89–006 

111TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 111–308 

BONNEVILLE UNIT CLEAN HYDROPOWER FACILITATION 

ACT 

OCTOBER 21, 2009.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. RAHALL, from the Committee on Natural Resources, 

submitted the following 

R E P O R T 

[To accompany H.R. 2008] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Natural Resources, to whom was referred the 

bill (H.R. 2008) to authorize the Secretary of the Interior to facilitate the development of hydroelectric power on the Diamond Fork 

System of the Central Utah Project, having considered the same, 

report favorably thereon with an amendment and recommend that 

the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Bonneville Unit Clean Hydropower Facilitation 

Act’’. 

SEC. 2. DIAMOND FORK SYSTEM DEFINED. 

For the purposes of this Act, the term ‘‘Diamond Fork System’’ means the facilities described in chapter 4 of the October 2004 Supplement to the 1988 Definite 

Plan Report for the Bonneville Unit. 

SEC. 3. COST ALLOCATIONS. 

Notwithstanding any other provision of law, in order to facilitate hydropower development on the Diamond Fork System, the amount of reimbursable costs allocated 

to project power in Chapter 6 of the Power Appendix in the October 2004 Supplement to the 1988 Bonneville Unit Definite Plan Report, with regard to power development within the Diamond Fork System, shall be considered final costs as well as 

costs in excess of the total maximum repayment obligation as defined in section 211 

of the Central Utah Project Completion Act of 1992 (Public Law 102–575), and shall 

be subject to the same terms and conditions. 

SEC. 4. NO PURCHASE OR MARKET OBLIGATION; NO COSTS ASSIGNED TO POWER. 

Nothing in this Act shall obligate the Western Area Power Administration to purchase or market any of the power produced by the Diamond Fork power plant and 


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none of the costs associated with development of transmission facilities to transmit 

power from the Diamond Fork power plant shall be assigned to power for the purpose of Colorado River Storage Project ratemaking. 

SEC. 5. PROHIBITION ON TAX-EXEMPT FINANCING. 

No facility for the generation or transmission of hydroelectric power on the Diamond Fork System may be financed or refinanced, in whole or in part, with proceeds 

of any obligation— 

(1) the interest on which is exempt from the tax imposed under chapter 1 of 

the Internal Revenue Code of 1986, or 

(2) with respect to which credit is allowable under subpart I or J of part IV 

of subchapter A of chapter 1 of such Code. 

SEC. 6. REPORTING REQUIREMENT. 

If, 24 months after the date of the enactment of this Act, hydropower production 

on the Diamond Fork System has not commenced, the Secretary of the Interior shall 

submit a report to the Committee on Natural Resources of the House of Representatives and the Committee on Energy and Natural Resources of the Senate stating 

this fact, the reasons such production has not yet commenced, and a detailed 

timeline for future hydropower production. 

PURPOSE OF THE BILL

The purpose of H.R. 2008 is to authorize the Secretary of the Interior to facilitate the development of hydroelectric power on the 

Diamond Fork System of the Central Utah Project. 

BACKGROUND AND NEED FOR LEGISLATION

Under current law, the costs of constructing Bureau of Reclamation projects that serve multiple purposes are allocated among the 

project purposes and participants. Some project purposes are reimbursable, including irrigation, hydroelectric power production, and 

municipal and industrial water use. The reimbursable costs of Bureau of Reclamation projects are borne by the project beneficiaries 

and are paid based on contracts into which the beneficiaries enter. 

Depending on the type of project use, however, the beneficiaries 

may pay substantially different portions of the project cost. 

Water users repay the capital cost of a project based on whether 

the water is used for municipal and industrial purposes (M&I) or 

instead used for irrigating agricultural lands. M&I contractors are 

responsible for repaying the cost of a project that is allocated to 

them plus interest that accrues during the repayment period. 

Irrigators repay their allocated share of a project cost without interest. The irrigators’ repayment, however, is typically subsidized 

by hydroelectric power production under a feature of current law 

called ‘‘ability to pay,’’ also referred to as ‘‘irrigation assistance.’’ 

Hydroelectric power beneficiaries must repay their share of the 

construction costs of a project, with interest, over a set repayment 

period by recovering those costs through electricity rates. They also 

pay any amount of the irrigators’ costs of a project that irrigators 

do not have the ability to pay. Any of the subsidized costs of a 

project shifted to hydroelectric power beneficiaries under irrigation 

assistance are paid over the repayment period, but without interest. 

The Diamond Fork System is a completed feature of the Bonneville Unit and is located in Utah County, Utah. It has the capacity 

to generate up to 50 megawatts of hydroelectric power. The Colorado River Storage Project Act of 1956 authorized power as a 

project purpose and required that project costs be allocated for repayment by power generation. These projects costs have increased 


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over the decades of construction of the Bonneville Unit and now 

make hydroelectric power generation at two plants on the Diamond 

Fork System financially unfeasible. Under current law, approximately $161 million would be allocated to power beneficiaries if 

they install turbines at the two plants. 

H.R. 2008 would declare as final the allocation of $161 million 

to hydroelectric power generation on the Diamond Fork System 

and would defer those costs indefinitely in accordance with section 

211 of the Central Utah Project Completion Act of 1992. The effect 

of this deferment is that any power developed on the Diamond 

Fork System would not be burdened with the $161 million of debt 

or with any other reallocation of costs once the Bonneville Unit is 

substantially complete. Enacting the legislation would help facilitate the development of 50 megawatts of clean hydroelectric power 

while generating revenue for the government for the use of its 

water facilities. 

COMMITTEE ACTION

H.R. 2008 was introduced on April 21, 2009, by Rep. Jim Matheson (D–UT). The bill was referred to the Committee on Natural Resources, and within the Committee to the Subcommittee on Water 

and Power. On May 14, 2009, the Subcommittee held a hearing on 

the bill. 

On September 10, 2009, the Subcommittee was discharged from 

further consideration of H.R. 2008 and the full Natural Resources 

Committee met to consider the bill. Subcommittee Chairwoman 

Grace Napolitano (D–CA) offered an amendment in the nature of 

a substitute to the bill, which adds an explicit definition of the Diamond Fork System, prohibits the use of tax-exempt financing to 

construct hydroelectric power facilities, and requires the Administration to report to the Congress on hydroelectric power development on the system 24 months after the date of enactment of the 

legislation. The amendment in the nature of a substitute was 

adopted by unanimous consent. The bill, as amended, was then ordered favorably reported to the House of Representatives by unanimous consent. 

SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

Section 1 provides that this Act may be cited as the ‘‘Bonneville 

Unit Clean Hydropower Facilitation Act.’’ 

Section 2. Diamond Fork System defined 

Section 2 defines the Diamond Fork System as the facilities described in chapter 4 of the October 2004 Supplement to the 1988 

Definite Plan Report for the Bonneville Unit. 

Section 3. Cost allocations 

Section 3 declares the reimbursable costs allocated to project 

power on the Diamond Fork System as final, as well as in excess 

of the total maximum repayment obligation as defined in section 

211 of the Central Utah Project Completion Act of 1992 (Public 

Law 102–575). 


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Section 4. No purchase or market obligation; no costs assigned to 

power 

Section 4 allows the Western Area Power Administration to decline to purchase power that is developed on the Diamond Fork 

System. Section 4 also clarifies that none of the costs of transmission development on the Diamond Fork System will be assigned 

to power for the purpose of Colorado River Storage Project ratemaking. 

Section 5. Prohibition on tax-exempt financing 

Section 5 prohibits entities from using tax-exempt financing to 

fund any portion of the development of hydroelectric power or 

transmission on the Diamond Fork System. 

Section 6. Reporting requirement 

Section 6 requires the Secretary of the Interior to report on the 

status of hydroelectric power development on the Diamond Fork 

System if, after 24 months, hydroelectric power production has not 

commenced. 

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 

Natural Resources’ oversight findings and recommendations are reflected in the body of this report. 

CONSTITUTIONAL AUTHORITY STATEMENT

Article I, section 8 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, spending authority, credit authority, or an increase or decrease in revenues or tax expenditures. 

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 authorize the Secretary of the Interior to facilitate 

the development of hydroelectric power on the Diamond Fork System of the Central Utah Project. 

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: 


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H.R. 2008—Bonneville Unit Clean Hydropower Facilitation Act 

Summary: H.R. 2008 would reduce the amounts that developers 

of hydropower resources at the Diamond Fork project in Utah 

would have to pay to the U.S. Treasury for certain reimbursable 

expenses. (Reimbursable expenses are the portion of a project’s 

costs that are repaid to the federal government by other entities.) 

Under current law, a sponsor of this project would have to pay 

about $5.3 million annually for a period of 50 years following the 

start of electricity production. H.R. 2008 would effectively eliminate 

that obligation. Instead, sponsors would be required to pay certain 

annual fees, which are estimated to total about $400,000 a year, 

adjusted for inflation, beginning in 2015. 

CBO expects that enactment of H.R. 2008 would lead to the development of hydropower facilities by a nonfederal entity within a 

few years, sooner than expected under current law. In addition, 

CBO estimates that the government would receive payments from 

the hydropower developer of about $2 million over the 2010–2019 

period. 

H.R. 2008 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 costs of this legislation fall within budget function 300 (natural resources and environment). CBO estimates that enacting this bill would increase 

offsetting receipts (a credit against direct spending) by $400,000 a 

year over the 2015–2019 period, or a total collection of $2 million. 

Basis of Estimate: Based on information from the Bureau of Reclamation, CBO expects that the federal government is unlikely— 

under current law—to develop the hydropower resources of the Diamond Fork project for at least the next 10 years. Although there 

are no formal development proposals currently being considered by 

the bureau, two nonfederal entities—the Central Utah Water Conservancy District and the Strawberry Water Users’ Association— 

have expressed interest in developing those resources since at least 

1995. Whether one of those entities or another nonfederal developer will propose a hydroelectric project at Diamond Fork under 

current law over the next decade is unclear. Among the issues that 

have delayed development of the site is a requirement to pay the 

Treasury for the federal government’s power-related investments in 

the water project. According to the bureau, such payments would 

begin after the hydroelectric facilities go into service and would average $5.3 million a year for 50 years. 

CBO expects that eliminating the required annual payment to 

the Treasury would encourage nonfederal entities to pursue development of the hydropower resources at Diamond Fork. Assuming 

that H.R. 2008 is enacted near the end of 2009, we expect that the 

Bureau of Reclamation would receive a proposal to develop the hydroelectric resources within a year or two and that such a project 

could be completed by 2015. In that case, the government would 

collect annual fees from the project developer totaling about 

$400,000 a year (adjusted for inflation) for the life of the project. 

Intergovernmental and private-sector impact: H.R. 2008 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would impose no costs on state, local, or tribal governments. 


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Previous CBO Estimate: On June 22, 2009, CBO transmitted a 

cost estimate for H.R. 2008 as introduced in the House of Representatives on April 21, 2009. While the two versions of the bill 

are similar, in the cost estimate for the introduced bill, the Joint 

Committee on Taxation estimated that the use of tax-exempt financing to develop the Diamond Fork project would result in a loss 

of $9 million in federal revenues over the 2010–2019 period. The 

version of H.R. 2008 that was ordered reported by the House Committee on Natural Resources would prohibit the use of tax-exempt 

financing to develop this project. 

Estimate Prepared by: Federal Costs: Aurora Swanson; Impact 

on State, Local, and Tribal Governments: Melissa Merrell; Impact 

on the Private Sector: Amy Petz. 

Estimate Approved by: Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 

COMPLIANCE WITH PUBLIC LAW 104–4

This bill contains no unfunded mandates. 

EARMARK STATEMENT

H.R. 2489 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

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. 

Æ 


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