19–006 

112TH CONGRESS REPT. 112–503 " ! HOUSE OF REPRESENTATIVES 2d Session Part 1 

BONNEVILLE UNIT CLEAN HYDROPOWER FACILITATION 

ACT 

MAY 30, 2012.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HASTINGS of Washington, from the Committee on Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R. 460] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Natural Resources, to whom was referred the 

bill (H.R. 460) 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 upstream of 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. 

SEC. 7. PAYGO. 

The budgetary effects of this Act, for the purpose of complying with the Statutory 

Pay-As-You-Go Act of 2010, shall be determined by reference to the latest statement 

titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this Act, submitted for printing 

in the Congressional Record by the Chairman of the House Budget Committee, provided that such statement has been submitted prior to the vote on passage. 

SEC. 8. LIMITATION ON THE USE OF FUNDS. 

The authority under the provisions of section 301 of the Hoover Power Plant Act 

of 1984 (Public Law 98–381; 42 U.S.C. 16421a) shall not be used to fund any study 

or construction of transmission facilities developed as a result of this Act. 

PURPOSE OF THE BILL

The purpose of H.R. 460, as ordered reported, 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

H.R. 460, as amended, removes administrative barriers to jump 

start hydropower development at an existing federal water supply 

facility. This hydropower development could occur in the Diamond 

Fork system of the Bonneville Unit, which is a system of dams, 

pipelines and tunnels that transports water from the eastern 

mountains in Utah to the Wasatch Front, where approximately 

80% of Utah’s population resides. 

An internal Department of the Interior cost formula has prohibited any hydropower development for years. Under a 2004 ‘‘use of 

facilities’’ cost allocation formula, any hydropower developer must 

agree to pay $106 million over 50 years as part of installing any 

hydropower infrastructure at Diamond Fork. This would be in addition to the actual capital cost of the facilities, which would be 

borne by the developer. One witness at a hearing on a predecessor 

bill in the 111th Congress likened this situation to one that requires any developer to start $106 million ‘‘in the hole.’’ Or as others have said, making a home renter not only pay the rent but the 

owner’s mortgage cost as well. As a result, hydropower investment 

has not occurred because a developer would not want to assume 

the $106 million cost, as it far outweighs the annual benefits of 

generating hydropower. 


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As amended, H.R. 460 defers the $106 million, which is similar 

to deferrals made with respect to municipal and industrial water 

costs addressed by the Central Utah Project Completion Act provisions in Public Law 102–575. Under this deferral, hydroelectric 

power generation at the Diamond Fork System will now become 

economic and, according to the Congressional Budget Office, the 

bill would eventually lead to $600,000 in federal revenue generation per year. The bill, as amended, also ensures that any developer would be required to pay for the cost of hydropower infrastructure. If H.R. 460 becomes law, it is anticipated that the Department of the Interior will initiate an open and competitive process 

to issue a Lease of Power Privilege for the right to install hydropower turbines at Diamond Fork. 

COMMITTEE ACTION

H.R. 460 was introduced on January 26, 2011, by Congressman 

Jason Chaffetz (R–UT). The bill was referred to the Committee on 

Natural Resources, and within the Committee to the Subcommittee 

on Water and Power. The bill was also referred to the Committee 

on the Budget. On April 17, 2012, the Subcommittee held a hearing 

on the bill. On April 25, 2012, the Full Natural Resources Committee met to consider the bill. The Subcommittee on Water and 

Power was discharged by unanimous consent. Congressman Tom 

McClintock (R–CA) offered amendment designated #1 to the bill; 

the amendment was approved by unanimous consent. The bill, as 

amended, was then adopted and ordered favorably reported to the 

House of Representatives by unanimous consent. 

SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

This section designates the short title of the bill 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 

This section states that the current amount of reimbursable costs 

allocated to power for the Diamond Fork System are final costs. 

This defers costs that are preventing hydropower development and 

clears the way for the government to receive revenue once development is complete. The Committee expects that the Interior Department will follow the longstanding federal ‘‘beneficiary pays’’ concept 

to ensure ratepayers who do not benefit from the Diamond Fork 

System will not have to pay for any deferment costs. In particular, 

the Committee expects that such deferred costs not be allocated to 

power users for repayment. 

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

power 

Section 4 ensures that nothing obligates the Western Area Power 

Administration to purchase or market any of the power produced 


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by the Diamond Fork System. This section also ensures that none 

of the transmission costs associated with the Diamond Fork power 

plant shall be assigned to other power users. 

Section 5. Prohibition on tax-exempt financing 

This section prohibits the use of tax-exempt financing to fund 

any facility for the generation or transmission of hydropower on 

the Diamond Fork System. 

Section 6. Reporting requirement 

This provision requires the Secretary of the Interior to report to 

the House Committee on Natural Resources and the Senate Energy 

and Natural Resources Committee if hydropower production on the 

Diamond Fork System has not commenced within 24 months after 

the date of enactment, and requires the Secretary to provide a detailed timeline for future hydropower production. 

Section 7. Paygo 

This provision contains language complying with the Statutory 

Pay-As-You-Go Act of 2010. 

Section 8. Limitation on the use of funds 

This section ensures that the project is not eligible for funding 

under the Western Area Power Administration’s borrowing authority created in Public Law 111–5. 

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. 

COMPLIANCE WITH HOUSE RULE XIII

1. Cost of Legislation. Clause 3(d)(1) 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)(2)(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. 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. 460—Bonneville Unit Clean Hydropower Facilitation Act 

Summary: CBO expects that enacting H.R. 460 would lead to the 

development of hydropower facilities at the Diamond Fork Project 

in Utah by a nonfederal entity within a few years, sooner than expected under current law. Based on information from the Bureau 

of Reclamation, CBO estimates that the federal government would 

receive payments from the hydropower developer of about $4 million over the 2013–2022 period. Enacting the bill would increase 

offsetting receipts (a credit against direct spending); therefore, payVerDate Mar 15 2010 05:18 Jun 01, 2012 Jkt 019006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR503P1.XXX HR503P1

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as-you-go procedures apply. Enacting the bill would not affect revenues. 

H.R. 460 contains no intergovernmental or private-sector mandates as defined in 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 H.R. 460 would increase 

offsetting receipts by $600,000 a year, beginning in 2017, for a total 

collection of about $4 million over the 2017–2022 period. 

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. 

Among the reasons that CBO expects the site is unlikely to be 

developed over the next 10 years is a requirement that project 

sponsors pay the Treasury for the federal government’s power-related investments in the water project. According to the bureau, 

those payments would average about $5 million annually, beginning after the hydroelectric facilities go into service and continuing 

through the life of the lease. 

CBO expects that eliminating that requirement would encourage 

nonfederal entities to pursue development of the hydropower resources at Diamond Fork. Assuming that H.R. 460 is enacted in 

2012, 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 2017. In that case, 

the government would collect annual fees from the project developer totaling about $600,000 a year (adjusted for inflation) for the 

life of the project. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. H.R. 460 

would increase offsetting receipts (a credit against direct spending) 

by about $600,000 annually beginning in 2017. The budgetary 

changes that are subject to those pay-as-you-go procedures are 

shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 460 AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON NATURAL RESOURCES ON APRIL 25, 2012 

By fiscal year, in millions of dollars— 

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012– 

2017 

2020– 

2022 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT 

Statutory Pay-As-You-Go Impact .... 0 0 0 0 0 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥4 

Intergovernmental and private-sector impact: H.R. 460 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA; any additional costs to state and local governments would 

result from participating in a voluntary federal program. 


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Previous CBO estimate: On January 13, 2012, CBO transmitted 

a cost estimate for S. 499, the Bonneville Unit Clean Hydropower 

Facilitation Act, as ordered reported by the Senate Committee on 

Energy and Natural Resources on November 10, 2011. At that 

time, CBO estimated that offsetting receipts from lease payments 

under S. 499 would total $2 million over the 2017–2022 period. 

H.R. 460 and S. 499 are substantively similar; however, our estimates differ because of a change in administrative policy that took 

effect after we estimated the impact of S. 499. Specifically, the Bureau of Reclamation’s new policy for lease payments includes an 

additional charge of about 5 percent of the gross revenue generated 

from hydropower under the project. As a result of that change, we 

now estimate that receipts generated under either bill would total 

$4 million over the 2017–2022 period. 

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. 

2. Section 308(a) of 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. Based on information from the Bureau of Reclamation, CBO estimates that the federal government would receive payments of about $4 million over the 2013–2022 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, as ordered reported, 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. 

EARMARK STATEMENT

This bill does not contain any Congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined under clause 9(e), 

9(f), and 9(g) of rule XXI of the Rules of the House of Representatives. 

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. 

Æ 


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