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113th Congress                                             Rept. 113-25
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

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



 
           BONNEVILLE UNIT CLEAN HYDROPOWER FACILITATION ACT

                                _______
                                

 April 9, 2013.--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. 254]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 254) 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 without amendment 
and recommend that the bill do pass.

                          PURPOSE OF THE BILL

    The purpose of H.R. 254 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. 254 removes administrative barriers to jumpstart non-
federal hydropower development at an existing federal water 
supply facility. This hydropower development could occur in the 
Diamond Fork System within the Central Utah Project's 
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.
    A 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 in the 111th Congress likened this situation to 
one that requires any developer to start $106 million ``in the 
hole.'' 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. Because hydropower has not been developed, the $106 
million is not being paid and the federal government is not 
receiving any lease revenue from a hydropower developer.
    H.R. 254 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, while lease revenues to the federal 
government will likely be facilitated by the bill. The bill 
also ensures that any developer would be required to pay for 
the cost of hydropower infrastructure. If H.R. 254 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. 254 was introduced on January 15, 2013, 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 March 5, 2013, the Subcommittee 
on Water and Power held a hearing on the bill. On March 20, 
2013, the Full Natural Resources Committee met to consider the 
bill. The Subcommittee on Water and Power was discharged by 
unanimous consent. No amendments were offered to the bill, and 
the bill was adopted and ordered favorably reported to the 
House of Representatives by unanimous consent.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    This section provides the short title of the bill: 
``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 federal 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 will 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. 254--Bonneville Unit Clean Hydropower Facilitation Act

    Summary: CBO expects that enacting H.R. 254 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 2014-2023 period. Enacting the 
bill would decrease direct spending (by increasing offsetting 
receipts); therefore, pay-as-you-go procedures apply. Enacting 
the bill would not affect revenues.
    H.R. 254 contains no intergovernmental or private-sector 
mandates as defined in the 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. 254 would 
increase offsetting receipts by $600,000 a year, beginning in 
2018; collections would total about $4 million over the 2018-
2023 period.
    Basis of estimate: Based on information from the Bureau of 
Reclamation, CBO expects that under current law, the federal 
government is unlikely 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.
    Among the reasons that CBO expects the site will probably 
not be developed over the next 10 years under current law is a 
requirement that project sponsors pay the Treasury for a 
portion of the federal government's previous 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.
    H.R. 254 would eliminate that requirement, and CBO expects 
that the bill would encourage nonfederal entities to pursue 
development of the hydropower resources at Diamond Fork. 
Assuming that H.R. 254 is enacted in 2013, 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 2018. 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. HR. 254 would increase offsetting receipts (a credit 
against direct spending) by about $600,000 annually beginning 
in 2018. 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. 254 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON NATURAL RESOURCES ON MARCH 20, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, in millions of dollars--
                                              ----------------------------------------------------------------------------------------------------------
                                                                                                                                        2013-
                                                2013    2014    2015    2016    2017    2018    2019    2020    2021    2022    2023    2018   2013-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       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
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components do not sum to totals because of rounding.

    Intergovernmental and private-sector impact: H.R. 254 
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 April 1, 2013, CBO transmitted a 
cost estimate for S. 26, the Bonneville Unit Clean Hydropower 
Facilitation Act, as ordered reported by the Senate Committee 
on Energy and Natural Resources on March 14, 2013. The text of 
the two pieces of legislation is identical, and the CBO cost 
estimates are the same.
    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 from the 
hydropower developer of about $4 million over the 2014-2023 
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 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.

                       COMPLIANCE WITH H. RES. 5

    Directed Rule Making. The Chairman does not believe that 
this bill directs any executive branch official to conduct any 
specific rule-making proceedings.
    Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                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.