59–010 

Calendar No. 250 

110TH CONGRESS REPORT " ! SENATE 1st Session 110–117 

RENEGOTIATION OF PAYMENT SCHEDULE 

JUNE 28, 2007.—Ordered to be printed 

Mr. BINGAMAN, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R. 235] 

The Committee on Energy and Natural Resources, to which was 

referred the Act (H.R. 235) to allow for the renegotiation of the 

payment schedule of contracts between the Secretary of the Interior and the Redwood Valley County Water District, and for other 

purposes, having considered the same, reports favorably thereon 

without amendment and recommends that the Act do pass. 

PURPOSE OF THE MEASURE

The purpose of H.R. 235 is to allow for the renegotiation of the 

payment schedule of contracts between the Secretary of the Interior and the Redwood Valley County Water District, and for other 

purposes. 

BACKGROUND AND NEED

In 1964, the Redwood Valley County Water District (District) in 

California was formed to provide a reliable water supply to 1,100 

residents and farmers of Redwood Valley. A small water project 

was built at a cost of $8.5 million, $7.3 million of which came from 

two Small Reclamation Projects Act (SRPA) loans (P.L. 84–984). 

The District’s rate schedules for the water system were subsequently inadequate to generate revenues to repay the loans. At the 

core of the problem was the District’s inability to secure a reliable 

water supply. In October 1988, Congress passed P.L. 100–516 suspending the District’s loan repayment obligation until a renegotiated payment schedule is in place. It also eliminated any accrued 

penalty interest. No such payment schedule has been negotiated. 

The District is now actively seeking to secure private financing to 


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acquire a stable water supply and expand its water system to new 

customers. To do that, the District needs to be able to commit future revenues to pay for the projects without objection from Reclamation. 

LEGISLATIVE HISTORY

H.R. 235 was introduced on January 4, 2007 by Representative 

Mike Thompson and referred to the House Committee on Natural 

Resources. Under suspension of the rules, H.R. 235 passed the 

House of Representatives on February 6, 2007. The bill was received in the Senate and referred to the Committee on Energy and 

Natural Resources. An identical measure, S. 1112, was introduced 

by Senator Feinstein for herself and Senator Boxer on April 16, 

2007, and referred to the Committee on Energy and Natural Resources. The Subcommittee on Water and Power held a hearing on 

S. 1116 and H.R. 235 on April 25, 2007. At its business meeting 

on May 23, 2007, the Committee ordered H.R. 235 to be favorably 

reported. 

COMMITTEE RECOMMENDATION

The Committee on Energy and Natural Resources, in open business session on May 23, 2007, by voice vote of a quorum present, 

recommends that the Senate pass H.R. 235. 

SECTION-BY-SECTION ANALYSIS

Section 1 amends Public Law 100–516 to authorize the Redwood 

Valley County Water District to finance through non-Federal entities, the procurement of water rights and water system improvements to address the District’s water needs, and, as set forth, to 

reschedule payments due from the District to the United States to 

satisfy existing outstanding financial obligations. 

COST AND BUDGETARY CONSIDERATIONS

The following estimate of costs of this measure has been provided 

by the Congressional Budget Office: 

JUNE 6, 2007. 

Hon. JEFF BINGAMAN, 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 H.R. 235, an act to allow for 

the renegotiation of the payment schedule of contracts between the 

Secretary of the Interior and the Redwood Valley County Water 

District, and for other purposes. 

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

to provide them. The CBO staff contact is Tyler Kruzich. 

Sincerely, 

PETER R. ORSZAG. 


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H.R. 235—An act to allow for the renegotiation of the payment 

schedule of contracts between the Secretary of the Interior and 

the Redwood Valley County Water District, and for other purposes 

H.R. 235 would require the Secretary of the Interior to reschedule payments owed by the Redwood Valley County Water District 

to the government on loans made to the district by the Bureau of 

Reclamation under the Small Reclamation Projects Act. Based on 

information from the bureau, CBO estimates that enacting H.R. 

235 would have no significant impact on direct spending or revenues over the next 10 years. 

The Bureau of Reclamation executed two loans over 25 years ago 

to help the district construct a dual distribution water supply system. The loans totaled $7.3 million. After making the first payment 

in 1983 on a 35–year repayment plan on the two loans, the district 

determined that water sales from the project would not be sufficient to repay the loans. After years of inability to repay the loans, 

the Mni Wiconi Project Act of 1988 was enacted. That act required 

the Secretary to renegotiate the repayments schedules of the district’s loans, and suspended repayments until such renegotiation 

was complete. 

To date, the water district has made no additional repayments, 

and under current law the Bureau of Reclamation does not expect 

to collect any significant repayments on those loans over the next 

10 years. Further, the agency holds no collateral for those loans 

and does not plan to foreclose on them. Hence, CBO estimates that 

enacting H.R. 235 would not affect direct spending because we expect the agency is unlikely to receive any significant repayments either under current law or under the bill over the next 10 years. 

H.R. 235 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act. The bill 

might benefit the Redwood Valley County Water District by requiring the Secretary of the Interior to revise the district’s repayment 

contracts for construction and water projects. 

The CBO staff contact for this estimate is Tyler Kruzich. This estimate was 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 

H.R. 235. 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 H.R. 235, as ordered reported. 

EXECUTIVE COMMUNICATIONS

The testimony provided by the Bureau of Reclamation at the 

Subcommittee hearing on April 25, 2007 on H.R. 235 follows: 


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STATEMENT OF ROBERT JOHNSON, COMMISSIONER, BUREAU

OF RECLAMATION, U.S. DEPARTMENT OF THE INTERIOR

Mr. Chairman and members of the Subcommittee, I am 

Robert W. Johnson, Commissioner of the Bureau of Reclamation. For the reasons discussed below, the Department does not support H.R. 235. 

Reclamation has worked with the Redwood Valley County Water District (District) for over 30 years to fund and 

build a water distribution system to provide over 1,100 

residents and farmers of Redwood Valley, California with 

a reliable municipal and industrial water supply. Although 

we recognize the need to develop a workable strategy for 

ensuring the District is able to repay its loan obligation to 

Reclamation, because H.R. 235 could provide the District 

legislative loan forgiveness, Reclamation cannot support 

the bill. 

Over 25 years ago, Reclamation executed two 35–year 

repayment contracts with the District (contract numbers 

14–06–200–8423A and 14–06–200–8423A Amendatory) for 

two Small Reclamation Projects Act (P.L. 94–984) loans totaling $7.3 million. Combining those loans with funding 

from other sources, the District built an $8.5 million water 

system project that is still in use today. By 1982, the District’s water rate for its customers were above the state average, yet still inadequate to generate revenues for facilities operation and maintenance and repayment of a projected debt of $200,000 per year. That same year the District informed Reclamation of possible repayment problems. 

Beginning in the late 1980s, the District, congressional 

representatives, and Reclamation engaged in numerous 

discussions over the District’s inability to make the scheduled loan payments. Subsequent legislation resulted in a 

postponement of loan interest, but did not produce any 

positive outcome on the repayment issue. 

Compounding its fiscal problems, the District does not 

have a firm and reliable water supply and is currently 

under a court-ordered moratorium preventing new service 

connections. This moratorium has greatly hampered the 

District’s ability to repay its two loans. 

Reclamation cannot support H.R. 235 because the legislation’s repayment provision does not establish a date certain for either repayment to begin or to be concluded. The 

proposed legislation does not provide any assurance that 

the United States will ever receive payment on the two 

loans, and essentially could provide loan forgiveness. The 

renegotiated payment arrangement could further postpone 

repayment of money owed Reclamation. 

Reclamation recognizes that a firm and reliable water 

supply is likely necessary to resolve the District’s current 

financial dilemma, which prevents the District from being 

able to complete repayment of these two loans. Also, any 

deferment legislation should include language to ensure 

that the District first uses proceeds from the sales of such 


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a supply to repay the new obligation used to secure the 

water supply and second to satisfy the District’s repayment obligations to Reclamation. Furthermore, such legislation should include a date certain for repayment of Reclamation loans to begin or to be completed. We support efforts by the District to recover financially and find a solution that will enable it to pay its debts. Any such solution 

must ensure that the loans made by Reclamation will be 

wholly repaid. 

While the Department cannot support H.R. 235, we look 

forward to working with the District to address the repayment issue. This concludes my prepared remarks. I am 

pleased to answer any questions. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the Act H.R. 

235, as ordered reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is 

printed in italic, existing law in which no change is proposed is 

shown in roman): 

Public Law 100–516, Section 15 (102 Stat. 2573) 

SEC. 15. CONTRACTS WITH THE REDWOOD VALLEY COUNTY WATER 

DISTRICT, CALIFORNIA. 

(a) RENEGOTIATION OF CONTRACTS.—(1) Notwithstanding any 

other provision of law, the Secretary of the Interior shall renegotiate the schedules of payment for the loans to the Redwood Valley 

County Water District which are numbered 14–06–200–8423A and 

14–06–200–8423A Amendatory. 

(2) øSuch renegotiated schedules of payment may not take effect 

until October 1, 1989.¿ If, as of January 1, 2006, the Secretary of 

the Interior and the Redwood Valley County Water District have not 

renegotiated the schedule of payment, the District may enter into 

such additional non-Federal obligations as are necessary to finance 

procurement of dedicated water rights and improvements necessary 

to store and convey those rights to provide for the District’s water 

needs. The Secretary shall reschedule the payments due under loans 

numbered 14–06–200–8423A and 14–06–200–8423A Amendatory 

and said payments shall commence when such additional obligations have been financially satisfied by the District. The date of the 

initial payment owed by the District to the United States shall be 

regarded as the start of the District’s repayment period and the time 

upon which any interest shall first be computed and assessed under 

section 5 of the Small Reclamation Projects Act of 1956 (43 U.S.C. 

422a et seq.). 

(b) The obligation to repay amounts loaned to the Redwood Valley County Water District, California, pursuant to the original negotiated schedule of payment of a loan specified in subsection (a) 

is suspended until the renegotiated schedule of payment for that 

loan takes effect. Any obligation to repay amounts under any such 

loan which is due, but not paid as of the date of enactment of this 

Act, is suspended. The renegotiated schedules of payment, referred 


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to in subsection (a) shall take into account any obligation suspended by this subsection. 

ø(c) No interest may be charged on any payment under either of 

the loans specified in subsection (a) which is due but not paid before the renegotiated schedule of payment for such loan takes effect.¿ 

Æ 


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