St. Mary group talks how to fund rehabilitating the diversion

The St. Mary Rehabilitation Working Group met Friday and discussed how to move forward with paying for a rehabilitation of the St. Mary Diversion and Conveyance.

Sens. Jon Tester, D-Mont., and Steve Daines R-Mont., and Rep. Greg Gianforte, R-Mont., are trying to shift the funding for the system from about 75 percent provided by the users and 25 percent by the federal government so the federal government picks up about 75 percent of the cost of operation and maintenance.

Tester said work on Drop 2 and Drop 5 has been progressing and the project is on schedule to get done within the next month or so.

But most of the discussion Friday was how to fund the rest of the project.

"There has been a lot of conversation about what needs to be done - the irrigators cost share is pushing 74 percents, that's too much," he said. "... I'm here to do what you want to do and if you want us to push for a 25 percent share by the irrigators and 75 percent by the federal I will do that. No questions asked and we will continue to do that."

The St. Mary Diversion and Conveyance Works, part of the irrigation system the Milk River Project, was one of the first projects authorized for the U.S. Bureau of Reclamation to work on when it was created at the start of the last century. The diversion and conveyance works, a 29-mile system of dams, canals, metal siphons and drop structures, transfers water from the St. Mary River into the North Fork of the Milk River, where it flows into Canada and then back into Montana.

The diversion has been band-aided together for decades, with most of the funding coming from the users of the system.

The St. Mary Rehabilitation Working Group was created in 2003 to plan for the system's rehabilitation and how to fund that rehabilitation.

After several decades of the Milk River irrigators and other users warning that the system was facing catostraphic failure, May 17 that happened when the last part of the conveyance works, Drop 5, collapsed.

Work on Drop 2, which was expected to fail, already was planned and the work on Drop 5 was added to the project.

The discussion Friday was mainly on how to proceed with funding the rest of the rehabilitation.

Tester said he will continue to try to engage with Sen. Lisa Murkowski R-Alaska, and Sen. Joe Manchin D-W.V., to try to make the shift in what percentage of the funding the users pay happen..

Daines and he have had a bill on this for sometime, he said, and it has been a nonstarter from Murkowski - she is the chairman of the committee and she doesn't want to set precedent by setting a lock-in percentage.

"There has been another idea floated that says we need to take and figure out what the ability to pay is," Tester said. "Some of the folks from Reclamation have said the ability to pay would probably come back pretty favorable. Emphasis on probably. You guys know what your guys' bottom line is on ability to pay much better than the Bureau of Rec does right now. If you want to go that way we'll go that way, but let me say this, this is for you guys to determine if you want us to push the 75/25 we will, that is 75 on federal government 25 on you. If you think it would be quicker to go with the ability to pay, but have them do that survey we'll go that way."

Right now, he said, they haven't not been allowed to have hearing on the 75/25 bill.

He said the challenge is money, which is always a problem.

Tester said right now the 75/25 is a political nonstarter.

"Either way, we are where we are and I'm here to do as you guys want, and we will what you guys want and hopefully we can get the folks to jump in," Tester said. "... This has been going on for, well longer than I've been in the state Legislature, so it's pre-'98 this has been going on, and it's still going on. We are where we are."

St. Mary Rehabilitation Working Group Co-Chair Lt. Gov. Mike Cooney, who flew over the the St. Mary Diversion Friday after the meeting, said the funding percentages have to change.

"It sounds to me from what (Tester) said from changing the percentages as we have discussed - the basic 75/25 - is according to you and other members of the delegation have heard is not likely to take off, it's not going to get much support," he said. "They are worried about just changing that and putting in concrete but, perhaps we might able to do something by looking at really what the true cost or the ability to pay would be."

Cooney is facing Rep. Greg Gianforte, R-Mont., Libertarian candidate Lyman Bishop and Robert Barb, who is running as a Green Party candidate, in the gubernatorial race in the 2020 general election.

Tester said the funding percentages have to change.

"I think the 75/25 is a real screw job to the irrigators," he said. "We need to reverse it. ... I don't want to put a bill out that the irrigators aren't absolutely in favor of. I don't want to do it. I've been down this road with other folks where we've said, 'Well, you know if you really want to get something done go this way and they say we really didn't want to do this.'"

"You cannot be sustainable in agriculture unless you can pay the bills," he added. "You tell me how you want to do it, and I'm at your service."

Phillips County Extension Agent and St. Mary Rehabilitation Working Group Co-Chair Marko Manoukian said he and other members on this project have been working refining their request from 75/25 change on everything down to three assets - Drop 2, Drop 5 and the diversion dam.

"At that point, some time after that, we were informed that an ability-to-pay study would be necessary to move any of that legislation, so we shrunk our request," he said.

Tester said he didn't who told Manoukian that in order to pass that bill that they had to an ability-to-pay study, but that was news to him.

"The fact is, if Congress acts and puts out $58 million bucks to get it appropriated for that piece of infrastructure - diversion dam - that's done, no ability to pay, that's done," he said. "That's really the bottom line. If there's ability to pay with congressional action I'm going to kick somebody's butt. I'll tell you that, that's crazy."

Montana Department of Natural Resources and Conservation Director John Tubbs said he has had the opportunity to conduct an ability analysis in his career.

He said he believes such a study would show the current funding ratio doesn't work for the irrigators.

"It is a viable option from my opinion, so that the Milk River beneficiaries can hear that," he said. "What I suspect is, if we did an early ability to pay analysis on the Milk River projects maybe 20 years ago, there is no ability to pay. When you took Reclamation onto this exercise, what they are going to find out is, from the way the Bureau looks at it, doesn't make a lot of sense to farm this ground in Montana because you aren't making money."

He said he thinks if an ability to pay option were done what the BOR would end up doing is negotiating some amount with the Milk River irrigators that could be paid.

"It is a process that I think could work," Tubbs said. "What I would ask is that if we move down that, that we got commitment by Reclamation to fund the ability-to-pay analysis. It takes economists paid for by the federal government and dedicated time to go up into Montana and get this analysis done. If there were a commitment by Reclamation to do the work and Congress could get the money to do that, I think that's a viable path forward that people should consider."

He thinks the 25/75 is a better deal, he said.

Tester said he thinks Murkowski is worried about setting a precedent where every Reclamation project could come in and say, "You guys didn't do anything, but an act of Congress put this at 75/25, we want our project at 75/25, too."

"I don't think her problem is that we want to get these guys a sweetheart deal, I think her problem is we don't want to set this precedent that will allow every Bureau of Reclamation project group in the country to come back and say, 'You know what, Tester got this for north-central Montana, we want this for Southern Texas ... the list goes on and on," Tester said.

Milk River Joint Board of Control Project Manager Jennifer Patrick said she had been very against the ability to pay study, but as she learns more about it her attitude is changing. 

"I've had a lot of phone calls on it, and I'm going to echo Director Tubbs sentiment that it could be good for us," she said. "I honestly think it might be a tool moving forward for the Joint Board of Control, the Milk River district and saying, 'Hey, now in 2020, the worst year ever, we have this study and here is ability going forward, going forward on the siphons, going forward on everything because they say, what is your ability to pay?"

"I do think it is a great tool going forward and I've come around on the ability to pay study, and I think it would be a good idea in that legislation though," Patrick added. "I would also like it where Reclamation commits to our fund are in there for Reclamation to commit to that study. Reclamation has done a lot of work on the Fresno Dam study, so a lot of that data could filter in, but I would agree it's possible we write that in there that they can do that in the next year."

Cooney said he thinks would be great to have a conversation with all the irrigators up and down the system to get a sense where they think what approach should they take.

"I would like to very much do that as quickly, so that we can certainly give (Tester) and other members of the delegation the guidance, we appreciate your willingness to guide us to do what we ultimately request," he said. "... I think we should probably have some further discussion as soon as possible to kind of ... here are what other people's thoughts are, so that way we can give you that guidance, so you and the delegation can get moving on this as quickly as possible."

Tester said it is really important that the irrigators have a voice.

"They are the ones who have to live with the cost share coming down the pipe, so it's really important that the irrigators are driving the bus," he said.

Milk River Joint Board of Control President Wade Jones said, with the state of economy on the Hi-Line, irrigators ability to pay is about zero.

Bureau of Reclamation Montana Area Manager Steve Davies said, prior to 2005 ,the St. Mary's project was 100 percent funded by the irrigators.

"Reclamation's policies are assigning costs to project beneficiaries, so it was actually reduced from 100 down to 74 percent to add things like flood control, recreation ... and so that study is fairly current, done in 2005," he said. "... Reclamation is very happy to work on technical assistance for legislative options to make sure intents are clear, to make sure what you want to do - what you are trying to describe and direct Reclamation to be doing has clear intent."

Patrick said after the meeting that Tester's office will work with legislative services to draft language for the Joint Board and Working Group to discuss at an upcoming meeting.

Going forward, the irrigators will have discussions on what they'd like to see from the delegation on whether to continue to push the 75/255 or looking at an ability to pay analysis.