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[Senate Report 107-289]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 608
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-289

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  KLAMATH BASIN EMERGENCY OPERATION AND MAINTENANCE REFUND ACT OF 2001

                                _______
                                

               September 17, 2002.--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. 2828]

    The Committee on Energy and Natural Resources, to which was 
referred the Act (H.R. 2828) to authorize payments to certain 
Klamath Project water distribution entities for amounts 
assessed by the entities for operation and maintenance of the 
Project's transferred works for 2001, to authorize refunds to 
such entities of amounts collected by the Bureau of Reclamation 
for reserved works for 2001, 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. 2828 is to authorize the Secretary of 
the Interior to refund amounts collected from Klamath Project 
irrigation and drainage districts, as well as from certain 
individuals, for operation and maintenance of the Project's 
irrigation works for water year 2001.

                          BACKGROUND AND NEED

    The U.S. Bureau of Reclamation Klamath Project lies within 
three counties along the Oregon and California border; Klamath 
County in southern Oregon, and Modoc and Siskiyou Counties in 
northern California. Authorized in 1905 for irrigation, the 
Klamath Project serves approximately 1,400 farms and provides 
irrigation water to approximately 220,000 acres in an otherwise 
arid area.
    In 1988, the U.S. Fish and Wildlife Service listed the 
Shortnose and Lost River sucker fish as ``endangered'' under 
the Endangered Species Act (ESA). In 1992, a biological opinion 
was issued on the effect of annual Klamath Project operations 
on the endangered fish. That opinion established a requirement 
that the annual minimum lake level be maintained at 4,139 feet 
above sea level in at least 6 out of every 10 years.
    In 1996, the Bureau of Reclamation agreed to meet certain 
minimum instream flows below Iron Gate Dam, a non-federal 
facility on the Klamath River, to protect habitat for 
anadromous fish. In 1997, Southern Oregon and Northern 
California Coastal Coho salmon were listed under the ESA as 
``threatened'' species. A 1999 biological opinion from the 
National Marine Fisheries Service concluded that Klamath 
Project operations that year would affect, but not likely 
jeopardize, coho salmon.
    Following a declaration of severe drought for the Klamath 
Basin in 2001, two new biological opinions from the U.S. Fish 
and Wildlife Service and the National Marine Fisheries Service 
were issued on April 5 and April 6, 2001. The opinions stated 
that the Bureau of Reclamation's operation of the Klamath 
Project for the year would jeopardize the continued existence 
of the endangered sucker fish and threatened coho salmon, and 
would harm but not jeopardize the continued existence of bald 
eagles who also rely on Project water. The opinions also called 
for the minimum elevation in upper Klamath Lake to be 
maintained at 4,140 feet above sea level at the end of 
September, and increased flows in the Klamath River.
    On April 6, 2001, the Bureau of Reclamation released the 
Klamath Project 2001 Operations Plan, stating that based on the 
requirements of the biological opinions and extreme drought 
conditions, only limited deliveries of Project water would be 
made for irrigation. Only a small area (Langell Valley and 
Bonanza) received water from Clear Lake and Gerber Reservoirs. 
Additional minor relief was also provided on July 24, 2001, 
when the Department of the Interior announced it would release 
about 70,000 to 75,000 acre-feet of water from Upper Klamath 
Lake to assist farmers in the Klamath Project area.
    Despite the non-delivery of water to most Klamath Basin 
farmers, they were still responsible for 2001 operations and 
maintenance expenses for the Project. Based on the unique 
circumstances affecting the Klamath Project in 2001, H.R. 2828 
authorizes the Secretary of the Interior to make refunds to 
qualified Klamath Project entities and individual contractors 
for amounts assessed to them for operation and maintenance of 
the Klamath Project for 2001. It also enables the Secretary of 
the Interior to waive additional operation and maintenance 
payments due for 2001 for certain irrigation districts which 
contracted with the Bureau of Reclamation for water from the 
Klamath Project.

                          LEGISLATIVE HISTORY

    H.R. 2828 was introduced by Representative Walden on August 
2, 2001 and passed by the House of Representatives on November 
13, 2001. An identical bill, S. 1824, was introduced by 
Senators Smith and Wyden on December 13, 2001. The Subcommittee 
on Water and Power held a hearing on H.R. 2828 and S. 1824 on 
June 6, 2002. At the business meeting on July 31, 2002, the 
Committee on Energy and Natural Resources ordered H.R. 2828 
favorably reported.

                        COMMITTEE RECOMMENDATION

    The Committee on Energy and Natural Resources, in open 
business session on July 31, 2002, by a voice vote of a quorum 
present, recommends that the Senate pass H.R. 2828, as 
described herein.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides the short title, the ``Klamath Basin 
Emergency Operation and Maintenance Refund Act of 2001''.
    Section 2 defines the term ``qualified Klamath Project 
entity'' which is used in the Act.
    Section 3, subsection (a) authorizes the Secretary of the 
Interior to pay each qualified Klamath Project entity an amount 
equal to the amount that entity assessed its members or other 
persons for the operation and maintenance of Klamath Project 
works in 2001.
    Subsection (b) requires each qualified entity, as a 
condition of payment, to (1) provide the Secretary with 
documentation concerning the total amount assessed; and (2) 
execute a binding agreement under which the payments under this 
Act will be distributed to the members or other persons 
assessed operation and maintenance fees in 2001.
    Subsection (c) authorizes the Secretary to waive any 
remaining 2001 operation and maintenance fees for Klamath 
Project reserved works.
    Subsection (d) authorizes the Secretary to pay individuals 
receiving water from the Klamath Project under contracts 
entered into pursuant to the Warren Act (43 U.S.C. 523-525), an 
amount equal to amounts collected for operation and maintenance 
costs for 2001. The Secretary is also authorized to waive any 
remaining 2001 charges.
    Section 4 authorizes appropriations to cover the amounts 
not paid by qualified Klamath Project entities for operation 
and maintenance of the reserved works for 2001 and directs that 
cost incurred by the Bureau of Reclamation in implementing the 
Act shall be nonreimbursable.
    Section 5 directs that activities or funding pursuant to 
the Act shall not be considered a supplemental or additional 
benefit under the Reclamation laws.

                    COST AND BUDGETARY CONSIDERATION

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

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 6, 2002.
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. 2828, the Klamath 
Basin Emergency Operation and Maintenance Refund Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Julie 
Middleton.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 2828--Klamath Basin Emergency Operation and Maintenance Refund Act 
        of 2001

    Summary: H.R. 2828 would authorize the Secretary of the 
Interior to refund fees assessed by the Bureau of Reclamation 
on Klamath Basin irrigation and drainage districts for certain 
operation and maintenance costs for calendar year 2001. Subject 
to appropriation of the necessary funds, the Secretary would 
also be authorized to pay for 2001 operations and maintenance 
costs of water projects managed by water districts in the 
basin. Finally, the act would authorize the Secretary to waive 
any remaining fees for 2001 that have not yet been paid. These 
refunds and waivers also would apply to individuals in the 
basin who have water contracts with the bureau.
    CBO estimates that implementing H.R. 2828 would cost about 
$2 million in 2003, assuming appropriation of the necessary 
funds. In addition, the bureau would be authorized to refund 
fees collected for certain operations and maintenance costs 
which would increase direct spending by less than $150,000; 
therefore, pay-as-you-go procedures would apply.
    H.R. 2828 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2828 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--
                                                                    --------------------------------------------
                                                                       2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                                CHANGES IN SPENDING SUBJECT TO APPROPRIATION \1\

Estimated authorization level......................................        2        0        0        0        0
Estimated outlays..................................................        2        0        0        0       0
----------------------------------------------------------------------------------------------------------------
\1\ Enacting H.R. 2828 also would cause a negligible increase in direct spending in 2002.

Basis of estimate

    H.R. 2828 would require the Bureau of Reclamation to refund 
fees association with the operation and maintenance of water 
projects run by the bureau (these are known as reserved works) 
and those run by local water districts (these are known as 
transferred works) in the Klamath Basin. Based on information 
from the bureau, CBO estimates that implementing H.R. 2828 
would increase direct spending by less than $150,000 in 2003. 
In addition, we estimate the legislation would cost about $2 
million in 2003, assuming the appropriation of the necessary 
funds.
            Reserved works
    The bureau pays for the operation and maintenance of 
certain structures used for flood control, storage, and 
drainage that have not been transferred to districts. Under 
current law, the bureau bills Klamath Basin and other water 
users for those operation and maintenance costs. H.R. 2828 
would authorize the Secretary of the Interior to refund fees 
paid to the bureau for operations and maintenance of reserved 
works in 2001. CBO estimates these refunds would increase 
direct spending by about $150,000 in 2003.
            Transferred works
    The bureau has transferred some structures used for flood 
control, storage, and drainage to local irrigation and drainage 
districts. Following transfer the districts are responsible for 
operation and maintenance costs. Under H.R. 2828, the Secretary 
of the Interior would be authorized to reimburse districts with 
transferred works for their 2001 operation and maintenance 
expenses from appropriated funds if they meet certain criteria. 
Based on information from the bureau, CBO estimates reimbursing 
the Klamath Irrigation District and other eligible districts 
would cost about $2 million.
    Pay-as-you-go consideration: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. CBO 
estimates that enactment of H.R. 2882 would increase direct 
spending by about $150,000 in 2002.
    Intergovernmental and private-sector impact: H.R. 2828 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO estimate: On November 13, 2001, CBO prepared a 
cost estimate for H.R. 2828 as ordered reported by the House 
Committee on Resources on November 7, 2001. The two versions of 
this legislation are identical, but CBO has slightly revised 
its estimate of the cost of this legislation.
    Based on updated information from the bureau on the actual 
cost of operating and maintaining reserved works in 2001, CBO 
increased its estimate of direct spending under the legislation 
from $100,000 to about $150,000. In addition, based on the 
actual operation and maintenance costs of transferred works for 
2001, CBO increased its estimate of the cost of reimbursing 
related fees from $1.5 million to $2 million, subject to 
appropriation of the necessary amounts.
    Estimate prepared by: Federal costs: Julie Middleton; 
impact on state, local, and tribal governments: Marjorie 
Miller; impact on the private sector: Lauren Marks.
    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 H.R. 2828. 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. 2828.

                        EXECUTIVE COMMUNICATIONS

    The pertinent legislative report received by the Committee 
from the Department of the Interior setting forth Executive 
agency recommendation relating to H.R. 2828 are set forth 
below:

                   U.S. Department of the Interior,
                                   Office of the Secretary,
                                   Washington, DC, August 27, 2002.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: This letter responds to your request for 
the views of the Department of the Interior on S. 1824 and H.R. 
2828, concerning refunds of amounts collected from Klamath 
Project irrigation and drainage districts for operation and 
maintenance of the Project's transferred and reserved works for 
water year 2001. This confirms testimony of Mark Limbaugh, 
Director of External and Intergovernmental Affairs for the 
Bureau of Reclamation (Reclamation) before the Subcommittee on 
Water and Power on June 6. The bills also authorize the 
Secretary of the Interior to waive requirements that the 
districts pay additional operation and maintenance (O&M) 
charges for the remainder of 2001. Our comments will address 
both bills.
    As much as the Department can sympathize with the 
unfortunate plight of the water supply contract holders in the 
Klamath Project, we do have some concerns about the long-term 
policy and cost ramifications these bills may unintentionally 
set.
    The troublesome series of events that occurred last year in 
the Klamath Basin were a reminder of the cyclical nature of 
droughts in the West and the increasing demands for a finite 
amount of water. The financial difficulties suffered by the 
irrigators, their families, and the community as a whole is 
something Reclamation has worked hard to counter. The 
Department responded quickly last year and continues to play an 
integral role in finding workable long-term solutions for that 
region.
    In March 2002, the President established the Klamath River 
Basin Federal Working Group, which is chaired by Interior 
Secretary Norton and includes Commerce Secretary Evans, 
Agriculture Secretary Veneman and CEQ Chairman Connaughton. The 
Working Group has since undertaken immediate and long-term 
actions to address the complex economic and natural resource 
issues in the basin. For instance, the Working Group announced 
$1.6 million from the Department of Agriculture (USDA) to 
accelerate assistance for water management and water quality 
actions on Forest Service land. The Department accelerated the 
construction schedule on screening of the A canal, and 
anticipates finishing construction in April 2003. Reclamation 
announced two significant restoration projects that will add 
water to a water bank. These projects involved partnerships 
with The Nature Conservancy and The Rangeland Trust. The 
Administration is considering additional water quality and 
water quantity measures and is considering reprogramming of 
Reclamation funds to accelerate water conservation and habitat 
restoration projects in the Klamath River Basin. Also, the USDA 
provided $20 million to help affected farming families.
    In addition to these Administration efforts, the region's 
congressional delegation, including Senator Gordon Smith and 
Congressman Greg Walden, were instrumental in passing a potent 
conservation title in the Farm Bill, also strongly supported by 
the Administration, which included $50 million specifically for 
Klamath farmers and ranchers to pursue conservation measures. 
The Klamath community may also be able to qualify for some of 
the large funding increases for the Environmental Quality 
Incentives Program (EQIP), Wetlands Reserve Program (WRP), and 
Conservation Reserve Program (CRP) authorized in the Farm Bill.
    While we all hope that this situation will never repeat 
itself, cyclical drought conditions pose a considerable 
challenge in the arid West, where we must manage water for 
endangered species, fulfill our trust responsibilities to 
Native Americans, and meet the needs of irrigators and other 
water users. Although what happened in the Klamath Basin was an 
extraordinary example of drought and Endangered Species Act 
(ESA) conditions hampering water deliveries for contract 
customers, this is not the first example, nor will it be the 
last. Over the years, there have been countless examples of 
when contractors were unable to get their full contract 
allotment of water due to drought or environmental demands. 
Nonetheless, O&M costs were incurred and the contractors paid 
their share.
    Regardless of how much water is delivered, maintenance of 
facilities must continue if they are to remain functional. As 
Reclamation enters the dawn of its second century, it is 
important that we not shed the tenets of our success from our 
first 100 years. The fundamental principles of Reclamation have 
always included fulfilling our contractual commitments and 
delivering water to our contractors in the arid West. The 
corresponding contractual commitment of the water users to help 
maintain this infrastructure, in good times and bad, is 
essential to the success of the program.
    The Department recognizes the hardships experienced by 
Klamath area residents. It is also keenly aware of the severe 
drought conditions playing out across the West. Reclamation 
also recognizes it will have additional water management 
challenges in the future. I have no doubt that the 
Administration and Congress will act with the same passion with 
other affected parties, where appropriate, as they did with 
Klamath customers. What we must not do is give cause to those 
persistent critics of Reclamation programs that allege the 
beneficiaries of our programs do not pay their fair share, even 
in the most difficult of times. That is why the Department has 
some serious concerns about the long-term policy and cost 
ramifications that these bills may unintentionally set. For 
example, applying the logic of these bills to all such 
situations could cost Federal taxpayers many millions of 
dollars per year in lost O&M payments. Every year there are 
water contractors who do not receive the full amount of water 
for which they have contracted, due to drought, ESA concerns, 
or over-allocation of scarce water. Nevertheless, if those 
contractors want to ensure future deliveries, they must help 
maintain the facilities that make those deliveries possible.
    The Department values its working relationship with our 
Klamath Project customers and is committed to working through 
the complex issues all of us face in that region. Reclamation 
stands ready to work with Senator Smith and other members of 
this Subcommittee to find a mutually acceptable solution for 
the Klamath Project customers.
    The Office of Management and Budget advises that there is 
no objection to the presentation of this report from the 
standpoint of the Administration's program.
            Sincerely,
                                                  John W. Keys III.

                        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 Act H.R. 2828, as 
ordered reported.

                                  
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