79–010

Calendar No. 709

106TH CONGRESS REPORT

2d Session " ! SENATE 106–358

PALMETTO BEND CONVEYANCE ACT

JULY 24, 2000.—Ordered to be printed

Mr. MURKOWSKI, from the Committee on Energy and Natural

Resources, submitted the following

REPORT

[To accompany S. 1474]

The Committee on Energy and Natural Resources, to which was

referred the bill (S. 1474) providing for conveyance of the Palmetto

Bend project to the State of Texas, having considered the same, reports favorably thereon with an amendment and recommends that

the bill, as amended, do pass.

The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof

the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Palmetto Bend Conveyance Act’’.

SEC. 2. DEFINITIONS.

In this Act:

(1) PROJECT.—The term ‘‘Project’’ means the Palmetto Bend Reclamation

Project in the State of Texas authorized under Public Law 90–562 (82 Stat.

999).

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Interior.

(3) STATE.—The term ‘‘State’’ means the State of Texas, acting through the

Texas Water Development Board or the Lavaca-Navidad River Authority or

both.

SEC. 3. CONVEYANCE.

(a) IN GENERAL.—The Secretary shall, as soon as practicable after the date of enactment of this Act and in accordance with all applicable law, and subject to the

conditions set forth in sections 4 and 5, convey to the State all right, title and interest (excluding the mineral estate) in and to the Project held by the United States.

(b) REPORT.—If the conveyance under Section 3 has not been completed within 1

year and 180 days after the date of enactment of this Act, the Secretary shall submit to the Committee on Resources of the House of Representatives and the Committee on Energy and Natural Resources of the Senate a report that describes—

(1) the status of the conveyance;

(2) any obstacles to completion of the conveyance; and

(3) the anticipated date for completion of the conveyance.

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SEC. 4. PAYMENT.

(a) IN GENERAL.—As a condition of the conveyance, the State shall pay the Secretary the adjusted net present value of current repayment obligations on the

Project, calculated 30 days prior to closing using a discount rate equal to the average interest rate on 30-year U.S. Treasury notes during the proceeding calendar

month, which following application of the State’s August 1, 1999 payment, is currently calculated to be $45,082,675 using a discount rate of 6.070%. The State shall

also pay interest on the adjusted net present value of current repayment obligations

from the date of State’s most recent annual payment until closing at the interest

rate for constant maturity U.S. Treasury notes of an equivalent term.

(b) OBLIGATION EXTINGUISHED.—Upon payment by the State under subsection (a),

the obligation of the State and the Bureau of Reclamation under the Bureau of Reclamation Contract No. 14–06–500–1880, as amended shall be extinguished. After

completion of conveyance provided for in Section 3, the State shall assume full responsibility for all aspects of operation, maintenance and replacement of the Project.

(c) ADDITIONAL COSTS.—The State shall bear the cost of all boundary surveys,

title searches, appraisals, and other transaction costs for the conveyance.

(d) RECLAMATION FUND.—All funds paid by the State to the Secretary under this

section shall be credited to the Reclamation Fund in the Treasury of the United

States.

SEC. 5. FUTURE MANAGEMENT.

(a) IN GENERAL.—As a condition of the conveyance under section 3, the State shall

agree that the lands, water, and facilities of the Project shall continue to be managed and operated for the purposes for which the project was originally authorized;

that is, to provide a dependable municipal and industrial water supply, to conserve

and develop fish and wildlife resources, and to enhance recreational opportunities.

In future management of the Project, the State shall, consistent with other project

purposes and the provision of dependable municipal and industrial water supply:

(1) provide full public access to the Project’s lands, subject to reasonable restrictions for purposes of Project security, public safety, and natural resource

protection;

(2) not sell or otherwise dispose of the lands conveyed under Section 3;

(3) prohibit private or exclusive uses of lands conveyed under Section 3;

(4) maintain and manage the Project’s fish and wildlife resource and habitat

for the benefit and enhancement of those resources;

(5) maintain and manage the Project’s existing recreational facilities and assets, including open space, for the benefit of the general public;

(6) not charge the public recreational use fees that are more than is customary and reasonable.

(b) FISH, WILDLIFE, AND RECREATION MANAGEMENT.—As a condition of conveyance under Section 3, management decisions and actions affecting the public aspects

of the Project (namely, fish, wildlife, and recreation resources) shall be conducted

according to a management agreement between all recipients of title to the Project

and the Texas Parks and Wildlife Department and shall extend for the useful life

of the Project that has been approved by the Secretary.

(c) EXISTING OBLIGATIONS.—The United States shall assign to the State and the

State shall accept all surface use obligations of the United States associated with

the Project existing on the date of the conveyance including contracts, easements,

and any permits or license agreements.

SEC. 6. MANAGEMENT OF MINERAL ESTATE.

All mineral interests in the Project retained by the United States shall be managed consistent with Federal Law and in a manner that will not interfere with the

purposes for which the Project was authorized.

SEC. 7. LIABILITY.

(a) IN GENERAL.—Effective on the date of conveyance of the Project, the United

States shall not be liable for damages of any kind arising out of any act, omission,

or occurrence relating to the Project, except for damages caused by acts of negligence committed prior to the date of conveyance by—

(1) the United States; or

(2) an employee, agent, or contractor of the United States.

(b) NO INCREASE IN LIABILITY.—Nothing in this Act increases the liability of the

United States beyond that provided for in the Federal Tort Claims Act, (28 U.S.C.

2671 et seq.).

SEC. 8. FUTURE BENEFITS.

(a) DEAUTHORIZATION.—Effective on the date of conveyance of the Project, the

Project conveyed under this Act shall be deauthorized.

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(b) NO RECLAMATION BENEFITS.—After deauthorization of the Project under subsection (a), the State shall not be entitled to receive any benefits for the Project

under Federal reclamation law (the Act of June 17, 1902 (32 Stat. 388, chapter

1093), and Acts supplemental to and amendatory of that Act (43 U.S.C. 371 et seq.).

PURPOSE OF THE MEASURE

The purpose of S. 1474 is to provide for the conveyance of the

Palmetto Bend project to the State of Texas.

BACKGROUND AND NEED

The Palmetto Bend Project (Lake Texana) was authorized by

Public Law 90–562. The primary purpose of the project is to provide municipal and industrial water to a large area along the Texas

Gulf Coast. The project was declared complete by the Bureau of

Reclamation in 1985 and was turned over to the Lavaca-Navidad

River Authority for operation and maintenance.

The Lavaca-Navidad River Authority (Authority) and the Texas

Water Development Board (Board) are signatories to the Federal

repayment contact. Since all surface water in Texas is owned by

the State, the Authority and the Board jointly hold a State water

right permit for Lake Texana.

The Authority is a political subdivision of the State, created by

the Texas legislature in 1959 for the purpose of controlling, storing,

preserving, and distribution flood waters of the rivers and streams

of the Lavaca and Navidad Basins, for all useful and beneficial purposes. Its boundaries are coterminous with Jackson County. The

Authority is governed by a nine member Board of Directors, appointed by the Governor and confirmed by the State Senate. The

Authority is also under the Administrative oversight of the Texas

Natural Resource Conservation Commission.

The Texas Water Development Board is responsible for administering the State’s water resources financing programs, and for

long range water resources planning. The Board is governed by six

directors appointed by the Governor and confirmed by the State

Senate.

Lake Texana is located near the Gulf Coast about midway between Houston and Corpus Christi. Lake Texana is capable of supplying a dependable yield of 79,000 acre feet annually (AFA). However, to maintain the environmental health of the downstream bays

and estuaries, the amount available for water supply was reduced

by the state to 74,500 AFA. All the reservoir’s yield has been committed, including about 42,000 AFA for municipal use (Corpus

Christi and Point Comfort) and over 32,500 AFA for industrial use,

largely in the regional petro-chemical-plastics industry. The city of

Corpus Christi service area includes a 10 county service area.

Currently, the Authority and the Board are obligated for repayment to the Federal Government of about $70 million with an interest rate of 3.5% over a term of 50 years. The contract between

the Texas Water Development Board and Lavaca-Navidad River

Authority permits the Authority to acquire the Board’s interest in

the project, and to assume all responsibility and potential liability

of the Project.

In addition to the federally financed portion of the project, the

Authority financed, constructed, and owns and operates a $24 million pipeline, pumping plant and distribution system. The AuthorVerDate 11-MAY-2000 02:26 Jul 26, 2000 Jkt 079010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR358.XXX pfrm06 PsN: SR358
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ity has constructed an additional $8.9 million intake-pumping

plant complex for delivery of water to the Lake Texana-Corpus

Christi pipeline. The bonds for the Authority project are guaranteed and being repaid by the water users. The Authority operates

and maintains the entire project, both Federal and State financed

portions.

S. 1474 requires that the outstanding balance of indebtedness be

repaid and the project purchased by the State project sponsors—

the Authority and the Board. Purchase would be accomplished by

payment of the net present value of the cash stream required to

repay the current contractual indebtedness, discounted at U.S.

Treasury rates on the date of purchase. The present value of the

payment needed to repay the adjusted repayment obligation, is estimated to be $45,082,675. Title of the Federal portion of the

project would be transferred to the Authority and the Board.

LEGISLATIVE HISTORY

S. 1474 was introduced by Senator Hutchison on August 2, 1999

and a Subcommittee hearing was held on October 20, 1999. At the

business meeting on June 7, 2000, the Committee on Energy and

Natural Resources ordered S. 1474, as amended, favorably reported.

COMMITTEE RECOMMENDATION AND TABULATION OF VOTES

The Committee on Energy and Natural Resources, in open business session on June 7, 2000, by a unanimous voice vote with a

quorum present, recommends that the Senate pass S. 1474, if

amended as described herein.

COMMITTEE AMENDMENT

During the consideration of S. 1474, the Committee adopted an

amendment in the nature of a substitute that makes several significant changes in the bill, First, the Committee amendment

strikes the requirement in the original bill that the Secretary convey the Project upon receipt of payment and replaces it with an

new requirement that the Secretary convey the Project as soon as

practicable after the date of enactment, and in accordance with all

applicable law and subject to the conditions set forth in the Committee amendment. Second, the Committee amendment changes

the purchase price for the Project from a set dollar amount to an

amount to be determined from the adjusted net present value of

current repayment obligations. Third, the Committee amendment

adds a list of six specific management measures the State must undertake as a condition of the conveyance. Fourth, the Committee

amendment strikes a provision that requires State approval for use

of the Project’s surface estate for mineral exploration and development and replaces it with a general direction that future mineral

development must be consistent with Project purposes.

SECTION-BY-SECTION ANALYSIS

Section 1 is a short title.

Section 2 defines key terms used in the bill. Section 2(3) defines

‘‘state’’ to include both the Texas Water Development Board

(TWDB) and the Lavaca Navidad River Authority (LNRA). Both

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the TWDB and the LNRA are responsible for all aspects of Project

operations, including maintenance, protecting public safety, and

maintaining the authorized project purposes at a level at least

equivalent to that when the Project was owned by the United

States. When the Project was build and repayment contracts executed, the Department of the Interior entered into contracts with

both TWDB and LNRA, thereby obligating both entities to pay the

reimbursable obligation of the Project. Current expectations are

that LNRA plans to purchase TWDB’s share of the Project. Until

that time, both entities are responsible for protecting public safety

and maintaining the public purposes of the Project. At such time

as LNRA acquires TWDB’s share, then LNRA assumes all responsibility and potential liability of the Project.

Section 3 provides that, subject to the conditions in sections 4

and 5, the Secretary shall, ‘‘as soon as practicable’’ after enactment,

convey the Project title of the State of Texas, subject to applicable

law and the conditions set forth in sections 4 and 5. This section

also requires a report from the Secretary if conveyance is completed later than 1 year and 180 days after date of enactment. The

report shall include status of conveyance, obstacles to conveyance

and anticipated date for completion.

Section 4 describes how payment shall be calculated and what

obligations are extinguished upon payment. It also provides that

the State bears transaction costs for conveyance and that all funds

paid by the State shall be credited to the Reclamation Fund.

Section 5 describes the general and specific conditions for future

management of the Project. Specific conditions relating to fish,

wildlife and recreation management and existing obligations are

detailed.

Section 6 provides that mineral interests in the Project retained

by the United States shall be managed consisted with Federal law

and in a manner that will not interfere with the purposes for which

the project was authorized.

Section 7 provides that the United States shall not be liable for

any damages, effective on the date of conveyance, except for acts

of negligence committed by either the United States or an employee, agent or contractor of the United States.

Section 8 provides that, upon conveyance, the Project shall be deauthorized and that after deauthorization, the Project is no longer

entitled to any benefits under Federal reclamation law.

COST AND BUDGETARY CONSIDERATIONS

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

S. 1474—Palmetto Bend Conveyance Act

Summary: S. 1474 would direct the Secretary of the Interior to

convey the Palmetto Bend Reclamation Project to the state of

Texas. As a condition of the conveyance, S. 1474 would require that

the state pay the net present value of its repayment obligations on

the project. This money would be deposited in the Reclamation

Fund. The bill specifies the discount and interest rates that must

be used to calculate the net present value of this revenue stream.

The state also must agree to manage the project for its original

purposes, which include providing a municipal and industrial water

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supply, conserving and developing fish and wildlife resources, and

enhancing recreational opportunities. Once the project is conveyed,

the Bureau of Reclamation would no longer pay for the operation

and maintenance of the project.

CBO estimates that enacting S. 1474 would result in a net de- crease in direct spending of $34 million over the 2001–2005 period.

Estimated asset sale receipts of $51 million would provide nearterm savings in 2001, but these savings would be offset by the loss

of offsetting receipts of about $4 million a year over the 35-year period from fiscal year 2001 through 2035. Because enacting S. 1474

would affect direct spending, pay-as-you-go procedures would

apply. CBO estimates that implementing this bill would have no

significant effect on discretionary spending.

S. 1474 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA).

The state of Texas probably would incur some costs as a result of

the bill’s enactment, but these costs would be voluntary.

Estimated cost to the Federal Government: The estimated budgetary impact of S. 1474 is shown in the following table. The costs

of this legislation fall within budget function 300 (natural resources

and environment).

By fiscal year, in millions of dollars—

2000 2001 2002 2003 2004 2005

CHANGES IN DIRECT SPENDING

Estimated Budget Authority ......................................................... 0 ¥48 3 3 4 4

Estimated Outlays ........................................................................ 0 ¥48 3 3 4 4

Basis of estimate: For this estimate, CBO assumes that S. 1474

will be enacted by the end of fiscal year 2000. We expect that the

state will have paid any amounts due for fiscal year 2000 in August of this year and that the project will be conveyed to the state

of Texas in fiscal year 2001.

CBO estimates that enacting S. 1474 would reduce direct spending by $34 million over the 2001–2005 period, but would have very

little net budgetary impact—on a present value basis—over the life

of the Palmetto project. As a condition of conveyance, S. 1474 requires that the state pay the net present value of its repayment obligations on the project, using a discount rate based on the average

interest rate on 30-year U.S. Treasury bonds in the month preceding the sale. CBO estimates that the state would pay $51 million in 2001 for the project, based on an estimated repayment obligation of $72 million and a projected discount rate of 6.6 percent.

Once conveyed, the government would forgo payments of roughly

$4 million a year for the next 35 years.

Based on information from the bureau, CBO estimates that the

agency currently spends less than $500,000 each year for the operation and maintenance of the project. Hence, we estimate that any

discretionary savings from the conveyance would not be significant.

Likewise, implementing this bill may change the timing of deposits

to the Reclamation Fund, but CBO expects that such changes

would have a negligible effect on discretionary spending.

Pay-as-you-go considerations: The Balanced Budget and Emergency Deficit Control Act sets up pay-as-you-go procedures for legislation affecting direct spending or receipts. The net changes in

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outlays that are subject to pay-as-you procedures are shown in the

following table. For the purposes of enforcing pay-as-you-go procedures, only the effects in the current year, the budget year, and the

succeeding four years are counted.

By fiscal year, in millions of dollars—

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Changes in outlays ................................................. 0 ¥48 3 3 4 4 4 4 4 4 4

Changes in receipts ............................................... Not applicable

Under the Balanced Budget Act (BBA), proceeds from nonroutine

asset sales (sales that are not authorized under current law) may

be counted for pay-as-you-go purposes only if the sale would entail

no financial cost to the government. CBO estimates that the sale

of the Palmetto Bend Project as specified in S. 1474 would satisfy

the conditions in the BBA, and therefore, the proceeds would count

for pay-as-you-go purposes.

Intergovernmental and private-sector impact: S. 1474 contains no

intergovernmental or private-sector mandates as defined in UMRA.

The conveyance authorized by this bill would be voluntary on the

part of the state, and any costs it would incur to meet the conditions imposed by the bill also would be voluntary. Before the property could be conveyed to the state, the bill would require the state

to pay the present value of its outstanding obligation to the United

States and to pay certain transaction costs. It also would require

the state to assume responsibility for operating and maintaining

the project.

Estimate prepared by: Federal Costs: Rachel Applebaum. Impact

on State, Local, and Tribal Governments: Marjorie Miller. Impact

on the Private Sector: Jean Wooster.

Estimate approved by: Peter H. Fontaine, 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. 1474. 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. 1474, as ordered reported.

EXECUTIVE COMMUNICATIONS

On October 13, 1999, the Committee on Energy and Natural Resources requested legislative reports from the Department of the

Interior and the Office of Management and Budget setting forth

Executive agency recommendations on S. 1474. These reports had

not been received at the time the report on S. 1474 was filed. When

the reports become available, the Chairman will request that they

be printed in the Congressional Record for the advice of the Senate.

The testimony provided by the Commissioner of the Bureau of Reclamation at the Subcommittee hearing follows:

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STATEMENT OF ELUID L. MARTINEZ, COMMISSIONER, U.S.

BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR

My name is Eluid L. Martinez. I am Commissioner of

the U.S. Bureau of Reclamation. I am pleased to provide

the Administration’s views on S. 1474, legislation providing for the conveyance of the Palmetto Bend Project to

the State of Texas.

S. 1474—Palmetto Bend Conveyance Act

S. 1474 directs the Secretary of the Interior to convey

the Palmetto Bend Project in coastal Texas to the State of

Texas, acting through the Texas Water Development

Board (TWDB) and/or the Lavaca-Navidad River Authority

(LNRA), which are governmental entities created by the

State of Texas. As drafted, the Administration opposes S.

1474. However, let me state that good progress has been

made in the past year. This is a complex multipurpose

project. Apart from technical issues with the language of

S. 1474, it is our view that the long list of concerns that

we have raised in the past, has been narrowed down to

several issues, which I will highlight in my statement. If

these remaining issues could be resolved, the Palmetto

Bend Project could be an appropriate candidate for title

transfer.

Background

The Palmetto Bend Project is a multipurpose project located in Jackson County, Texas near Edna on the Navidad

River, with the dam site about 4 miles above the confluence of the Lavaca and Navidad rivers. Project features

consist of Palmetto Bend Dam and Lake Texana, including

recreation facilities on approximately 7,000 acres of public

land surrounding the lake. Palmetto Bend Dam regulates

natural flows of the Navidad river to provide municipal

and industrial water supplies in the counties of Jackson

and Calhoun, and to the City of Corpus Christi. Through

contract with Reclamation, the Lavaca-Navidad River Authority has operation and maintenance responsibility for

the facilities. This project was originally authorized by

Public Law 90–562 in October 1968.

In August 1997, LNRA formally requested that Reclamation enter into a process to consider transferring title of

the land and facilities associated with the Palmento Bend

Project from federal to non-federal ownership. In October,

1997, Reclamation and LNRA signed an agreement to

‘‘evaluate the Authority’s proposed transfer of title to the

Palmetto Bend Project in an Environmental Assessment in

accordance with the National Environmental Policy Act

(NEPA), other applicable laws and Reclamation policy.’’

In December, 1997, as part of that NEPA process, two

public scoping meetings were conducted in the towns of

Edna and Victoria, Texas to identify issues and concerns

by members of the local community and other stakeholders. At both sessions, a variety of viewpoints were repVerDate 11-MAY-2000 02:26 Jul 26, 2000 Jkt 079010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6969 E:\HR\OC\SR358.XXX pfrm06 PsN: SR358
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resented and several important issues were raised that

needed to be addressed as part of the process. In February

1998, the results of the scoping meeting, and the NEPA

document outline, were provided to LNRA.

In March 1999, Reclamation released a draft environmental assessment (EA) and received numerous comments.

These comments were incorporated and addressed in a

final EA which was released on June 21, 1999. The issues

and analysis documented in that EA form the basis for

much of my testimony today.

Concerns about S. 1474

Mr. Chairman, as I stated, a great deal of progress has

been made on Palmetto Bend in the past year. A final environmental assessment has been completed, and productive discussions with stakeholders are underway. However,

the Department does not have some important policy as

well as technical concerns about the proposal as drafted:

(1) Compliance with NEPA and Other Laws and Treaties: S. 1474 as introduced directs rather than authorizes

the Secretary to convey the facilities of the Project. The

Administration strongly opposes such directives. Such a

mandate would severely diminish the value of the NEPA

process by removing the Secretary’s discretion to make decisions on proposed title transfers based on the results of

environmental analysis and public involvement. The Administration firmly believes that meaningful NEPA compliance is critical prior to title transfer, to allow the Department, the Congress, and the public to fully explore the

impacts of the proposed transfer, its alternatives, and opportunities to avoid undesirable effects on public resources

and values. The Secretary’s authority to condition the

transfer to resolve important issues identified during the

NEPA process prior to title transfer must also be clear.

(2) Mineral Development: As introduced, S. 1474 effectively gives the State veto authority over any development

of the retained Federal mineral estate at the Project. This

is problematic for a number of reasons. First, in the State

of Texas, as in many States, the mineral estate is dominant over the surface estate, putting S. 1474’s Section 7 in

conflict with existing law. Second, the title transfer valuation assumes that the mineral estate would be administered by the United States, and would be available for

leasing, development, and production consistent with applicable Federal and State laws. As written, Section 7 is

likely to change the valuation as it effectively reduces potential Federal revenues from future mineral development.

Third, the Bureau of Land Management has issued approximately 20 leases for the development of Federallyowned oil and gas estate within the project boundary, and

the imposition of new restrictions would place an unanticipated burden upon these lesses. Fourth, in its strictest application, such as a total prohibition of surface occupancy

for mineral development, this section may result in a taking of property interests.

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To protect the rights of the State while addressing the

above concerns, we suggest the following language: ‘‘All

mineral interests in the Project retained by the United

States shall be managed consistent with Federal law and

with the purposes for which the Project was originally authorized.’’

(3) Future Management of Public Purposes: The Department believes that this is a crucial issue that must be resolved before title transfer can be completed. Reclamation

policy for title transfer requires that public aspects of the

transferred project be protected. In the case of multipurpose projects such as Palmetto Bend, where more than $21

million of public Federal funds have been invested in nonreimbursable recreation, fish and wildlife purposes, there

are a number of authorized public purposes. They include

public access to public lands and waters; and public uses

and benefits, such as recreation, fish and wildlife. The Administration must protect the significant taxpayer investments.

During the environmental review process for the proposed Palmetto Bend title transfer, a number of concerns

were raised by the public and government agencies regarding the need to protect fish, wildlife, environmental, recreation and other public benefits of the Project to ensure

that no future degradation or diminishment occurs in

these public resources and benefits. The Department

shares this concern. Reclamation believes it is possible to

develop a legally enforceable, long-term arrangement with

an agency such as the Texas Parks and Wildlife Department (TPWD), to assure that these public resources are

protected. In essence an agency such as the TPWD would

assume Reclamation’s public trust responsibilities for the

oversight and management of fish and wildlife resources

and public recreational opportunities at the project.

I understand that for several months, LNRA and TPWD

have been working on such an agreement. While a preliminary Memorandum of Understanding has been signed between these agencies, we have identified a number of

areas where changes are needed. We have articulated

those concerns and are pleased that LNRA has expressed

a willingness to address them.

S. 1474 can provide an important statutory foundation

to assure protection of the public aspects of the project.

Reclamation recommends that Section 6(a) be modified to

include the following:

Assurance that full public access to the project’s

lands and waters will be continued, subject only to restrictions for purposes of project security, public safety, and natural resource protection;

Assurance that the project’s public lands will not be

sold or otherwise disposed of;

Assurance that the project’s public lands will not be

made available for private or exclusive uses;

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Assurance that the project’s fish and wildlife resources and habitats will continue to be managed for

the benefit and enhancement of those resources;

Assurance that the project’s existing recreational facilities and assets will be maintained for the benefit of

the general public;

Assurance that the public will be charged recreation

use fees that are no more than is customary and reasonable.

(4) Payment: Additional Administration review is needed

to determine whether the proposed payment adequately

protects the Federal financial interest. In addition, it is

important to understand that in calculating the valuation,

certain assumptions about future management of public

surface resources and Federal mineral estate were made.

Given these assumptions, clarifications in the proposed

legislation, as outlined above, regarding management of

surface resources and Federal estate are needed.

(5) Tax Exempt Financing: It needs to be clear that payments made to the United States should not be financed

with the proceeds of obligations that qualify as Federally

tax exempt under Section 103 of the Internal Revenue

Code as amended.

Technical amendments

In addition to those issues raised above, I have a number of technical and clarifying modifications which I would

like to provide:

(1) Section 2(3) Definition of ‘‘State’’: As introduced, S.

1474 is not clear on which entity—the Texas Water Development Board or the Lavaca Navidad River Authority—

will actually hold title and make the management decisions. The roles, responsibilities and liabilities of each

need to be clarified.

(2) Section 3 Conveyance: This section states that the

Project would be transferred upon payment. H.R. 2764

needs to be clarified to show that payment is one of a

number of steps that must occur prior to transfer. Other

activities, such as NEPA compliance, must be completed

prior to transfer. Furthermore, it needs to be further clarified that the United States will retain ownership to all

Project museum properties.

(3) Section 4 Completion of Conveyance: This section

needs to make clear that in addition to NEPA, compliance

with the National Historic Preservation Act and the Endangered Species Act must be completed prior to conveyance.

(4) Section (5) Payment: Language needs to be added to

establish a ‘‘due date’’ for the payment.

(5) Section 5(b): This subsection should be clarified to

make clear that while the contracts will be extinguished,

the obligations of the State in terms of management and

operations will not be extinguished upon payment. Therefore the title of this subsection should be changed from

‘‘Obligations’’ to ‘‘Contract’’ Extinguished. Additionally the

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subsection should be modified to make this more clear. We

suggest the following revision: ‘‘On payment by the State

under subsection (a), Contract No. 14–06–500–1880, as

amended, between the United States and the State shall

be extinguished. After completion of conveyance provide

for in Section 3, the State shall assume full responsibility

for all aspects of operation, maintenance and replacement

of the Project.’’

(6) Section 6. Future Management: The State does not

currently hold, nor is it envisioned to hold, an interest in

the Federal mineral estate. Therefore the reference to

‘‘mineral estate’’ in this subsection should be deleted.

(7) Section 6(a). Future Management: This section needs

to be clarified to ensure that the Project benefits will not

be diminished after transfer. We recommend replacing the

phrase ‘‘implementation of fish, wildlife, and recreational

activities,’’ with ‘‘conservation and development of the fish

and wildlife resources and the enhancement of recreational

activities.’’ We also recommend that previously discussed

concerns related to public access, land disposal, private

and exclusive uses, and recreation use fees be addressed in

this section.

We also recommend adding the following subsection in

section 6:

(b) MANAGEMENT DECISIONS.—As a condition of conveyance under section 3, specific management decisions affecting the public aspects of the project (namely, fish and wildlife resources and recreation opportunities) shall be conducted according to a management agreement between all

recipients of title to the project and TPWD. This agreement is subject to the review and approval of the Secretary.

(8) Section 6(b) Existing Obligation: This subsection

needs to be revised to clarify that the responsibilities being

transferred are obligations to be assigned by the United

States. The nature of the obligations also needs to be clarified. We recommend the following revision: ‘‘As a condition

of the conveyance under Section 3, the United States shall

assign all obligations of the United States associated with

the Project existing on the date of conveyance including for

contracts, recreation, fish and wildlife easements, and any

permits, or license agreements including oil and gas.’’

(9) Section 7. Mineral Development: Management of the

mineral estate, which is what is envisioned in this section,

constitutes more than development of the resources. As

such, Reclamation recommends this section be renamed:

Section 7. Management of Mineral Estate.

(10) Section 8(a) and 8(b) Liability: To make this consistent with liability language that we have worked out

with other entities interested in title transfer, we suggest

two modifications to subsection (a) and two in subsection

(b). In 8(a) delete the phrase ‘‘except as related to retained

mineral interests,’’ also, delete ‘‘with respect’’ and insert in

lieu thereof ‘‘relating.’’ In 8(b), after ‘‘nothing in this’’ replace ‘‘section’’ with ‘‘Act’’ and following the phrase ‘‘proVerDate 11-MAY-2000 02:26 Jul 26, 2000 Jkt 079010 PO 00000 Frm 00012 Fmt 6659 Sfmt 6969 E:\HR\OC\SR358.XXX pfrm06 PsN: SR358
13

vide for in,’’ replace ‘‘chapter 171 of title 28, United States

Code’’ with ‘‘the Federal Tort Claims Act, 28 U.S.C. Section 2671 et seq.’’

(11) Section 9(b) No Reclamation Benefits: As drafted,

this subsection can be read to say that the State would not

be eligible for any benefits under Federal Reclamation law

for any Reclamation Project throughout the State (where

the Texas Water Development Board has an interest). As

such, this needs to be clarified by inserting the words, ‘‘ for

the Palmetto Bend Project’’ after ‘‘not entitled to received

any benefits.’’

As you can see, Mr. Chairman, together with LNRA, we

have come a long way toward addressing the Administration’s concerns and those of the other stakeholders who

have raised concerns about this proposed title transfer.

That concludes my remarks on S. 1474. I would 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 the bill S. 1474, as ordered reported.

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