alpcentral :: CPA Senate hearing Testimony on ALP Cost Overruns

Resources

Home

Archives

Press Releases
Media
Litigation
Open Records
Opinion
Government

Don't Buy A Lie!

Dam promoters cleave to false and corrupt pretense of justice.

CPA Senate hearing Testimony on ALP Cost Overruns

Posted by Steve Cone on 3:33 PM March 20, 2004.

HEARING ON A-LP COST OVERRUNS, April 24, 2004, TESTIMONY of the CITIZENS PROGRESSIVE ALLIANCE, before the SENATE APPROPRIATIONS COMMITTEE, SUBCOMMITTEE ON ENERGY AND WATER DEVELOPMENT

Thank you for the opportunity to provide testimony on the Animas-La Plata project cost overruns. We will supplement these remarks with more detailed information in the coming weeks.

The recent disclosure that the Animas-La Plata Project is already $150,000,000 over the original cost estimates is not the real news. The real news is that the BOR knew the estimates to be bogus back in 1999--when they submitted them to Congress. Indeed, these cost estimates were commissioned not by the BOR, but, in a callous and calculated misuse of the Indian Self-Determination Act, by the Ute tribes*, the project's primary contractors and chief beneficiaries.

Moreover, as internal documents show, these estimates underwent little or no governmental review, and were actually devoid of cost estimates for whole portions of the project. Some suspect these rascally "accounting errors" to be deliberate so as to convince the Congress and the public that the project really had been downsized, both in cost and size. Actually, the public costs of the project are much greater than have ever yet been reported, and the project has not really been downsized despite the PR to the contrary.

First the costs: The BOR's policy has been to tailor the truth about the projectís overall costs by focusing only on the construction costs, while totally ignoring all other costs, past and future. We ask that there be a true accounting. If done honestly, both the Congress and the public will be agog at the outcome. Here are a few of the hidden costs that need to be accounted for:

1. The interest on the public debt that the project will burden us with over the 100 year life of the project needs to be calculated and added as a project cost. The interest component alone will add billions of dollars to the true cost of this project. The taxpayers also have to repay all but a sliver of project construction costs. And those costs, too, for reasons outlined below, will reach well into the billions when all is said and done.

2. The construction cost estimates need to include estimated cost increases from inflation. With a modest 3 percent rate of inflation over a 15 to 20 years construction phase present costs estimates might increase by 50 percent from inflation.

3. The estimated costs should be calculated based on a range from high to low. Presently, the BOR prefers to give only a low-range cost estimate. They persist in the fanciful notion that their forecasting is precise anunsusceptible to unknowns and human error. Yet, the last three major BOR construction projects, the Dallas Creek and Dolores Projects, both in Colorado, and the Central Arizona Project have all been at least 300 percent over original cost estimates. Recently, the~project construction engineer admitted ALP was one of the most complicated projects ever. Cost sensitivity analysis is a must if we are to have any confidence in BOR cost projections, even those they admit to.

4. Adding to our concern over the final price tag is the fact that, while $100ís of millions in federal tax dollars have already been spent on this project, ALP construction is only 3 to 4 percent completed according to a recent admission by the project construction engineer. Even if the project were to experience annual cost overruns of 10 percent annually, rather than last yearís 50 percent jump, we are looking at well over another 100 percent increase in public costs, assuming a 15 to 20 years construction period.
*Note: The Southern Ute and Ute Mountain Ute tribes are the chief beneficiaries of A-LP, receiving the lionís share of project water free of cost. These two small but very wealthy tribes have a combined population of about 3000 people, counting man, woman and child. And despite claims made by some in support of building ALP, these tribes are not without water. In fact, they already control about 150,000 acre feet of water, most of it developed with federal assistance. This constitutes the water the entire state of Nevada is entitled to under the Colorado River Compact. Approximately 2,000,000 people live in Nevada.

5. Over $60,000,000 in planning costs have been shaved off because the BOR has determined they were incurred for the agricultural portion of the project that was supposedly eliminated by the so-called 1999 compromise. These are still part of the project's cost to the public and should be shown as such. Moreover, as we will discuss later, the agricultural portion of this project is still very much alive in the minds of the major backers of the project.

6. The Ute tribes received $60,000,000 in ALP settlement money back in 1987. This money also should be added in as a public cost. Indeed, the Utes were awarded another $40,000,000 in the 1999 amendments. This money should also be shown as a public cost even though the BOR is asking the BIA to budget for that money so that it does not undercut the money they have to spend on construction and does not show up as a project cost.

7. The BOR's 1999 cost estimates failed to account for the power lines and other infrastructure required to bring federally subsidized power to the project pumping plant at Durango. The BOR is presently asking WAPA to request $10,000,000 in its budget to fund this portion of the project. Once again this is a project cost and should be added in even if it comes disguised in WAPA's budget.

8. In 1996, we asked the Department of Interior to calculate the value of lost hydropower and increased salinity from project water diversions. Their estimate was a public cost of $18,000,000 annually. Clearly, over the 100-year life of the project those public costs will reach into the billions of dollars. Moreover, the huge power requirements for project pumping will be robbed from present CRSP users. It is not unlikely, therefore, that another coal-fired power plant will be required in the 4-corners area to replace the power needed for project pumping and that lost because of project diversions. These costs, too, have not been estimated or acknowledged for what they are, project induced costs to the public.

There are many other costs which remain hidden or half buried, but even the foregoing give ample proof that this project is a bank buster. So, when we add into this putrid mix the fact that there are no known uses for most project water, the burdensome imbecility of this project becomes even more pronounced. In fact, we have been in court for almost two years trying to find out the intended uses of project water, for ìbeneficial useî is a requirement before a water right can be granted under Colorado law. Project proponents have refused to provide any information on use. As a result, the American taxpayer is advancing truck loads of scarce public dollars for a project that doesnít even have a secured water right with which to fill the reservoir.

On top of that, the BOR rushed into the few repayment contracts it has for small amounts of project water knowing that the cost estimates they were basing these contracts on were wrong. They even threatened project backers that if they didnít sign up for water immediately they would have to pay more when the real costs became known. These contractors are now refusing to pay more no matter what the final costs of the project may be. This threat defies federal reclamation law requiring full repayment of the costs of M&I water, plus interest. It also helps explain why BOR is attempting to have other agencies such as WAPA fund some of the construction outlays.

We mentioned earlier that the agricultural portion of the project is still alive and well. We know this from recent court briefs in which one of the projectís chief backers, the Southwest Water Conservation District, is fighting our efforts to have them abandon the agricultural water rights for the Animas-La Plata Project. Despite the 1999 legislation which supposedly eliminated agricultural water from the project, theyíve declared they intend to use this water for irrigation. Perhaps that explains why project pumps were greatly increased in size in the final design. Now multiple filling of the project reservoir can be easily accomplished so that project backers can have their cake and eat it too. It is Candide!

In summation we make two requests. We ask Congress to suspend funding for this project until an independent GAO audit exposes the real public costs and Congress has an opportunity to evaluate those costs against the purported benefits. We also ask that, if this audit discloses criminal intent to defraud the American taxpayer, as we think it will, Congress join us in asking for a federal grand jury investigation and prosecution of those responsible.

Finally we note with great approval present efforts to adopt a pay-as-you-go budgetary process in the Senate. This is not only necessary and wise public policy, in our opinion, but one of its minor consequences must surely be the red lining of that mountain of lies known as the Animas-La Plata Project.

Thank you for the opportunity to testify.

Phil Doe
Chair
Citizens Progressive Alliance

From: "Phil Doe"
Date: Thu Mar 18, 2004 10:57:52 AM America/Denver
To:

Subject: testimony for the March 24 hearings on ALP cost overruns

Dear Roger, attached is our testimony. If any of it seems too strong, too accusatory, in your judgment, we are more than willing to change it before it is circulated.

Both Ute tribes will be testifying, from what you told me yesterday. Let me give you a thumb nail sketch. The two tribes have a combined
population of about 3000 people. The smaller of the two, the Southern Utes, surely are among the wealthiest groups of people in the state.
Numbering about 1300 souls, they reported the value of their investment portfolio at about $1.5 billion a year ago, most of it coming from oil and gas revenues. They are the largest single natural gas producer in the state, I believe. The value of the portfolio does not include the value of their land, timber, oil, gas, and coal reserves, cattle, or casino. The Ute Mountain Utes are less wealthy, certainly, but they too have a casino, tremendous land resources given their numbers, and receive substantial crop subsidies from the federally constructed Dolores project. According to the EWF website the UMU received about $430,000 in crop subsidy payments between 1995 and 2002. They don't farm their Dolores Project irrigation land. They hire a non-Indian manager, though the operation does provide some employment for tribal members, maybe 6 or 7 people seasonally from what were told a couple of years ago.

Campbell and other backers of A-LP have repeatedly said that the Utes have been left high and dry for centuries, waiting patiently for their water. This is a preposterous and contemptible lie. The two tribes control about 150,000 acre feet of water already. That's enough water for the residential needs of well over 1,000,000 people, and is worth a large fortune if leased downstream. Most of this water has come through the efforts of the feds, some of it, like the Dolores Project water, at tremendous cost. By comparison in terms of water wealth, the state of Nevada is entitled to 300,000 acre feet of water under the Colorado River Compact. With A-LP, the Utes, all 3,000 of them, will rival the water wealth of Nevada. I believe Nevada has about 2,000,000 people according to the 2000 census.

The claim that A-LP is necessary to satisfy Ute treaty rights is apparently a major stumbling block for you all. Some history: The Utes have been before the U.S. Supreme Court twice with claims that they have unsatisfied monetary claims against the United States for the loss of their 1868 reservation. It was dissolved in 1880 as a result of the so-called Meeker Massacre and not reestablished until 1938. The Court has held twice, once in 1971 and implicitly in 1999, that the Utes have been compensated by the United States for the lose of their reservation and that further consideration is res judicata. Even so, this has not stopped the Utes and their highly paid lawyers and lobbyists from pushing A-LP as necessary to satisfy their remaining 1868 claims, rights the Supreme Court has ruled they don't have because they've already been compensated for them. It is our opinion that A-LP represents the satisfaction of a non-existant claim, a huge fraud really, but one too delicate for most to take on because of the parties involved and our country's past treatment of the Indian people. Our attorney, Alison Maynard, 303 758 7038, has written a law review article on this subject. We will incorporate it into our final comments.

I won't bury you further in the sordid history of A-LP except to say that one of the witnesses on the 24th, Mr. Griswald, the head of the Animas La Plata Water Conservation District, is an interesting case. That district, which taxes local residents and was set up specifically to manage the project, has not contracted for any water from it. One wonders why he is there? Someone might ask him why they haven't contracted for any water from a project they intend to manage and how much they would be willing to pay for such water? Would they be willing to pay their share if the costs went to $1,000,000,000? $2,000,000,000? Watch the squirming. Everybody wants this project as long as the public has to pay for it, and they don't. We continue to wonder why the public doesn't have the same rights of refusal.

It might be interesting if someone were to ask the Utes what they intend to do with all this high-priced water. They've always maintained as sovereigns that they don't have to tell us. But remember we maintain the water rights they are after are state water rights, not federal reserved rights, so under state water law they must have a use before a right can be granted. Water speculation is also forbidden under state water law.

In as much as I'm leaving for Spain this afternoon, would you please contact Steve Cone, 505 327 0743, one of our board members, with any questions or clarifications you might have. I'm rushed, so if I've made any legal blunders in the above our attorney will inform you. She is very good. thanks, phil doe

< Click for a printer friendly version of this article. >