Senate Report 106-450 - NORTHERN COLORADO WATER CONSERVANCY DISTRICT

[Senate Report 106-450]
[From the U.S. Government Publishing Office]

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

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NORTHERN COLORADO WATER CONSERVANCY DISTRICT

_______

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

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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).

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.