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Calendar No. 751
106th Congress Report
2d Session 106-373
MISSOURI RIVER BASIN, MIDDLE LOUP DIVISION FACILITIES CONVEYANCE ACT
August 25, 2000.--Ordered to be printed
Filed under authority of the order of the Senate of July 26, 2000
Mr. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 1612]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 1612) to direct the Secretary of the
Interior to convey certain irrigation project property to
certain irrigation and reclamation districts in the State of
Nebraska, having considered the same, reports favorably thereon
with an amendment and recommends that the bill, as amended, do
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 ``Missouri River Basin, Middle Loup
Division Facilities Conveyance Act''.
SEC. 2. DEFINITIONS.
In this act:
(1) Commissioner.--The term ``Commissioner'' means the
Commissioner of Reclamation.
(2) District.--The term ``District'' means--
(A) the Farwell Irrigation District, a political
subdivision of the State of Nebraska;
(B) the Sargent Irrigation District, a political
subdivision of the State of Nebraska; and
(C) the Loup Basin Reclamation District, a political
subdivision of the State of Nebraska.
(3) Project.--The term ``Project'' means Sherman Reservoir,
Milburn Diversion Dam, Arcadia Diversion Dam, related canals
and other related lands, water rights, acquired land,
distribution and diversion facilities, contracts, personal
property, and other associated interests owned by the United
States and authorized under the Act of June 17, 1902 (32 Stat.
388, chapter 1093), the Act of December 22, 1944 (commonly
known as the ``Flood Control Act of 1944'') (58 Stat. 887,
chapter 665), and the act of August 3, 1956 (70 Stat. 975,
(4) Repayment and water service contracts.--The term
``Repayment and Water Service Contracts'' means all repayment
and water service contracts between the Secretary and the
District relating to the Project.
(5) Secretary.--The term ``Secretary'' means the Secretary of
SEC. 3. CONVEYANCE OF THE PROJECT.
(1) In general.--As soon as practicable after the date of
enactment of this Act and in accordance with all applicable
laws, the Secretary shall convey to the Districts, by quitclaim
deed, assignment, or patent, the interest of the United States
in the Project, in consideration of payment to the Secretary--
(A) by the Districts of $2,847,360, which--
(i) has been determined in accordance with
the Bureau of Reclamation document entitled
``Framework for Title Transfer'' and the
memorandum of understanding between the
Commissioner and the Districts under section 5;
(ii) includes all credits and adjustments
provided for in that document and memorandum of
(B) by the Western Area Power Administration, of
(2) Cancellation of obligation.--The obligation to make
payments due and owing from the Districts to the United States
under the repayment and water service contracts are canceled
for the year 2000 and thereafter.
(3) Timing.--The conveyance under paragraph (1) shall be made
concurrently with the making of the payment under paragraph
(1)(A), but the payment under paragraph (1)(B) shall be made
from capacity and energy charges at Pick-Sloan Missouri Basin
Program firm power rates received in fiscal year 2000 or the
first subsequent fiscal year in which the amount of power sale
revenue received exceeds the amount of interest and operation
and maintenance obligations of the Western Area Power
Administration by at least $2,600,000, to the extent of the
(4) Satisfaction of obligations against the project.--The
payment under paragraph (1)(B) shall constitute full and
compete satisfaction of all obligations of the Western Area
Power Administration against the Project, the United States,
and the Districts existing before the date of the conveyance or
thereafter relating to the Project, including--
(A) future obligations for additional drainage
required in the project;
(B) obligations under any contracts entered into
between the United States, the Districts, and the
Western Area Power Administration of its predecessors;
(C) any obligation that may have been required by the
Act of December 22, 1944 (58 Stat 887, chapter 665) or
other related Federal law.
(5) Satisfaction of obligations for irrigation benefits.--The
conveyance of the Project and the payment of the consideration
under paragraph (1) shall constitute full satisfaction of any
and all obligations of the Districts or of the Pick-Sloan
Missouri Basin Program firm power users of the Western Area
Power Administration for irrigation benefits of the Project or
for any other benefits conveyed to the Districts.
(b) Contaminated Property.--The Secretary shall convey the Project
without regard to whether all necessary remedial action required under
section 120(h)(3) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. 9620(h)(3) on any
part of the Project has been completed.
(c) Extinguishment of Obligations Between the Secretary and the
Districts.--Effective on the date of the conveyance, all obligations
not canceled under subsection (a)(2) between the Secretary and the
Districts relating to the Project and the Repayment and Water Service
Contracts are extinguished.
SEC. 4. LIABILITY.
Effective on the date of conveyance of the Project, the United
States shall not be liable for claims, costs, damages, or judgments of
any kind arising out of any act, omission, or occurrence related to the
Project except for such claims, costs, or damages arising from acts of
negligence committed by the United States or by employees or agents of
the United States before the date of conveyance for which the United
States is liable under chapter 171 of title 28, United States Code
(commonly known as the ``Federal Tort Claims Act'').
SEC. 5. COMPLETION OF CONVEYANCE.
(a) In General.--The Secretary shall not make the conveyance under
section 3 until the following events have been completed:
(1) Compliance with the National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.).
(2) Execution of a memorandum of understanding between the
Commissioner and the Districts describing the purchase price
and other terms and conditions of the conveyance consistent
with this Act.
(b) District Management of Project.--The Districts shall manage the
Project in a manner substantially similar to the manner in which the
Project was managed before the conveyance and in accordance with
applicable Federal and State laws, including--
(1) entering into an agreement with the Nebraska Game and
Parks Commission that preserves on a permanent basis the right
of the Commission to develop, provide, and protect the public
interest in Project fish, wildlife, and recreation facilities
related to the Projects, and
(2) entering into an agreement with the University of
Nebraska Lincoln-State Museum that provides for protection of
cultural resources at the project after the conveyance
consistent with applicable law that authorizes the Districts or
others with responsibility to protect significant historic
features in situ or otherwise, and
(3) providing that the Districts shall annually make payments
to local governments in the amounts in which the Commissioner
made payment to the local governments under chapter 69 of title
31, United States Code (commonly known as ``payments in lieu of
taxes'') for fiscal year 1999.
(c) Crediting to Reclamation Fund.--All funds paid to the Secretary
under this Act shall be credited to the Reclamation Fund in the
Treasury of the United States toward repayment of capital costs of the
project in an amount equal to the associated undiscounted obligation.
(d) No Effect on Rates.--No payment under this act shall affect
Pick-Sloan Missouri Basin Program firm power rates in any way.
(e) Report.--If the conveyance under section 3 is not substantially
completed on or before December 31, 2001, the Secretary and Districts
shall promptly submit to the Committee on Resources of the House of
Representatives and the Committee on Energy and Natural Resources of
the Senate a report on the status of the conveyance describing the
matters remaining to be resolved before completion of the conveyance
and stating the anticipated date for the completion of the conveyance.
(f) Future Benefits.--
(1) In general.--Effective on the date of the conveyance
under section 3, the Middle Loup Division of the Missouri River
(A) shall not be treated as a Federal reclamation
(B) shall not be subject to the reclamation laws or
entitled to receive any reclamation benefits under
(2) No flood control component.--After the date of the
conveyance under section 3, the Project shall no longer have a
flood control component.
purpose of the measure
The purpose of S. 1612, as ordered reported, is to direct
the Secretary of the Interior to convey certain irrigation
project property to certain irrigation and reclamation
districts in the State of Nebraska.
background and need
S. 1612 would provide for the transfer of title of
irrigation project facilities and lands from the Bureau of
Reclamation to the Loup Basin Reclamation District, including
the Sargent Irrigation District and the Farwell Irrigation
District. The project facilities are part of the Missouri River
Basin Project in central Nebraska, and provide water from the
Middle Loup River to just under 64,000 acres of irrigable
lands, as well as providing recreation and fish and wildlife
benefits. Principal features of the projects include the
Sherman Dam and Reservoir, the Arcadia Diversion Dam, the
Milburn Diversion Dam, irrigation canals and laterals, drains
and pumping plants. Crops grown on the project lands include
alfalfa, small grains, sugar beets and feed corn.
The projects were constructed between 1955 and 1966 under
authorities of the Flood Control Act of 1944, and are operated
and maintained by the Districts under contracts between each
project and the Bureau of Reclamation. The transfer will
provide for total repayment, at net present value, of all
outstanding obligations on behalf of the irrigation districts
and power producers in accordance with law, construction plans
and obligations. All current uses and purposes for the projects
will be retained, except that flood control benefits, which
have never existed, will be removed from the listed benefits.
The Bureau of Reclamation and the Corps of Engineers, the
agency responsible for flood control management in the Missouri
River Basin, have agreed to this deletion.
The legislation provides for the conveyance of the project
and facilities on or before January 1, 2001, at a cost of
approximately $5.4 million. The irrigation districts will pay
$2,847,360 of this obligation and power producers will pay
S. 1612 was introduced by Senators Kerrey and Hagel on
September 22, 1999 and a Subcommittee hearing was held on
October 20, 1999. At the business meeting on June 7, 2000, the
Committee on Energy and Natural Resources ordered S. 1612, as
amended, favorably reported.
The Committee on Energy and Natural Resources, in open
business session on June 7, 2000, by a unanimous voice vote
with a quorum present, recommends that the Senate pass S. 1612,
if amended as described herein.
During the consideration of S. 1612, the Committee adopted
an amendment in the nature of a substitute. Significant changes
made in the substitute amendment were the elimination of the
trust fund and the establishment of a purchase price. Other
changes are described in the section-by-section analysis,
Section 1 is a short title.
Section 2 defines key terms used in the bill.
Section 3 provides that the Project shall be conveyed as
soon as practicable (to provide Reclamation with some
flexibility in time to comply with NEPA requirements) and
includes conditions regarding financial consideration (specific
purchase price of $2,847,360 by District and $2,600,000 by
WAPA); timing; satisfaction of obligations against the Project;
and contaminated property. Further district payments on present
water service and repayment contracts for 2000 and beyond are
terminated. Reclamation does not retain any obligation for
remedial action at CERCLA sites and District assumes such
liability upon transfer of title.
Section 4 provides that, upon conveyance, the United States
shall have no liability except for that arising out of acts of
negligence committed by the United States or its employees,
agents or contractors.
Section 5 describes events that must occur before
conveyance, including compliance with NEPA, execution of a
memorandum of agreement describing terms and conditions of the
conveyance and an agreement regarding: (1) management of the
Project in accordance with Federal and State laws; (2)
protection of cultural resources; and (3) PILT payments.
Section 5 requires that all funds paid to the Secretary be
credited to the Reclamation Fund. Also, the Secretary and the
Districts must submit a report to Congress if the conveyance is
not substantially completed on or before December 31, 2001.
Upon conveyance, the Districts are no longer entitled to
benefits under reclamation law and the Project shall no longer
have a flood control component.
cost and budgetary considerations
The Congressional Budget Office cost estimate report had
not been received at the time the report was filed. When the
report becomes available, the Chairman will request that it be
printed in the Congressional Record for the advice of the
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. 1612. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant economic responsibilities on private individuals
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
Little, if any, additional paperwork would result from the
enactment of S. 1612, as ordered reported.
On, October 13, 1999, 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. 1612. These
reports had not been received at the time the report on S. 1612
was filed. When the reports become available, the Chairman will
request that they be printed in the Congressional Record for
the advice of the Senate. The testimony provided by the
Commissioner of the Bureau of Reclamation at the Subcommittee
Statement of Eluid L. Martinez, Commissioner, Bureau of Reclamation,
Department of the Interior
My name is Eluid Martinez. I am Commissioner of the U.S.
Bureau of Reclamation (Reclamation). Thank you for the
opportunity to provide the Department's views on S. 1612 to
direct the Secretary of the Interior to convey the Middle Loup
Division of the Pick Sloan Missouri Basin Program to the Loup
Basin Reclamation District, the Sargent River Irrigation
District, and the Farwell Irrigation District (Districts) in
Nebraska. While we believe this project to be a good candidate
for title transfer and have made significant progress on many
issues, the Administration opposes S. 1612 as drafted.
However, we are continuing to work closely with Senator
Kerrey, Representative Barrett, who introduced a similar bill
in the House, the Districts and the other stakeholders to
address the outstanding issues.
The Middle Loup Division of the Pick Sloan Missouri Basin
Program provides water for irrigation to the Sargent and the
Farwell Irrigation Districts in central Nebraska. The Loup
Basin Reclamation District operates and maintains the water
supply for both irrigation districts. The project costs were
principally allocated to irrigation and a majority of the costs
will be recovered through revenues from power generation known
as ``aid-to-irrigation.'' However, a small amount of the costs
are allocated to recreation and fish and wildlife. The project
proposed for transfer includes the dam and reservoir at the
Sherman site, as well as supply and distribution canals,
laterals, drains, and all lands or interest in lands associated
with the project.
While primarily an irrigation project, Sherman Reservoir
also provides significant recreation and wildlife benefits in
the area. The Nebraska Game and Parks Department manages the
recreation and wildlife components through a lease agreement
with the Bureau of Reclamation. Reclamation expects that there
will be a similar agreement between the Districts and the State
if the facilities are conveyed.
Mr. Chairman, we have been working with the irrigation
districts along with the State of Nebraska, the State Historic
Preservation Office, the University of Nebraska--Lincoln, the
neighboring Middle Loup Public Power and Irrigation District,
the U.S. Fish and Wildlife Service, the U.S. Army Corps of
Engineers and a number of other stakeholders for a number of
years on the issues associated with this title transfer.
Reclamation participated in two public meetings, sponsored by
the Districts in January 1996 to identify issues of concern.
Since that time we have been working cooperatively with the
Districts to address the myriad of issues that have arisen. In
addition, Reclamation, in consultation with the Districts has
been working to complete an environmental assessment on this
transfer, which we hope will be completed shortly. We have also
completed discussions on, and signed, the memorandum of
understanding, referenced in S. 1612, which addresses a clear
process and delineates roles and responsibilities for
completing this title transfer in a timely fashion.
As we testified on a similar bill, H.R. 2984, we are
concerned about directed transfer provisions in the bill.
Compliance with Federal Laws and Agreement: S. 1612 as
introduced ``directs'' rather than ``authorizes'' the Secretary
to convey the facilities of the Project. The Department
strongly opposes such directive. This mandate directing the
Secretary would severely diminish the review process to be
conducted pursuant to the National Environmental Policy Act
(NEPA), as the Secretary's ultimate decision regarding the
transfer would be predetermined. The Administration firmly
believes that a meaningful NEPA analysis must occur prior to
title transfer to allow the Department, the Congress, and the
public to fully understand the impacts of the proposed
transfer, its alternatives, and potential mitigation measures.
Reclamation has almost completed the environmental assessment
and does not anticipate encountering significant environmental
issues in this transfer. However, the Secretary's authority to
condition the transfer in ways that resolve any issues
identified during the NEPA process prior to title transfer must
also be clear. Additionally, I must make clear that final
Administration approval of the transfer is predicated on
satisfactory implementation of the memorandum of Understanding.
In addition, S. 1612, as drafted, raises additional policy
and technical concerns.
(1) Price: While S. 1612 states that the price should be
determined with Reclamation's ``Framework for Title Transfer,''
and the Memorandum of Understanding (MOU) that is in place
between Reclamation and the Districts, it places an artificial
ceiling on the amount the District and the Western Area Power
Administration should pay. The payment to be made for the
Project should reflect a price that protects the financial
interests of the taxpayers. Placing this limitation restricts
our ability to do that and contradicts the provisions of the
MOU in terms of the process that was agreed to. Additionally,
the Administration objects to S. 1612's requirement that the
Federal government assume or maintain responsibility for costs
associated with certain remedial and historic preservation
activities. This is contrary to both our signed MOU with the
district and the Administration's fiscal policy on title
transfers, as the provision requires continued Administration
financial responsibility for aspects of the transferred
(2) Drains: For several years, we have been working with
the Districts, the State and the neighboring community of Loup
City to identify the source of drainage problems that exist in
the area. As drafted S. 1612 proposes to transfer all of the
facilities, but proposes to require that all of the obligations
for the drains, which may be directly related to the project
would remain with the United States. In taking title to this
project, the Districts must take all the obligations along with
the benefits that come along with holding title.
Mr. Chairman, the most significant benefits to Reclamation
in this title transfer is that we would get out of the
management and oversight obligations as well as being relieved
of the liability for this project. If the liability for the
drains is left with the United States, that benefit is not
realized. In summary, it is our view that the Districts should
take title to the entire project, including the drains.
(3) Trust Funds: S. 1612 as introduced establishes the
Nebraska-Middle Loup River Community Environmental Trust and
the Nebraska-Middle Loup River Game and Parks Trusts--which
propose to undertake--at a local level--a number of important
activities including stabilizing surface and groundwater
supplies, conserving water, improving and enhancing fisheries
and recreational opportunities. While we applaud these program
goals, we are concerned that S. 1612 proposes to capitalize
these trust funds with the proceeds from the transfer that
would otherwise go to the Treasury. The Administration is
strongly opposed to this provision. As a base criteria of its
title transfer policy, the Administration requires that the
Federal Treasury and the taxpayers' financial interests be
Further concerns are raised by the fact that S. 1612 does
not indicate who would be managing the funds. In previous
drafts of legislation to transfer title to this project, there
were provisions indicating what organizations or types of
organizations would be represented on the entity that
administers the trust fund. No such provision is included in S.
(4) Project Power: As drafted, it is unclear how S. 1612
deals with issue of the District's ability to continue to
receive Pick Sloan power at subsidized rates for irrigation
pumping even though the projects are no longer owned by the
Federal government. It is the Administration's policy that,
after title transfer, districts previously receiving pumping
power would no longer be eligible for the ``project use pumping
power rate.'' They would be eligible to receive the same amount
of power as they did when it was a Federal project, but would
be required to pay the wholesale preference customer rate,
currently at 14.54 mills/Kwh for this project.
In addition to those issues raised above, there are a
significant number of technical and clarifying concerns that
need to be addressed. We would be pleased to work with the
Districts, Senator Kerrey, and the Committee to work to clarify
or address these concerns which are likely to be technical in
nature. These issues include, but are not limited to,
provisions relating to: (1) the drains; (2) the ``obligations''
that are ``satisfied'' by this legislation; (3) how remediation
under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (CERCLA) is carried out; (4)
crediting of certain items toward payment; (5) references to a
Memorandum of Agreement; (5) ``Nonreimbursability'' of funds
deposited into the trust funds; (6) provisions relating to
funding of planning and the potential implementation of work on
drains; and (7) eligibility for future benefits under
At this time I would like to thank Tom Knutson, General
Manager for the Loup Basin Reclamation District, Senator Kerrey
and his staff, and Congressman Barrett, sponsor of H.R. 2984
for their cooperation as we have worked through a variety of
complicated and technical issues.
That concludes my testimony. I would be happy to answer any
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. 1612, as