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[House Report 112-503]
[From the U.S. Government Printing Office]


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 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.
    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 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, pay-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
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    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.
    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.
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