79–010

Calendar No. 896

106TH CONGRESS REPORT

2d Session " ! SENATE 106–450

NORTHERN COLORADO WATER CONSERVANCY DISTRICT

OCTOBER 2 (legislative day, SEPTEMBER 22), 2000.—Ordered to be printed

Mr. MURKOWSKI, from the Committee on Energy and Natural

Resources, submitted the following

REPORT

[To accompany S. 2400]

The Committee on Energy and Natural Resources, to which was

referred the bill (S. 2400) to direct the Secretary of the Interior to

convey certain water distribution facilities to the North Colorado

Water Conservancy District, having considered the same, reports

favorably thereon with an amendment and recommends that the

bill, as amended, do pass.

The amendment is as follows:

In section 2, strike subsection (b)(1) and replace with the following:

‘‘(1) IN GENERAL.—The Secretary shall accept $355,502

as payment from the District and $1,798,200 as payment

from the power customers, under the terms specified in

this section, as consideration for the conveyance under

subsection (a). Out of the receipts from the sale of power

from the Loveland Area Projects collected by the Western

Area Power Administration and deposited into the Reclamation fund of the Treasury in fiscal year 2001,

$1,798,200 shall be treated as full and complete payment

by the power customers of such consideration and as repayment by the power customers of all aid to irrigation associated with the facilities conveyed under subsection (a).’’

PURPOSE OF THE MEASURE

The purpose of S. 2400 is to direct the Secretary of the Interior

to transfer title to water distribution facilities, currently held by

the United States, to the Northern Colorado Water Conservancy

District.

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BACKGROUND AND NEED

Built between 1938 and 1957, the Colorado-Big Thompson

Project (Project) provides supplemental water to 30 cities and

towns. The water is used to help irrigate 615,000 acres of northeastern Colorado farmland. Twelve reservoirs, 35 miles of tunnels,

95 miles of canals and 700 miles of transmission lines comprise the

complex collection, distribution and power system. The Project system spans 150 miles east to west and 65 miles from north to south.

The Project was intended to provide 310,000 acre-feet of water

annually to northeastern Colorado for agricultural, municipal, and

industrial uses. The Northern Colorado Water Conservancy District

(District), a political subdivision of the State of Colorado created in

1937, provides water for agricultural, municipal, domestic, and industrial uses in northeastern Colorado. The District was established as the local agency to contract with the United States to

build the Project. The District has deposited in escrow, the funds

necessary to fulfill its repayment obligations under its repayment

contract. The Project stores water from the Colorado River headwaters in a series of reservoirs on Colorado’s West Slope. Water is

transported, via the 13-mile Alva B. Adams Tunnel, through the

mountains to the District’s seven-country service area on the East

Slope. The District encompasses 1.5 million acres in portions of

Boulder, Larimer, Weld, Morgan, Logan, Washington, and Sedgwick counties.

S. 2400 will divest the Bureau of Reclamation (Bureau) of all

present and future responsibility for, and cost associated with, the

management, operation, maintenance, repair, rehabilitation and replacement of, and liability for, these particular facilities. Moreover,

the legislation will eliminate the duplication of efforts between the

District and the Bureau in issuing and administering crossing licenses and other forms of permission to utilize the land on which

the facilities are located. Finally, the legislation will provide for enhanced local control over single-purpose water facilities that are

not of national importance, allowing these facilities to be used for

more efficient and effective water management.

The sale price of $2,133,702 included in the legislation, as ordered reported, has been mutually agreed upon. On behalf of its

preference customers, the Western Area Power Administration

(WAPA) will pay $1,798,200 and the District will be responsible for

$335,502. The aid-to-irrigation obligation for the project will be

credited $3,767,682 as a result of the accelerated payment by

WAPA, and the District’s repayment obligation would be reduced

by $170,555. The remainder of the District’s repayment, $185,187,

is compensation for Reclamation’s loss of future revenue. Power

users agreed to repay the aid-to-irrigation component for two reasons. First, the District has worked closely with WAPA and its customers for decades, and both the District and WAPA have previously agreed to jointly fund Project-related activities that are mutually beneficial. And second, the prepayment of this amount will

save interest that would otherwise accrue on this obligation if it

were repaid in the future in accordance with the existing schedule.

The prepayment of this amount at this time does not adversely affect existing power rates and in fact, if this prepayment does not

occur and this amount is paid under the existing schedule, it would

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become due at a time when other, and far greater amounts, are due

and payable, and would contribute to the need to increase preference power rates at that time.

LEGISLATIVE HISTORY

S. 2400 was introduced by Senator Allard on April 11, 2000. The

Subcommittee on Water and Power held a hearing on S. 2400 on

June 21, 2000. At the business meeting on September 20, 2000, the

Committee on Energy and Natural Resources ordered S. 2400 with

amendment, favorably reported.

COMMITTEE RECOMMENDATION

The Committee on Energy and Natural Resources, in open business session on September 20, 2000, by a unanimous voice vote of

a quorum present, recommends that the Senate pass S. 2400 if

amended as described herein.

COMMITTEE AMENDMENT

During the consideration of S. 2400, the Committee adopted an

amendment to strike subsection (b)(1) in section 2, which set out

the sale price the Secretary may accept as consideration. The

amendment reflects a sale price that has been, mutually agreed

upon by the District and WAPA. The total consideration to be accepted by the Secretary is $2,153,702, of which $355,502 will come

from the District and $1,798,200 will come from the power customers.

COST AND BUDGETARY CONSIDERATIONS

The following estimate of costs of this measure has been provided

by the Congressional Budget Office.

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, September 29, 2000.

Hon. FRANK H. MURKOWSKI,

Chairman, Committee on Energy and Natural Resources,

U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 2400, a bill to direct the

Secretary of the Interior to convey certain water distribution facilities to the Northern Colorado Water Conservancy District.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Rachel Applebaum.

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.

S. 2400—A bill to direct the Secretary of the Interior to convey certain water distribution facilities to the Northern Colorado

Water Conservancy District

Summary: S. 2400 would direct the Secretary of the Interior to

convey certain canals and water distribution facilities to the Northern Colorado Water Conservancy District. These facilities are a

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small part of the Colorado-Big Thompson project in Larimer County, Colorado. S. 2400 would require the district to pay $355,502 and

electricity customers of the Western Area Power Administration

(WAPA) to pay $1,798,200 as a condition of the conveyance.

Based on information from the Bureau of Reclamation, CBO estimates that enacting S. 2400 would reduce direct spending by about

$2 million in fiscal year 2001. These savings would be offset by the

loss of about $4 million in offsetting receipts over the 2001–2012

period. Because enacting S. 2400 would affect direct spending, payas-you-go procedures would apply. CBO estimates that implementing this bill would have no significant effect on discretionary

spending.

S. 2400 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA).

State and local governments would probably incur some costs as a

result of the bill’s enactment, but those costs would be voluntary.

Estimated Cost to the Federal Government: The estimated budgetary impact of S. 2400 is shown in the following table. The costs

of this legislation fall within budget function 300 (environment and

natural resources).

By fiscal year, in millions of dollars—

2001 2002 2003 2004 2005

CHANGES IN DIRECT SPENDING

Estimated Budget Authority ................................................................ ¥2 (1) 000

Estimated Outlays ............................................................................... ¥2 (1) 000

1 Less than $500,000.

Basis of estimate: For this estimate, CBO assumes that the conveyance would occur at the beginning of fiscal year 2001. The bill

would require the water district to pay $355,502 and WAPA power

customers to pay $1,798,200 as a condition of the conveyance. The

bill would credit these amounts to their repayment of capital costs

for the Colorado-Big Thompson project.

Based on information from the Bureau of Reclamation, CBO expects that, after conveying these facilities, the federal government

would forgo a payment of $170,555 from the water district in fiscal

year 2002, a payment of $764,463 from the power customers in fiscal year 2011, and another payment of $3.0 million from power customers in fiscal year 2012.

If the project is sold in 2001, the federal government could not

enter into a contract to sell excess water capacity from the project

to the Pleasant Valley Pipeline. CBO estimates that the federal

government would receive $197,261 in fiscal year 2001 from such

a contract in the absence of this legislation.

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

outlays that are subject to pay-as-you-go 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.

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By fiscal year, in millions of dollars—

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Changes in outlays .............................. 0 ¥2000000000

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

Under the Balanced Budget Act (BBA), proceeds from a sale that

is not authorized under current law may be counted for pay-as-yougo purposes only if the sale would entail no financial cost to the

government. CBO estimates that the sale of the water facilities

mandated by S. 2400 would satisfy the conditions in the BBA;

therefore, the proceeds would count for pay-as-you-go purposes.

Under BBA, ‘‘financial cost to the government’’ is defined in terms

of the present value of all cash flows associated with an asset sale.

The forgone payments of about $4 million over the 2002–2012 period has an estimated present value that is slightly less than the

sale price specified in S. 2400 (about $2 million).

Intergovernmental and private-sector impact: S. 2400 contains no

intergovernmental mandates as defined in UMRA. The Northern

Colorado Water Conservancy District, a local public agency, would

probably incur costs to acquire the four water distribution facilities,

both the decision to bear those costs would be voluntary. The district would benefit from the enactment of this legislation.

Previous CBO estimate: On July 24, 2000, CBO transmitted a

cost estimate for H.R. 4389, a bill to direct the Secretary of the Interior to convey certain water distribution facilities to the Northern

Colorado Water Conservancy District, as ordered reported by the

House Committee on Resources on June 21, 2000. The two versions

of this bill are very similar, and our cost estimates are the same.

Estimate prepared by: Federal Costs: Rachel Applebaum. Impact

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

on the Private Sector: Lauren Marks.

Estimate approved by: Robert A. Sunshine, 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. 2400. 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. 2400, as ordered reported.

EXECUTIVE COMMUNICATIONS

On July 16, 2000, 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. 2400. These reports had

not been received at the time the report on S. 2400 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.

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The testimony provided by the Department of the Interior at the

Subcommittee hearing follows:

STATEMENT OF ELUID L. MARTINEZ, COMMISSIONER,

BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR

My name is Eluid Martinez. I am Commissioner of the

U.S. Bureau of Reclamation (Reclamation). I am pleased to

provide the Administration’s views on S. 2400, to convey

certain water distribution features of the Colorado Big

Thompson Project (CBT) to the Northern Colorado Water

Conservancy District (District). We have worked closely

with this District on this proposal and could support this

bill if certain issues are resolved. I am pleased to report

that since the May 23, 2000, hearing on H.R. 4389 by the

House Resources Subcommittee on Water and Power, Reclamation and the District have reached agreement on a

sales price and have made progress on the aid to irrigation

issue. However, some technical modifications are still

needed.

RECENT ACTIVITIES

Mr. Chairman, before talking about the specifics of S.

2400, I would like to give the Subcommittee a quick status

report on some recent activities with Reclamation’s Title

Transfer initiative.

At the end of the 105th Congress, two proposals were

signed into law, enabling the Secretary of the Interior to

transfer title to Reclamation facilities. The first, Public

Law 105–316, authorized the prepayment and subsequent

conveyance of the Canadian River Pipeline in Texas to the

Canadian River Authority. This facility was transferred in

May, 1999.

The second, Public Law 105–351, enabled Reclamation

to convey the distribution facilities associated with the

Southside Pumping Division of the Minidoka Project in

Idaho. I am pleased to report that just a few months ago,

these facilities were transferred to the Burley Irrigation

District (BID).

As you may recall, Public Law 105–316 required that

several steps be taken before title could be transferred—

including completion of the process under the National Environmental Policy Act (NEPA). It also required the negotiation and development of a water rights agreement between BID, the Secretary, and the neighboring Minidoka

Irrigation District (MID) on the distribution and management of the natural flow water rights, part of which would

be transferred to BID, but historically had been managed

together with those of MID. We worked diligently with

BID, other Federal agencies, and the State to get this process completed in a timely fashion. This water rights agreement was completed and signed in February, 2000.

Since BID started the environmental review prior to the

legislation’s passage, the NEPA process was completed, including the full public review, and a finding of no signifiVerDate 11-MAY-2000 15:30 Oct 03, 2000 Jkt 079010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6969 E:\HR\OC\SR450.XXX pfrm08 PsN: SR450
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cant impact (FONSI) was issued on February 18, 2000.

The Quit Claim Deed for the water rights transfer was negotiated in December, 1999 and signed in February, 2000

and the Real Property Quit Claim Deed was negotiated in

February, 2000 and signed on February 24, 2000. As such,

I am very proud to report that the facilities were transferred to the Burley Irrigation District on February 24,

2000—more than two months ahead of schedule.

Completing this transfer is a credit to the hard work and

cooperation of both Reclamation staff and to the Burley Irrigation District, and all should be commended for their

work. However, had we gone through Reclamation’s

Framework process where we work through NEPA, the

water rights agreement and negotiate all of the details

prior to the legislative process, we would likely have completed the transfer more quickly at less cost. Instead, the

details of the transfer were negotiated in Washington,

which in this case took several Congresses to be completed.

Upon passage, a significant amount of work was required

to make the transfer happen. The NEPA compliance had

to be completed, the water rights agreement had to be negotiated and finalized, and other local consultations had to

be carried out. While we were able to get through it in this

case, there is a risk in going this route. As a result of the

NEPA process, the hazardous waste review and the other

steps that must be completed, unanticipated problems

could be identified which were not addressed in the legislation. This may delay conveyance or require coming back to

the Congress for additional legislation before the transfer

can occur. This has happened in the past and delayed

some transfers.

In addition to the completed transfers mentioned above,

a significant amount of work has been going-on throughout

the Western United States to move other projects and facilities toward possible title transfers. Memoranda of

Agreement have been negotiated and signed between Reclamation and numerous water districts across the west including districts in Idaho, Nevada, Colorado, Montana, Arizona and Texas. These memoranda establish roles and responsibilities, and in some cases, identify goals and objectives, for completing a fair and open title transfer process.

In addition, we are working with numerous other entities

that are just now coming forward with an interest in title

transfer.

Mr. Chairman, as I have stated in the past, the process

for completing title transfer, even for relatively ‘‘uncomplicated’’ projects, is not simple. Each project has unique authorities, characteristics and circumstances that need to be

analyzed and worked through to avoid serious unintended

consequences. Given the significant progress that we have

made, I continue to believe that title transfer, and the

process envisioned in the Framework, is an important and

worthwhile initiative.

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BACKGROUND ON S. 2400

The Colorado-Big Thompson Project (CBT) is the largest

transmountain water diversion project in Colorado, and

one of the Most complex projects undertaken by Reclamation. Built from 1938 to 1957, the project includes over 100

water and power facilities which store, regulate, and divert

water from the west slope of the Rockies under the Continental Divide to 125 water user organizations and municipalities on the east slope.

The northern Colorado Water Conservancy District—the

entity to receive title to the distribution facilities under S.

2400—was organized in 1937 as the local public agency to

contract with the United States to build the Colorado-Big

Thompson Project. The District provides water for agricultural, municipal, domestic and industrial uses in northeastern Colorado and encompasses 1.5 million acres in portions of Larimer, Boulder, Weld, Morgan, Washington,

Logan, and Sedgwick counties.

Since 1956, the District has managed, operated and

maintained the single-purpose facilities proposed for transfer which include the North Poudre Supply Canal and diversion works, also known as the Munroe Gravity Canal;

the Charles Hansen (Supply) Canal and Windsor Extension; and the Dixon Feeder Canal.

Since 1986, the District has also managed, operated, and

maintained the following multipurpose works: Farr

Plumping Plant, Granby Discharge Line and Pump Canal,

Granby Dam, Willow Creek Pumping Plant, Willow Creek

Pump Canal, Willow Creek Dam, Shadow Mountain Dam,

Shadow Mountain Connecting Channel, Charles Hansen

Feeder Canal, Carter Lake and Dams, and Horsetooth

Reservoir and Dams. These facilities would not be transferred under S. 2400.

In 1999, the District contacted Reclamation’s Eastern

Colorado Area Office based in Loveland, CO to express its

interest in obtaining title to these single-purpose Project

facilities where they are the sole beneficiary.

In October, 1999, a Memorandum of Understanding between Reclamation and the District was signed. This document defined the roles and responsibilities for the activities to be undertaken in order to complete the process for

title transfer under Reclamation’s Title Transfer Framework.

Mr. Chairman, Reclamation has worked very closely

with the District over the years and I think it is safe to

say that we have a good and cooperative relationship not

only on the management of the facilities under consideration for title transfer in S. 2400, but in the operation and

maintenance of the entire CBT Project in general.

S. 2400 CONVEY CERTAIN WATER DISTRIBUTION FACILITIES OF

THE COLORADO BIG THOMPSON PROJECT

As introduced, S. 2400 would enable the Secretary of the

Interior to transfer all right, title and interest in certain

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water distribution facilities of the Colorado Big Thompson

Project in Colorado—built by the U.S. Bureau of Reclamation and owned by the United States—to the Northern Colorado Water Conservancy District.

The rest of the CBT will remain in Federal ownership

and the terms of the existing contract will remain in place.

Furthermore, the District’s obligation for their share of repayment for the Project’sother features will continue until

they are paid out. This bill could affect direct spending.

Assuming the Administration’s concerns are resolved, we

expect the bill to be PAYGO neutral.

NEPA and Compliance with Federal Laws: Over the

past several years, the Administration has insisted that

title transfers comply with all applicable laws including

NEPA and the Endangered Species Act (ESA) prior to

transfer. As a result of a compromise worked out with the

Chairman, that is reflected in this legislation, we believe

that S. 2400 does this.

Compliance with the process under NEPA will enable all

interested stakeholders to have an opportunity to voice

their concerns and have them addressed. Furthermore,

compliance with NEPA and ESA will enable the U.S. Fish

and Wildlife Service to evaluate the impacts of the transfer

and future activities on species that may be threatened or

endangered and to develop any mitigation that may be

necessary.

Sale price: Addressing the valuation is central to getting

an agreement on title transfer. It is Reclamation’s title

transfer valuation policy that we determine the base value

by calculating the net present value of the future revenue

stream that would, absent the title transfer, come to the

United States. As a next step, we adjust the base value to

account for changes that the new owners are likely to

make in the public benefits. Since the May 23, 2000, hearing on H.R. 4389 by the House Resources Subcommittee on

Water and Power, Reclamation and the District have

reached agreement on a sales price of $2,133,702.

Aid to Irrigation: The source of the payments to satisfy

Section 2(b)(1) needs to be made clear. As I understand it,

a portion of the amount to be paid under section, will be

made by the District directly. The remaining portion will

be paid by the Project’s power beneficiaries as aid-to-irrigation. That division of payment and its timing need to be

identified, reviewed by the Administration and authorized

by the legislation. Furthermore, the portion of the repayment obligation paid by the power users needs to be appropriately credited by the Western Area Power Administration (western) to ensure that this amount is noted as completed for Western’s book-keeping purpose.

Credit Project Repayment: The Administration supports

inclusion of Section 2(c) and I believe that some explanation is necessary for the hearing record. Since S. 2400

transfers title to only a portion of CBT, which is not completely paid-out, it needs to be clear—for book-keeping

purposes—that while the amount being paid is the net

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present value of the obligation, the undiscontinued amount

that this payment represents is credited against the total

capital amount that is owed. This will ensure that when

the final accounting on the Project is done, that the District is not asked to pay the difference between the present

value payment that is made pursuant to the legislation,

and the undiscounted amount that is on the books. Absent

this language, which has been included in several other

bills currently pending, how to handle this issue may not

be clear and could result in some confusion.

TECHNICAL MODIFICATION AND AMENDMENT

As I mentioned earlier, the Department can support S.

2400 if one technical modification is made and if the bill

is amended to reflect the sale price agreement between the

District and Reclamation.

Section 2(b)(1) needs to be amended to state clearly that

payment by the District is a trigger and a prerequisite for

transfer. The existing language can be interpreted as simply allowing the Secretary to receive payment. Also, Section 2(b)(1) should be amended to reflect the agreement between the District and Reclamation establishing the sales

price at $2,133,702.

We recommend the following revision:

(B) CONSIDERATION.—

(1) IN GENERAL.—As a condition of transfer, the Secretary shall receive the sum of $2,133,702 as consideration for the conveyance. ***

CONCLUSION

In conclusion Mr. Chairman, I would like to reiterate

that we have worked well with the District in the past and

are working closely with them on the memorandum of understanding to get the title transfer process started. The

Department looks forward to working with the Committee,

the Colorado delegation, and the District to address these

remaining issues and to move this legislation forward.

That concludes my statement, 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. 2400 as ordered reported.

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