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                                                       Calendar No. 896
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-450

======================================================================



 
              NORTHERN COLORADO WATER CONSERVANCY DISTRICT

                                _______
                                

October 2 (legislative day, September 22), 2000.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 2400]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 2400) to direct the Secretary of the 
Interior to convey certain water distribution facilities to the 
North Colorado Water Conservancy District, having considered 
the same, reports favorably thereon with an amendment and 
recommends that the bill, as amended, do pass.
    The amendment is as follows:
    In section 2, strike subsection (b)(1) and replace with the 
following:

          ``(1) In General.--The Secretary shall accept 
        $355,502 as payment from the District and $1,798,200 as 
        payment from the power customers, under the terms 
        specified in this section, as consideration for the 
        conveyance under subsection (a). Out of the receipts 
        from the sale of power from the Loveland Area Projects 
        collected by the Western Area Power Administration and 
        deposited into the Reclamation fund of the Treasury in 
        fiscal year 2001, $1,798,200 shall be treated as full 
        and complete payment by the power customers of such 
        consideration and as repayment by the power customers 
        of all aid to irrigation associated with the facilities 
        conveyed under subsection (a).''

                         purpose of the measure

    The purpose of S. 2400 is to direct the Secretary of the 
Interior to transfer title to water distribution facilities, 
currently held by the United States, to the Northern Colorado 
Water Conservancy District.

                          background and need

    Built between 1938 and 1957, the Colorado-Big Thompson 
Project (Project) provides supplemental water to 30 cities and 
towns. The water is used to help irrigate 615,000 acres of 
northeastern Colorado farmland. Twelve reservoirs, 35 miles of 
tunnels, 95 miles of canals and 700 miles of transmission lines 
comprise the complex collection, distribution and power system. 
The Project system spans 150 miles east to west and 65 miles 
from north to south.
    The Project was intended to provide 310,000 acre-feet of 
water annually to northeastern Colorado for agricultural, 
municipal, and industrial uses. The Northern Colorado Water 
Conservancy District (District), a political subdivision of the 
State of Colorado created in 1937, provides water for 
agricultural, municipal, domestic, and industrial uses in 
northeastern Colorado. The District was established as the 
local agency to contract with the United States to build the 
Project. The District has deposited in escrow, the funds 
necessary to fulfill its repayment obligations under its 
repayment contract. The Project stores water from the Colorado 
River headwaters in a series of reservoirs on Colorado's West 
Slope. Water is transported, via the 13-mile Alva B. Adams 
Tunnel, through the mountains to the District's seven-country 
service area on the East Slope. The District encompasses 1.5 
million acres in portions of Boulder, Larimer, Weld, Morgan, 
Logan, Washington, and Sedgwick counties.
    S. 2400 will divest the Bureau of Reclamation (Bureau) of 
all present and future responsibility for, and cost associated 
with, the management, operation, maintenance, repair, 
rehabilitation and replacement of, and liability for, these 
particular facilities. Moreover, the legislation will eliminate 
the duplication of efforts between the District and the Bureau 
in issuing and administering crossing licenses and other forms 
of permission to utilize the land on which the facilities are 
located. Finally, the legislation will provide for enhanced 
local control over single-purpose water facilities that are not 
of national importance, allowing these facilities to be used 
for more efficient and effective water management.
    The sale price of $2,133,702 included in the legislation, 
as ordered reported, has been mutually agreed upon. On behalf 
of its preference customers, the Western Area Power 
Administration (WAPA) will pay $1,798,200 and the District will 
be responsible for $335,502. The aid-to-irrigation obligation 
for the project will be credited $3,767,682 as a result of the 
accelerated payment by WAPA, and the District's repayment 
obligation would be reduced by $170,555. The remainder of the 
District's repayment, $185,187, is compensation for 
Reclamation's loss of future revenue. Power users agreed to 
repay the aid-to-irrigation component for two reasons. First, 
the District has worked closely with WAPA and its customers for 
decades, and both the District and WAPA have previously agreed 
to jointly fund Project-related activities that are mutually 
beneficial. And second, the prepayment of this amount will save 
interest that would otherwise accrue on this obligation if it 
were repaid in the future in accordance with the existing 
schedule. The prepayment of this amount at this time does not 
adversely affect existing power rates and in fact, if this 
prepayment does not occur and this amount is paid under the 
existing schedule, it would become due at a time when other, 
and far greater amounts, are due and payable, and would 
contribute to the need to increase preference power rates at 
that time.

                          legislative history

    S. 2400 was introduced by Senator Allard on April 11, 2000. 
The Subcommittee on Water and Power held a hearing on S. 2400 
on June 21, 2000. At the business meeting on September 20, 
2000, the Committee on Energy and Natural Resources ordered S. 
2400 with amendment, favorably reported.

                        committee recommendation

    The Committee on Energy and Natural Resources, in open 
business session on September 20, 2000, by a unanimous voice 
vote of a quorum present, recommends that the Senate pass S. 
2400 if amended as described herein.

                          committee amendment

    During the consideration of S. 2400, the Committee adopted 
an amendment to strike subsection (b)(1) in section 2, which 
set out the sale price the Secretary may accept as 
consideration. The amendment reflects a sale price that has 
been, mutually agreed upon by the District and WAPA. The total 
consideration to be accepted by the Secretary is $2,153,702, of 
which $355,502 will come from the District and $1,798,200 will 
come from the power customers.

                   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, September 29, 2000.
Hon. Frank H. Murkowski,
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. 2400, a bill to 
direct the Secretary of the Interior to convey certain water 
distribution facilities to the Northern Colorado Water 
Conservancy District.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Rachel 
Applebaum.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 2400--A bill to direct the Secretary of the Interior to convey 
        certain water distribution facilities to the Northern Colorado 
        Water Conservancy District

    Summary: S. 2400 would direct the Secretary of the Interior 
to convey certain canals and water distribution facilities to 
the Northern Colorado Water Conservancy District. These 
facilities are a small part of the Colorado-Big Thompson 
project in Larimer County, Colorado. S. 2400 would require the 
district to pay $355,502 and electricity customers of the 
Western Area Power Administration (WAPA) to pay $1,798,200 as a 
condition of the conveyance.
    Based on information from the Bureau of Reclamation, CBO 
estimates that enacting S. 2400 would reduce direct spending by 
about $2 million in fiscal year 2001. These savings would be 
offset by the loss of about $4 million in offsetting receipts 
over the 2001-2012 period. Because enacting S. 2400 would 
affect direct spending, pay-as-you-go procedures would apply. 
CBO estimates that implementing this bill would have no 
significant effect on discretionary spending.
    S. 2400 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
State and local governments would probably incur some costs as 
a result of the bill's enactment, but those costs would be 
voluntary.
    Estimated Cost to the Federal Government: The estimated 
budgetary impact of S. 2400 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(environment and natural resources).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                               -------------------------------------------------
                                                                  2001      2002      2003      2004      2005
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Estimated Budget Authority....................................        -2     \(1)\         0         0         0
Estimated Outlays.............................................        -2     \(1)\         0         0         0
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.

    Basis of estimate: For this estimate, CBO assumes that the 
conveyance would occur at the beginning of fiscal year 2001. 
The bill would require the water district to pay $355,502 and 
WAPA power customers to pay $1,798,200 as a condition of the 
conveyance. The bill would credit these amounts to their 
repayment of capital costs for the Colorado-Big Thompson 
project.
    Based on information from the Bureau of Reclamation, CBO 
expects that, after conveying these facilities, the federal 
government would forgo a payment of $170,555 from the water 
district in fiscal year 2002, a payment of $764,463 from the 
power customers in fiscal year 2011, and another payment of 
$3.0 million from power customers in fiscal year 2012.
    If the project is sold in 2001, the federal government 
could not enter into a contract to sell excess water capacity 
from the project to the Pleasant Valley Pipeline. CBO estimates 
that the federal government would receive $197,261 in fiscal 
year 2001 from such a contract in the absence of this 
legislation.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table. For the purposes of enforcing 
pay-as-you-go procedures, only the effects in the current year, 
the budget year, and the succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0     -2      0      0      0      0      0      0      0      0      0
Changes in receipts................                                 Not applicable
----------------------------------------------------------------------------------------------------------------

    Under the Balanced Budget Act (BBA), proceeds from a sale 
that is not authorized under current law may be counted for 
pay-as-you-go purposes only if the sale would entail no 
financial cost to the government. CBO estimates that the sale 
of the water facilities mandated by S. 2400 would satisfy the 
conditions in the BBA; therefore, the proceeds would count for 
pay-as-you-go purposes. Under BBA, ``financial cost to the 
government'' is defined in terms of the present value of all 
cash flows associated with an asset sale. The forgone payments 
of about $4 million over the 2002-2012 period has an estimated 
present value that is slightly less than the sale price 
specified in S. 2400 (about $2 million).
    Intergovernmental and private-sector impact: S. 2400 
contains no intergovernmental mandates as defined in UMRA. The 
Northern Colorado Water Conservancy District, a local public 
agency, would probably incur costs to acquire the four water 
distribution facilities, both the decision to bear those costs 
would be voluntary. The district would benefit from the 
enactment of this legislation.
    Previous CBO estimate: On July 24, 2000, CBO transmitted a 
cost estimate for H.R. 4389, a bill to direct the Secretary of 
the Interior to convey certain water distribution facilities to 
the Northern Colorado Water Conservancy District, as ordered 
reported by the House Committee on Resources on June 21, 2000. 
The two versions of this bill are very similar, and our cost 
estimates are the same.
    Estimate prepared by: Federal Costs: Rachel Applebaum. 
Impact on State, Local, and Tribal Governments: Marjorie 
Miller. Impact on the Private Sector: Lauren Marks.
    Estimate approved by: Robert A. Sunshine, 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. 2400. 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. 2400, as ordered reported.

                        executive communications

    On July 16, 2000, 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. 2400. These 
reports had not been received at the time the report on S. 2400 
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 
Department of the Interior at the Subcommittee hearing follows:

 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). I am pleased to provide 
the Administration's views on S. 2400, to convey certain water 
distribution features of the Colorado Big Thompson Project 
(CBT) to the Northern Colorado Water Conservancy District 
(District). We have worked closely with this District on this 
proposal and could support this bill if certain issues are 
resolved. I am pleased to report that since the May 23, 2000, 
hearing on H.R. 4389 by the House Resources Subcommittee on 
Water and Power, Reclamation and the District have reached 
agreement on a sales price and have made progress on the aid to 
irrigation issue. However, some technical modifications are 
still needed.


                           recent activities


    Mr. Chairman, before talking about the specifics of S. 
2400, I would like to give the Subcommittee a quick status 
report on some recent activities with Reclamation's Title 
Transfer initiative.
    At the end of the 105th Congress, two proposals were signed 
into law, enabling the Secretary of the Interior to transfer 
title to Reclamation facilities. The first, Public Law 105-316, 
authorized the prepayment and subsequent conveyance of the 
Canadian River Pipeline in Texas to the Canadian River 
Authority. This facility was transferred in May, 1999.
    The second, Public Law 105-351, enabled Reclamation to 
convey the distribution facilities associated with the 
Southside Pumping Division of the Minidoka Project in Idaho. I 
am pleased to report that just a few months ago, these 
facilities were transferred to the Burley Irrigation District 
(BID).
    As you may recall, Public Law 105-316 required that several 
steps be taken before title could be transferred--including 
completion of the process under the National Environmental 
Policy Act (NEPA). It also required the negotiation and 
development of a water rights agreement between BID, the 
Secretary, and the neighboring Minidoka Irrigation District 
(MID) on the distribution and management of the natural flow 
water rights, part of which would be transferred to BID, but 
historically had been managed together with those of MID. We 
worked diligently with BID, other Federal agencies, and the 
State to get this process completed in a timely fashion. This 
water rights agreement was completed and signed in February, 
2000.
    Since BID started the environmental review prior to the 
legislation's passage, the NEPA process was completed, 
including the full public review, and a finding of no 
significant impact (FONSI) was issued on February 18, 2000. The 
Quit Claim Deed for the water rights transfer was negotiated in 
December, 1999 and signed in February, 2000 and the Real 
Property Quit Claim Deed was negotiated in February, 2000 and 
signed on February 24, 2000. As such, I am very proud to report 
that the facilities were transferred to the Burley Irrigation 
District on February 24, 2000--more than two months ahead of 
schedule.
    Completing this transfer is a credit to the hard work and 
cooperation of both Reclamation staff and to the Burley 
Irrigation District, and all should be commended for their 
work. However, had we gone through Reclamation's Framework 
process where we work through NEPA, the water rights agreement 
and negotiate all of the details prior to the legislative 
process, we would likely have completed the transfer more 
quickly at less cost. Instead, the details of the transfer were 
negotiated in Washington, which in this case took several 
Congresses to be completed. Upon passage, a significant amount 
of work was required to make the transfer happen. The NEPA 
compliance had to be completed, the water rights agreement had 
to be negotiated and finalized, and other local consultations 
had to be carried out. While we were able to get through it in 
this case, there is a risk in going this route. As a result of 
the NEPA process, the hazardous waste review and the other 
steps that must be completed, unanticipated problems could be 
identified which were not addressed in the legislation. This 
may delay conveyance or require coming back to the Congress for 
additional legislation before the transfer can occur. This has 
happened in the past and delayed some transfers.
    In addition to the completed transfers mentioned above, a 
significant amount of work has been going-on throughout the 
Western United States to move other projects and facilities 
toward possible title transfers. Memoranda of Agreement have 
been negotiated and signed between Reclamation and numerous 
water districts across the west including districts in Idaho, 
Nevada, Colorado, Montana, Arizona and Texas. These memoranda 
establish roles and responsibilities, and in some cases, 
identify goals and objectives, for completing a fair and open 
title transfer process. In addition, we are working with 
numerous other entities that are just now coming forward with 
an interest in title transfer.
    Mr. Chairman, as I have stated in the past, the process for 
completing title transfer, even for relatively 
``uncomplicated'' projects, is not simple. Each project has 
unique authorities, characteristics and circumstances that need 
to be analyzed and worked through to avoid serious unintended 
consequences. Given the significant progress that we have made, 
I continue to believe that title transfer, and the process 
envisioned in the Framework, is an important and worthwhile 
initiative.


                         background on s. 2400


    The Colorado-Big Thompson Project (CBT) is the largest 
transmountain water diversion project in Colorado, and one of 
the Most complex projects undertaken by Reclamation. Built from 
1938 to 1957, the project includes over 100 water and power 
facilities which store, regulate, and divert water from the 
west slope of the Rockies under the Continental Divide to 125 
water user organizations and municipalities on the east slope.
    The northern Colorado Water Conservancy District--the 
entity to receive title to the distribution facilities under S. 
2400--was organized in 1937 as the local public agency to 
contract with the United States to build the Colorado-Big 
Thompson Project. The District provides water for agricultural, 
municipal, domestic and industrial uses in northeastern 
Colorado and encompasses 1.5 million acres in portions of 
Larimer, Boulder, Weld, Morgan, Washington, Logan, and Sedgwick 
counties.
    Since 1956, the District has managed, operated and 
maintained the single-purpose facilities proposed for transfer 
which include the North Poudre Supply Canal and diversion 
works, also known as the Munroe Gravity Canal; the Charles 
Hansen (Supply) Canal and Windsor Extension; and the Dixon 
Feeder Canal.
    Since 1986, the District has also managed, operated, and 
maintained the following multipurpose works: Farr Plumping 
Plant, Granby Discharge Line and Pump Canal, Granby Dam, Willow 
Creek Pumping Plant, Willow Creek Pump Canal, Willow Creek Dam, 
Shadow Mountain Dam, Shadow Mountain Connecting Channel, 
Charles Hansen Feeder Canal, Carter Lake and Dams, and 
Horsetooth Reservoir and Dams. These facilities would not be 
transferred under S. 2400.
    In 1999, the District contacted Reclamation's Eastern 
Colorado Area Office based in Loveland, CO to express its 
interest in obtaining title to these single-purpose Project 
facilities where they are the sole beneficiary.
    In October, 1999, a Memorandum of Understanding between 
Reclamation and the District was signed. This document defined 
the roles and responsibilities for the activities to be 
undertaken in order to complete the process for title transfer 
under Reclamation's Title Transfer Framework.
    Mr. Chairman, Reclamation has worked very closely with the 
District over the years and I think it is safe to say that we 
have a good and cooperative relationship not only on the 
management of the facilities under consideration for title 
transfer in S. 2400, but in the operation and maintenance of 
the entire CBT Project in general.


 s. 2400 convey certain water distribution facilities of the colorado 
                          big thompson project


    As introduced, S. 2400 would enable the Secretary of the 
Interior to transfer all right, title and interest in certain 
water distribution facilities of the Colorado Big Thompson 
Project in Colorado--built by the U.S. Bureau of Reclamation 
and owned by the United States--to the Northern Colorado Water 
Conservancy District.
    The rest of the CBT will remain in Federal ownership and 
the terms of the existing contract will remain in place. 
Furthermore, the District's obligation for their share of 
repayment for the Project'sother features will continue until 
they are paid out. This bill could affect direct spending. 
Assuming the Administration's concerns are resolved, we expect 
the bill to be PAYGO neutral.
    NEPA and Compliance with Federal Laws: Over the past 
several years, the Administration has insisted that title 
transfers comply with all applicable laws including NEPA and 
the Endangered Species Act (ESA) prior to transfer. As a result 
of a compromise worked out with the Chairman, that is reflected 
in this legislation, we believe that S. 2400 does this.
    Compliance with the process under NEPA will enable all 
interested stakeholders to have an opportunity to voice their 
concerns and have them addressed. Furthermore, compliance with 
NEPA and ESA will enable the U.S. Fish and Wildlife Service to 
evaluate the impacts of the transfer and future activities on 
species that may be threatened or endangered and to develop any 
mitigation that may be necessary.
    Sale price: Addressing the valuation is central to getting 
an agreement on title transfer. It is Reclamation's title 
transfer valuation policy that we determine the base value by 
calculating the net present value of the future revenue stream 
that would, absent the title transfer, come to the United 
States. As a next step, we adjust the base value to account for 
changes that the new owners are likely to make in the public 
benefits. Since the May 23, 2000, hearing on H.R. 4389 by the 
House Resources Subcommittee on Water and Power, Reclamation 
and the District have reached agreement on a sales price of 
$2,133,702.
    Aid to Irrigation: The source of the payments to satisfy 
Section 2(b)(1) needs to be made clear. As I understand it, a 
portion of the amount to be paid under section, will be made by 
the District directly. The remaining portion will be paid by 
the Project's power beneficiaries as aid-to-irrigation. That 
division of payment and its timing need to be identified, 
reviewed by the Administration and authorized by the 
legislation. Furthermore, the portion of the repayment 
obligation paid by the power users needs to be appropriately 
credited by the Western Area Power Administration (western) to 
ensure that this amount is noted as completed for Western's 
book-keeping purpose.
    Credit Project Repayment: The Administration supports 
inclusion of Section 2(c) and I believe that some explanation 
is necessary for the hearing record. Since S. 2400 transfers 
title to only a portion of CBT, which is not completely paid-
out, it needs to be clear--for book-keeping purposes--that 
while the amount being paid is the net present value of the 
obligation, the undiscontinued amount that this payment 
represents is credited against the total capital amount that is 
owed. This will ensure that when the final accounting on the 
Project is done, that the District is not asked to pay the 
difference between the present value payment that is made 
pursuant to the legislation, and the undiscounted amount that 
is on the books. Absent this language, which has been included 
in several other bills currently pending, how to handle this 
issue may not be clear and could result in some confusion.


                  technical modification and amendment


    As I mentioned earlier, the Department can support S. 2400 
if one technical modification is made and if the bill is 
amended to reflect the sale price agreement between the 
District and Reclamation.
    Section 2(b)(1) needs to be amended to state clearly that 
payment by the District is a trigger and a prerequisite for 
transfer. The existing language can be interpreted as simply 
allowing the Secretary to receive payment. Also, Section 
2(b)(1) should be amended to reflect the agreement between the 
District and Reclamation establishing the sales price at 
$2,133,702.
    We recommend the following revision:
    (B) Consideration._
          (1) In general._As a condition of transfer, the 
        Secretary shall receive the sum of $2,133,702 as 
        consideration for the conveyance. * * *


                               conclusion


    In conclusion Mr. Chairman, I would like to reiterate that 
we have worked well with the District in the past and are 
working closely with them on the memorandum of understanding to 
get the title transfer process started. The Department looks 
forward to working with the Committee, the Colorado delegation, 
and the District to address these remaining issues and to move 
this legislation forward.
    That concludes my statement, I would be pleased to answer 
any questions.

                        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. 2400 as ordered 
reported.