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c 001141 Statement of Bennett Raley, Assistant Secretary for Water and Science Department of the Interior Before the Senate Appropriations Committee Subcommittee on Energy and Water Development Oversight Hearing on the Construction of the Animas La-Plata Project Wednesday, March 24,2004 Mr. Chairman, I am Bennett Raley, Assistant Secretary of the Interior for Water and Science. My testimony today is intended to help the Committee understand why the cost estimate to complete the Animas La-Plata Project (project) increased from $338 million in 1999 to $518 million today, and to explain the steps we've taken to ensure that the problem does not recur. Background The purpose of the Project, essentially, is to divert, pump, store, and convey water from the Animas River at Durango, Colorado to provide water for both Indian and non-Indian municipal and industrial uses in Colorado and New Mexico. It is required to fulfill the requirements of the Colorado Ute Settlement Act Amendments of 2000. After several changes in the scope of the project over six decades, the project plan is now settled on four key project features: the Durango Pumping Plant; Ridges Basin Inlet Conduit; Ridges Basin Dam; and the Navajo Nation Municipal Pipeline. Project construction also required the relocation of parts of a county road and natural gas pipelines. 2003 Project Construction Cost Estimate Reclamation began developing the new Project construction cost estimate in early 2003, which contained a total estimate of$500 million, based on January 2003 price levels. The current indexed price for.the project is $518 million. After these construction cost estimates for the Project were completed in July 2003, Secretary Norton directed Reclamation to review the costs associated with the project to explain the reasons for the increase in the construction cost estimate. Reclamation undertook a detailed and critical review of technical and administrative data, held discussions with Reclamation staff involved in program and construction management, and met with project sponsors to prepare the report. The complete report, including a chronology of the project dating to 1956, is submitted for the record along with this statement. In summary, there is no single reason why the construction cost estimate for the Project increased from $337.9 million in 1999 to $500 million in 2003. There are, however, several factors that contributed to the increased estimate that I will focus on today: