[Senate Report 108-16]
[From the U.S. Government Publishing Office]
Calendar No. 28
108th Congress Report
SENATE
1st Session 108-16
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BLUNT RESERVOIR AND PIERRE CANAL LAND CONVEYANCE ACT OF 2003
_______
March 5, 2003.--Ordered to be printed
_______
Mr. Domenici, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 426]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 426) to direct the Secretary of the
Interior to convey certain parcels of land acquired for the
Blunt Reservoir and Pierre Canal features of the initial stage
of the Oahe Unit, James Division, South Dakota, to the
Commission of Schools and Public Lands and the Department of
Game, Fish, and Parks of the State of South Dakota for the
purpose of mitigating lost wildlife habitat, on the condition
that the current preferential leaseholders shall have an option
to purchase the parcels from the Commission, and for other
purposes, having considered the same, reports favorably thereon
without amendment and recommends that the bill do pass.
PURPOSE
The purpose of S. 426 is to authorize the conveyance of
approximately 19,200 acres of Federal land in South Dakota
administered by the Bureau of Reclamation that were never used
for the proposed Blunt Reservoir. The lands would be conveyed
back to the original land owners or their descendants, or to
the State of South Dakota for the mitigation of lost wildlife
habitat.
BACKGROUND AND NEED
S. 426 is the product of more than four years of discussion
with local landowners, the South Dakota Water Congress, the
Bureau of Reclamation, local legislators, representatives of
South Dakota sportsmen groups, and other affected citizens.
The Oahe Unit was originally approved as part of an overall
plan or water development in the Missouri River Basin that was
incorporated in the Floor Control Act of 1944. The initial
stage of the project included a system of main canals, such as
the Pierre Canal, running east from the Oahe Reservoir, and the
establishment of regulating reservoirs, including the Blunt Dam
and reservoir, located approximately 35 miles east of Pierre,
South Dakota.
A total of 17,878 acres of land was acquired from willing
sellers for the proposed Blunt Reservoir feature during the
1970's. More than 1,300 acres of additional land was acquired
for the Pierre Canal feature.
After the growth of opposition to the project, construction
on the Oahe unit was halted on September 30, 1977. Congress did
not provide funds for the project in the fiscal year 1978.
In response to this situation, the Bureau of Reclamation
gave to those persons who had willingly sold their lands to the
project, and their descendants, the right to lease those lands
and use them as they had in the past until they were needed by
the Federal Government for project purposes. Since 1978, the
Bureau of Reclamation has administered these lands on a
preference lease basis for original landowners or their
descendants and on a non-preferential basis for lands under
lease to persons who had not previously owned or controlled the
land.
Currently, the Bureau of Reclamation administers
approximately 13,000 acres as preferential leases in Blunt
Reservoir, and administers approximately 1,100 acres of
preferential leases in the Pierre Canal feature. The Bureau
also administers approximately 5,000 acres of non-preferential
leases at the two features. The lands are not in their original
condition. Various stockpiled materials, fences, access roads,
road detours, and other items left by the Bureau remain on the
land.
The Oahe project was a part of the overall Pick-Sloan
Missouri Basin program, which included four major dams across
the Missouri River that caused the loss of approximately
221,000 acres of fertile, wooded bottomland that was productive
wildlife habitat.
Under the provisions of the Wildlife Coordination Act of
1958, the State of South Dakota has developed a plan to
mitigate a part of this lost wildlife habitat. The transfer of
non-preferential lease lands in the Blunt Reservoir feature to
the South Dakota Department of Game, Fish and Parks would
satisfy, in part, this habitat mitigation obligation.
Enactment of this measure would provide important habitat
for wildlife and equitably address the effects of this project
on original landowners and their descendants.
LEGISLATIVE HISTORY
S. 426 was introduced by Senator Daschle on February 14,
2003. Similar legislation, S. 1028, was introduced by Senators
Daschle and Johnson in the 107th Congress. The Subcommittee on
Public Lands and Forests held a hearing on S. 1028 on November
27, 2001, and ordered the bill favorably reported, with an
amendment in the nature of a substitute, on July 31, 2002. The
text of S. 1028, as amended, was adopted by the Senate as part
of an amendment to S. 2222, which passed the Senate by
unanimous consent on November 19, 2002. At the business meeting
on February 26, 2003, the Committee on Energy and Natural
Resources ordered S. 426, favorably reported.
COMMITTEE RECOMMENDATIONS
The Committee on Energy and Natural Resources, in open
business session on February 26, 2003, by a unanimous voice
vote of a quorum present, recommends that the Senate pass S.
426 as described herein.
SECTION-BY-SECTION ANALYSIS
Section 1 entitles the Act the ``Blunt Reservoir and Pierre
Canal Land Conveyance Act of 2002.''
Section 2 (a) defines key terms used in the Act.
Subsection (b) deauthorizes the Blunt Reservoir feature of
the Oahe Irrigation Project.
Subsection (c) requires the State of South Dakota to accept
land conveyed to it under the bill in ``as is'' condition,
assume responsibility for any outstanding liabilities, and
recognize any outstanding obligations associated with expired
easements or other rights granted to either feature. The
conveyances to the State shall also be subject to the
reservations by the United States and the conditions specified
in section 667b of title 16, United States Code, for transfer
of property to State agencies for wildlife conservation
purposes. The conveyances shall be subject to the reservation
by the United States of all oil, gas, and mineral rights, to
the condition that the property continue to be used for
wildlife conservation and to a requirement that in the event it
is no longer used for such purposes, or in the event it is
needed for national defense purposes, title shall revert to the
United States.
Subsection (d) allows the preferential leaseholders
(original landowners or descendants, or operators of the land
at the time of purchase) an option to purchase the land they
lease within 5 years of enactment. Any purchases shall be from
the South Dakota Commission of Schools and Public Lands
(``Commission''), acting as an agent for the Secretary of the
Interior. The leaseholders would have theoption of paying cash
and receiving a 10 percent discount on the land's value, or receiving a
30-year mortgage at 3 percent annual interest.
If the preferential leaseholder fails to purchase a parcel
within the 5-year period, that parcel would be conveyed to the
South Dakota Department of Game, Fish, and Parks to assist in
the implementation of the wildlife habitat mitigation plan.
Proceeds of the sales shall be deposited as miscellaneous
funds in the Treasury and made available subject to
appropriation, to the State for the establishment of a trust
fund to pay the county taxes on the lands received by the State
Department of Game, Fish, and Parks under the bill.
Subsection (e) directs the Secretary of the Interior to
convey to the South Dakota Department of Game, Fish, and Parks
the nonpreferential leased parcels and unleased parcels of the
Blunt Reservoir and Pierre Canal to be used for mitigating the
wildlife habitat that was lost as a result of the development
of the Pick-Sloan project. The Commission would also be
authorized, with the Department's concurrence, to allow a
person to exchange other land in South Dakota for a
nonpreferential lease parcel or unleased parcel at Blunt
Reservoir or Pierre Canal. This subsection also reserves to the
United States a perpetual easement to the land to allow for a
pipeline or other water conveyance structure over, under,
across, or through the Pierre Canal Feature.
Subsection (f) releases the United States from liability,
except for damages from certain acts of negligence committed
prior to the date of conveyance.
Subsection (g) provides that, during the interim period
prior to the expiration of their purchase option after five
years, the preferential leaseholders would be entitled to
continue to lease from the Secretary of the Interior under the
same terms and conditions applicable on the date of enactment.
Within 180 days of enactment, the Secretary shall provide the
State a full legal description of all preferential lease
parcels and nonpreferential lease parcels that may be conveyed
under this section.
Subsection (h) authorizes $750,000 to be appropriated to
reimburse the Secretary for expenses incurred in implementing
this Act, and such sums as are necessary to reimburse the
Commission for expenses incurred implementing this Act, not to
exceed 10 percent of the cost of each transaction conducted
under this Act.
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, March 3, 2003.
Hon. Pete V. Domenici,
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. 426, the Blunt
Reservoir and Pierre Canal Land Conveyance Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark Hadley
and Julie Middleton.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
S. 426--Blunt Reservoir and Pierre Canal Land Conveyance Act of 2003
Summary: S. 426 would direct the Secretary of the Interior
to transfer title to the lands and facilities that make up the
nonpreferential lease parcels and unleased parcels of the Blunt
Reservoir and Pierre Canal in South Dakota to the state. During
the five years following enactment, S. 426 would allow any
preferential leaseholder to purchase the parcel that is the
subject of their lease for cash or on an installment basis.
After five years, the bill would direct the Secretary to
transfer any remaining parcels to South Dakota. S. 426 would
authorize the appropriation of $750,000 to implement those
provisions. The bill also would authorize the appropriation of
payments to South Dakota equal to the amount of any proceeds
from sales to leaseholders.
Assuming appropriation of the authorized amounts, CBO
estimates that implementing S. 426 would cost about $1.2
million in 2004 and negligible amounts in subsequent years. For
Congressional scorekeeping purposes, CBO estimates that
enacting S. 426 would increase direct spending by about
$100,000 in 2004. Enacting the bill would also lead to about
$450,000 in collections from asset sales, but those proceeds
would not count for purposes of Congressional scorekeeping
because completing the asset sales would ultimately result in a
net cost to the federal government.
S. 426 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
The bill would benefit the state of South Dakota, and any costs
would be incurred voluntarily.
Estimated cost to the Federal Government: Subject to the
appropriation of the authorized amounts, CBO estimates that
implementing S. 426 would cost $1.2 million in 2004 and
insignificant amounts in subsequent years. CBOestimates that
enactment of the bill would increase offsetting receipts by about
$500,000 in 2004 from land sales and would increase direct spending by
about $100,000 in 2004 for loan subsidies for the installment purchases
of certain land parcels in the affected area.
Spending subject to appropriation
S. 426 would direct the Secretary of the Interior to
transfer title to the lands and facilities that make up the
nonpreferential lease parcels and unleased parcels of the Blunt
Reservoir and Pierre Canal to South Dakota. During the five
years following enactment, S. 426 would allow any preferential
leaseholder to purchase the parcel that is the subject of their
lease. After such time has expired, the bill would direct the
Secretary to transfer any remaining preferential lease parcels
to the state. S. 426 would authorize the appropriation of
$750,000 to implement those provisions.
The bill also would authorize the appropriation of federal
proceeds to South Dakota from sales to leaseholders. We
estimate that by selling parcels to preferential leaseholders,
the federal government would collect nearly $500,000 in 2004
and smaller amounts in each of the next four years. Thus,
subsequent appropriations of that amount to South Dakota would
cost about $500,000 in 2004.
Direct spending
To purchase their leased lands under the bill, preferential
leaseholders would pay the value of such lands appraised for
agricultural purposes only (i.e., not including recreational
value). The bill would allow leaseholders to pay 10 percent
less than the appraised value if they pay up front in a lump
sum. The bill also would allow those leaseholders whose parcels
are valued above $10,000 to pay in installments over 30 years
with an annual interest rate of 3 percent. Based on information
from the Bureau of Reclamation, we expect that over the five-
year period, nearly 30 leaseholders would purchase the parcels
valued at less than $10,000. We estimate that the government
would receive about $30,000 a year from such sales.
Because of the favorable terms under the bill, we expect
that all 17 of the leaseholders with parcels valued above
$10,000 would purchase those parcels on an installment basis.
Based on information from the Bureau of Reclamation, CBO
estimates that the government would collect about $450,000 from
the sale of those more-valuable leases in 2004. However, those
proceeds would not count for Congressional scorekeeping
purposes because CBO estimates that the sales would result in a
net cost to the government (on a present-value basis).
Scorekeeping guideline #15 states that if an asset sale would
result in a net financial cost to the government, the proceeds
from such a sale ``shall not be scored'' under the
Congressional Budget Act.
The Federal Credit Reform Act of 1990 requires that
agencies record the subsidy cost of financing arrangements in
the year the assets are sold if payment is deferred for more
than 90 days. In effect, S. 426 would allow the Secretary to
issue direct loans to the 17 leaseholders with parcels valued
about $10,000. Based on the experience of similar loan programs
within the Department of Agriculture, CBO expects that very few
purchasers would default on their payments. Because the
purchasers would pay annual interest of 3 percent, however, CBO
estimates that the loans under S. 426 would have a subsidy cost
of about $100,000, or 25 percent of the purchase price. under
credit reform procedures, this cost would be recorded in 2004.
Intergovernmental and private-sector impact: S. 426
contains no intergovernmental or private-sector mandates as
defined in UMRA. The bill would benefit the state of South
Dakota, and any costs would be incurred voluntarily.
Estimate prepared by: Federal Costs: Mark Hadley and Julie
Middleton; Impact on State, Local, and Tribal Governments:
Marjorie Miller; and Impact on the Private Sector: Cecil
McPherson.
Estimate approved by: Peter H. Fontaine, Deputy 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. 426. 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. 426, as ordered reported.
EXECUTIVE COMMUNICATIONS
On February 26, 2003, 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. 426. These reports
had not been received at the time the report on S. 426 was
filed.
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. 426, as ordered
reported.