb even
higher in those rankings, but only if we have the transmission system that allows
us to do it. I believe that the DOE memorandum will lead to a transmission system
that will support renewable and other energy projects, which I know will foster jobs.
And I am not the only Mayor in Arizona looking to energy for job creation. Spurring
renewable energy is a frequent subject of conversation among my fellow Mayors,
and it is going to play a significant role in the upcoming annual meeting of the
League of Arizona Cities and Towns.
The DOE efforts to update the PMAs by asking them to engage in more energy
efficiency, and altering their rate structures in such a way that the PMAs can accomplish this, strikes me as a real benefit to ratepayers. Energy efficiency is something that we have been doing in Arizona for almost a decade now, primarily because we know that it is the cheapest form of energy. It is estimated that energy
efficiency programs which produce the negawattor energy we dont consume to
begin withcost between 1 and 3 cents per kilowattfar less than most forms of
electricity, from coal, to nuclear to natural gas. In 2010, the Arizona Corporation
Commissioncomprised of a majority of Republicanspassed the nations most ambitious Energy Efficiency Resource Standard, requiring our regulated utilities to
conserve 22 percent of their retail sales by 2020 through energy efficiency programs.
This 22 percent EERS Standard is estimated to save Arizona ratepayers $9 billion
over the course of the next several decades, because we are not going to have to
build a single new base load power plant here until the year 2030 as a result of
doing more cost-effective energy efficiency.
Finally, let me touch for a moment on what clean energy means to my community
and my state from the standpoint of our future and the kind of people we want to
be and place we want to live in. Every public opinion poll that has been taken here
in the past five years shows that overwhelmingly Arizonans want us to implement
more renewable energy, not less. One poll taken in Arizona showed that almost as
many Republicans as Democrats are in favor of solar energy, and solar has become
incredibly popular all across the state. The people of Clarkdale are putting solar on
their rooftops, and are supportive of our plans to do community solar. And renewables are popular even in the most conservative corners of the state: I am told that
the fastest growing part of Arizona right now for the installation of rooftop solar
systems is Sun Cityhardly a liberal bastion.
These polls dont ask about transmission, but my guess is that if folks knew how
important this federal utility called WAPA is to our ability to build out our renewable energy economy, the majority of Arizonans would be in favor of the Department
of Energys plans. They certainly wouldnt think that we should stand in the way
of efforts to make common sense investments in our nations electrical infrastructure.
As a mayor, I have the responsibility of ensuring that the roads, bridges, tunnels,
and other critical infrastructure in my town are not only adequate to serve my
towns current residents, but also are up to the task of serving future generations.
In Clarkdale, we are focused on making sure that our infrastructure is sustainable
in a manner that allows future generations to enjoy the beauty of the Verde Valley
in the same way we do today, by promoting renewable energy, energy efficiency, and
water conservation. At the state level, we have always been willing in Arizona to
27
take the tough decisions and make the difficult investments in to make this the productive, innovative state it is. I believe Congress has a duty to similarly protect and
expand the electrical infrastructure of the nation; Congress certainly shouldnt take
our focus off the future by telling the Western Area Power Authority that it is appropriate for them to have a sub-par transmission system.
I urge you to support the DOEs efforts to modernize the Power Marketing Administrations, including WAPA.
Mr. MCCLINTOCK. I now recognize Ms. Nicole Horseherder, Dine

of To Nizhoni Ani, from Kykotsmovi, Arizona, to testify.
Ms. Horseherder, go ahead.
STATEMENT OF NICOLE HORSEHERDER,
DINE, TO NIZHONI ANI, KYKOTSMOVI, ARIZONA
Ms. HORSEHERDER. Mr. Chairman and members of the Subcommittee, thank you for this opportunity to speak before you
today. My name is Nicole Horseherder. I am Dine Navajo from
Dzilijiin, Black Mesa, Arizona. I am here as a member of To
Nizhoni Ani and, recently, Moms Clean Air Force.
And I am here as your constituent, Congressman Gosar. It is unfortunate that I am the only one here to express dissent before the
Committee. I hope that others have the opportunity to submit testimony for the record.
Since 1971 when NGS came on line and coal from Black Mesa
was used, and there has been tremendous growth and prosperity
for Phoenix and Tucson, there has been no real prosperity to the
Navajo community surrounding the mine in NGS. While you hear
that 80 percent of the jobs at NGS are Natives, this accounts for
less than half a percent of the total jobs on the reservation.
Prosperity for some has come to, has come at a cost to the Nation. The poverty rate continues to be high. 30 percent of Navajos
continue to live without electricity and/or running water. Over 353
million gallons of pristine Navajo water from the N-aquifer was
gone in 40 years. And water costs, and water costs of bringing
and the cost of bringing water to Black Mesa residents have increased as the water levels decline. In addition, NGS has enjoyed
over 31,000 acre-feet of Navajo water per year free of charge for the
last 40 years.
Prosperity has also come at the cost of health. According to the
EPA, asthma disproportionately affects children in families with
lower incomes and minorities. Between 1972 and 1974 and 1996
and 98 Navajo area age adjusted death rates for cancer have increased from 43.7 to 87.5 deaths per 100,000 according to IHS.
To Nizhoni Ani has engaged community members across the
northwest and central region of the Navajo Nation, in the area of
NGS, in a survey to assess the number of family members with
asthma and respiratory problems. 141 surveys were returned from
13 communities. Results show that 60 percent of families surveyed
had at least one person who suffers from respiratory problems
while 42 percent reported more than one family member with respiratory issues. Of those who have respiratory problems, half are
under the age of 20. I myself have two children that suffer from
asthma.
Future prosperity for all calls for a transition. Beyond the tangible benefits, a transition away from the unfulfilling history of
28
coal and toward clean energy aligns more closely with Dine fundamental laws and values.
The Federal Government as our trustee and as majority owner
of NGS must be part of meeting this goal. The transition cannot
be done over night. But the continuation of NGS should be contingent on the commitment to renewable energy.
Four out of five voters believe that coal should be replaced by
other energy sources. A significant 79 percent of the electorate
agrees with the statement that we should start replacing coal with
other energy sources like wind and solar power. Three quarters, 75
percent, of APS customers and 84 percent of SRP customers express agreement with the idea of starting to transition from coal
to cleaner sources of energy. And I will submit that for the record,
the study that shows that.
To Nizhoni Ani, with other grassroots groups, are deploying the
development of solar energy generation facilities on brown fields on
Black Mesa. At least 6,000 acres of mined lands are available at
this time. This alone is enough for more than a thousand
megawatts of power.
A total of 68,000 acres of land is still held in lease by Peabody
Western. While some mining has been complete for more than 15
years, reclamation has not been completed by Peabody and none of
the lands have been transferred back to the Nation.
To Nizhoni also believes the decision EPA should require the
BART, the Best Available Retrofit Technology, that require a minimum SCR for both the Four Corners power plant and the Navajo
Generating Station, a decision that would reduce the health impacts from the pollutants for Navajos living in the region.
Finally, water is scarce in the desert southwest. And large volumes of water is used to serve Kayenta Mine in NGS.
The true cost associated with these environmental and public
health impacts have never been internalized by the operators of the
coal complex. It is disappointing to see that, as part of the water
rights settlement legislation introduced in Congress recently, S
2109, and its companion bill, language is included to ensure that
NGS and Peabody continue their operation for another 50 years instead of a meaningful transition.
The Navajo Nations prosperity has already evaporated with the
Federal Governments and Arizonas problems. It is time for a renewable energy investment on the Navajo Nation. If the Dine are
to see their existence into the future, they must develop clean
energy economies instead of continuing to advance steadily declining coal based economies.
Please turn your efforts away from diminishing the powers of
EPA, which sets the rules that gives us clean air and safe power
industry that protect all, especially our children and elders. Representative Gosar, now is the time for full compliance and a transition that must begin today. Lets get Arizona on the right path to
true prosperity where the costs are shared by all who benefit.
Thank you.
Mr. MCCLINTOCK. Thank you, Ms. Horseherder.
[The prepared statement of Ms. Horseherder follows:]
29
Statement of Nicole Horseherder, To Nizhoni Ani, Black Mesa, Arizona
Summary:
For over fifty years, the Navajo Nation has been largely dependent on a coalbased industrial economy. While revenues from development of coal resources account for a substantial portion of tribal budgets, coal development has had a substantial, and some would say irreparable, impact on tribal health, culture, land, air,
and water. Further, the impacts are not limited to tribal lands as the effects of hazardous air and green-house gas emissions, toxic water borne pollution, massive depredation of aquifers used for drinking water, and contamination of soil, air and
water from toxic coal combustion waste (CCW) disposal has dispersed into adjacent
non-indigenous communities.
Situated in the Four Corners region of New Mexico and Arizona, the Dine homelands encompass an existing, sprawling coal-industrial complex. The Navajo Mine
operated by BHP Billiton serves the Four Corners Power Plant (FCPP) in Fruitland,
New Mexico; Kayenta and Black Mesa mines operated by Peabody Energy serves
Navajo Generating Station (NGS) in Page, Arizona. The construction and operation
of these facilities have been central in the economies of the Navajo Nation. Energy
is exported from these facilities to Southern California, Texas, Southern Arizona,
and Nevada.
The Power Plants at NGS and FCPP will not sustain the Dine in perpetuity. Once
the fossil fuel supplied by the tribes is extracted, the powerful utility companies will
be looking for other locations to continue their operations. The Dine will have no
leverage to level the playing field and no plan in place to sustain tribal governance
as it currently exists.
After decades of exploitation by mining and energy companies, a combination of
factors make now the ideal time for the Navajo Nations to transition to a more sustainable clean-energy economy.
Best Available Retrofit Technology:
Under the federal Clean Air Act (CAA), the Four Corners and Navajo power
plants are subject to requirements for Best Available Retrofit Technology (BART) in
order to comply with federal regional haze requirements. The proposed BART determination for the FCPP, which was issued by EPA Region 9 in October 2010, will
likely require the installation of Selective Catalytic Reduction (SCR) at all five
units. Estimated cost for the FCPP to install SCR is $717 million for all five units.
The owners of the rapidly aging FCPP and NGS are faced with significant decisions about whether to commit financing to pollution-control technology upgrades
for the facilities, or retire them and replace their output with modern, clean energy
sources. EPA has determined it is necessary for the owners of the FCPP to upgrade
pollution controls to reduce haze in the region. The ruling proposal calls for the likely installation of selective catalytic reduction controls (SCR), which could cost hundreds of millions of dollars.
Rather than incur such costly upgrades for plants that will eventually be phased
out anyway, the Navajo and Hopi would benefit instead from a move toward newer,
cleaner and more sustainable energy sources of which economic equity should be included.
With significant investment to bring these plants into compliance with required
regulatory protections, it is entirely possible that the owners will determine that the
FCPP and NGS have exhausted their economically useful lives and that continuing
to operate them would be unprofitable. Utilities around the country are having the
same internal debates, and several major owners of FCPP and NGS have already
made a decision to abandon their stakes in the projects.
According the EPA website, asthma disproportionately affects children, families
with lower incomes, and minorities. While asthma was a rare diagnosis in many
HIS areas before 1975, asthma prevalence and hospitalizations increased dramatically among AI/AN populations during the 1980s. (IHS 2006). Between 197274
and 199698, Navajo Area age-adjusted death rates for cancer have increased from
43.7 to 87.5 deaths per 100,000 populations (IHS 2006).
In addition, TNA has engaged community members across the northwest and central region of the Navajo Nation (in the area of NGS) in a survey that is meant to
assess the need for a more comprehensive health study primarily focused on respiratory and heart disease and may include cancer. 141 surveys were returned by
adult community members from 13 communities in the Northwest region of the
Navajo Nation (Kaibeto, Chilchinbito, Pinon, Navajo Mt. Coppermine, Lechee,
Dennehotso, Kitsillie/Black Mesa, Tonalea, Tuba City, Bittersprings, CedarRidge,
and Shonto). The survey was conducted from March to May, 2011. The survey asks
community members to assess the number of family members with asthma and res-
30
piratory problems and to identify the number of members with respiratory problems
over the age of 25 years and under the age of 25 years. It also asks community
members to identify distance to nearest hospital facilities and what other kinds of
ways they address these problems besides modern methods.
Survey Results:
Coal Mining a Legacy of Non-Compliance:

Part of the transition strategy is to compel meaningful and timely reclamation,
closure, and clean-up of the tens-of-thousands of acres of mine lands used for coalfired power plants. Actual clean-up and reclamation of mined lands (which could
take decades) not only creates jobs and a transitional revenue stream, but in some
instances may present important renewable energy site and location opportunities
on mined-lands (i.e. brown fields).
Peabodys Kayenta Mining Operation covers approximately 44,000 acres and has
produced approximately 8.5 million tons of coal per year. Peabodys 44,073 acre
Kayenta Mine mining operation continues to supply coal exclusively to the Navajo
Generation station and has done so since 1973. NGS became operational in 1971
and was based in part on a resolution from Navajo Nation which waived claims of
50,000 acre feet of Navajo water in the upper Colorado River basin for 50 years or
the life of Navajo Generating Station.
Tens of millions of tons of coal combustion waste (CCW), the toxic by-product of
burning coal in power plants, has been disposed of in insufficiently regulated landfills and dumped back into the mines or on-site on the Navajo Nation. This CCW
contains toxic pollutants such as mercury, cadmium, barium, and arsenic, which
cause cancer and various other serious health effects. These contaminants can leach
into groundwater from the landfills and mines where they are dumped, and can migrate to drinking water sources, posing significant public health concerns.
Peabodys 18,000 acre Black Mesa mining operation supplied coal to the Mohave
Generating Station from 1970 to December 2005. The Black Mesa mine became nonoperational in 2005 after closure of Mohave in 2005 due to the Stations inability
to comply with the Clean Air Act.
In addition to the coal mining at the Black Mesa Mine, Peabody has also pumped
an average of 40006000 acre-feet per year. That is more than 1.3 billion gallons
of potable water annually from the Navajo Aquifer (NAquifer) between 1969 to
2005 a span of 35 years. This water was used to transport pulverized coal in a pipeline (Black Mesa Pipeline) 273 miles to the Laughlin, NV, and the location of the
Mohave Generating Station.
The N-aquifer is the primary source of water for municipal users and tribal members within the 5,400 square mile Black Mesa area. All of the Hopi and many of
the Navajo who live in the region take their water, which they use for drinking, subsistence farming and for religious purposes, from the same source. Since Peabody
began using N-aquifer water for its coal slurry operations, water levels have decreased by more than 100 feet in some wells and discharge has slackened by more
than 50 percent in majority of monitored springs. There are reports that washes
along the mesas southern cliffs are losing outflow. There are also signs that the aquifer is being contaminated in places by low-quality water from overlying basins,
which leaks down in response to the stress caused by pumping. Peabodys ongoing
groundwater pumping, which is not covered by a reclamation bond, undercuts the
sustainability of North Americas oldest cultures, and continues to have a significant
impact on tribal communities throughout the region.
31
In 2010, an independent scientist at the University of Arizona completed a study
investigating both Peabodys mine and the tribal communities impact on the N-aquifer. This study demonstrated the following mine-related impacts and OSMs (coincidental) discretionary decisions and actions:
1. In 1989, OSM set a damage-threshold for spring discharge at a 10% reduction to discharge caused by the mine.
As of 2009, Moenkopi Spring (sixty miles southwest of the mine) had
declined by more than 26%. OSM maintains, however, that the decline
is caused by tribal pumping or recent drought conditions.
The University of Arizona study demonstrated that the declining rate
of discharge from Moenkopi Spring expresses a strong, statistically significant relationship with the rate of Peabodys increasing withdrawals.
Further, the spring has no statistically significant relationship with either local municipal withdrawals or local rates of precipitation.
In 2008, OSM concluded that there have been and will be no impacts
to these springs attributable to mining (OSMCHIA 2008: 86). Subsequently, OSM removed the oversight of Moenkopi Spring from its regulatory review.
2. In 1989, OSM determined that water level decline at the community of
Kayenta (20 miles north of the mine) would be caused almost entirely by
Kayentas groundwater pumping.
As of 2009, the water level at Kayenta had dropped more than 106 feet;
the aquifers structural stability is currently at risk of compaction at
Kayenta.
The University of Arizona study demonstrated a statistically significant
relationship between Kayentas declining water level and Peabodys increasing withdrawals. Further, there is no statistically significant relationship between this decline and Kayentas withdrawals. In fact, the
rate of Kayentas withdrawals expresses a slightly decreasing trend
since 1984 although the water level has continued to fall.
In 2008, OSM concluded that the mine had not adversely affected the
N-aquifer and completely removed structural stability from its regulatory purview.
3. In 2008, OSM implemented Peabodys $3 million groundwater model for regulatory purposes.
According to the model report, a regional scale model cannot currently
be developed for the basin that will accurately predict the impacts of
pumping on individual springs (HSIGeoTrans & WEHE 1999: 523).
Similarly, the model cannot accurately simulate groundwater discharge
to streams.
Nonetheless, in 2008, OSM determined that, rather than using actual
groundwater monitoring data, it will use the simulation results from
Peabodys groundwater model for its annual evaluation of the mines impact on springs and streams.
Water is scarce in the desert Southwest, and large volumes of water derived from
local watersheds serve the needs of the mines and cool the coal plants, drawing
down aquifers, degrading river water quality and depleting one of the regions most
valuable and scarce resources. Fallout from smokestack pollution and the vast quantities of CCW that have been dumped into mines over the past 4550 years have
degraded the quality of the remaining water supplies. Health advisories have been
issued for most streams, rivers and lakes in the Four Corners, warning the public
against neurological and cardiovascular damage from consuming local fish due to
mercury contamination (in part due to mercury emissions from FCPP and NGS).
The true costs associated with these environmental and public health impacts have
never been internalized by the operators of the coal complex.
The following table illustrates only one example of the gap in water prices among
Dine living on the Reservation and those living off the reservation. Dine in Pinon,
Az. (central Navajo Reservation) pay at least 20 times more per gallon than do residents in Glendale, Az (Phoenix area).
32
Transition the Navajo Nation for the sustainability of all Nations:

The Navajo Nation is the size of Scotland. It is blessed with an abundance of resources that could provide the foundation necessary for a transition to renewable
energy development. The Navajo Nation encompasses regions with ample wind,
solar, and geothermal resources, along with vast expanses of land, including large
reclaimed coal-mining tracts that are ideal for locating renewable energy facilities.
The regions solar potential is some of the best in the world and certain portions
of reservation lands have wind resource ratings capable of supporting utility-scale
projects. Additionally, as a result of all three power plants extensive interconnections to the electric grid there is a network of power lines whose capacity would be
freed up for an expansion of renewable energy by phasing out the three coal-burning
plants.
Utility-scale development of either wind or solar energy resources alone has potential to offset job and revenue losses from the phase-out of the existing coal
plants. An analysis by the U.S. Department of Energy (DOE), for example, determined that constructing a wind energy project in Navajo County could generate up
to 140 construction and operations jobs and more than $14 million in economic activity.
If the Dine are to see their existence into the future they must develop clean energy economies instead continuing to advance a steadily declining coal-based economy.
Beyond the tangible benefits, a transition away from the unfulfilling history of
coal and toward clean energy aligns more closely to Dine fundamental laws and values.
Building a new clean energy economy, one in which the viability of the Navajo
Nation is included must be based on the following:
Acknowledging the real value associated with land, water, air and other natural resources on Dine lands.
Acknowledging the significant adverse environmental and health impacts of
a coal based economy and the reliance on the FCPP and NGS and related
mine operations.
Acknowledging that benefits from the sale of Dine raw resources is directly
disproportionate to the profits of the sale or the recipient of cheap electricity.
Creating legislation that would provide the Navajo Nation the financial, political and regulatory means to pursue real solutions in transitioning from fossil
fuel electricity
Developing privately-owned and tribal-owned clean energy generation resources on Dine lands, such as wind and solar; and,
Subsidizing clean energy facilities rather than fossil fuel facilities;
The biggest question Dine face along with the rest of the world is, what happens
after all the fossil fuel is gone. We have no choice but to embrace the renewable
technology available and move forward with it.
Position of To Nizhoni Ani:
1. It is the position of To Nizhoni Ani that a decision by EPA that would require the Maximum Available Control Technology otherwise known as
MACT that requires at minimum SCR for the FCPP and NGS would be the
most beneficial in terms of the issues of the regional haze and visibility.
More importantly, a MACT decision would also reduce the health impacts
from the pollutants for Navajos living in the region.
2. In lieu of declining coal resources, the Navajo Nation must work towards incorporating into recent expired leases, a plan to transition these areas into
a solar generation facility and to target brownfields instead of undeveloped
lands. The purpose of this plan is 1) to ensure continued revenues and jobs
for the Navajo Nation and 2) to eliminate health impacts to the people.
3. The Navajo Nation must begin incorporating a plan for continued revenues
and jobs in place of the declining coal mined at Kayenta and the Navajo
33
Mine. Currently the development of a Solar Energy Generation Facility on
brown fields, is being explored by grassroots groups, Black Mesa Water Coalition and To Nizhoni Ani. At least 6,000 aces of mined lands is available
at this time. This alone is enough for more than 1000 MW of power. A total
of 68,000 acres of land is held in lease by Peabody Western Coal Company.
While some mining on hundreds of acres of lease land has been complete for
more than 15 years, reclamation has not been completed by Peabody and
none of the lands have been transferred back to the Navajo Nation, to be
given back to the local residents for use.
Currently the Black Mesa Water Coalition and To Nizhoni Ani has completed a Solar Potential Study, conducted dozens of community meetings
to residents in the mine lease area as well as residents in communities
throughout Black Mesa. The purpose of these community meetings is to
educate for the purpose of mobilizing the community.
4. Installation of Solar facilities on the CAP canals to provide additional power
to power the pumps that push the water to Phoenix and Tucson or other
power users. This would help eliminate the evaporation of 75,000 acre feet
of water annually.
5. Make CAP self-sufficient.
Mr. MCCLINTOCK. I just, to keep of the record straight, both you

and Mayor Van Gausig were invited at the request of the minority
Democrats on this Committee. I am sorry our democratic colleagues
arent here to welcome you, but we certainly thank you for your
testimony.
Ms. HORSEHERDER. Thank you.
Mr. MCCLINTOCK. Our next witness is Mr. Andy Groseta, president of the Arizona Cattle Growers Association from Cottonwood.
STATEMENT OF P. ANDREW GROSETA, PRESIDENT, ARIZONA
CATTLE GROWERS ASSOCIATION, COTTONWOOD, ARIZONA
Mr. GROSETA. Good morning. My name is Andy Groseta. I am

here testifying on behalf of the Arizona Cattle Growers Association.
I would like to thank you for giving me the opportunity to testify
in front of your Subcommittee today. It is my pleasure to enlighten
the Committee on the failures of the Federal land management and
how this has impacted our residents and economy in Arizona. But,
more importantly, it is drying up our watersheds in the entire
state.
I am the current president of ACGA, a professional organization
that represents over 100,000 ranchers from throughout Arizona. I
am a third generation rancher, and our family has been ranching
in the Verde Valley since 1922. We operate on Forest Service lands,
state private lands. And we take our jobs seriously as being good
stewards of the land. We collaborate with state and Federal agencies to maintain working landscapes that are vital to Arizonas
economy and its citizens.
Arizonas agricultural industry is a $10.3 billion industry, contributing to communities in every county in this state. This base
industry relies on the stability of sunlight, soil, and water to
produce the safest and most affordable food supply in the world.
In 1955 ranchers, water users, Salt River Project officials, and
employees of the United States Forest Service all met to discuss
the conditions of Arizonas watershed and its future. 50 plus years
ago these folks recognized the importance of water and how the
management of land would impact agriculture, industry, and a
34
growing city. From this meeting and local collaboration, the Beaver
Creek Watershed Evaluation Program began. The emphasis was to
determine how much water yield could be increased by managing
and controlling vegetation on the landscape. At the same time, the
project would analyze livestock foraging, wildlife, soil types, and
recreational values. The project encompassed tens of thousands of
acres with real on-the-ground work. And it went far beyond the
computer models that we rely on today.
This type of work contributed to real data over time and revealed
the benefits of basic landscape stewardship to our watersheds. The
project continues on today but is not well known and does not focus
much on the actual on-the-ground work of managing vegetation because of over regulation on Federal lands and a process that can
easily last 10 plus years.
Now, today, 50 years later, I have the pleasure of coming before
you again to talk about the same issue that our predecessors had
the foresight to begin evaluating and initiating solutions. However,
after 50 years of analyzing and collecting data, it is Federal regulations and mountains of bureaucratic processes that have kept us
from implementing any type or practical solutions that would benefit all the citizens of Arizona.
These former leaders understood that there were major ecosystem functions that our forest lands provided for: The water
cycle, the mineral cycle, energy flow, and biological succession.
They also understand that management, or the lack thereof, can
have a profound effect on the very important functions.
Recently, over the past 20 years, we have witnessed a diminished
land, health, and productivity, most especially the diminishment of
water yields from a now unhealthy water cycle. The current lack
of action and on-the-ground management has diminished the water
on our forest lands, which is the water that these lands yield to
several million people here who live in the Valley of the Sun.
Part of the reason our forests are yielding less water is the U.S.
Forest is caught up in a process predicament, a framework of statutory and regulatory and administrative procedures that has rendered the agency ineffective in addressing the rapidly declining
forest health. The Forest Service spends the majority of its time
managing lawsuits today and job promotions. It has no real time
to dedicate to actual landscape management. We are literally
studying our forests to death caused by catastrophic wildfires that
threaten our communities, destroy our local economies, destroy
wildlife habitat, and drastically change an ecosystem for a lifetime.
It was not long ago that many springs and creeks along the
Mogollon Rim produced twice as much water as they do today. And
these rural communities were abuzz, were abuzz from the sounds
of chainsaws and the bells of cows. We had healthy working landscapes that provided jobs and safe places for our citizens to work
and recreate.
At one time Apache County in northeastern Arizona was one of
the richest counties in the nation. Federal regulations such as the
National Environmental Policy Act, the Endangered Species Act
has become a tool that radical environmental groups have used to
close our forests down to all mankind. Commercial logging no
longer exists in Arizona and has not for more than a decade. Now
35
Apache County is one of the poorest counties of the Nation as Federal regulations have driven families and entire industries out of
business.
The cattle industry is struggling to hold on as we continue to lose
valuable and productive grasslands to overgrown forests. And with
this, it takes a lot of money to repair and restore the damage that
these catastrophic wildfires do on our Federal lands.
I would just like to say in closing that the Arizona Cattle Growers Association requests that Congress takes immediate action
time is of the essenceto do something to correct the Federal land
management practices, to create a balanced model that recognizes
communities, economies, industry, recreation, habitat and wildlife.
It is possible and it can be done. But the bottom line is our forest
desperately needs on-the-ground management. And thats where
we need man and management to return to the land.
Thank you for giving me this opportunity.
Mr. MCCLINTOCK. Thank you, Mr. Groseta. I would let you go on
except I cant put that on Mr. Gosars tab; it is already full, so
but I do thank you for your testimony.
[The prepared statement of Mr. Groseta follows:]
Statement of P. Andrew Groseta, President,
Arizona Cattle Growers Association
My name is Andy Groseta and I am testifying on behalf of the Arizona Cattle
Growers Association. I would like to thank the Honorable Tom McClintock, the
Honorable Paul Gosar and the Honorable Trent Franks for the opportunity to testify
in front of the Water and Power Subcommittee today. It is my pleasure to enlighten
the committee on the failures of federal land management and how that has impacted our residence and economy, but more importantly it is drying up our watershed. I am the current President of the Arizona Cattle Growers Association, a professional organization dedicated to Arizonas Cattle Industry and representing over
one thousand ranchers across Arizona. I am a 3rd generation rancher and our family has been ranching in the Verde Valley along the Verde River since 1922. We operate on forest service, state and private lands and take our jobs as stewards of the
land very seriouslyin respect for those who have enjoyed them before us and to
ensure that continues for future generations. We collaborate with state and federal
agencies to maintain the working landscapes that are vital to Arizonas economy
and its citizens. Arizonas agricultural industry is a 10.3 billion dollar economic engine, contributing to communities in every county in the state. This base industry
relies on the stability of sunlight, soil and water to produce the safest, most affordable and reliable food and fiber supply in the world.
In 1955 ranchers, water users, Salt River Project Officials and employees of the
United States Forest Service all met to discuss the conditions of Arizonas watershed and the future. Fifty plus years ago these folks recognized the importance of
water and how the management of lands would impact agriculture, industry and the
people of a growing city. From this meeting and local collaboration the Beaver Creek
Watershed Evaluation Program began. The emphasis was to determine how much
water yield could be increased by managing and controlling vegetation on the landscape. At the same time the project would analyze livestock foraging, wildlife, soil
types and recreational values. The project encompassed tens of thousands of acres
with real on-the-ground work; it went beyond the computer models we rely on today.
This type of work contributed real data over time and revealed the benefits of basic
landscape stewardship to our watershed. The project continues on today but is not
well known and does not focus much on actual on-the-ground work of managing
vegetation because of over regulation on federal lands and a process that can easily
last ten plus years. Now fifty years later I have the pleasure of coming before you
today to talk about the same issue that our predecessor had the insight to begin
evaluating and initiating solutions. However, after Fifty years of analyzing and collecting data it is federal regulation and mountains of bureaucratic process that has
kept us from implementing any type of practical solution that would benefit all the
citizens of Arizona.
36
These former leaders understood that there were major ecosystem functions that
our Forest lands provided for: the water cycle, mineral cycle, energy flow and biological succession. They also understood that managementor the lack thereofcan
have a profound effect on these very important functions. Recentlyover the past
two decadeswe have witnessed a diminished land health and productivitymost
especially the diminishment of water yields from a now unhealthy water cycle. The
current lack of action and on the ground management has diminished the water our
forest lands yield to the several million people who live in the Valley of the Sun.
Part of the reason our forests are yielding less water is that the U.S. Forest Service is caught in a process predicament, a frame work of statutory, regulatory and
administrative procedure that has rendered the agency ineffective in addressing the
rapidly declining forest health. This is absolute fact; the United States Forest Service recognizes this issue in a report they issued in 2002. The Forest Service spends
a majority of its time managing lawsuits and job promotions and has no real time
to dedicate to the actual landscapes and ecosystems that support wildlife, communities and industry. We are literally studying our forest to death, a death caused
by catastrophic wildfires that threatens communities, destroys economies, wildlife
habitat and drastically changes an ecosystem for a lifetime.
It was not long ago that many of the springs and creeks along the Mogollon Rim
produced twice as much water as they do today and the rural communities nestled
in the middle of the Ponderosa Pines were a buzz from the sounds of chainsaws and
the bellow of cows. We had healthy working landscapes that provided jobs and safe
places for citizens to recreate all year round. At one time Apache County was one
of the richest counties in the nation. Federal regulation such as the National Environmental Policy Act and the Endangered Species Act has become a tool for radical
environmental groups used to close our forest to all mankind. Commercial scale logging no longer exists in Arizona and has not for more than a decade. Apache County
has become one of the poorest counties in the nation as federal regulation has driven families and entire industries out of business. You no longer see semi-trucks full
of logs moving down the highways, forest equipment businesses, or the local family
owned chainsaw repair shops. You would be hard pressed to even find a chainsaw
in those northern communities anymore. The cattle industry is struggling to hold
on as we continue to lose grasslands to over grown forests and infrastructure to
massive wildfires that take more and more resources to repair.
The overgrown forest, that is growing as we speak, with no tools to properly manage timber and forage is slowly cutting the water supply of the sixth largest city
in the nation, Phoenix. For decades we have allowed our forest to become dense
with trees sucking up water before it hits the river and the arid climate is unable
to support such a forest in periods of drought. We have left an unnatural forest at
the hands of Mother Nature and now we are faced with massive wildfires charring
forests to bare ground. The Wallow fire is a perfect example an after fire crew
mopped up the hot spots and left, the summer rains came causing massive soil erosion and flash floods. Mismanagement of federal lands has caused massive wildfire
that changed the landscape for a lifetime and has now polluted our watershed killing a whole generation of fish, frogs and owls.
Just recently the U.S. Forest Service patted itself on the back for issuing the largest stewardship contract in history working with a collaborative group called Four
Forest Restoration Initiative (4FRI). While we all hope this will become a reality
quickly the contract that was issued has not run the gauntlet of the National Environmental Policy Act. At the same time, so called partners in the program have
issued statements alluding to potential lawsuits. Once again process predicament
will raise its ugly head while our forest health continues to deteriorate.
It is long past due that we take immediate action to correct federal land management to create a balanced model that recognizes communities, economies, industry,
recreation, habitat and wildlife. It is possible and can be done but we have to be
sure that it is driven by local residents that live and work with the consequences
of decisions made from DC. The bottom line is our forest desperately needs on the
ground management and for that we need man to return to our forest with
chainsaws and cows. It is imperative that we actively manage the renewable resources that we have been provided before we allow Mother Nature to do it for us.
I want to thank you for taking the time to come to Arizona today and allowing
me to testify before the committee. I would be happy to entertain any questions.
Mr. MCCLINTOCK. And our next witness is Mr. Tom Jones, who
is the chief executive officer for the Grand Canyon State Electric
Cooperative Association from Tempe, Arizona, to testify.
37
STATEMENT OF TOM JONES, GRAND CANYON STATE
ELECTRIC COOPERATIVE ASSOCIATION, TEMPE, ARIZONA
Mr. JONES. Chairman McClintock, Representative Gosar, Mr.

Schweikert, thank you for holding this hearing and thank you for
allowing me an opportunity to testify. My name is Tom Jones. I am
CEO of Grand Canyon State Electrical Cooperative Association, a
regional service organization representing the interests of cooperative electric utilities and their consumers.
In Arizona 10 electric cooperatives serve more than 220,000 consumers in 10 of Arizonas 15 counties and employing nearly 900
people. Electric cooperatives in Arizona average just 12 customers
per mile of electrical distribution line, by far the lowest density in
the industry. Electric cooperatives were some of the first purchasers of Federal hydropower, and today more than 600 electric
cooperatives in 34 states are PMA customers. In Arizona six distribution customers, a generation cooperative, and a transmission
cooperative serving more than 220 homes, farms, ranches, and
businesses are PMA customers in the desert southwestern region
of the Western Area Power Administration.
Secretary Chus memo directs the administrators of PMAs to
begin a process to fundamentally change the way they do business,
which will increase electricity rates for millions of rural Americans
and may not provide meaningful benefits.
The long-standing partnership between the PMAs and their customers in providing access to power produced at Federal dams is
guided by a statutory requirement that electricity is sold at the
lowest possible cost to consumers.
The Energy Department acknowledges that changes proposed in
its memo will likely be costly. Since incomes of electric cooperative
customers in Arizona lag 21 percent below the national average
and 17 percent behind the state average, electric cooperatives work
daily to keep rates affordable for their consumer-members at all
times.
In the memo, Secretary Chu states PMAs will become involved
in a wide range of businesses, including test bids for cyber security,
advancing electric car deployment, and energy efficiency. These are
valid policy goals and, in fact, are ones that many electric cooperatives are pursuing. However, asking current consumers and taxpayers to foot the bill for these pursuits is stepping well outside the
PMAs statutory mission. This mission created for the PMAs would
be bad public policy.
The Secretarys memo strikes for some of us as a solution looking
for a problem, and a potentially costly solution for PMA customers,
too. The Federal power program pays its own way. Indeed the
PMAs have consistently operated under the principle of beneficiary
pays. To hear the Secretarys proposal described as a modest step
strikes me as a game change for the PMAs to one where costs dont
matter as long as they are covered by OPM, other peoples money.
It is relevant to note that the PMAs control just 6 percent of all
transmission in the U.S. And barely 10 percent in the Western
Electricity Coordinating Council area where we are located.
The Secretarys efforts to spur innovation in the transmission
field using such a small percentage of the grid is misplaced at best.
38
In fact, the better agency to do this would be the Federal Energy
Regulatory Commission.
Arizona electric co-ops support increasing energy efficiency, demand response, and renewable generation. Arizona has one of the
strongest energy efficiency standards in the nation. However, the
Secretarys direction to the PMAs to participate in an energy balanced market presumably as a tool to help with the integration of
renewable variable energy resources is not necessary at this time.
An EIM may be a beneficial term but it is just one option among
many to help efficiently integrate these resources.
It is interesting to note that the California ISO consumers pay
a rate that is 26 percent higher for electricity than those of us in
Arizona.
We disagree with assertions in the Secretarys memo and that
have been made here today by some earlier witnesses that the
WAPA transmission system is outdated and incapable of integrating renewable energy resources. I would refer you to the attachment in my written testimony that discusses several of the
mechanisms in use today by owner-operators.
Congress should exercise its oversight of any proposals that alter
the statutory mission of the PMAs. By working together, Congress,
the Administration, and the Federal power customers can address
the multiple goals of the Federal hydropower resource.
Let me conclude by thanking Congressman Gosar and the other
two Congressmen on the stage for signing the letter to Congress,
to Secretary Chu expressing concerns about his memo. More than
150 signers in a bipartisan effort, including 18 Members of the
Natural Resources Committee, and eight Members of the Water
and Power Subcommittee, signed on to that letter.
I also want to very briefly mention our concerns about coal combustion residuals.
Mr. MCCLINTOCK. I think we will probably have to ask you to
defer that to
Mr. JONES. Thank you very much.
Mr. MCCLINTOCK.the question and answer period. Thank you,
Mr. Jones.
[The prepared statement of Mr. Jones follows:]
Statement of Tom Jones, Chief Executive Officer,
Grand Canyon State Electric Cooperative Association, Inc.
Mr. Chairman and members of the Subcommittee, thank you for holding this
hearing and for providing me the opportunity to testify. My testimony will mainly
focus on the March 16, 2012 memorandum (Memo) from Secretary of Energy Steven
Chu to the administrators of the four Power Marketing Administrations (PMAs) and
on the U.S. Environmental Protection Agency (EPA) proposed federal regulations
governing the disposal of Coal Combustion Residuals (CCRs) under the Resource
Conservation and Recovery Act.
The Grand Canyon State Electric Cooperative Association (GCSECA) is a regional
service organization representing the interests of cooperative electric utilities and
their consumers. Electric cooperatives are not-for-profit, private businesses governed
by their consumers who are members of their cooperative. There are more than 900
electric cooperatives which serve more than 42 million consumers in 47 states. In
Arizona, 10 electric cooperatives serve more than 220,000 consumers in 10 of
Arizonas 15 counties and employ nearly 900 people. Electric cooperatives in Arizona
average just 12 customers per mile of electrical distribution line, by far the lowest
density in the industry. These low population densities, the challenge of traversing
vast, remote stretches of often rugged topography, and the increasing uncertainty
39
in the electric marketplace pose a daily challenge to our mission: to provide a stable,
reliable supply of affordable power to our members, your constituents.
Power Marketing Administrations
Electric cooperatives were some of the first purchasers of federal hydropower, and
today more than 600 rural electric cooperatives in 34 states are PMA power customers. In Arizona, six distribution cooperatives, a generation cooperative and a
transmission cooperative serving more than 220,000 homes, farms, ranches and
businesses are PMA customers in the Desert Southwest Region of the Western Area
Power Administration (WAPA).
Secretary Chus Memo directs the administrators of the PMAs to begin a process
to fundamentally change the way they do business which will increase electricity
rates for millions of rural Americans and may not provide meaningful benefits.
The Memos general policy guideline to modernize PMA operations will needlessly undermine their historic partnership with not-for-profit electric cooperatives
and others in providing affordable and reliable electricity that benefits consumers
and taxpayers. This longstanding partnership in providing access to power produced
at federal dams is guided by a statutory requirement that electricity is sold at the
lowest possible cost to consumers.
The Energy Department acknowledges that changes in its Memo will likely be
costly. Rising electric bills hurt American families and businesses. Since incomes of
electric co-op customers in Arizona lag 21 percent below the national average and
17 percent behind the state average, electric cooperatives work to keep rates affordable for their consumer-members at all times. Each time input costs increase for an
electric co-op, their consumer-members electric bills must also increase to make up
the difference. If changes are made that increase the costs of PMA-marketed electricity, customers cost-based rates will also increase.
While the Memo suggests that increased costs will be phased in to minimize disruption, phasing in expenses does not address the issue of increasing costs to consumers with no associated benefits. The Energy Department sought no input from
PMA customers before initiating this effort and many important questions remain
to be answered.
In addition to providing consumers across the country with reliable, affordable
electricity, the PMA-customer partnership is also a good deal to taxpayers. The federal power program pays its own way. It provides a mechanism through which dam
operation costs are covered by federal power customers, including:
Capital investment costs, including renewals and replacements, with interest;
Power-related annual operating and dam maintenance costs;
Transmission and marketing of federal power;
Financial support of some non-power related authorized project purposes.
In the Memo, Secretary Chu states PMAs will become involved in a wide range
of businesses including test beds for cyber security, advancing electric car deployment, and energy efficiency. These are valid policy goals, and in fact they are ones
that many electric cooperatives are pursuing. However, asking current consumers
and taxpayers to foot the bill for these pursuits is stepping well outside the PMAs
mission. It would be bad public policy to use the PMAs as technology laboratories,
forgetting their primary mission of marketing federal power.
It is relevant to note that the PMAs control just six (6) percent of all transmission. The Secretarys effort to spur innovation in the transmission field, using
such a small percentage of the transmission sector, is misplaced at best. The agency
with direct jurisdiction over the majority of transmission facilities in the United
States, the Federal Energy Regulatory Commission, is better equipped to give policy
leadership in this context.
The Energy Department proposal also overlooks the widely-recognized leadership
of electric cooperatives across the country in smart grid technology efforts. Electric
co-ops are also actively incorporating demand response and reducing load through
energy efficiency programs. Electric co-ops are both developing renewable energy
projects and purchasing renewable energy that totals more than 4,000 MW of wind,
solar, geothermal, biomass and clean renewable hydropower capacity.
Arizona electric co-ops support increasing energy efficiency, demand response and
renewable generation. Arizona has one of the strongest energy efficiency standards
in the nation.
The Secretarys direction to the PMAs to participate in an Energy Imbalance
Market (EIM), presumably as a tool to help with the integration of renewable/variable energy resources, is not necessary at this time. An EIM may be a beneficial
tool but it is just one option among many to help efficiently integrate these resources. To impose an EIM on WAPA while a number of parties are still studying
the costs and benefits is premature. The costs associated with implementing an EIM
40
are significant. We are very concerned about the impact of those costs on the rates
of PMA customers.
Transmission owners and operators in the west are currently implementing a
number of tools to effectively incorporate variable generation and increase coordination and cooperation among industry players, including the PMAs. We believe that
further development of these mechanisms, while continuing to study the complexities and costs associated with an EIM, is a better approach than hastily creating
an EIM without sufficient analysis of need or assessment of benefits. Such an approach will also aid the PMAs in continuing to provide federal hydropower and
transmission service at the lowest possible rates.
Here is a brief description of the mechanisms in use today in the west. A more
detailed description of these initiatives is included as an attachment.
Intra-hour transmission schedulingCurrently generation is scheduled hourly. However, variable energy resources do not have level production throughout an entire hour. Intra-hour scheduling beginning with thirty-minute
schedules has been implemented as a tool to help address this problem.
Dynamic Scheduling System (DSS)The output of variable energy resources
varies throughout the hour. Schedules must be tracked in real time to know
what has actually been purchased. DSS utilizes advanced communications to
facilitate intra-hour schedules and dynamic schedules.
Area Control Error (ACE) Diversity Interchange and Reliability Based Controls (RBC)Variable generation can increase frequency within an electrical
system. ACE and RBC allow operators to balance multiple generating units
over a broader electrical area to maintain reliable system frequency.
Intra-hour transaction scheduling platformAllows for buyers and sellers to
consummate bilateral trades of variable generation from renewable resources
within the operating hour.
Implementation of lower cost local energy efficiency and demand response
programs.
We believe that further development of these mechanisms, while continuing to
study the complexities and costs associated with an EIM, is a better approach than
hastily creating an EIM without sufficient analysis of need or assessment of benefits. Such an approach will also aid the PMAs in continuing to provide federal hydropower and transmission service at the lowest possible rates.
Any changes to the PMAs strategic planning processes should be carefully considered, and new capital expenditures should be specifically discussed with the customers who will pay those expenses. There should be a full and open public process
with opportunities for PMA customers to provide input before any changes in existing policy and direction are undertaken. Congress should exercise its oversight of
any proposals that alter the statutory mission of the PMAs. The Energy Department
should remember three simple principles in its management of the PMAs: affordability; fairness; and upholding the PMAs core mission.
Congress and the Administration could make a significant impact in our nations
energy security by working with PMA customers to improve federal hydropower resources. These efforts should include:
Using existing authorities to prudently integrate newly developed resources
into federal transmission systems, while improving reliability;
Improving access to federal lands to speed construction of transmission and
distribution lines;
Recognizing the importance of clean, renewable, affordable hydropower as an
important part of our nations energy policy;
Making a greater federal commitment to our hydropower resources. The
Presidents budget request and congressional appropriations must prioritize
the safety and efficiency of federal dams and power-related resources as a priority.
The federal power program pays its own way. Unlike most other federal programs, appropriations for the federal power program are repaid to the U.S. Treasury
by federal power customers. Some years ago, Congress recognized this fact and decided to change the scoring for the PMAs purchased power and wheeling and direct
program expenses. Indeed, the Congressional Budget Committees, the Congressional
Budget Office, and the Office of Management and Budget all agreed to change the
scoring for the PMAs because they recover their expenses in the year in which they
are incurred.
From a budget scoring perspective, the PMAs are considered neutral and not a
draw on the Treasury which means the Secretarys proposals in the Memo would
hide the true expense of these new initiatives by rolling them into the PMAs budget.
If the Secretary was to propose these initiatives as stand-alone measures, they
41
would have scoring impacts which would have to be paid for through spending reductions in other programs.
Historically, deficit reduction measures have curtailed appropriations for the federal power program, despite the fact that all of the costs of the federal power program are repaid. These curtailments threaten the reliability and efficiency of federal
hydropower assets. However, the federal power customers, in partnership with the
PMAs and generating agencies, have contributed funds to reduce this threat. Continued federal appropriations must remain the primary support for sustaining the
federal power program, but should not preclude alternative funding methods to complement these appropriations.
By working together, Congress, the Administration, and the federal power customers can address the multiple goals of the federal hydropower resource and the
PMAs, and maximize the benefit of the system for all.
Let me conclude this portion of my testimony regarding the PMAs by joining Mr.
Sullivan in thanking the members of the Committee for their support regarding this
issue, especially Congressmen Gosar and Matheson for their leadership in the
House on the forthcoming Congressional letter to Secretary Chu. This has truly
been a bi-partisan effort.
Coal Combustion Residuals
Another issue which threatens to profoundly impact electric bills of our memberowners is the regulation of Coal Combustion Residuals (CCRs). CCRs are materials
produced when coal is burned to generate electricity. These materials are used beneficially in a variety of applications including sustainable construction practices. For
example, CCRs are used to enhance the strength and durability of concrete. The volume of CCRs being recycled and put to beneficial use amounts to about 43 percent
of all CCRs produced nationally.
The U.S. Environmental Protection Agency (EPA) has proposed federal regulations governing the disposal of CCRs under the Resource Conservation and Recovery
Act (RCRA). Whether to regulate CCRs as hazardous has been researched for nearly
three decades and the overwhelming conclusion is that CCRs do not warrant hazardous regulatory treatment. EPA itself, in two prior reports to Congress and two
related regulatory determinations, confirmed that regulating CCRs under RCRA
Subtitle C is not necessary to protect public health and the environment.
Adding to the regulatory uncertainty is a lawsuit filed against EPA on April 5,
2012 by a coalition of environmental groups advocating for hazardous regulation of
CCRs. The lawsuit is designed to force a hard legal deadline for release of the rule
which could limit EPAs ability to fully and carefully select the proper regulatory
path forward for CCRs.
In order to resolve the regulatory uncertainty associated with this issue, electric
co-ops actively support the Coal Residuals Reuse and Management Act (H.R. 2273/
S. 1751). The legislation would establish a federal regulatory program to ensure the
safe management of CCRs as a non-hazardous material. H.R. 2273 was passed by
the U.S. House of Representatives on October 14, 2011 on a strong bipartisan vote.
S. 1751, was introduced with bipartisan backing in the U.S. Senate on October 20,
2011 but has since stalled in the Senate Environment & Public Works Committee.
Prospects for this legislation improved when the House recently voted to include
its CCR bill (H.R. 2273) as an amendment to the Surface Transportation bill.
H.R. 2273 would have the states administer a performance-based Subtitle D regulatory program for CCR patterned after the criteria for municipal solid waste landfills. In circumstances where a state does not implement a CCR permit program,
or where EPA finds a particular state program to be deficient under a defined set
of criteria, EPA would administer and enforce the non-hazardous waste permit program using the same defined set of criteria. The bill does not authorize EPA to establish new federal regulations for CCR.
Arizonas electric co-ops agree that regulating CCRs under the RCRA hazardous
waste rules is not warranted and we oppose the hazardous regulatory option set
forth in EPAs proposed rule. In addition to reducing the rate of beneficial use, hazardous regulatory treatment of CCRs will create significant compliance costs at coalbased generation facilities. These costs could be sufficiently high to render some
units uneconomic with plant closure the only viable option.
Arizona Electric Power Cooperative, Inc. (AEPCO) is the owner/operator of Apache
Generating Station. Approximately 90 percent of the 180,000 tons of CCRs produced
annually at Apache Station are sold for beneficial use. The unsold portion is stored
at the plant site in a lined facility that became operational in 1995 with a projected
life expectancy of 20 years. Due to the high demand for beneficial reuse of CCRs,
AEPCO has been able to extend the life expectancy of the waste disposal facility.
42
The waste disposal facility was designed and constructed in accordance with strict
regulatory standards under the direction of a registered professional civil engineering firm. Safety inspections and monitoring of the waste disposal facilities are performed by AEPCO internally under the supervision of a registered professional engineer on a weekly, monthly and quarterly basis.
If EPA were to classify CCRs as hazardous waste, AEPCO would be forced to close
its existing waste disposal facility at a cost of approximately $14.5 million. Then,
at an estimated initial capital cost of $20 million (these costs are without complete
detailed engineering), AEPCO would have to shift from wet management of CCRs
to dry management.
Under Subtitle C, AEPCO would be forced to ship its CCRs to an approved offsite landfill for final disposal. Because of AEPCOs remote location in southeast
Arizona, the costs of trucking and disposal of such material would be a significant
increase of approximately $18.1 million in AEPCOs annual operational cost. This
figure does not include the cost that will result from the shortage of off-site disposal
facilities that is likely to occur from a dramatic increase in need by AEPCO and
many other electric generators.
The CCRs disposal facility also provides the benefit of wastewater compliance for
the facility. In order to replace this benefit, which will no longer exist if the waste
disposal facility was to be closed under Subtitle C, AEPCO would need to construct
a new evaporation surface area to support plant operations. Preliminary estimates
indicate the new evaporation surface area will need to be approximately 200 acres
for a total estimated capital cost of $20 million.
All of these costs would flow to customers who would see dramatic increases in
their electric bills.
I want to conclude by thanking the Chairman and Committee Members for holding this hearing and for the opportunity to address the significant impacts these
proposals could have on the electric cooperative members in Arizona.
Mr. MCCLINTOCK. On a personal note, I want to thank you for

recognizing the damage that these policies have already done to
consumers in California and to thank all of you Arizonans for welcoming the steady stream of refugees from that economy.
And with that, our final witness is Mr. John Sullivan, a familiar
personage to the Subcommitteewe are pleased to welcome him
back; he is the associate general manager and chief resources executive for the Salt River Project of Phoenix, Arizonato testify.
STATEMENT OF JOHN SULLIVAN, ASSOCIATE GENERAL
MANAGER AND CHIEF RESOURCES EXECUTIVE, SALT RIVER
PROJECT, PHOENIX, ARIZONA
Mr. SULLIVAN. Chairman McClintock, members of the Subcommittee, Congressman Schweikert, thank you for the opportunity to testify at todays hearing. I would also like to thank Representative Gosar for his continued interest and involvement on
many issues of importance to water and power users in the State
of Arizona.
My written testimony includes our views on a number of issues
being discussed at the hearing today. However, I will focus the majority of my comments this morning on the activities and issues associated with the Navajo Generating Station, or NGS.
I appreciate the comments provided this morning by Governor
Mendoza and Representative Reeve on NGS.
The Committee heard last May from Dick Silverman, former general manager of SRP, regarding the history of NGS and the importance generally to the southwest. As you have heard, the issues facing NGS are complex. In order to keep NGS operating we must
complete the lease extension rights-of-way renewals, negotiation of
key agreements, and compliance with numerous Federal laws.
43
To address these challenges SRP has been working with Native
American Tribes, CAWCD, other effective stakeholders to develop
a resolution that will ensure the continued operation of this critical
generating asset. We appreciate our relationship with these stakeholders and their continued engagement.
A major outstanding factor is how EPA will move forward with
its determination on what constitutes Best Available Retrofit Technology, or BART, for NGS. We remain hopeful that EPA will determine that BART for NGS is the emission controls the participants
voluntarily installed at the plant over the past three years, but the
timing of a decision is also important and we need EPA to make
its preliminary determination this summer.
Clearly the closure of NGS would have far-reaching adverse economic impacts to the State of Arizona as a whole and, more particularly, to Arizonas Indian Tribes. In fact, Arizona State Universitys Seidman Institute recently conducted a study that found NGS
and the mine that serves it will contribute over $20 billion to
Arizonas economy between 2011 and 2044 and contribute over
3,000 jobs each year throughout the state.
I would like to reiterate the importance of a prompt decision by
EPA to allow NGS participants to make appropriate plans moving
forward.
We are pleased the Committee also is looking at forest health.
To SRP, unhealthy forests present a threat to our watershed and
numerous electric and communications assets that cross these
lands. The recent announcement of a landscape forest thinning contract in Arizona is a positive step. We hope that this is a first step
in ongoing forest management. We remain committed to working
with all the stakeholders and Federal agencies to ensure progress
continues.
SRP is also affected by several recent actions and ongoing processes impacting power generation at the Glen Canyon Dam. As detailed in my written testimony, major changes to Glen Canyon operations have complex and far reaching impacts. And the cost is
largely borne by power customers.
SRP believes that a balanced approach needs to be taken when
looking at these issues and remains committed to working with the
Federal agencies and with Congress.
Last, I want to briefly address the policy changes that Secretary
Chu of the Department of Energy is proposing for Power Marketing
Administrations, beginning with WAPA. Like the cooperative association represented by Mr. Jones, SRP would be directly impacted
by the policy changes that Secretary Chu is pursuing, and I agree
with his comments.
I would just add that a primary concern to SRP is the proposal
to create an energy imbalance market, or EIM, in the west. We are
concerned that this would have a high cost and limited benefits
while the industry is developing implementing a number of lower
cost initiatives to help with the integration of variable generation.
We think a better approach is to continue the implementation and
improvement of these tools while continuing to study the potential
of an EIM.
44
Mr. Chairman and members of the Subcommittee, I want to
thank you for this opportunity to come before you again and would
be happy to answer any questions at the appropriate time.
Mr. MCCLINTOCK. Great. Thank you.
[The prepared statement of Mr. Sullivan follows:]
Statement of John F. Sullivan, Associate General Manager & Chief
Resources Executive, Salt River Project Agricultural Improvement and
Power District
Chairman McClintock and Members of the Subcommittee on Water and Power,
thank you for the opportunity to submit testimony today. I also would like to thank
Representative Gosar for his interest and involvement with the Committee on many
issues important to water and power users in Arizona.
My name is John F. Sullivan. I am the Associate General Manager and Chief Resources Executive of the Salt River Project Agricultural Improvement and Power
District (Salt River Project), a political subdivision of the State of Arizona that provides retail electric service to more than 950,000 residential, commercial, industrial,
agricultural and mining customers in Arizona. Salt River Project operates or participates in a broad portfolio of generating resources, including nuclear, coal, natural
gas, hydroelectric and renewable facilities. Salt River Project also operates a water
delivery system providing the primary water supply for an area of approximately
250,000 acres that includes major portions of the Arizona cities of Phoenix, Glendale, Mesa, Tempe, Chandler, Gilbert, Peoria, Scottsdale, and Tolleson. Salt River
Project appreciates the Committees steadfast interest in issues important to
Arizona and the Southwest, including the issues being addressed today.
My comments today will address at least briefly a number of the issues identified
by the Committee for todays field hearing because SRP is impacted by many of
them. Of most immediate concern to SRP due to significant timing constraints, however, is the continued operation of the Navajo Generating Station (NGS), so I will
begin by addressing that subject.
Navajo Generating Station
Salt River Project is the operating agent and one of six participants in NGS, a
2,250 MW generating station located on the Navajo Nation just outside of Page,
Arizona. As the Committee is aware, Salt River Project and the other participants
are addressing and responding to numerous issues and challenges relating to the
continued operation of NGS. Last summer, Mr. Richard Silverman, then General
Manager of Salt River Project, testified before this Committee. Mr. Silvermans testimony is attached for the Committees reference. Although I will not repeat his testimony to this Committee today, I want to reiterate several key points that remain
of significant to SRP, and to summarize new information that we recently developed
regarding the economic benefit of NGS.
NGS provides critical baseload energy to meet each of its utility owners customer
needs year round, and plays a key role in Central Arizona Water Conservation Districts (CAWCD) delivery of water to Native American communities, farmers, and
cities in Arizona. NGS cannot be simply or easily replaced. Yet, the participants currently are faced with a set of complex issues that threaten the long-term viability
of the plant. Those issues include the need for lease extension and rights-of-way renewals, and the negotiation of key agreements, including for coal. To address these
challenges, Salt River Project has been working closely with Native American
Tribes, water and power users, and other affected stakeholders to develop a resolution that will ensure the continued operation of this critical generating asset. We
greatly appreciate our relationship with these stakeholders and their continued engagement in issues affecting NGS.
Unfortunately, while Salt River Project has been working diligently to secure the
necessary agreements to keep NGS in operation, the U.S. Environmental Protection
Agency (EPA) has been working to develop a regulation that could put the future
of NGS in jeopardy. This regulation, called the Best Available Retrofit Technology
(BART) rule, could require costly additional emission control technologies for the
purpose of improving visibility in nearby national parks.
Emissions from NGS currently are controlled by hot-side electrostatic
precipitators (ESPs), wet limestone scrubbers, and Low-NOx Burners and Separated
Overfire Air (LNB/SOFA). The ESPs and scrubbers reduce particulate matter by
99% and the scrubbers reduce sulfur dioxide emissions by more than 95%. LNB/
SOFA, which were voluntarily installed by the NGS owners at a cost of $45 million,
have reduced nitrogen oxide emissions by approximately 40%.
45
The total cost of the additional controls under consideration by EPA as part of
the BART rule is estimated to be between $550 million and $1.1 billion. However,
SRPs modeling results suggest that the visibility improvement that would be
achieved from installing such controls would be imperceptible to the human eye. As
a result, SRP believes that LNB/SOFA is BART for NGS.
In addition to EPAs BART rule, several other Federal actions also could put the
future viability of NGS at substantial risk:
The initial term of the plant site lease expires in 2019. The extension of the
lease and related agreements will trigger a review under the National Environmental Policy Act (NEPA) and the Endangered Species Act (ESA). NEPA
could require the preparation of an Environmental Impact Statement (EIS).
The development of an EIS could take several years to complete and the outcome of that process is uncertain.
Recently issued regulations and potential future rules that are yet to be developed or finalized also could impact the future economic viability of NGS.
These include the recently issued Mercury and Air Toxic Standards (MATS),
as well as potential future regulations on coal ash, ozone, and greenhouse
gases.
Although the NGS participants are committed to securing all of the agreements
and completing the reviews necessary to ensure the continued operation of NGS, it
would be difficult for the participants to justify an investment of potentially more
than $1 billion for emission controls given the uncertainties that the plant currently
faces. As several of the NGS participants articulated to EPA in a March 12, 2012
letter, if the EPA imposes a requirement to install the most costly additional emission controls as BART before the lease is extended, other agreements are reached,
and the NEPA and ESA processes are complete, the continuing viability of the plant
is at substantial risk. A copy of the participants letter to EPA is attached.
Given the significance of this issue, SRP and the other NGS participants have
more recently been engaged in several studies to quantify the overall economic benefit of NGS to the state of Arizona, and to evaluate the potential economic impacts
of the EPAs pending BART rule.
The economic contribution of NGS is substantial. NGS has over 500 employees,
more than 80% of whom are Navajo. NGS and the Kayenta Mine, which supplies
the plant with coal, employ almost 1,000 people, with a combined annual operating
budget of approximately $500 million. The plant and the mine provide significant
economic benefit to the Navajo Nation and the Hopi Tribe through employment,
scholarships, lease payments, and coal royalties.
NGS and the mine also provide far reaching economic benefits to the state of
Arizona as a whole. Arizona State Universitys Seidman Institute recently conducted
a study that found that NGS and the mine will contribute over $20 billion to
Arizonas economy between 2011 and 2044, and contribute over 3,000 jobs each year
throughout the state.
In addition to providing electricity for millions of customers in the Southwest,
NGS also provides 95% of the power used by CAWCD to pump water from the Colorado River to central Arizona. It provides funds for the repayment of the cost of constructing the Central Arizona Project (CAP), and for water rights settlements with
multiple central Arizona Indian Tribes.
A study conducted by Harvey Economics, a consulting firm specializing in water
resource economics, estimated that the shutdown of NGS could result in a loss of
over $3.5 billion between 2012 and 2044 to the economies of the Central Arizona
Tribes that depend on the affordable water received through the CAP.
Clearly, the closure of NGS would have far-reaching adverse economic impacts to
the State of Arizona as a whole, and more particularly to Arizonas Indian Tribes.
SRP continues to strongly believe that LNB/SOFA is BART for NGS and that a
prompt decision by EPA is critical for the NGS participants to make appropriate
plans moving forward.
Forest Health
We are pleased that the Committee also is looking at forest health, which is important in ensuring we are able to deliver a dependable and reliable water and
power supply. Salt River Project has a long-standing commitment to forest health
and restoration, and I would like to compliment the Forest Service for its commitment to the Four Forest Restoration Initiative (4FRI or Initiative), an endeavor that
is sorely needed to prevent further catastrophic destruction of Arizonas forests, in
particular those forests that are part of Salt River Projects 13,000 square mile watershed. 4FRI provides the framework for implementing forest management actions
that will result in a natural ecological regime less likely to be devastated by
46
wildfires to ensure the forests continue to provide recreational, economical,
hydrological and biological value into the future.
An important step in moving the Initiative forward was the Forest Services recent award of a contract to begin mechanized treatments on the thinning of 300,000
acres of forest land in the Coconino and Kaibab National Forests. That action, which
also supports job creation in the area, is welcomed by SRP and we hope is a step
towards continued sustainable forest management practices.
Yet, despite the proactive actions by U.S Congress, fire suppression and other
management practices on the National Forest lands over the past one hundred
years or so ultimately have resulted in unnaturally dense forest conditions. Such
dense conditions result in unhealthy trees that are increasingly vulnerable to insect
attack and diseases, which further increases the threat of catastrophic wildfires.
Poor forest health and catastrophic wildfires impact the hydrologic characteristics
of the watershed. Specifically, runoff and water yield, peak flows and low flows, erosion and sedimentation, and water temperature and chemistry are adversely impacted by unnatural forest conditions and severe wildfires.
Northern Arizona Universitys Ecological Research Institute has partnered with
Salt River Project to conduct field work, data collection and modeling to better understand the effects of the restoration program by comparing hydrologic and natural
resource responses under alternative forest treatments. The effort will include in the
field measurements and management analysis to provide empirical evidence and
modeling data to compare control watersheds to those treated.
Healthy forests correspond to healthy ecosystems and water resources, and are
components of the public good that directly compliment Salt River Projects watershed stewardship responsibility. In addition to improving watershed health, forest
restoration actions also protect Salt River Project investments in facilities and infrastructure, including C.C. Cragin reservoir, power lines and rights of way, and communication sites. We reiterate our commitment to working with this Committee,
federal agencies and other stakeholders to work toward long-term forest health
through active management.
Western Area Power Administration (Western) Issues
Finally, I would like to briefly address two policies impacting Western operations
and power customers. Salt River Project and numerous consumer-owned utilities in
Arizona are Western customers and receive an allocation of power generated at Hoover Dam, the Colorado River Storage Project, and the Parker-Davis Project. These
resources produce important clean and renewable power that benefits millions of
customers throughout the west.
Secretary Chu Memo to PMAs
On March 16, 2012, Department of Energy Secretary Chu sent a memo outlining
a number of new policy goals for the Power Marketing Agencies (PMAs), including
Western. Let me begin by thanking the members of the Committee for their support
regarding this issue, especially Congressmen Gosar and Matheson for their leadership in the House on the forthcoming Congressional letter to Secretary Chu. This
has truly been a bi-partisan effort.
Like the municipal and cooperative associations represented by Mr. Jones, Salt
River Project would be directly impacted by the policy changes Secretary Chu is
pursuing.
Our primary concerns relate to the proposal that Western participate in the creation of an automated Energy Imbalance Market (EIM) proposed for the Western
Interconnection. An EIM is a sub-hourly, real-time, centrally-dispatched energy
market intended to improve the integration of variable generation from renewable
resources such as wind and solar. Salt River Project fully supports the development
of renewable resources. We have a robust portfolio of renewable resources that includes solar, wind, biomass, geothermal and energy efficiency programs. Like Secretary Chu we want to see these resources reliably and efficiently integrated in to
the grid. In fact, as a public power entity, we are obligated to ensure that our limited resources are spent wisely to ensure the efficient integration of these resources.
It is this obligation that drives our concern about the desire to include Western as
a participant in an EIM when the value of this approach is still in question. The
economic studies to date do not make the case for the implementation of EIM across
the west right now.
The industry is developing and implementing a number of other lower cost initiatives to help with the integration of variable generationtools such as inter hour
scheduling, dynamic scheduling service, area control error diversity exchange and
implementation of low cost energy efficiency and demand-side management programs. We think a better approach is also studying the implementation and im-
47
provement of these tools while continuing to study the potential of an EIM. We are
concerned that the approach advocated in the Secretarys memo is a rush to judgment that will increase costs for consumers without the commensurate benefits.
Glen Canyon Dam Operations
Salt River Project also is affected by several recent actions and ongoing processes
impacting power generation at Glen Canyon Dam. Last week, the Department of the
Interior (DOI) announced that it may begin high-flow releases from the Dam beginning next fall and continuing periodically through 2020. Salt River Project and other
beneficiaries of power from Glen Canyon Dam remain committed to improving habitat of native species on the Colorado River.
In fact, power customers have agreements in place to fund a significant portion
of the $626 million (in 2003 dollars) Lower Colorado Multi-Species Conservation
Program.
However, we are concerned that if the releases require moving water so that it
is unavailable during a month when energy demand is high, and depending on the
volume and frequency, it could cost power customers as much as $120 million over
10 years. As a not-for-profit utility, any increase in costs is passed through directly
to our customers. In addition, the impacts of releases are highly complex and concerns have been raised about the revised operations benefiting non-native species,
which could in turn negatively affect endangered native species.
Furthermore, Salt River Project is a cooperating agency in DOIs Long-Term Experimental Management Plan Environmental Impact Statement process. Launched
in February of this year, this process will dictate the long-term operation of Glen
Canyon Dam. Recognizing that power customers bear the economic consequences associated with major operational changes at Glen Canyon, Salt River Project believes
that a balance evaluation of alternatives should be conducted. To date, however,
Salt River Project and other cooperating agencies have not been included in meaningful participation, and we urge the Committee to continue oversight on this issue.
Summary
In summary I would like to again thank Chairman McClintock, Representative
Gosar and the Committee for your continuing support and interest on all of these
issues. Because others also have addressed the other issues we discussed, I will
close by emphasizing that complex and critical issues must be addressed, and resolved, in a timely manner to ensure that NGS continues to serve as an important
economic driver for multiple stakeholders:
For the state of Arizona, NGS and the mine that supplies it with coal are expected to provide more than $20 billion in economic benefit for the state between 2011 and 2044 and to contribute more than 3,000 jobs each year
throughout the state;
For the Navajo Nation and the Hopi Tribe, NGS and the mine generate revenues that support government operations and further economic development;
and
For the Central Arizona Tribes, NGS provides assurance of affordable water
received through the CAP, the loss of which could result in a loss to their
economies of over $3.5 billion between 2012 and 2044.
Salt River Project is working diligently with the NGS participants, the Navajo
Tribe and a host of others to seek solutions to the complex issues faced by NGS,
and we have reached consensus with stakeholders on many issues. Salt River
Project is committed to continuing those efforts and to working with the multiple
federal agencies that will play a role in the future of NGS.
Chairmen McClintock and Members of the Subcommittee, Salt River Project appreciates your support and interest. Thank you again for the opportunity to testify
before you today on these important issues. I would be happy to answer any questions.
Mr. MCCLINTOCK. Actually this is the appropriate time.

I will start those questions in five-minute intervals. And I would
like to begin with Mr. Jones and Mr. Sullivan.
How many Arizona consumers do you serve?
Mr. SULLIVAN. The Salt River Project serves 950,000 plus a few
electric customers here in the metropolitan
Mr. MCCLINTOCK. Arizonans and of course former Californians
who are now Arizonans.
48
Mr. Jones.
Mr. SULLIVAN. Arizonans and former Californians. I am happy
and proud to say I am a native myself.
Mr. MCCLINTOCK. Mr. Jones.
Mr. JONES. Mr. Chairman, the electric cooperatives serve 220,000
customers. Thats homes, farms, ranches, businesses.
Mr. MCCLINTOCK. Well, what would be the impact on all of these
customers if all the provisions of the Chu Memo are implemented?
Mr. JONES. Mr. Chairman, for us thats a bit uncertain in that
the Chu Memo itself is rather broad in terms of the objectives and
goals that it lays out in the PMAs going forward.
Mr. MCCLINTOCK. We see exactly where they are going. Is this
going to be good news or bad news for your consumers?
Mr. JONES. It is hard to imagine that the results of the Chu
memo would do anything but raise the cost of power to our consumer members, sir.
Mr. MCCLINTOCK. Mr. Sullivan, the same.
Mr. SULLIVAN. I would agree. In the short term our estimates are
that to implement just the early stages of this EIM program could
cost as much as $60 million additional to the power customers in
the inland southwest.
Mr. MCCLINTOCK. Now, Governor Mendoza, you said you were
the biggest consumer of electricity from the Navajo Generating Station. We have been told that it would be a good thing to shut the
station down. What is the impact to your folks?
Governor MENDOZA. Thank you, Mr. Chairman.
Again, as I mentioned, without a mitigation plan, our community
will suffer. Again, the health and future of our tribal people depends on our community being able to continue to cultivate our
lands.
Mr. MCCLINTOCK. Now, by the way, the issue on the selective
catalytic reduction technology, is that goingfirst of all, thats not
a public health issue, as I understand it. Thats strictly what the
Left is calling a viewshed issue, correct?
Governor MENDOZA. Correct.
Mr. MCCLINTOCK. On haze. So this is not a public health issue.
It is a viewshed issue.
And what is the practical difference between the very expensive
selective catalytic reduction technology advocated by a witness that
is selected by the Democrats today and the actions that have already been taken on viewshed issues?
Governor MENDOZA. Again, you know, with regard to that, again,
you know, the community
Mr. MCCLINTOCK. Point blank, is it a difference that would be
visible to the human eye?
Governor MENDOZA. No.
Mr. MCCLINTOCK. OK. So this is not a public health issue. It is
not even a viewshed issue that a human eye can discern. So I, for
one, have to conclude this is part of an ideological battle being
waged by the radical Left that has no logic or reason to it. This is
more religion than it is anything else.
Mr. MCCLINTOCK. Back to Mr. Jones and Mr. Sullivan, actually
Mr. Sullivan I think in this case. What would be the cost to con-
49
sumers of additional Glen Canyon water releases to simulate
spring floods?
Mr. SULLIVAN. The estimate that I have seen would be $120 million over a 10-year period
Mr. MCCLINTOCK. To your consumers.
Mr. SULLIVAN.at a minimum to the consumers of public power
that benefit from Glen Canyon Dam.
Mr. MCCLINTOCK. Wasnt it the spring flood releases that the
dams were built to conserve for dry periods?
Mr. SULLIVAN. Thats correct. The dams were built to preserve
water so that the compact between the upper basin states and the
lower basin states of the Colorado River
Mr. MCCLINTOCK. OK.
Mr. SULLIVAN.could be met.
Mr. MCCLINTOCK. So we have all of these spring floods that inundate the area, and all of that water then is not available in dry
periods. We build dams to assure that we can save that water, conserve that for the dry periods. And now this Administration is releasing all of that water so that we dont have it to store in dry
periods. Is that essentially what is going on here?
Mr. SULLIVAN. I think the Chairman has the story straight.
Mr. MCCLINTOCK. You know, sometimes I wonder if we are not
dealing with the lunatic fringe of our society and at the moment
they are in charge of our public policy.
Let me ask you. To your knowledge, Mr. Jones, probably more
up your alley, have we yet invented a more expensive way to
produce electricity than solar power?
Mr. JONES. Mr. Chairman, I believe thats an accurate statement,
yes. It is quite expensive.
Mr. MCCLINTOCK. We are told we can replace coal electricity,
which is one of the cheapest ways of generating electricity, with
solar, which is the most expensive, and somehow consumers will be
better off. Can you supply me with a wiring diagram of that logic?
I dont get it.
Mr. JONES. We have not been able to solve that one either. We
are under a requirement in Arizona, the electric cooperatives along
with the investor owned utilities, to have a certain percentage of
our portfolio resources come from renewable energy. And we are
finding that to be a challenge to work that more expensive resource
into our rate bases.
Mr. MCCLINTOCK. By the way, we have a very ambitious one in
California, and the result is we have among the highest electricity
prices in the continental United States and the lowest per capita
consumption of electricity not only among all of the states, our per
capita electricity consumption is now lower than Guam.
Mr. JONES. Correct, Mr. Chairman. But on the bright side, you
do have a whole host of other states trying to find ways to sell you
high cost power.
Mr. MCCLINTOCK. Now I am in debt for 53 seconds.
Dr. GOSAR. You get a reprieve for a second.
You know, before I start my questioning, I would like to submit
for the record testimony from Arizona Representative Brenda Barton. Representative Barton is one of my constituents who lives in
the area. And she serves on the House Agriculture Water, House
50
Energy and Natural Resources Committee, and is a strong advocate on behalf of rural Arizona.
Mr. MCCLINTOCK. Without objection.
Dr. GOSAR. I would also like to reiterate Chairman McClintocks
offer to folks to submit their testimony for the congressional record.
We would have loved 30 witnesses, but there is just not time and
energy for. So please reach out to my office. We will make sure that
your testimony is included into the record.
Mr. Sullivan, so just lets reiterate this. Is there any replacements for the Navajo Generating Station, renewable or traditional?
Mr. SULLIVAN. Thats a difficult question. There are alternatives.
None are really base-load alternatives. What
Dr. GOSAR. What do you mean by base-load, sir?
Mr. SULLIVAN. A resource thats available 24 hours a day, 365
days out of the year.
Dr. GOSAR. So if we were to take a solar project or an alternative
energy project like wind and solar, are those considered base loads?
Mr. SULLIVAN. Those are renewable resources. Like solar and
wind are not base-load. They are intermittent in nature. Even the
folks from St. Johns, Arizona will say every once in awhile the
wind stops. And we have 128 megawatts of wind power in the St.
Johns, Winslow area.
We also are proud to have a number of solar projects. They run
very, very well in Arizona, but only from about 10:00 in the morning until 3:00 in the afternoon. So we like our air conditioning in
Arizona. So 10:00 at night, we would still like to have energy
sources, base-load resources to take care of that.
Dr. GOSAR. So if you were to take a solar alternative type of
mechanism to replace Navajo Generating Station, how many thousands of acres would it take to cover?
Mr. SULLIVAN. I do not know exactly. I have seen the number.
It is thousands of acres.
Dr. GOSAR. Thats what I thought.
Governor Mendoza, the solar project that you mentioned, it
sounds like a great project. And regardless of the NGS issue, we
are certainly happy to help you. We are very aware of all the Federal barriers to all that development.
The NGS is really the only option in the short term to pump the
CAP water. If the EPA mandates the SCRs as the best retrofit
technology, the effects would be devastating to your tribe and other
Arizona tribes, is that true?
Governor MENDOZA. Yes.
Dr. GOSAR. So this is a huge issue with the tribal obligation of
Congress, right?
Dr. GOSAR. And the jurisdiction is Congress and Congress only?
Dr. GOSAR. Thank you.
Representative Reeve, according to the ADEQ and your Committees work, SCR would have negligible environmental effects and
unproven visibility improvements. DOEs NREL study backs that
as well, does it not?
Ms. REEVE. I believe so, yes.
51
And I have to answer, if I may, Chairman McClintocks question
earlier. Director Eric Massey of the ADEQ from the air division has
said that you measure the units, visibility is measured in units
called deciviews. And the lowest level of change perceptible to the
human eye is perceived between .5 and 1 deciview. He notes that
some studies with the SCR technology the EPA favors have shown
less than .05 deciview change, meaning the human eye doesnt register the difference. So I think that answers both your questions.
Dr. GOSAR. Lets take it a step further. So you know where the
plant is compared relative to the canyon; would it have really impacted the canyon, especially when you look at air currents?
Ms. REEVE. No.
Dr. GOSAR. And doesnt the DOEs evaluation actually show that?
Ms. REEVE. I believe so. I would have to look at that.
Dr. GOSAR. Most Arizonans remember air moving from southwest
to northeast. That would be a Colorado problem. And the remainder or the majority of the time it is from northwest to southeast,
which would be a New Mexico problem.
So maybe really our problem is from you, from California. Sorry
about that.
Mr. MCCLINTOCK. Dont let that happen again.
Mr. SCHWEIKERT. Will the gentleman yield for a second?
Dr. GOSAR. I would be happy to yield.
Mr. SCHWEIKERT. I think most of our problems are from California.
Dr. GOSAR. So
Mr. MCCLINTOCK. Most of your water, too.
Dr. GOSAR. So if the EPA requires the SCRs, they would make
it a mandate that would have negligible environmental and visibility effects, that would wreak havoc on our states economy,
threaten the water security of fifth and 32nd largest cities in the
country, devastate multiple tribal agricultural and mining economies, undermined Federal Governments ability to meet its obligations under current water settlements and public view in future
settlements, I am not so sure what the EPA defines as best, but
clearly SCRs are not the best retrofit technology. The best, the current technology at the Navajo Generating Station is the best retrofit technology.
What we have to do is we have to base it on science. I am a
science guy. And we cant be basing it on theoretical science. And
thats part of the problem we see here over and over, is the Federal
Government advocating to junk science.
And with that, I will catch back up on some of my allocated over
allotment.
Mr. MCCLINTOCK. Put the rest of us to shame.
The Chair is now pleased to recognize Mr. Schweikert for five
minutes, or thereabouts.
Mr. SCHWEIKERT. We shouldnt let him have any caffeine. He is
like a machine gun.
And I said this in our opening statement. I sort of feel like I am
in the time warp machine because many of the arguments seem to,
you know, resurge or come back, you know, every few years.
52
Governor, and you and I have had this conversation, but I want
to make sure I completely have my head around it. You are the
largest user of allocated CAP
Governor MENDOZA. Thats correct.
Mr. SCHWEIKERT.today?
Mr. SCHWEIKERT. If your costs change substantially, A, how does
that affect your community, but, also, how do you think it affects
how would you and your legal team and the community you represent feel that affects also the compacts or the water settlement
agreements?
Governor MENDOZA. Well, again, as mentioned, without that
plant our community will suffer. Again, we are, we are still suffering as a consequences of this illegal taking of our water. But
using our settlement water to refocus, again, our way of life back
to our agriculture and traditional foods, our access to affordable
CAP water that was guaranteed to us in our 2004 law is critical
to the long-term health of our, of my people.
Mr. SCHWEIKERT. Would you, and I will ask from a personal
level, would you consider that if all of a sudden that water got dramatically more expensive that we are now in violation of that settlement?
Governor MENDOZA. Yes, yes.
Mr. SCHWEIKERT. And how many years did it take to get to that
settlement?
Governor MENDOZA. Oh, wow, many years. Many of my former
leadership have been involved in this for years.
Mr. SCHWEIKERT. Would you bothwould you agree it is older
than you and I are?
Governor MENDOZA. Yes, yes.
Mr. SCHWEIKERT. And we are getting old.
Senator, and you put up one of my very favorite maps, years ago
we were trying to work on the calculation of saying if only 13 percent of the population, or of the acreage can be privately held, how
much of that actually has water rights, and is it a mountaintop or
others. We were getting down to around 8 percent of the states
acreage that was truly usable.
There is a bit of a movement starting to take off in parts of the
west where the discussion is could we put much of this public lands
under a single management regime, maybe a state based one.
From your, because I know this is one of your areas of specialization, would you be ready to take that on at an Arizona level?
Ms. GRIFFIN. My letter to Santa Claus would be for the state to
take over for the public lands.
Mr. SCHWEIKERT. Because when you consider Forest Service,
BLM, Bureau of Reclamation, the list just goes on and on.
Ms. GRIFFIN. I would be happy to tackle that and address that.
I would be most interested in doing that.
Mr. SCHWEIKERT. OK. And forgive me, but, I am embarrassed,
but I cant even read your names without my glasses. Is it Nicole?
Ms. HORSEHERDER. Yes.
Mr. SCHWEIKERT. Pronounce your last name for me.
Ms. HORSEHERDER. Horseherder.
Mr. SCHWEIKERT. OK.
53
Ms. HORSEHERDER. Just the way it is spelled.
Mr. SCHWEIKERT. I couldnt see that.
I saw in your testimony you were speaking of asthma. How much
statistical modelingand this is one of my personal fixations, because we often will throw out saying we have this experience rate.
But do you know if it has been truly statistically modeled for both
a regional national means or is that just sort of what you are finding, you know, on Black Mesa? I mean, how much study has truly
gone into those numbers?
Ms. HORSEHERDER. Which particular statistic are you referring
to?
Mr. SCHWEIKERT. You spent some time throwing out, saying we
are seeing higher asthma rates. And I am a rather severe sufferer
of asthma, you know, growing up here in the valley.
But I bounce off the walls, because at first I was a quantitative
major, and I find people throw out numbers and they dont understand the modeling that actually goes into the facts. And I am
justyou threw out the number, so I was looking for the statistics
layout.
Ms. HORSEHERDER. OK. So one bit of information, one bit of statistic is from the Indian Health Services, which covers a pretty
broad area
Mr. SCHWEIKERT. OK.
Ms. HORSEHERDER.on the reservation. But the statistics I mentioned in specifically here in my testimony was based on a questionnaire that was done in the region of the NGS.
Mr. SCHWEIKERT. But a questionnaire model is not real facts.
Ms. HORSEHERDER. It is the best that we have. I am sorry.
Mr. SCHWEIKERT. OK.
Ms. HORSEHERDER. Yeah, if we could compel some agency to take
on that study, I would bet that it would be similar.
Mr. SCHWEIKERT. And I know I am out of time but it is one of
my actual fixations. I find in Washington particularly they make
public policy on folklore instead of true, truly vetted data.
Mr. Chairman, I yield back.
Mr. MCCLINTOCK. Thank you, gentlemen.
I would also point out McClintocks second law of political physics is also at work in that folly. And that is the more we invest in
our mistakes the less willing we are to admit them.
And on that very subject, I just want to hammer home the point
that Mr. Gosar began with Mr. Sullivan. And that is wind and
solar, you say, do not add to baseline power. We have to constantly
have backup supply for that unpredictable moment when the wind
suddenly drops off or a cloud passes over an array or the sun sets
on the western horizon as it is wont to do from time to time, is that
correct?
Mr. SULLIVAN. That is correct, Mr. Chairman.
Mr. MCCLINTOCK. So we not only are dealing in the case of solar
with the most expensive way we have ever invented to produce
electricityafter 170 years, by the way, of technological advancement and innovation and God knows how much in taxpayer subsidieswe start with the most expensive possible way of producing
power, we then on top of that have to have backup supply immediately ready.
54
Now, how do you do that with a turbine generator for example?
How do you keep that ready at a moments notice to kick in to
maintain the integrity of the grid?
Mr. SULLIVAN. There are several ways that we maintain readiness, as you would put it.
Mr. MCCLINTOCK. Dont you have to run the boilers?
Mr. SULLIVAN. We maintain spinning reserves. So we have units
that are not fully
Mr. MCCLINTOCK. So you are running
Mr. SULLIVAN. So
Mr. MCCLINTOCK.all this generating capacity?
Mr. SULLIVAN. Right.
Mr. MCCLINTOCK. So you are just not getting any generation out,
is that correct?
Mr. SULLIVAN. Right. So we are burning fuel. We do that also in
case we lose a generating unit. The other thing we have done is
invested in a rapid response gas turbine plant in Pinal County
Mr. MCCLINTOCK. Right.
Mr. SULLIVAN.where we can have
Mr. MCCLINTOCK. But the more
Mr. SULLIVAN.quick start capacity.
Mr. MCCLINTOCK. The more wind and solar you add to the grid
the more you have to do this, correct?
Mr. SULLIVAN. Thats correct.
Mr. MCCLINTOCK. Now, who is paying for all of this, this second
ready-to-go backup supply?
Mr. SULLIVAN. The customers of the utilities that benefit from
the solar.
Mr. MCCLINTOCK. So you are now paying the most expensive way
to generate electricity on itself. They are then paying for additional
backup because that process is intermittent and unreliable and you
have to maintain the integrity of the grid. Then we are told, oh,
well, we need to modernize our transmission lines. Well, we are not
actually talking about modernizing transmission lines. We are talking about replacing existing transmission lines with high tension
direct current lines because thats the only way to transmit solar
generated, wind generated electricity over any kind of considerable
distance because of the low output of these facilities.
Mr. Jones, is that correct?
Mr. JONES. Mr. Chairman, the short answer to that would be
yes.
Mr. MCCLINTOCK. Mr. Sullivan, do you agree?
Mr. SULLIVAN. It depends. In our particular case, we have been
able to integrate the intermittent resources without major additions to our transmission. We have taken a little different approach.
Mr. MCCLINTOCK. But when the Chu Memo calls for
Mr. SULLIVAN. The Chu Memo calls for
Mr. MCCLINTOCK.high tension
Mr. SULLIVAN.large changes. We dont believe those are required.
Mr. MCCLINTOCK. For you, but they are required obviously for
remote locations where most of the solar arrays and wind generators are located.
55
Now, when Mr. Chus memo says that general ratepayers, for example those whose rates have already paid for our existing hydroelectric facilities, are now going to have to cough up the money for
this, too, what does that do to their electricity bills?
Mr. SULLIVAN. Unless the Federal Department of Energy comes
up with a way to spread these costs over the general transmission
users, it would fall on the public power customers, both co-ops and
public agencies, that currently pay for those transmission facilities.
Mr. MCCLINTOCK. OK. So you have the cost for these, these most
expensive ways of generating electricity, plus all the backup power,
plus the special high tension direct current lines to transmit this
electricity. Is any of this broken down in the bills for consumers?
Can they actually see the costs broken down that they are paying
for this ideological program?
Mr. SULLIVAN. It depends on the utility. Some do break it down
and have a number of escalators. In our particular case, we have
an escalator much like a fuel escalator. When natural gas prices go
up and down, we have an escalator for environmental and renewable portfolio activities.
Mr. MCCLINTOCK. Well
Mr. SULLIVAN. So it is
Mr. MCCLINTOCK.I will tell you in California my bills certainly
dont break that down. I dont think the bills of most consumers
break that down. In fact, thats the way that the advocates get
away with claiming, oh, this is very cost competitive. It is only because we have hidden the true costs in other peoples electricity
bills or on their tax bills.
Mr. Jones, was that the other peoples money that you were referring to?
Mr. JONES. Somewhat, yes, Mr. Chairman. We do show in
Arizona on customer bills for electric co-ops the amount of surcharge on the bill thats authorized by our public utility commission for renewable energy. It is the RES surcharge. So we are trying to give consumers an indication what those costs are.
But, yes, we are very concerned that the historical pay as you
go, beneficiary pays methodology that has been used with the
PMAs is at risk under the Chu Memo and that we are going to be
faced with paying for costs of items that, frankly, we either see no
benefits for or, even if there are benefits, may not be those that
would directly affect the consumers but be there for other purposes.
Mr. Gosar.
Dr. GOSAR. Well, thank you, Chairman.
Before I start my questions again, I would also like to take a
chance to thank the staff, because you cant have meetings like this
without the help of the endless work of the staff: Daniel Briggen,
Kyle Briggen, Rose Estes, Daniel Frank, Adrianne Luff, Ryan
Omay, I am probably saying your name wrong, Clarissa Wright,
Jason Fitzpatrick, Ron Geld, and Dan Nichols. So thank you so
very, very much for helping us out with that.
You know, I want to make sure that we get in some pretty good
facts here. The NGS produces enough power to be a large nuclear
power plant. Thats how much power we are talking about, enough
power for 2 million homes. What we are looking at in renewable
56
type energy is still experimental. There are things that actually
still work but there are a lot of things that still have to happen.
We have photovoltaic. And we have also got mass types of solar collectors, what we are seeing here in Abengoa in Gila River.
Those are the pursuits we ought to have. And I think what we
have to look at here is all the above energy policy. No one is dispelling solar and wind power and hydropower. In fact, myself and
Congressman Tipton actually looked at empowering the small conduits, the Cal systems, by using small hydropowered systems that
actually generate, increase the number of megawatts toward
locales where you have elevation drops which feeds the water going
through. These are the conscientious aspects of how we ought to be
looking at our energy policy.
And then the last part that I also want to make mention is the
beneficiaries of utilizing our natural resources in this state is education. We lose that so many and so often, is that the educational
system actually benefits from the dollars generated. So we ought
to be using this beneficially and worthwhile.
Mr. Groseta, I want to touch base with you in here because this
is also about looking at your natural resources.
You know the Wallow Fire. It took us almost $400 million to put
that fire out, money we dont have. And we lost $2.5 billion, with
a B, of board feet, of habitat and trees. You know, we actually
brought down a portable mill and we have yet to cut one single tree
out of salvage. In fact, we have locked a lot of the forest up, have
we not?
Mr. GROSETA. That is correct, Congressman Gosar. As I shared,
we are in an analysis-paralysis litigation gridlock. Two particular
acts, Endangered Species Act and National Environmental Policy
Act, they have been manipulated and massaged over the years to
use these tools to inhibit progress to go out and harvest timber, to
go out and harvest forage on our national forests. And as long as
our national forests are continued to be managed in the name of
protecting the Mexican Spotted Owl and the Goshawk, both of
those require highly dense old growth trees, we will continue to be
in this predicament. So
Dr. GOSAR. I want to touch base with you on that. So in the Wallow Fire, what percent of the Spotted Owl habitat did we lose?
Mr. GROSETA. I am told that half of the habitat for the Mexican
Spotted Owl burned up and went up in smoke.
Dr. GOSAR. And isnt it also true that we lost half that population?
Mr. GROSETA. Thats correct.
Dr. GOSAR. Wow. We really won on this one, just really won. Plus
I wonder how many of the gray wolves we also lost, too.
Mr. GROSETA. I dont know the number, but there were several
species that we lost during that fire.
And also, in addition to that, I would like to just, for the point
of the record, I have submitted photos, two pages, to each one of
you up there. This is pictures of dead fish on the San Francisco
River. And this happened last summer after the big fire, the Wallow Fire that you alluded to. After we started to have our summer
rains, the monsoons that we have here in Arizonathat fire was
so hot that it just, it burned and sterilized the soil. It actually was
57
just barren landscape. And all of the ashes, once we received the
summer rains, we not only had soil erosion problems but look
whatwe were talking about the Spotted Owl and the Goshawk
but look at what it did to the fish.
Dr. GOSAR. Yes.
Mr. GROSETA. Look at all the dead fish in the San Francisco
River. These photos, all four of these photos were taken late July
of last year after the summer rains starred northeast of Safford,
Arizona.
So we not only talk about we are not only losing the species we
are trying to protect up there, but we are also losing owls, we are
losing fish. And the bottom line is the status quo is not working
and we need to change the management on these lands in order to
get to go out and harvest the resources. We have the worlds richest
Dr. GOSAR. And I agree
Mr. GROSETA.resources here in this state.
Dr. GOSAR. I agree with you on that one. Let me ask you another
question. There is also complications from windmills. Do birds have
problems with windmills? What is one of the biggest killers of migratory birds? It is actually windmills.
Mr. GROSETA. Wind machines.
Dr. GOSAR. Wind turbines, absolutely. And actually we are finding out about wind turbines that we actually create microclimates.
Mr. GROSETA. Thats correct.
Dr. GOSAR. They actually create microturbidity that planes are
affected by. So there is a lot of consequences here.
I have one more thing here. I know, Ms. Griffin, you know, up
in Flagstaff we had the Schultz Pass Fire, a disaster. We are going
to still have ramifications with this over and over again. We have
a flooding issue because, you know, of that mountain, San Francisco Peaks, this volcanic cone has got projections about 45 degree
angles. So when water comes off of this, it flies. Thats why we lost
a little girl.
Thats what is so sad about this. We could have had solutions
here but were prohibited. Do you realizeand I, really, this is my
last commentit is going to be awhile because we just broke
ground on the Schultz Pass Fire amendment for fixing the pipeline
from the inner basin, thats how sad this is, and we are still talking
about, and the words have been, condemning private property.
How do you feel about condemning private property, maam?
Ms. GRIFFIN. You saw the map. We have very little private property there. I believe the state and the people in Arizona can manage our public lands better than the Federal Government. We can
do it cheaper, more effective, and immediate. It is going to take a
long time to take care of the devastation that has occurred because
of the fires. But it is, and it is moonscapes out there. The wilderness areas in my area, they are all gone. I had pictures of bear and
deer and different animals that areit is a moonscape, you know.
They are cinders.
Dr. GOSAR. You are exactly right. And I want to say, you know,
because of that map that you saw up there, the Federalthe western states get less than one half of what eastern states get in educational funding. And we have to rely on PILT and secure rural
58
schools, which we have to beg, plead and steal from to try and get.
And this is a mechanism and a way that we should be getting back
the authority for the states.
I want to thank the Chairman for allowing me a little extra time.
And thank you for coming out today to see why Arizona, why we
wanted to bring these issues to point and center in Arizona.
Mr. MCCLINTOCK. Oh, Mr. Gosar, it is a genuine pleasure. Misery loves company, and many of the problems that you have talked
about here today we have been suffering in my district in the Sierra Nevada as well.
Mr. Schweikert.
Mr. SCHWEIKERT. I dont think he actually gave you the extra
time. I think you just took it.
Dr. GOSAR. I did.
Mr. SCHWEIKERT. Andy, I want to throw fromand this is one
of my personal fixations. I actually think a lot of the litigation, a
lot of the things you see out there, it is about money. You know,
when equal access to justice and those mechanics, we have
incentivized not decision making, we have incentivized law firms
to, hey, this is a book of business, lets sue. And it has been a decade since I last asked this question, but we had someone in front
of us from the Forest Service who was telling us almost half the
regional budget was going into some litigation or litigation preparation or mechanics.
Would you disagree with me? Am I, I mean, am I off base?
Mr. GROSETA. No, I agree with you, Congressman. We definitely
need tort reform. It is big business.
Mr. SCHWEIKERT. Well, actually some of this is less even than
tort reform. You actually redesign the statute saying, instead of
funding a bunch of lawyers, lets actually use the money to actually
fund plans that actually work. Personal opinion. If any of you are
lawyers, I am sorry if I offended you.
Mr. Mayor, you, in your testimony you sort of, you spoke of trying to take part of your community and turning it into an alternative energy hub. A noble effort. Have you actually sort of modeled how much of that is going to require subsidies, specialty line
items, credits and cash and those things from the Federal Government for that to actually work?
Mr. VON GAUSIG. Yeah. Actually the plans Clarkdale has and the
way we have looked at it so far dont require any at all. They would
all be private-public partner ships based on various kinds of efficiency that are gained by the improving technologies that we have
out there.
Mr. SCHWEIKERT. Wonderful. It is one of the things I willfrom
a policy makers standpoint, as you know, we often hear the rhetoric about, well, we subsidize fossil fuels, which isnt actually accurate. The depletion allowance, that is 2.4 billion, there is almost 9
billion a year that goes into green energy, so green energy gets
about three times more than fossil fuels. So, and my guess is, with
the pending fiscal crisis that is coming very fast, that whole world
is going to change. So from a personal standpoint, please be careful
in public-private partnerships. I mean you saw how well it worked
in Ireland.
59
Mr. Sullivan, a tough question. SRP, you do your modeling and
your capital planning five years? Ten years? 50 years? When you
do a capital plan for your generation for your delivery, how far out
are you planning?
Mr. SULLIVAN. Typically for our generation plans we look out 15,
20 years. In terms of our financial plan, we do detailed financial
planning looking out six years.
Mr. SCHWEIKERT. In that planning, how do you do that modeling,
that planning in this environment where, you know, Navajo Generations capacity may be in play, you know, low yield generation
coming from alternative energy? I mean, are you having to do an
A, B, and C plans? I mean, how are you modeling?
Mr. SULLIVAN. Typically we do a lot of scenario planning, so
with/without Navajo going forward.
We also participate in the Four Corners plant. So we have to factor in the future of the Four Corners generating station, whether
it will be there once that plant gets through the environmental
process.
And then in terms of our renewables, our board has established
both an energy efficiency and renewable standard combined for us,
a sustainability portfolio. And our view is you have to have a balance. Representative Gosar talked about that.
Thats how we try to approach our future resource planning, is
a balance of renewables that we can adjust for as we move forward,
a balance of energy efficiency, and then a balance of traditional,
mostly nowadays natural gas resources.
Mr. SCHWEIKERT. Mr. Chairman, Mr. Sullivan, in the models you
have done, lets just take the five year, best case scenario for a
ratepayer is what, and worst case scenario? You know, how big is
the spread right now?
Mr. SULLIVAN. Well, what we dont do is factor in rate increases
or price adjustments. What we do look at is, as we go out in time,
how big a deficit are we building that would have to be made up
by our customers. So I cant answer your question exactly
Mr. SCHWEIKERT. OK.
Mr. SULLIVAN.today. But it would be quite a spread. It would
be a large spread if you look out five years without Four Corners
or Navajo in our resource plan. It would be a very expensive plan
for our customers.
Mr. SCHWEIKERT. Thank you, Mr. Chairman. Thank you, Mr.
Sullivan.
Mr. MCCLINTOCK. You are very welcome. And we are going to go
to one final round, mainly because I owe the till about a minute
and a half and Mr. Gosar owes two. So between me and ourselves
let me have two quick questions.
First to Mr. Governor Mendoza. You painted a compelling picture
of the economic devastation that imposing SCR technology on the
Navajo Generating Station will have on your community. Yet we
are told by a representative of the Navajo that the Nation welcomes shutting it down. Why should we believe you?
Governor MENDOZA. Well, again, you know, again, you know, the
community would support any pragmatic solution about this issue.
Again, it is, it protects the rights of our community and it does not
jeopardize our water settlement.
60
Again, with regard to having the access to affordable water that
was guaranteed to us in our 2004 water settlement law is critical
to our community. And if we lose access to affordable CAP water,
we wont be able to help cultivate our lands for our community.
Final question to Senator Griffin and Representative Reeve.
What can you advise us, what should the Federal Government be
doing to spur the economic and natural resource development of
Arizona?
Ms. GRIFFIN. Get out of the way.
Mr. SCHWEIKERT. Sort of to the point.
Mr. MCCLINTOCK. Representative Reeve.
Ms. REEVE. There is a reason that we have state primacy on certain issues. And they should allow the state to, to do what we are
doing.
I mean we have things in place. We are, you know, ADEQ is
doing a very competent job on these air issues. And yet we are
being cut at the knees right now with the regional haze rule in particular. They should allow the states to do what we knowyou
know, we know this area better than they do because we live here.
And thats why there is such a thing as state primacy. So they
should work at least with the states if nothing else, but yes.
Mr. MCCLINTOCK. Thank you very much. I yield back my three
minutes and I am square.
Mr. Gosar.
Dr. GOSAR. Well, Ms. Horseherder, let me ask you a question.
Has the life expectancy of the Navajos increased or decreased over
the last century?
Ms. HORSEHERDER. The life expectancy has probably increased in
the last century.
Dr. GOSAR. Governor Mendoza, has the life expectancy gone up
or down on the Gila River Community?
Governor MENDOZA. It has gone down.
Dr. GOSAR. The life expectancy?
Dr. GOSAR. OK. Is it part ofwhat would you attribute that to?
Governor MENDOZA. The health, the health of our community.
Again, you know, when the waters of our community were diverted
illegally, our tribal members had to change their diets to one of
cheap processed foods. And, of course, it devastated our community,
because, as you know, we have the highest rate of diabetes in the
world. So, again, you know, the water was the blood line to our culture.
Dr. GOSAR. So the other thing I want to make sure we understand is that almost half of the water that Phoenix utilizes comes
from CAP water, almost half, 45 percent. And 80 percent of the
water that goes to Tucson comes from CAP water.
So I guess what my hearingwhat I am trying to get at here is
this is not an option to shut the Navajo Generating Station down.
There is not an option here, just absolutely not an option. What we
have to do is start building upon science, real science, a science
that is based by facts. What I mean by that is, is that I provide
the criteria, or you provide the criteria, and I can go replicate your
results. Thats why surveys dont work.
61
I am a healthcare professional. Surveys are only an inquisition
into maybe a problem, and that you have to follow it up with scientific study. Thats one of the things that I have to tell you, is we
have to start basing our discussions not on scare tactics but on real
data, real data.
Now, the other thing that I also want to make sure is that today
I know the Navajo Nation person said that they were against the
Navajo Generating Station. Thats not what the tribal council and
the president has advocated for. They have been in front of us advocating for not shutting it down. So those are things we want to
make sure that those viewpoints are poignant and perfectly legit.
I think one of the things that I would hope, and I am a dentist
impersonating a politician, is that what we have to start doing is
start working together. I am tired of the Federal Government picking and choosing winners and losers. We need to have everything
on play. And the magic of America is its beauty to investigate and
invigorate and create. Thats why we are here today and thats why
we share in the economy that we so do. And we need to get the
Federal Government out of the way.
And I think what we saw today from the NGS to the Chu Memorandum to the forest dictations to how we use Federal lands, it is
obvious we have a problem. And the way I look at it is when there
is disarray is the greatest opportunity for change.
So I hope that we work much better together than working
against each other, and not to pit one solution over another.
So I thank everybody for coming today. It has been an absolute
pleasure. It is so great to see everybody in attendance, even Bass
in the back. But thank you very much Chairman for having us.
Mr. MCCLINTOCK. Thank you for inviting us.
And final words to Mr. Schweikert.
Mr. SCHWEIKERT. Thank you, Mr. Chairman.
And I know the Chairman is going to make a motion to accept
additional testimony. If anyone has information in writing, please
give that to us. It will get read. One of the joys of having a fivehour flight is we get on that airplane with binders like this. And
this is sort of like graduate school on steroids. You often sit there
and read things that were never in your area of specialty.
I do have some mechanical concerns, because I know part of our
focus has been on Navajo Generation, part of it is on what it does
to our water resources, but the issue here, if you even look at each
of you on the panel, I believe each of you care passionately, but
those of us in the west, it is our public lands, it is how we manage
our resources.
You have to take a step back and take a look. 30, 40 years ago,
was our forest healthier or less healthy today? Where are we at?
I remember going up to Round Valley and watching forest harvesting. We dont do it today. Are those lands actually healthier
today?
And to our mayor friend, I actually as a young man spent a
bunch of my summers in your community, have someused to
have family, they have all passed, that lived there. I hopeI wish
you great, great success. You may want to do a little bit of research, because I think there were a couple communities in Iowa
that, about a decade and a half ago, were going to become the eth-
62
anol capitals of the world. So always be very careful how you build
your financial structures on, is it truly sustainable, particularly as
we go throughthe reality is we are devastatingly broke and it is
getting bad really fast. You know, as baby boomers retire, I dont
think people understand what is going on with the Federal deficit
and how fast it is going to grow.
But within that, to all of our members of the Legislature, there
might be an opportunity here where, if we can deal with the
egomaniacs back in Washington and maybe say lets treat the
states like adults, lets hand you back some authority because
maybe managing the resources closest to the resources would be
best for the citizens of the states and best for the lands and the
critters that live on those lands, I know thats a bit of a diatribe,
but that is our future. So that was why the question about do we
now have the talents and the data and the ability to manage those
data and talents, because I think a lot of the authority is going to
have to come back over the next few years.
And with that, Mr. Chairman, thank you for being here in
Arizona with us.
Mr. MCCLINTOCK. Again, a genuine pleasure. I want to thank all
of you for coming here, thank our witnesses.
As Mr. Schweikert said, the Subcommittee will be receiving additional written testimony. So if there is anyone here that would like
to weigh in on this, that would be the opportunity to do this. The
hearing record will be open for ten days to receive those responses.
And if there is no further business and without objection, the
Subcommittee stands adjourned.
[Whereupon, at 11:51 a.m., the Subcommittee was adjourned.]

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EVAPORATING PROSPERITY: HOW

FEDERAL ACTIONS ARE DRIVING

OVERSIGHT FIELD HEARING

SUBCOMMITTEE ON WATER AND POWER

COMMITTEE ON NATURAL RESOURCES

Monday, June 4, 2012, in Phoenix, Arizona

Serial No. 112-115

U.S. GOVERNMENT PRINTING OFFICE

For sale by the Superintendent of Documents, U.S. Government Printing Office

COMMITTEE ON NATURAL RESOURCES

Todd Young, Chief of Staff

SUBCOMMITTEE ON WATER AND POWER

Hearing held on Monday, June 4, 2012 .................................................................

OVERSIGHT FIELD HEARING IN PHOENIX,

The Subcommittee met, pursuant to call, at 10 a.m., House

Mr. MCCLINTOCK. Todays hearing, as I said, is convened at the

Dr. GOSAR. Well, first of all, I would like to thank Chairman

Mr. MCCLINTOCK. I am very pleased to introduce my colleague

Mr. SCHWEIKERT. Well, I will make it up by being fairly short.

Governor MENDOZA. Good morning, Chairman McClintock.

2, November 16, 2011 letter from Edward F. Harvey to Linus Everling.

Mr. MCCLINTOCK. I now recognize The Honorable Gail Griffin,

Ms. GRIFFIN. Thank you, Mr. Chairman and Honorable Members

Ms. REEVE. Thank you, Mr. Chairman and members of the

Mr. MCCLINTOCK. I now recognize The Honorable Doug Von

Mr. MCCLINTOCK. I now recognize Ms. Nicole Horseherder, Dine

Coal Mining a Legacy of Non-Compliance:

Transition the Navajo Nation for the sustainability of all Nations:

Mr. MCCLINTOCK. I just, to keep of the record straight, both you

Mr. GROSETA. Good morning. My name is Andy Groseta. I am

Mr. JONES. Chairman McClintock, Representative Gosar, Mr.

Mr. MCCLINTOCK. On a personal note, I want to thank you for

Mr. MCCLINTOCK. Actually this is the appropriate time.

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