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[Senate Report 106-486]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 935
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-486

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                 RECLAMATION REFORM REFUND ACT OF 1999

                                _______
                                

October 4 (legislative day, September 22), 2000.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1697]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1697) to authorize the Secretary of the 
Interior to refund certain collections received pursuant to the 
Reclamation Reform Act of 1982, 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 title may be cited as the ``Reclamation Reform Refund Act of 
2000''.

SEC. 2. REFUND OF CERTAIN AMOUNTS RECEIVED UNDER RECLAMATION REFORM ACT 
                    OF 1982.

    (a) Refund Required.--Subject to the availability of 
appropriations, the Secretary of the Interior is authorized and 
directed to refund fully amounts received by the United States as 
payments for charges assessed by the Secretary before January 1, 1994, 
for failure to file or properly file certain certification or reporting 
forms pursuant to sections 206 and 224(c) of the Reclamation Reform Act 
of 1982 (43 U.S.C. 390ff, 390ww(c)) prior to the receipt of irrigation 
water. Such refunds shall be made regardless of whether such payments 
were required by the United States, were made pursuant to a compromise 
or settlement (whether court approved or otherwise), or were otherwise 
received by the United States. Any refund issued pursuant to this 
subsection shall include the amount of associated interest assessed by 
the Secretary and paid to the United States pursuant to section 224(i) 
of that Act (43 U.S.C. 390ww(ii)).
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as necessary.

                         purpose of the measure

    The purpose of S. 1697 is to authorize the Secretary of the 
Interior to refund certain charges assessed by the Bureau of 
Reclamation, before January 1, 1994, for failure to file 
certain reporting forms prior to the receipt of irrigation 
water.

                          background and need

    From 1987 to 1994, the Bureau of Reclamation assessed 
penalties against landholders who received Project water 
without filing the necessary forms required by the Reclamation 
Reform Act of 1982. The Solicitor of the Department of the 
Interior opined that the receipt of Project water by an 
ineligible party was tantamount to a common law conversion of 
that water. The Solicitor noted that the traditional remedy for 
conversion is either (i) the return of the property to the 
rightful owner or (ii) the payment to the owner of the fair 
value of the property. Because improperly delivered Project 
water cannot be recovered, the Solicitor concluded that an 
ineligible recipient of Project water should be required to pay 
the Bureau the fair value of the water--which the Solicitor 
determined to be the ``full cost'' rate payable under the 
Reclamation law by certain lessees.
    On the strength of the Solicitor's opinion, the Bureau then 
asserted that a landowner filing incomplete or incorrect 
certification/reporting forms was ineligible to receive Project 
water and must therefore pay a ``full cost penalty'' on all 
water received before the correct forms were filed. The Bureau 
insisted on collecting those full cost penalties for even 
minor, technical errors in filed forms, including, some allege, 
defects which resulted from faulty advice given by Bureau 
personnel. Because the Bureau had no means of directly 
enforcing full cost penalties against individual water users, 
the penalties were levied against the districts that delivered 
water to the allegedly ineligible water users. Millions of 
dollars in full cost penalties were assessed by the Bureau from 
1988 through 1994.
    Two districts that paid full cost penalties separately 
filed suits against the United States. Ultimately, the Court of 
Federal Claims determined that the Bureau had no authority to 
assess full cost penalties and the Bureau was ordered to issue 
a refund to the plaintiff district Orange Cove Irrigation 
District v. United States, 28 Fed.Cl.790 (1993). The second 
lawsuit was settled by the district involved when it received a 
similar refund. Many other districts applied for refunds or 
appealed the imposition of full cost penalties before paying.
    In 1995, the Bureau promulgated a new regulation to provide 
for the assessment of an ``administrative fee'' for minor 
certification and reporting form violations. By adopting that 
new regulation, the Bureau impliedly acknowledge the failure of 
its full cost penalty strategy. Thereafter, the Bureau proposed 
settlement of most pending full cost penalty claims based on 
the payment by the affected districts of administrative fees.
    However, the Solicitor advised the Bureau that it did not 
have the legal authority to make refunds of amounts previously 
paid by the districts as full cost penalties. As a result, 
although the Bureau has recognized that full cost penalties for 
minor certification and reporting form violations are 
inappropriate--and a court has determined them to be illegal--
nearly 100 Bureau contractors westwide cannot receive refunds 
of amounts paid to the Bureau for such penalties.
    Recognizing the dilemma of owing money but not having the 
authority to pay it, the Department of the Interior, through 
the Bureau of Reclamation, sent legislation to Congress and 
requested that it be introduced. The legislation authorizes the 
Secretary of the Interior to refund to landholders payments 
made in excess of $260 (the administrative fee). Reclamation 
estimates this legislation would affect landholders in 77 water 
districts in the states of Arizona, California, Colorado, 
Idaho, Montana, New Mexico, Oregon, Utah, and Wyoming.

                          legislative history

    S. 1697 was introduced by Senator Smith of Oregon on 
October 6, 1999 at the request of the Administration. The 
Subcommittee on Water and Power held a hearing on October 20, 
1999. At the business meeting on September 20, 2000, the 
Committee on Energy and Natural Resources ordered S. 1697, as 
amended, favorably reported.

            committee recommendation and tabulation of votes

    The Committee on Energy and Natural Resources, in open 
business session on September 20, 2000, by a unanimous vice 
vote with a quorum present, recommends that the Senate pass S. 
1697, if amended as described herein.

                          committee amendment

    During the consideration of S. 1697, the Committee adopted 
an amendment in the nature of a substitute. The amendment 
extended relief to water districts that paid the full cost 
penalties but have already settled with the Bureau of 
Reclamation. The amendment also deletes the $260 administrative 
fee and authorizes such sums as necessary rather than the 
$1,000,000 total authorization in the bill as introduced.

                   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 25, 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. 1697, the 
Reclamation Reform Refund Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lisa Cash 
Driskill.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 1697--Reclamation Reform Refund Act of 2000

    S. 1697 would authorize the appropriation of such sums as 
necessary to refund certain payments made by water districts to 
the Bureau of Reclamation (bureau) before January 1, 1994. 
Until that time, the bureau charged the full cost of irrigation 
water, rather than the reduced rate, to those water districts 
whose customers failed to file the appropriate forms, as 
required by the Reclamation Reform Act of 1982. Currently, the 
bureau assesses a $260 fee for failure to file such forms.
    The bill would authorize and direct the bureau to fully 
refund the difference between the full cost rate and the 
reduced rate for providing irrigation water to certain 
districts with customers who did not complete the bureau's 
required paperwork prior to January 1, 1994. In addition, about 
80 districts have already settled with the bureau and paid the 
fee required for failure to file the appropriate forms. Under 
the bill, those districts would also be eligible for a refund. 
Based on information from the bureau, CBO estimates that about 
160 districts would receive payments of about $1 million in 
2001, subject to the availability of appropriated funds.
    S. 1697 would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply. The bill 
contains no intergovernmental or private-sector mandates as 
defined by the Unfunded Mandates Reform Act and would benefit 
some water districts by directing the Secretary of the Interior 
to refund certain penalties collected from them.
    On August 18, 2000, CBO transmitted a cost estimate for 
H.R. 4847, the Reclamation Reform Refund Act of 2000, as 
ordered reported by the House Committee on Resources on July 
26, 2000. H.R. 4847 and S. 1697 have different criteria for 
determining which districts would be eligible for a refund, but 
both bills would cost about $1 million to implement.
    The CBO staff contact for this estimate is Lisa Cash 
Driskill. 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 S. 1697. 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. 1697, as ordered reported.

                        executive communications

    On, October 22, 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. 1697. These 
reports had not been received at the time the report on S. 1697 
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:

   Statement of Eluid Martinez, Commissioner, Bureau of Reclamation, 
                       Department of the Interior

    Thank you for the opportunity to testify on S. 1697, a bill 
to authorize the Secretary of the Interior to refund certain 
collections. The Bureau of Reclamation (Reclamation) 
appreciates Subcommittee Chairman Gordon Smith's introduction 
of this bill at the Administration's request.
Background
    Sections 206 and 224(c) of the Reclamation Reform Act of 
1982 require certain landholders, including owners and lessees, 
to file with their respective water districts on an annual 
basis certification and reporting forms disclosing their 
landholdings. These forms are the basis upon which water 
districts and Reclamation determine the eligibility of 
landholders to receive Reclamation irrigation water and assess 
the proper charges for the water. From 1987 through 1994, 
certain landholders failed to file the appropriate forms in a 
timely manner. In response, Reclamation charged those who 
failed to file the forms full cost for the water delivered.
    In 1993, Reclamation reviewed its policy and determined 
that use of an administrative fee could be established through 
a rulemaking process to address those who failed to file forms. 
In 1995, Reclamation issued regulations charging a $260 
administrative fee for anyone not filing the appropriate forms 
in a timely basis. That policy is in effect today, but it can 
not be applied retroactively.
    Reclamation has addressed those who failed to file the 
forms and did not pay the full cost assessment by charging the 
$260 administrative fee. Reclamation would like to be able to 
reimburse those who paid the full cost charge by refunding all 
but $260.
Legislation
    S. 1697 authorizes the Secretary of the Interior to refund 
to landholders payments made in excess of $260. Reclamation 
estimates that the legislation will affect approximately 75 
water districts in the states of Arizona, California, Colorado, 
Idaho, Montana, New Mexico, Oregon, Utah and Wyoming.
    The Administration strongly supports this bill.
    Thank you for holding this hearing. I appreciate the 
opportunity to present the Administration's views.

                        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. 1697, as 
ordered reported.

                                  
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