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LR Letter
March 7, 2003

YDP Comments to the Bureau

March 6, 2003

Mr. Robert Johnson Regional Director Lower Colorado River Region U.S. Bureau of Reclamation PO Box 61470 Boulder City, Nevada 89006-1470

By fax: (702) 293-8614

Dear Mr. Johnson:

Thank you for presenting the Bureau's most recent draft of Modifications to Projects of Title I of the Colorado River Basin Salinity Control Act (CRBSCA) (Public Law 93-320) on February 25, 2003. We write in response to that presentation and to reiterate our opposition to the Bureau’s plan to request appropriations to upgrade and prepare the Yuma Desalting Plant (Desalter) for operations. We further emphasize our concern with the Bureau's failure to respond to Congress’ request in the draft report presented this week.

The current version of the report to Congress includes a number of fallacies, inconsistencies and highly unlikely assumptions that overstate the economic feasibility of operating the Desalter and understate the feasibility of alternative measures for replacing the bypass flow. We again remind the Bureau that this report subjects the Secretary of Interior to a reprimand from Congress, which has legislated that:

The Secretary is authorized to provide for modifications of the projects … to the extent he determines appropriate for purposes of meeting the international settlement objective of this subchapter at the lowest overall cost to the United States. 43 U.S.C. § 1574 (emphasis added).

Further, the Bureau has failed to produce the information requested by Congress concerning alternatives to operating the Desalter. Congress specifically requested a “report on alternatives to meeting Treaty requirements without the YDP, and actions the Bureau of Reclamation can take to reduce the high annual operation and maintenance costs.” S. Rep No. 58, 106th Cong. 1st Sess. 80 (1999) (emphasis added).

We appreciate your correction of the estimated low-end cost of acquiring short-term leases of water, referred to in this draft as forbearance agreements, as well as the inclusion of the cost comparison table. However, to reiterate the other questions raised in our November 22 letter would be to virtually rewrite the entire letter. Therefore we refer you to our previous letter and again request answers to the questions and concerns therein.

In addition to the concerns already expressed, we request corrections to the current report and answers to additional questions as outlined in this letter.

Environmental Review

A complete environmental review of the impacts of re-operation of the Desalter or other alternatives must be completed prior to any implementation of actions to further the recommendations included in the report, including seeking congressional appropriations. We are concerned that the Bureau has already begun to channel funds towards preparation for reoperation without the benefit of environmental review, and without the benefit of analysis of fully developed alternatives.

The Bureau has also not yet secured a discharge permit for product water from the Arizona Department of Environmental Quality. Proceeding with appropriations requests and funding of Desalter readying activities without the appropriate environmental reviews would be pre-decisional.

Furthermore, we wish to point out that the language included in the current report and the cover letter from the Secretary which talks about assuring the operation of the YDP is pre-decisional in that it precludes a No Action alternative . Such language must be eliminated from the report and cover letter before transmittal to Congress.

Discussion of the Cienega de Santa Clara is incomplete, serves only to mask the importance of the wetlands to wildlife and humans, and retreats from the enhanced description in the previous draft. The Cienega de Santa Clara (not once referred to in full) provides habitat not only for migratory waterfowl and shorebirds, but also for threatened and endangered species. What is more, these species -- including the desert pupfish, Yuma clapper rail, and black rail -- have been listed pursuant to the U.S.’s and Mexico’s endangered species statutes. Deletion of endangered species sustained by the Cienega does not eliminate the Bureau’s obligations to endangered species, and what is more, the Bureau has glossed over a significant piece of information that we are sure Congress would appreciate having when weighing the costs and benefits of operating the Desalter.

Likewise, the reduced volume of water coupled with increased salinity of water reaching the salinity will degrade the ecosystem. This ecosystem is part of a Biosphere Reserve as designated by Mexico, is a major link in the Pacific Flyway and supports the vast majority of the Yuma clapper rail population. To claim that these effects “may” happen (p. 4) is deceptive and underestimates the impact to the environment that will most certainly occur as a result of operating the Desalter. Again, costs in the form of adverse impacts to the environment have been missed.

We also suggest you refrain from qualifying the Cienega as an “isolated” wetland. It is not, and this is a blatant attempt to minimize the size and importance of this wetland complex.

Economic Analysis

There are several fallacies and assumptions included in the economic analysis of operating the Desalter and implementing the alternatives. Many of the assumptions do not withstand the test of simple mathematical principles. Others are so optimistic as to be deceptive. In modeling projections, assumptions are necessary and in providing a cost estimate range, optimistic assumptions can be utilized in predicting the low-end cost. If such assumptions are employed, however, equally pessimistic assumptions must be used in predicting the upper-end of cost ranges. This is not at all the case in the Bureau's analysis.

Without performing a full analysis of our own as yet, we cannot divine every fallacy in the Bureau's analysis. However, some of the more obvious are as follows:

· Including the Desalter ready-reserve maintenance expenditures in the cost of obtaining forbearance agreements is misleading and completely unacceptable. Including it in this analysis is an insult to Congress and to the public. Desalter maintenance and pursuit of forbearance agreements are completely unrelated processes; either can quite obviously exist without the other. Linking them for the purposes of economic analysis in this report falsely inflates the costs of alternatives to operating the Desalter.

· Including $2.4 million in research in the $5.1 million annual cost of keeping the Desalter in ready-reserve mode is erroneous. The Desalter could be kept in ready-reserve without doing extraneous research. This is at best poor math and at worst a blatant effort to delude Congress. It needs to be backed out of the equation.

· While the analysis includes extraneous unrelated costs to estimate forbearance costs, it fails to include estimates of environmental mitigation costs for Desalter operations. The Bureau fails to note that operation of the Desalter would degrade the Cienega de Santa Clara but references studies with these conclusions (p.16); it is therefore appropriate to include the potential costs of avoiding, minimizing, and mitigating such impacts within the total projected cost of Desalter operation.

· Even using the Bureau's unrealistic assumptions, the analysis does not provide the accurate cost of operating the Desalter in its five-year and ten-year scenarios. By the Bureau's estimates, the Desalter would have to operate at one-third to two-third capacity for four years. Yet the analysis calculates cost of product water using the admittedly impossible assumption of full capacity. Operations at one-third and two-thirds capacity produce water not at the stated cost of $305/acre foot, but at an estimated cost of $689/acre foot and $325/acre foot respectively. The Bureau should revise the report to accurately reflect the increased costs associated with necessary maintenance and system downtime. Assuming two years of operations at one-third capacity and two years at two-thirds capacity, as suggested in the Bureau's Gantt Chart (per HJA Consulting) product water in the five-year scenario averages $466/acre foot.

· The low-end estimate of $32/MWh for power costs to operate the plant is unrealistic. The best price available for a strip of power (four quarters averaged) on the bulk power market today on the southwest grid is approximately $44/MWh, even assuming the plant will be operating during less expensive shoulder hours. While the bulk power market is arguably volatile, this is not a liquid market. The Forward Curve for the market does not predict excesses of supply over demand, and with build-out time for power plants of five to ten years, the Curve tends to be accurate. The low-end estimate used in this analysis is unlikely to be available for a long-term contract in the massive quantity needed for full capacity Desalter operations.

· The report fails to analyze a one-time cost of decommissioning the Desalter as an action the Bureau of Reclamation can take to reduce the high annual operation and maintenance costs of the Desalter. This alternative should be compared against keeping the Desalter in ready-reserve mode and/or operation of the Desalter at various partial or full capacity levels.

Operations Decision Criteria

The Bureau stated in its presentation that decisions on the percentage of capacity at which the Desalter would be operated would be made annually. Yet the Bureau was unable to adequately answer our question concerning what the decision criteria will be. Please answer the following questions regarding operating capacity and decision criteria: · What are all the elements of the decision criteria? · What will be the timing of determining percentage of capacity for operations? · Who beside the Bureau will participate in developing and applying the criteria? · Will the development of these criteria be subject to public review? We have similar concerns and questions regarding the replacement criteria (p.20).

Scientific Debate The report states that "Operation of the YDP would decrease the volume and increase the salinity of bypass water reaching the Cienega and may degrade its ecological value. Operation of YDP would be met with substantial controversy, and additional scientific debate." (page 5) The phrase “additional scientific debate” has not appeared in previous drafts: why was it included in this draft? The disruption of bypass flows to the Cienega in 1993, due to flood damage and subsequent repairs of the bypass canal, significantly degraded the Cienega. These impacts are clearly documented in the scientific literature. If, as we suspect, the Bureau is unable to document any “debate” about the expected degradation of the Cienega due to Desalter operation, then all references to “scientific debate” should be expunged from the report.

Federal Obligation Previously, we disputed the Bureau’s apparent claim that the “interim period,” in which the United States received credit for the Coachella Canal Lining Program, had ended. Given the Secretary’s decision to reduce California water orders to 4.4 million acre-feet for calendar year 2003, we believe that this “interim period” has ended. Given that the Secretary authorized the delivery of some 200,000 acre-feet of additional Colorado River water to California’s agricultural contractors last November – despite the existence of extraordinary drought throughout the basin – it is quite clear that the interim period was in effect through 2002. Further given that the Coachella Canal Lining Program salvages some 132,000 acre-feet per year, 24,000 acre-feet per year more than flows to Mexico via the Bypass Drain, and that there has not been a flood release from Hoover Dam since 1999, it is reasonable to assume that the United States has accumulated 72,000 acre-feet of bypass-flow credits, that can be applied to the current year’s obligation. This federal credit should be noted in the report.

Water Supplies and Needs While we understand the concerns surrounding tightening water supplies, particularly those of Arizona contract holders, we do not trust in the rationale that operation of the Desalter seeks to address those concerns (p.14). Were the Bureau truly interested in alleviating the pressures on Lake Mead storage and lower priority water users, this interest would be reflected in other Bureau proposals and policies – unfortunately, it is not. For example, in the FEIS for the Inadvertent Overrun and Payback Policy, the Bureau would allow any and all debt to be forgiven in the event of a flood control release. If the Bureau were aiming to maximize water storage, the agency would require full payback of all debt.

Thank you for the opportunity to comment. We hope these concerns will be accommodated in a new draft report. However, should you continue to include the elements that we find objectionable, we insist that you adjust the language of the report under “Consultation with Affected and Interested Parties” to remove any implication that we concur with the report as written. This could be effected by changing the last sentence at the end of that section to read, “This report of the Secretary of the Interior reflects the views and proposals of the Department after consideration of the comments and suggestions received in that review process. It does not reflect a consensus of the parties with which the Bureau of Reclamation consulted, nor does it represent a compromise between the different views expressed.” Should this report go forward with elements that we find objectionable and an implication that we concur with those elements, we certainly would not hesitate to contact members of Congress on our own to expose the deception being waged by the Department.

Please don’t hesitate to contact us if you have questions. Thank you.


Kara Gillon
Wildlife Counsel
Defenders of Wildlife

Jennifer Pitt
Senior Resource Analyst
Environmental Defense

Lisa Force
Program Director
Living Rivers

Michael Cohen
Senior Associate
Pacific Institute

Steve Glazer
Chair, Colorado River Task Force
Sierra Club

Pamela Hyde
Executive Director
Southwest Rivers

cc: Commissioner Carlos Ramirez, IBWC
Commissioner Arturo Herrera, CILA

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