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[Senate Report 108-16]
[From the U.S. Government Publishing Office]

                                                        Calendar No. 28
108th Congress                                                   Report
                                 SENATE
 1st Session                                                     108-16

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      BLUNT RESERVOIR AND PIERRE CANAL LAND CONVEYANCE ACT OF 2003

                                _______
                                

                 March 5, 2003.--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. 426]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 426) 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, reports favorably thereon 
without amendment and recommends that the bill do pass.

                                PURPOSE

    The purpose of S. 426 is to authorize the conveyance of 
approximately 19,200 acres of Federal land in South Dakota 
administered by the Bureau of Reclamation that were never used 
for the proposed Blunt Reservoir. The lands would be conveyed 
back to the original land owners or their descendants, or to 
the State of South Dakota for the mitigation of lost wildlife 
habitat.

                          BACKGROUND AND NEED

    S. 426 is the product of more than four years of discussion 
with local landowners, the South Dakota Water Congress, the 
Bureau of Reclamation, local legislators, representatives of 
South Dakota sportsmen groups, and other affected citizens.
    The Oahe Unit was originally approved as part of an overall 
plan or water development in the Missouri River Basin that was 
incorporated in the Floor Control Act of 1944. The initial 
stage of the project included a system of main canals, such as 
the Pierre Canal, running east from the Oahe Reservoir, and the 
establishment of regulating reservoirs, including the Blunt Dam 
and reservoir, located approximately 35 miles east of Pierre, 
South Dakota.
    A total of 17,878 acres of land was acquired from willing 
sellers for the proposed Blunt Reservoir feature during the 
1970's. More than 1,300 acres of additional land was acquired 
for the Pierre Canal feature.
    After the growth of opposition to the project, construction 
on the Oahe unit was halted on September 30, 1977. Congress did 
not provide funds for the project in the fiscal year 1978.
    In response to this situation, the Bureau of Reclamation 
gave to those persons who had willingly sold their lands to the 
project, and their descendants, the right to lease those lands 
and use them as they had in the past until they were needed by 
the Federal Government for project purposes. Since 1978, the 
Bureau of Reclamation has administered these lands on a 
preference lease basis for original landowners or their 
descendants and on a non-preferential basis for lands under 
lease to persons who had not previously owned or controlled the 
land.
    Currently, the Bureau of Reclamation administers 
approximately 13,000 acres as preferential leases in Blunt 
Reservoir, and administers approximately 1,100 acres of 
preferential leases in the Pierre Canal feature. The Bureau 
also administers approximately 5,000 acres of non-preferential 
leases at the two features. The lands are not in their original 
condition. Various stockpiled materials, fences, access roads, 
road detours, and other items left by the Bureau remain on the 
land.
    The Oahe project was a part of the overall Pick-Sloan 
Missouri Basin program, which included four major dams across 
the Missouri River that caused the loss of approximately 
221,000 acres of fertile, wooded bottomland that was productive 
wildlife habitat.
    Under the provisions of the Wildlife Coordination Act of 
1958, the State of South Dakota has developed a plan to 
mitigate a part of this lost wildlife habitat. The transfer of 
non-preferential lease lands in the Blunt Reservoir feature to 
the South Dakota Department of Game, Fish and Parks would 
satisfy, in part, this habitat mitigation obligation.
    Enactment of this measure would provide important habitat 
for wildlife and equitably address the effects of this project 
on original landowners and their descendants.

                          LEGISLATIVE HISTORY

    S. 426 was introduced by Senator Daschle on February 14, 
2003. Similar legislation, S. 1028, was introduced by Senators 
Daschle and Johnson in the 107th Congress. The Subcommittee on 
Public Lands and Forests held a hearing on S. 1028 on November 
27, 2001, and ordered the bill favorably reported, with an 
amendment in the nature of a substitute, on July 31, 2002. The 
text of S. 1028, as amended, was adopted by the Senate as part 
of an amendment to S. 2222, which passed the Senate by 
unanimous consent on November 19, 2002. At the business meeting 
on February 26, 2003, the Committee on Energy and Natural 
Resources ordered S. 426, favorably reported.

                       COMMITTEE RECOMMENDATIONS

    The Committee on Energy and Natural Resources, in open 
business session on February 26, 2003, by a unanimous voice 
vote of a quorum present, recommends that the Senate pass S. 
426 as described herein.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 entitles the Act the ``Blunt Reservoir and Pierre 
Canal Land Conveyance Act of 2002.''
    Section 2 (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 of South Dakota 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 and to a requirement that in the event it 
is no longer used for such purposes, or in the event it is 
needed for national defense purposes, title shall revert to the 
United States.
    Subsection (d) allows the preferential leaseholders 
(original landowners or descendants, or operators of the land 
at the time of purchase) an option to purchase the land they 
lease within 5 years of enactment. Any purchases shall be from 
the South Dakota Commission of Schools and Public Lands 
(``Commission''), acting as an agent for the Secretary of the 
Interior. The leaseholders would have theoption of paying cash 
and receiving a 10 percent discount on the land's value, or receiving a 
30-year mortgage 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 
South Dakota Department of Game, Fish, and Parks 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 bill.
    Subsection (e) directs the Secretary of the Interior 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 expiration of their purchase option after five 
years, the preferential leaseholders would be entitled to 
continue to lease from the Secretary of the Interior under the 
same terms and conditions applicable on the date of enactment. 
Within 180 days of enactment, the Secretary shall provide the 
State a full legal description of all preferential lease 
parcels and nonpreferential lease parcels that may be conveyed 
under this section.
    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, not to 
exceed 10 percent of the cost of each transaction conducted 
under this Act.

                   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 3, 2003.
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. 426, the Blunt 
Reservoir and Pierre Canal Land Conveyance Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
and Julie Middleton.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

S. 426--Blunt Reservoir and Pierre Canal Land Conveyance Act of 2003

    Summary: S. 426 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, S. 426 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. S. 426 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 leaseholders.
    Assuming appropriation of the authorized amounts, CBO 
estimates that implementing S. 426 would cost about $1.2 
million in 2004 and negligible amounts in subsequent years. For 
Congressional scorekeeping purposes, CBO estimates that 
enacting S. 426 would increase direct spending by about 
$100,000 in 2004. Enacting the bill would also lead to about 
$450,000 in collections from asset sales, but those proceeds 
would not count for purposes of Congressional scorekeeping 
because completing the asset sales would ultimately result in a 
net cost to the federal government.
    S. 426 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
The bill would benefit the state of South Dakota, and any costs 
would be incurred voluntarily.
    Estimated cost to the Federal Government: Subject to the 
appropriation of the authorized amounts, CBO estimates that 
implementing S. 426 would cost $1.2 million in 2004 and 
insignificant amounts in subsequent years. CBOestimates that 
enactment of the bill would increase offsetting receipts by about 
$500,000 in 2004 from land sales and would increase direct spending by 
about $100,000 in 2004 for loan subsidies for the installment purchases 
of certain land parcels in the affected area.

Spending subject to appropriation

    S. 426 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 to South Dakota. During the five 
years following enactment, S. 426 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. S. 426 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 $500,000 in 2004 
and smaller amounts in each of the next four years. Thus, 
subsequent appropriations of that amount to South Dakota would 
cost about $500,000 in 2004.

Direct spending

    To purchase their leased lands under the bill, preferential 
leaseholders would pay the value of such lands appraised 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, nearly 30 leaseholders would purchase the parcels 
valued at less than $10,000. We estimate that the government 
would receive about $30,000 a year from such sales.
    Because of the favorable terms under the bill, we expect 
that all 17 of the 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 $450,000 from 
the sale of those more-valuable leases in 2004. However, those 
proceeds would not count for Congressional scorekeeping 
purposes because CBO estimates that the sales would result in a 
net cost to the government (on a present-value basis). 
Scorekeeping guideline #15 states that if an asset sale would 
result in a net financial cost to the government, the proceeds 
from such a sale ``shall not be scored'' under the 
Congressional Budget Act.
    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, S. 426 would allow the Secretary to 
issue direct loans to the 17 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, however, CBO 
estimates that the loans under S. 426 would have a subsidy cost 
of about $100,000, or 25 percent of the purchase price. under 
credit reform procedures, this cost would be recorded in 2004.
    Intergovernmental and private-sector impact: S. 426 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would benefit the state of South 
Dakota, and any costs would be incurred voluntarily.
    Estimate prepared by: Federal Costs: Mark Hadley and Julie 
Middleton; Impact on State, Local, and Tribal Governments: 
Marjorie Miller; and Impact on the Private Sector: Cecil 
McPherson.
    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. 426. 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. 426, as ordered reported.

                        EXECUTIVE COMMUNICATIONS

    On February 26, 2003, 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. 426. These reports 
had not been received at the time the report on S. 426 was 
filed.

                        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. 426, as ordered 
reported.

                                
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