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[House Report 109-588]
[From the U.S. Government Publishing Office]

109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-588

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      BLUNT RESERVOIR AND PIERRE CANAL LAND CONVEYANCE ACT OF 2005

                                _______
                                

 July 20, 2006.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Pombo, from the Committee on Resources, submitted the following

                              R E P O R T

                        [To accompany H.R. 4301]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Resources, to whom was referred the bill 
(H.R. 4301) to direct the Secretary of the Interior to convey 
certain parcels of land acquired for the Blunt Reservoir and 
Pierre Canal features of the initial stage of the Oahe Unit, 
James Division, South Dakota, to the Commission of Schools and 
Public Lands and the Department of Game, Fish, and Parks of the 
State of South Dakota for the purpose of mitigating lost 
wildlife habitat, on the condition that the current 
preferential leaseholders shall have an option to purchase the 
parcels from the Commission, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                          PURPOSE OF THE BILL

    The purpose of H.R. 4301 is to direct the Secretary of the 
Interior to convey certain parcels of land acquired for the 
Blunt Reservoir and Pierre Canal features of the initial stage 
of the Oahe Unit, James Division, South Dakota, to the 
Commission of Schools and Public Lands and the Department of 
Game, Fish, and Parks of the State of South Dakota for the 
purpose of mitigating lost wildlife habitat, on the condition 
that the current preferential leaseholders shall have an option 
to purchase the parcels from the Commission, and for other 
purposes.

                  BACKGROUND AND NEED FOR LEGISLATION

    As part of the Pick-Sloan Missouri Basin Program, the 
federal government planned numerous dams and reservoirs on the 
Upper Missouri River in South Dakota. The projects would 
provide irrigation water, flood control, and power generation. 
Two of the four completed reservoirs (Oahe and Sharpe) 
impounded over 220,500 acres of state and tribal lands.
    In 1968, Congress authorized the Secretary of the Interior 
to construct, operate, and maintain the Initial Stage of the 
Oahe Unit (Unit), James Division, for irrigation, municipal and 
industrial water supplies, flood control, fish and wildlife 
conservation, and recreational activities. Known as the Oahe 
Irrigation Project, it was to consist of a pumping plant, a 
system of main canals (including the Pierre Canal), along with 
the Blunt Dam and Reservoir roughly 35 miles east of Pierre.
    The federal government was authorized to acquire 42,000 
acres of land to construct and operate the Blunt Reservoir and 
Pierre Canal feature of the Unit. Between 1972-1977, 
approximately 19,000 acres were acquired in Hughes and Sully 
Counties with an understanding that the willing sellers would 
be able to lease back the land until the Project was completed. 
Some lands were purchased from willing sellers, while others 
were acquired through condemnation. At the time, many 
landowners believed that they would be able to purchase the 
land back if it was not needed for the Project. Some local 
opposition to the Project surfaced in 1973 and continued to 
build until a series of public meetings were held in 1977 to 
determine if the Project should continue. Later that year, 
Project construction was halted. All major construction 
contract activities ceased, and land acquisition was halted, 
though the Blunt Reservoir and Pierre Canal have remained 
authorized to date.
    The acquired lands have remained federal property since 
Project construction ended and the Bureau of Reclamation has 
administered them using preferential and nonpreferential 
leases. Preferential leaseholders are the original land owners 
(and their descendants) at the time of Project purchase, with 
holdings of approximately 13,700 acres. The non-preferential 
leaseholders consist of those who had not previously owned or 
controlled the land prior to Project purchase, with holdings of 
approximately 4,700 acres. Throughout the years, all of this 
land has remained off local property tax rolls. Most of the 
land is still used for agricultural purposes, while some is not 
in original condition and contains stockpiled materials, 
fences, access roads, detours, and other various items.
    In order to meet aspects of Section 602 of Public Law 105-
277, known as the Cheyenne River Sioux Tribe, Lower Brule Sioux 
Tribe, and State of South Dakota Terrestrial Wildlife Habitat 
Restoration Act, the State developed a habitat mitigation plan 
for the previously mentioned 220,500 acres of lost wildlife 
habitat. This plan allows for the development of approximately 
27,000 acres of wildlife habitat in the State. Transferring 
approximately 4,700 acres of non-preferential lease lands in 
the Blunt Reservoir feature to the State Department of Game, 
Fish and Parks would constitute a step toward satisfying the 
habitat mitigation obligation.
    The goals of H.R. 4301 are to: deauthorize the Blunt 
Reservoir feature; allow preferential leaseholders the first 
option to purchase the land they currently lease; and to convey 
to the State Department of Game, Fish, and Parks 
nonpreferential leased parcels, unleased parcels, and any 
parcels not purchased back for the purposes of mitigating lost 
wildlife habitat. Preferential leaseholders will have five 
years to purchase the land, via cash or 30 year financing. In 
order to encourage cash purchases, the legislation fixes the 
price at 10% below fair market value, as determined by Uniform 
Appraisal Standards.
    Related to a February 8, 2006, Water and Power Subcommittee 
hearing on H.R. 4301, the State commissioned a study to 
evaluate the change in land values around the Blunt Reservoir 
and Pierre Canal feature lands. Between 2000, just after the 
Blunt Reservoir legislation was first introduced, and 2006, the 
State's report concluded that agricultural land values have 
increased 88 percent around the Reservoir and canal feature 
lands. This substantial increase is consistent with concerns 
raised at that hearing.

                            COMMITTEE ACTION

    H.R. 4301 was introduced on November 10, 2005, by 
Congresswoman Stephanie Herseth (D-SD). The bill was referred 
to the Committee on Resources, and within the Committee to the 
Subcommittee on Water and Power. On February 8, 2006, the 
Subcommittee held a hearing on the bill. On June 21, 2006, the 
Full Resources Committee met to consider the bill. The 
Subcommittee on Water and Power was discharged from further 
consideration of the bill by unanimous consent. No amendments 
were offered and the bill was ordered favorably reported to the 
House of Representatives by unanimous consent.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    This section cites the short title of this bill as the 
``Blunt Reservoir and Pierre Canal Land Conveyance Act of 
2005.''

Section 2. Blunt Reservoir and Pierre Canal

    Subsection (a) defines key terms used in the Act.
    Subsection (b) deauthorizes the Blunt Reservoir feature of 
the Oahe Irrigation Project.
    Subsection (c) requires the State to accept land conveyed 
to it under the bill in ``as is'' condition, assume 
responsibility for any outstanding liabilities, and recognize 
any outstanding obligations associated with expired easements 
or other rights granted to either feature. The conveyances to 
the State shall also be subject to the reservations by the 
United States and the conditions specified in section 667b of 
title 16, United States Code, for transfer of property to State 
agencies for wildlife conservation purposes. The conveyances 
shall be subject to the reservation by the United States of all 
oil, gas, and mineral rights, to the condition that the 
property continue to be used for wildlife conservation
    Subsection (d) allows the preferential leaseholders an 
option to purchase the land they lease within 5 years of 
enactment. Any purchases shall be from the Commission, acting 
as an agent for the Secretary. The leaseholders would have the 
option of paying cash and receiving a 10 percent discount on 
the land's value, or paying by installment with a 10 percent 
down payment and the remainder paid over a 30-year period at 3 
percent annual interest. If the preferential leaseholder fails 
to purchase a parcel within the 5-year period, that parcel 
would be conveyed to the State to assist in the implementation 
of the wildlife habitat mitigation plan. Proceeds of the sales 
shall be deposited as miscellaneous funds in the Treasury and 
made available, subject to appropriation, to the State for the 
establishment of a trust fund to pay the county taxes on the 
lands received by the State Department of Game, Fish, and Parks 
under the Act.
    Subsection (e) directs the Secretary to convey to the South 
Dakota Department of Game, Fish, and Parks the nonpreferential 
leased parcels and unleased parcels of the Blunt Reservoir and 
Pierre Canal to be used for mitigating the wildlife habitat 
that was lost as a result of the development of the Pick-Sloan 
project. The Commission would also be authorized, with the 
Department's concurrence, to allow a person to exchange other 
land in South Dakota for a nonpreferential lease parcel or 
unleased parcel at Blunt Reservoir or Pierre Canal. This 
subsection also reserves to the United States a perpetual 
easement to the land to allow for a pipeline or other water 
conveyance structure over, under, across, or through the Pierre 
Canal Feature.
    Subsection (f) releases the United States from liability, 
except for damages from certain acts of negligence committed 
prior to the date of conveyance.
    Subsection (g) provides that during the interim period 
prior to the beginning on the date of enactment of this Act and 
ending on the date of conveyance of the parcel, the Secretary 
shall continue to lease each parcel under the same lease terms 
as prior to enactment of this Act.
    Subsection (h) authorizes $750,000 to be appropriated to 
reimburse the Secretary for expenses incurred in implementing 
this Act, and such sums as are necessary to reimburse the 
Commission for expenses incurred implementing this Act.

            COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Resources' oversight findings and recommendations 
are reflected in the body of this report.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Article IV section 3, clause 2 of the Constitution of the 
United States grants Congress the authority to enact this bill.

                    COMPLIANCE WITH HOUSE RULE XIII

    1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(3)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.
    2. Congressional Budget Act. As required by clause 3(c)(2) 
of rule XIII of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, this 
bill does not contain any new budget authority, credit 
authority, or an increase or decrease in revenues or tax 
expenditures. According to the Congressional Budget Office, 
enactment of this bill would increase direct spending by about 
$300,000 in 2007, but also result in $1.1 million in 
collections from asset sales, with a net reduction in direct 
spending of $800,000 over the 2007-2016 time period.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to direct the Secretary of the 
Interior to convey certain parcels of land acquired for the 
Blunt Reservoir and Pierre Canal features of the initial stage 
of the Oahe Unit, James Division, South Dakota, to the 
Commission of Schools and Public Lands and the Department of 
Game, Fish, and Parks of the State of South Dakota for the 
purpose of mitigating lost wildlife habitat, on the condition 
that the current preferential leaseholders shall have an option 
to purchase the parcels from the Commission, and for other 
purposes.
    4. Congressional Budget Office Cost Estimate. Under clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for this bill from the Director of the Congressional Budget 
Office:

H.R. 4301--Blunt Reservoir and Pierre Canal Land Conveyance Act of 2005

    Summary: H.R. 4301 would direct the Secretary of the 
Interior to transfer title to the lands and facilities that 
make up the nonpreferential lease parcels and unleased parcels 
of the Blunt Reservoir and Pierre Canal in South Dakota to the 
state. During the five years following enactment, H.R. 4301 
would allow any preferential leaseholder to purchase the parcel 
that is the subject of their lease for cash or on an 
installment basis. After five years, the bill would direct the 
Secretary to transfer any remaining parcels to South Dakota. 
H.R. 4301 would authorize the appropriation of $750,000 to 
implement those provisions. The bill also would authorize the 
appropriation of payments to South Dakota equal to the amount 
of any proceeds from sales to leaseholder.
    Assuming appropriation of the necessary amounts, CBO 
estimates that implementing H.R. 4301 would cost about $2 
million in 2007. CBO estimates that enacting H.R. 4301 would 
increase direct spending by about $300,000 in 2007. Enacting 
the bill would also lead to about $1.1 million in collections 
from asset sales. Thus, the net impact on direct spending over 
the 2007-2016 period would be a reduction of $0.8 million.
    H.R. 4301 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
Accepting the land conveyance authorized in this bill would be 
voluntary on the part of South Dakota and any costs to the 
state would be incurred voluntarily.
    Estimated cost to the Federal Government: Subject to the 
appropriation of the authorized amounts, CBO estimates that 
implementing H.R. 4301 would cost about $2 million in 2007. CBO 
estimates that enacting the bill would increase offsetting 
receipts by about $1.1 million in 2007 from land sales and 
would increase direct spending by about $300,000 in 2007 for 
loan subsidies for the installment purchases of certain land 
parcels in the affected area. The estimated budgetary impact of 
H.R. 4301 is shown in the following table. The costs of this 
legislation fall within budget function 300 (natural resources 
and environment).

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                                    By fiscal year, in millions of dollars--
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                                                              2007       2008       2009       2010       2011
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                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Payments to South Dakota:
    Estimated Authorization Level........................          0        1.9          0          0          0
    Estimated Outlays....................................          0        1.9          0          0          0
                                           CHANGES IN DIRECT SPENDING

Collections from Land Sales:
    Estimated Budget Authority...........................       -1.1          0          0          0          0
    Estimated Outlays....................................       -1.1          0          0          0          0
Loan Subsidy Cost:
    Estimated Budget Authority...........................        0.3          0          0          0          0
    Estimated Outlays....................................        0.2        0.1          0          0          0
    Total:
        Estimated Budget Authority.......................       -0.8          0          0          0          0
        Estimated Outlays................................       -0.9        0.1          0          0          0
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Basis of estimate

            Spending subject to appropriation
    H.R. 4301 would direct the Secretary of the Interior to 
transfer title to the lands and facilities that make up the 
nonpreferential lease parcels and unleashed parcels of the 
Blunt Reservoir and Pierre Canal to South Dakota. During the 
five years following enactment, H.R. 4301 would allow any 
preferential leaseholder to purchase the parcel that is the 
subject of their lease. After such time has expired, the bill 
would direct the Secretary to transfer any remaining 
preferential lease parcels to the state. H.R. 4301 would 
authorize the appropriation of $750,000 to implement those 
provisions.
    The bill also would authorize the appropriation of federal 
proceeds to South Dakota from sales to leaseholders. We 
estimate that by selling parcels to preferential leaseholders, 
the federal government would collect nearly $1.1 million in 
2007. Thus, subsequent appropriations of that amount to South 
Dakota would cost $1.1 million in 2007.
            Direct spending
    To purchase their leased lands under the bill, preferential 
leaseholders would pay the value of such lands appraied for 
agricultural purposes only (i.e., not including recreational 
value). The bill would allow leaseholders to pay 10 percent 
less than the appraised value if they pay up front in a lump 
sum. The bill also would allow those leaseholders whose parcels 
are valued above $10,000 to pay in installments over 30 years 
with an annual interest rate of 3 percent. Based on information 
from the Bureau of Reclamation, we expect that over the five-
year period, leaseholders would purchase about 14 parcels 
valued at less than $10,000 each. We estimate that the 
government would receive about $100,000 in 2007 from such 
sales.
    Because of the favorable loan terms under the bill, we 
expect that leaseholders with parcels valued above $10,000 
would purchase those parcels on an installment basis. Based on 
information from the Bureau of Reclamation, CBO estimates that 
the government would collect about $1 million from the sale of 
those more-valuable leases in 2007.
    The Federal Credit Reform Act of 1990 requires that 
agencies record the subsidy cost of financing arrangements in 
the year the assets are sold if payment is deferred for more 
than 90 days. In effect, H.R. 4301 would allow the Secretary to 
issue direct loans to the leaseholders with parcels valued 
about $10,000. Based on the experience of similar loan programs 
within the Department of Agriculture, CBO expects that very few 
purchasers would default on their payments. Because the 
purchasers would pay annual interest of 3 percent, an amount 
below the interest rate paid by the Treasury, CBO estimates 
that the loans under H.R. 4301 would have a subsidy cost of 
about $300,000, or 30 percent of the purchase price. Under 
credit reform procedures, this cost would be recorded in 2007.
    Intergovernmental and private-sector impact: H.R. 4301 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. Accepting the land conveyance authorized in 
this bill would be voluntary on the part of South Dakota and 
any costs to the state would be incurred voluntarily.
    Estimate prepared by: Federal Costs: Julie Middleton; 
Impact on state, local, and tribal governments: Lisa Ramirez-
Branum; Impact on the private sector: Craig Cammarata.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    COMPLIANCE WITH PUBLIC LAW 104-4

    This bill contains no unfunded mandates.

                PREEMPTION OF STATE, LOCAL OR TRIBAL LAW

    This bill is not intended to preempt any State, local or 
tribal law.

                        CHANGES IN EXISTING LAW

    If enacted, this bill would make no changes in existing 
law.

                                  
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