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[Senate Report 108-250]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 467
108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-250
======================================================================
 
    WALLOWA LAKE DAM REHABILITATION AND WATER MANAGEMENT ACT OF 2004

                                _______
                                

                 March 29, 2004.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1355]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1355) to authorize the Bureau of 
Reclamation to participate in the rehabilitation of the Wallowa 
Lake Dam in Oregon, and for other purposes, 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 Act may be cited as the ``Wallowa Lake Dam Rehabilitation and 
Water Management Act of 2004''.

SEC. 2. DEFINITIONS.

  In this Act:
          (1) Associated ditch companies, incorporated.--The term 
        ``Associated Ditch Companies, Incorporated'' means the 
        nonprofit corporation established under the laws of the State 
        of Oregon that operates Wallowa Lake Dam.
          (2) Phase ii and phase iii of the wallowa valley water 
        management plan.--The term ``Phase II and Phase III of the 
        Wallowa Valley Water Management Plan'' means the Phase II 
        program for fish passage improvements and water conservation 
        measures, and the Phase III program for implementation of water 
        exchange infrastructure, developed for the Wallowa River 
        watershed, as contained in the document entitled ``Wallowa Lake 
        Dam Rehabilitation and Water Management Plan Vision 
        Statement'', dated February 2001, and on file with the Bureau 
        of Reclamation.
          (3) Secretary.--The term ``Secretary'' means the Secretary of 
        the Interior, acting through the Commissioner of Reclamation.
          (4) Wallowa lake dam rehabilitation program.--The term 
        ``Wallowa Lake Dam Rehabilitation Program'' means the program 
        for the rehabilitation of the Wallowa Lake Dam in Oregon, as 
        contained in the engineering document entitled, ``Phase I Dam 
        Assessment and Preliminary Engineering Design'', dated December 
        2002, and on file with the Bureau of Reclamation.

SEC. 3. AUTHORIZATION TO PARTICIPATE IN PROGRAM.

  (a) Grants and Cooperative Agreements.--The Secretary may provide 
grants to, or enter into cooperative or other agreements with, tribal, 
State, and local governmental entities and the Associated Ditch 
Companies, Incorporated, to plan, design, and construct facilities 
needed to implement the Wallowa Lake Dam Rehabilitation Program and 
Phase II and Phase III of the Wallowa Valley Water Management Plan.
  (b) Conditions.--As a condition of providing funds under subsection 
(a), the Secretary shall ensure that--
          (1) the Wallowa Lake Dam Rehabilitation Program meets the 
        standards of the dam safety program of the State of Oregon;
          (2) the Associated Ditch Companies, Incorporated, agrees to 
        assume liability for any work performed, or supervised, with 
        funds provided to it under this Act; and
          (3) the United States shall not be liable for damages of any 
        kind arising out of any act, omission, or occurrence relating 
        to a facility rehabilitated or constructed under this Act.
  (c) Cost Sharing.--
          (1) In general.--The Federal share of the costs of activities 
        authorized under this Act shall not exceed 80 percent.
          (2) Exclusions from federal share.--There shall not be 
        credited against the Federal share of such costs--
                  (A) any expenditure by the Bonneville Power 
                Administration in the Wallowa River watershed; and
                  (B) expenditures made by individual agricultural 
                producers in any Federal commodity or conservation 
                program.
  (d) Compliance With State Law.--The Secretary, in carrying out this 
Act, shall comply with otherwise applicable State water law.
  (e) Prohibition on Holding Title.--The Federal Government shall not 
hold title to any facility rehabilitated or constructed under this Act.
  (f) Prohibition on Operation and Maintenance.--The Federal Government 
shall not be responsible for the operation and maintenance of any 
facility constructed or rehabilitated under this Act.
  (g) Ownership and Operation of Fish Passage Facility.--Any facility 
constructed using Federal funds authorized by this Act located at 
Wallowa Lake Dam for trapping and transportation of migratory adult 
salmon may be owned and operated only by the Nez Perce Tribe.

SEC. 4. RELATIONSHIP TO OTHER LAW.

  Activities funded under this Act shall not be considered a 
supplemental or additional benefit under Federal reclamation law (the 
Act of June 17, 1902 (32 Stat. 388, chapter 1093), and Acts 
supplemental to and amendatory of that Act (43 U.S.C. 371 et seq.)).

SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

  There is authorized to be appropriated to the Secretary to pay the 
Federal share of the costs of activities authorized under this Act 
$25,600,000.

                         PURPOSE OF THE MEASURE

    The purpose of S. 1355 is to authorize the Bureau of 
Reclamation to participate in the rehabilitation of the Wallowa 
Lake Dam in Oregon.

                          BACKGROUND AND NEED

    Wallowa Lake Dam is a privately owned dam constructed in 
1918 and raised in 1929. It is owned and operated by the 
Associated Ditch Companies, Inc. (ADC). Dam safety deficiencies 
have been identified by the U.S. Army Corps of Engineers and 
Oregon Water Resources Department, causing the reservoir to be 
held below full pool elevation since 1996. ADC, in conjunction 
with the Grande Ronde Model Watershed Council, the Bureau of 
Reclamation, and other local, State, and Federal agencies, 
developed the Wallowa Lake Dam Rehabilitation and Water 
Management Program to address dam safety deficiencies and to 
tie correction of those deficiencies to larger environmental 
issues in the Wallowa River Basin.
    S. 1355 authorizes the Secretary of the Interior, acting 
through the Commissioner of Reclamation, to participate in: (1) 
the Wallowa Lake Dam Rehabilitation Program, in cooperation 
with ADC; and (2) phases II and III of the Wallowa Valley Water 
Management Plan, in cooperation with tribal, State, and local 
governmental entities. The Wallowa Lake Dam Rehabilitation 
Program, as described in the Vision Statement (February 2001), 
focuses on planning, designing, and constructing recommended 
improvements to Wallowa Lake Dam. When this phase is completed, 
ADC will be able to raise pool levels, working closely with the 
Oregon State Parks Department to assess the impact on nearby 
park facilities.
    Phase II of the Wallowa Valley Water Management Plan will 
focus on the planning and implementation of fish screens, 
automated head gates, and flow measurements devices at 
unscreened diversions. The Nez Perce Tribe is currently working 
with the Oregon Department of Fish and Wildlife to plan and 
implement fish recovery measures, and S. 1355 provides that 
only the Tribe may own and operate fish passage facilities 
constructed with Federal funds at Wallowa Lake Dam.
    Phase III focuses on planning, designing, and implementing 
the institutional framework and infrastructure, including pumps 
and pipelines, needed for a water exchange between the Wallowa 
River and the Lostine and Bear Creek Valley irrigation system.

                          LEGISLATIVE HISTORY

    S. 1355 was introduced by Senators Smith and Wyden on June 
26, 2003. The Subcommittee on Water and Power held a hearing on 
S. 1355 on October 15, 2003. S. Hrg. 108-271. At the business 
meeting on March 10, 2004, the Committee on Energy and Natural 
Resources ordered S. 1355 favorably reported, with an amendment 
in the nature of a substitute.
    During the 107th Congress, a similar measure, S. 1883, was 
introduced by Senators Smith and Wyden. The Subcommittee on 
Water and Power held a hearing on S. 1883 on June 6, 2002. The 
Committee on Energy and Natural Resources ordered S. 1883 
favorably reported on July 31, 2002 with an amendment. S. 1883 
passed the Senate as title III of S. 2556 on November 20, 2002.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in 
open business session on March 10, 2004, by a unanimous voice 
vote of a quorum present, recommends that the Senate pass S. 
1355, if amended as described herein.

                          COMMITTEE AMENDMENT

    During consideration of S. 1355, the Committee adopted an 
amendment in the nature of a substitute. The amendment in the 
nature of a substitute modifies the original test to: (1) 
clarify that the Secretary may provide grants to, or enter into 
cooperative agreements with, tribal, state, and local 
government entities and ADC, to plan, design, and construct 
facilities needed to implement the Wallowa Lake Dam 
Rehabilitation Program and Phase II and Phase III of the 
Wallowa Valley Water Management Plan; (2) require the Secretary 
to ensure, as a condition of providing funds, that the 
Rehabilitation Program meet the standards of the dam safety 
program of the State of Oregon; (3) provide the ADC, as a 
condition of receiving funds, agrees to assume liability for 
work performed or supervised with funds under the Act; (4) 
provide a waiver of liability for the United States, as set 
forth in the amendment; and (5) reduce the authorization level 
to fund only the Federal share of the Wallowa Lake Dam 
Rehabilitation Program and Phase II and III of the Wallowa 
Valley Water Management Plan. The amendment is further 
described in the section-by-section analysis below.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 entitles the bill the ``Wallowa Lake Dam 
Rehabilitation and Water Management Act of 2004''.
    Section 2 defines key terms used in the Act.
    Section 3(a) authorizes the Secretary to provide grants or 
enter into cooperative or other agreements with tribal, State, 
and local governmental entities and the Associated Ditch 
Company, Incorporated, to plan, design, and construct 
facilities needed to implement the Wallowa Lake Dam 
Rehabilitation Program and Phases II and III of the Wallowa 
Valley Water Management Plan.
    The Committee recognizes that this bill, by authorizing the 
Bureau of Reclamation toprovide grant money for the 
rehabilitation of the Wallowa Dam, and for Phase II and Phase III of 
the Wallowa Valley Water Management Plan, provides a unique, cost-
effective means of enhancing flood control protection for downstream 
communities, and of reestablishing a fishery for the Nez Perce Tribe.
    The Wallowa Basin is aboriginal territory for the Nez 
Perce, who are co-managers with the Federal government of 
certain fish resources and support enactment of the bill. It 
will also help provide water for the recovery of ESA-listed 
species in an important sub-basin within the Columbia River 
Basin, where actions by the Bureau of Reclamation are covered 
by the 2000 Columbia River biological opinion. The Nez Perce 
Tribe, as well as numerous State, Federal and local agencies 
have collaborated on this successful project since 1992. The 
management plan for the Wallowa Valley is consistent with 
action plans associated with the Bonneville Power 
Administration Fish and Wildlife Program and the Wallowa 
County/Nez Perce Tribe Salmon Habitat Recovery Plan. 
Rehabilitation of the dam is necessary to provide for 
additional water storage.
    With the ability to fill the lake to a higher elevation, 
the water rights holders have agreed to make an additional 
4,300 acre-feet of water available each year, in accordance 
with State water law, to help Nez Perce Tribal Fisheries 
restore sockeye and coho salmon passage at the dam, and provide 
for the downstream water exchange, which will resolve issues 
related to Federally-listed salmon runs. The Committee notes 
that these circumstances are unique and the Committee does not 
intend this legislation to set precedent for Federal assistance 
to private projects.
    Section 3(b)(1) requires the Secretary, as a condition of 
providing funds, ensure that the program meet the standards of 
the dam safety program in the State of Oregon.
    Section 3(b)(2) requires that as a condition of receiving 
funding, ADC assume liability for work performed or supervised 
with funds provided to it under this Act.
    Section 3(b)(3) provides a liability waiver for the United 
States for damages arising out of any act, omission, or 
occurrence, relating to a facility rehabilitated or constructed 
under this Act.
    Section 3(c) limits the Federal share of the cost of 
activities authorized under this Act to 80 percent.
    Section 3(c)(2)(A) excludes any expenditures by the 
Bonneville Power Administration from being credited against the 
Federal share of the costs.
    Section 3(c)(2)(B) excludes any expenditures made by 
individual agricultural producers in any Federal commodity or 
conservation program from being credited against the Federal 
share of the costs.
    Section 3(d) requires the Secretary to comply with 
applicable State water law.
    Section 3(e) prohibits the Federal Government from holding 
title to any facility rehabilitated or constructed under this 
Act.
    Section 3(f) provides that the Federal Government is not 
responsible for the operation and maintenance of any facility 
constructed or rehabilitated under this Act.
    Section 3(g) provides that any facility constructed using 
Federal funds for trapping and transporting migratory salmon 
may be owned and operated only by the Nez Perce tribe.
    Section 4 states that activities funded under this Act 
shall not be considered a supplemental or additional benefit 
under Federal reclamation law.
    Section 5 authorizes appropriations.

                   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, March 19, 2004.
Hon. Pete V. Domenici,
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. 1355, the Wallowa 
Lake Dam Rehabilitation and Water Management Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Julie 
Middleton.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

S. 1355--Wallowa Lake Dam Rehabilitation and Water Management Act of 
        2004

    Summary: S. 1355 would authorize the Bureau of Reclamation 
to participate in the rehabilitation of the Wallowa Lake Dam in 
Oregon and the implementation of the Wallowa Valley Water 
Management Plan. The bill would limit the bureau's share of the 
rehabilitation costs to 80 percent. Assuming appropriation of 
the necessary amounts, CBO estimates that implementing S. 1355 
would cost $25 million over the 2005-2009 period. In addition, 
we estimate that implementing S. 1355 would result in 
additional net direct spending by the Bonneville Power 
Administration (BPA) of $5 million over the 2005-2009 period. 
The federal government would not hold title to any facility 
rehabilitated or constructed under this bill, nor would the 
federal government be responsible for the operation and 
maintenance of those facilities.
    S. 1355 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 S. 1355 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--
                                                                    --------------------------------------------
                                                                       2005     2006     2007     2008     2009
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 Rehabilitation Spending by the Bureau of Reclamation:
    Estimated Authorization Level..................................        5        7        7        7        0
    Estimated Outlays..............................................        2        4        7        7        5
                                           CHANGES IN DIRECT SPENDING
 Net BPA Spending:
    Estimated Budget Authority.....................................        5        0        0        0        0
    Estimated Outlays..............................................        2        2        1        1        1
----------------------------------------------------------------------------------------------------------------
1 Collections of less than $500,000.

    Basis of estimate: For this estimate, CBO assumes that S. 
1355 will be enacted by the end of fiscal year 2004 and that 
spending would occur at the same rate as similar bureau and BPA 
projects.

Spending subject to appropriation

    Based on information from the Bureau of Reclamation, CBO 
estimates that the total cost of rehabilitating the Wallowa 
Lake Dam in Oregon and implementing the Wallowa Valley Water 
Management Plan would be about $32.6 million. S. 1355 would 
authorize the appropriation of $25.6 million for the bureau's 
share of the cost of those projects. The remaining $7 million 
would be paid by the BOA and the Bonneville Power Foundation, a 
nonprofit organization. Based on information from the bureau, 
we expect that rehabilitation of the dam and implementation of 
the management plan would take five years and that funds will 
be appropriated in roughly equal installments over that period 
to complete the projects. Assuming appropriation of the 
authorized amount, we estimate that implementing the bill would 
cost the bureau $25 million over the 2005-2009 period, and an 
additional $2 million after that period.

Direct spending

    Implementing S. 1355 also would result in additional direct 
spending by BPA of $5 million over the 2005-2009 period for 
structures to allow for safe passage of fish through the 
Wallowa Lake Dam projects authorized in the bill. Such spending 
is authorized under current law, but BPA would not make these 
investments without the bureau's involvement in the Wallowa 
Lake projects. Because BPA must recover its costs through the 
sale of electricity, any additional spending would be offset by 
slightly higher proceeds from electricity sales over the next 
15 to 20 years. Consequently, BPA's additional spending would 
have a negligible net budgetary impact over many years.
    Intergovernmental and private-sector impact: S. 1355 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Julie Middleton and 
Lisa Cash Driskill; Impact on State, Local and Tribal 
Governments: Marjorie Miller; and Impact on the Private Sector: 
Selena Caldera.
    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 S. 1355.
    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. 1355.

                        EXECUTIVE COMMUNICATIONS

    On March 5, 2004, 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 views on S. 1355. These reports had not been 
received at the time the report on S. 1355 was filed. The 
testimony provided by the Department of the Interior at the 
Subcommittee hearing follows:

 Statement of John W. Keys, III, Commissioner, Bureau of Reclamation, 
                       Department of the Interior

    Mr. Chairman and Members of the Subcommittee I am John 
Keys, Commissioner of the Bureau of Reclamation. I appreciate 
the opportunity to present the Department's views on S. 1355, a 
bill that would authorize Reclamation to participate in 
implementation of the Wallowa Lake Dam Rehabilitation Program 
and Wallowa Valley Water Management Plan in Oregon. Reclamation 
believes the Wallowa Lake Dam Rehabilitation Program and 
Wallowa Valley Water Management Plan are potentially 
worthwhile, with numerous benefits. While we believe there may 
be merit to this proposed project, the Department does not 
support S. 1355, as currently drafted.
    Wallowa Lake Dam is a privately-owned dam constructed in 
1918 and raised in 1929, and is owned and operated by the 
Associated Ditch Companies, Inc. (ADC). Dam safety deficiencies 
have been identified by the United States Army Corps of 
Engineers and Oregon Water Resources Department. ADC, in 
conjunction with the Grande Ronde Model Watershed, Reclamation, 
and other local, state, and Federal agencies, developed the 
Wallowa Lake Dam Rehabilitation Program to address dam safety 
deficiencies and developed the Wallowa Valley Water Management 
Plan to tie correction of those deficiencies to larger 
environmental issues in the Wallowa River Basin. The Dam 
Rehabilitation Program and Water Management Plan is a six year 
proposal with an estimated total cost of $38,800,000. S. 1355 
sets out an 80/20 cost share for these efforts, under which the 
Federal government would pay $32 million funded through the 
Bureau of Reclamation.
    While the programs developed by the ACD and the Model 
Watershed provide a concept, they do not meet Federal standards 
established in the Principles and Guidelines for planning water 
development programs. Furthermore, the project may affect 
species listed under the Endangered Species Act (ESA). Should 
Reclamation be authorized to fund this project, a funding 
decision may constitute a major Federal action subject to 
consultation under Section 7 of the ESA. It would also require 
environmental analysis in compliance with the National 
Environmental Policy Act (NEPA). The bill, as currently 
drafted, does not provide for Reclamation's participation in 
the planning stages of the dam rehabilitation aspects of the 
project and separates dam rehabilitation from implementation of 
the water management plan. Consequently, it would be difficult 
for Reclamation to meet the environmental compliance 
requirements for the ESA and NEPA. Until adequate planning can 
be completed, the Administration can not support funding this 
project.
    The proposed bill would authorize Reclamation to provide 
funding to the ADC for dam rehabilitation activities, [nit] 
however, it does not provide administrative authority to 
transfer those funds. The legislation would need revision to 
provide Reclamation authority to issue grants. We would be 
pleased to work with the Committee in developing appropriate 
language.
    Finally, we are concerned that Reclamation's participation 
in this program would adversely impact ongoing projects and 
operations. S. 1355 would authorize the use of Reclamation 
funds for a non-Federal purpose. Reclamation funds are limited 
and are targeted to perform essential functions at our 
projects, such as security, operations and maintenance (O&M), 
resource management, dam safety, and construction. In addition, 
despite the very high Federal cost share for the project under 
S. 1355, there is no provision for repayment by project 
beneficiaries in accordance with Reclamation law. Funding for 
this project was not included in the President's budget, and we 
can not support activities which detract from high priority 
work on current Bureau of Reclamation facilities. The 
Department cannot, therefore, support S. 1355.
    Thank you again for the opportunity to provide the 
Administration's position on S. 1355. I would be happy to 
answer any questions you might have.

                        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. 1355 as ordered 
reported.

                                
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