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[Senate Report 112-62]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 142
112th Congress                                                   Report
                                 SENATE
 1st Session                                                     112-62

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              UINTAH WATER CONSERVANCY CONTRACT REPAYMENT

                                _______
                                

  August 30 (legislative day, August 2), 2011.--Ordered to be printed

   Filed under authority of the order of the Senate of August 2, 2011

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 808]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 808) to direct the Secretary of the 
Interior to allow for prepayment of repayment contracts between 
the United States and the Uintah Water Conservancy District, 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                PURPOSE

    The purpose of S. 808 is to direct the Secretary of the 
Interior to allow for the prepayment of a repayment contract 
between the United States and the Uintah Water Conservancy 
District in the State of Utah.

                          BACKGROUND AND NEED

    The Uintah Water Conservancy District (District) operates 
and maintains the Vernal and Jensen Units of the Central Utah 
Project, which was authorized as part of the Colorado River 
Storage Project Act of 1956. The District entered into a 
repayment contract dated June 3, 1976, requiring the repayment 
of the costs associated with the construction of the Jensen 
Unit. In 1992, the contract was amended to reduce the project 
water supply from 18,000 acre-feet per year to 2,000 acre-feet 
per year. Legislation is required to allow prepayment of the 
repayment obligations in the amended contract. According to the 
District, prepayment of the contract will substantially reduce 
the cost of water to the District. The bill provides that the 
Bureau of Reclamation will receive the net present value of the 
full amount that would be due from the District without any 
early repayment.

                          LEGISLATIVE HISTORY

    Senator Hatch introduced S. 808 on April 13, 2011. The bill 
is co-sponsored by Senator Lee. The Subcommittee on Water and 
Power held a hearing on S. 808 on May 19, 2011 and considered 
the bill at its business meeting on July 14, 2011. The 
Committee ordered S. 808 favorably reported without amendment 
at its business meeting on July 14, 2011.
    During the 111th Congress, the Committee considered 
identical legislation, S. 1757, sponsored by Senator Bennett. 
The Subcommittee on Water and Power held a hearing on S. 1757 
on November 5, 2009 (S. Hrg. 111-339) and the Committee ordered 
the bill favorably reported without amendment on December 16, 
2009 (S. Rpt. 111-143). A companion measure, H.R. 2950, 
sponsored by Representative Matheson, passed the House of 
Representatives by a voice vote on September 29, 2009.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in 
open business session on July 14, 2011, by voice vote of a 
quorum present, recommends that the Senate pass S. 808.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides that the Secretary of the Interior shall 
allow the Uintah Water Conservancy District to prepay the 
Federal government for the cost of municipal and industrial 
water delivery facilities that were financed by the United 
States (contract no. 6-05-01-00143). The section further 
provides that prepayment shall reflect the net present value of 
the debt the District owes to the government, and that the 
District may prepay the debt in several installments, though 
the debt must be prepaid in full by September 30, 2022. The 
prepayment shall be adjusted to conform to any final cost 
allocation, as determined by the Bureau of Reclamation, and may 
not be adjusted based on the type of financing used by the 
District to prepay the debt.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

S. 808--A bill to direct the Secretary of the Interior to allow for 
        prepayment of repayment contracts between the United States and 
        the Uintah Water Conservancy District

    S. 808 would allow the Uintah Water Conservancy District in 
Utah to prepay the present value of certain amounts the 
district owes to the U.S. Treasury for its share of the cost to 
build the Jensen Unit of the Central Utah Project. Based on 
information from the Bureau of Reclamation and the Uintah Water 
Conservancy District, CB0 estimates that enacting the 
legislation would have no impact on the federal budget. Because 
the legislation would not affect direct spending or revenues, 
pay-as-you-go procedures do not apply.
    The Uintah Water Conservancy District is currently paying 
the federal government about $227,000 a year on a balance of 
$3.9 billion in project construction costs that have been 
allocated to the district for repayment. However, if the 
district chose to prepay its debt to the government under the 
bill, it also would have to pay for additional construction 
costs--totaling $7.4 million--that have not yet been assigned 
to the district for repayment. Information from the district 
indicates that it would be unable to prepay that additional 
amount. Therefore, if the bill were enacted, CB0 expects that 
the district would continue to make the annual payments it does 
under current law and the legislation would have no impact on 
the federal budget.
    S. 808 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CB0 staff contact for this estimate is Aurora Swanson. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 808.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 808, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 808, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Bureau of Reclamation, at the 
May 19, 2011, Subcommittee hearing on S. 808 follows:

Statement of David Murillo, Deputy Commissioner, Operations, Bureau of 
                Reclamation, Department of the Interior

    Madam Chairman and Members of the Subcommittee, I am David 
Murillo, Deputy Commissioner of Operations of the Bureau of 
Reclamation (Reclamation). Thank you for the opportunity to 
provide the views of the Department of the Interior 
(Department) on S. 808, as introduced on April 13, 2011. This 
legislation allows for prepayment of the current and future 
repayment contract obligations of the Uintah Water Conservancy 
District (District) of the costs allocated to their municipal 
and industrial water (M&I) supply on the Jensen Unit of the 
Central Utah Project (CUP) and provides that the prepayment 
must result in the United States recovering the net present 
value of all repayment streams that would have been payable to 
the United States if S. 808 were not enacted. S. 808 would 
amend current law to change the date of repayment to 2022 from 
2037. The legislation would also allow repayment to be provided 
in several installments and requires that the repayment be 
adjusted to conform to a final cost allocation. The Department 
supports S. 808.
    The District entered into a repayment contract dated June 
3, 1976, in which they agreed to repay all reimbursable costs 
associated with the Jensen Unit of the CUP. The Jensen Unit's 
total water supply was envisioned at this time to be roughly 
18,000 acre-feet because plans anticipated completion of 
another pumping plant at a location on the Green River known as 
Burns Bench.
    However, for a variety of reasons, the Burns Bench feature 
was never built. And with the enactment of language in Section 
203(g) of the Central Utah Project Completion Act of 1992 (P.L. 
102-575), the District's contract was amended in 1992 to reduce 
the project M&I supply subject to repayment to 2,000 acre-feet 
annually, and temporarily fix repayment for this supply based 
upon a reduced interim cost allocation developed for the still-
uncompleted project. The amended 1992 contract required the 
District to repay about $5.545 million through the year 2037 at 
the project interest rate of 3.222% with annual payments of 
$226,585. The current balance due, without discounting, is 
$3,949,058 as of 2011.
    It is important to note that this $3,949,058 figure 
reflects a repayment amount that is statutorily lowered by the 
1992 legislation, and does not reflect the true repayment costs 
of the Jensen Unit. The costs allocated to the 2,000 acre-feet 
of contracted M&I supply, and the M&I supply available through 
additional incomplete project features, may be significantly 
revised upward in the future upon project completion or 
enactment of this bill, both of which would require a Final 
Cost Allocation. An additional currently unallocated cost of 
$7,419,513 is expected to be allocated to the contracted 2,000 
acre-feet in order to achieve a full and final project 
repayment.\1\
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    \1\This allocation will be subject to revision should there be 
additions to the project.
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    These are the costs that paragraph 3 of S. 808 requires to 
be included in the prepayment. The 2011 balance on the 1992 M&I 
repayment contract is $3,949,058 and the adjustment amount when 
factoring in the total project cost including interest on that 
debt is $7,419,513. Therefore, in total non-discounted dollars, 
the Conservancy District owes the Federal government 
$11,368,571.
    Under Reclamation law, water districts are not authorized 
to prepay their M&I repayment obligation based upon a 
discounted value of their remaining annual payments.
    This legislation would authorize early repayment by the 
Uintah Conservancy District to the Federal government. Because 
there is an interest component to the M&I repayment streams to 
be repaid early, early repayment without an adjustment for 
interest would result in lower overall repayment to the United 
States. To keep the United States whole, the Bureau of 
Reclamation would collect the present value of the whole amount 
that would be due without early repayment.
    The language in S. 808 has been amended from the language 
contained in an earlier version of this legislation, S. 1757 
(111th Congress). The amended language clarifies that this 
legislation requires that the Federal government be paid what 
it is owed by the Conservancy District. Because the United 
States supports the goals of providing for early repayment 
under this contract so long as the United States is kept whole, 
and S. 808 clearly establishes that early repayment under this 
legislation must be of an amount equal to the net present value 
of the foregone revenue stream, the Department supports this 
legislation.
    This concludes my testimony. I will be pleased to answer 
any questions.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by S. 808, as ordered 
reported.

                                  
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