[Senate Report 112-62]
[From the U.S. Government Publishing Office]
Calendar No. 142
112th Congress Report
SENATE
1st Session 112-62
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UINTAH WATER CONSERVANCY CONTRACT REPAYMENT
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August 30 (legislative day, August 2), 2011.--Ordered to be printed
Filed under authority of the order of the Senate of August 2, 2011
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Mr. Bingaman, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 808]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 808) to direct the Secretary of the
Interior to allow for prepayment of repayment contracts between
the United States and the Uintah Water Conservancy District,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
PURPOSE
The purpose of S. 808 is to direct the Secretary of the
Interior to allow for the prepayment of a repayment contract
between the United States and the Uintah Water Conservancy
District in the State of Utah.
BACKGROUND AND NEED
The Uintah Water Conservancy District (District) operates
and maintains the Vernal and Jensen Units of the Central Utah
Project, which was authorized as part of the Colorado River
Storage Project Act of 1956. The District entered into a
repayment contract dated June 3, 1976, requiring the repayment
of the costs associated with the construction of the Jensen
Unit. In 1992, the contract was amended to reduce the project
water supply from 18,000 acre-feet per year to 2,000 acre-feet
per year. Legislation is required to allow prepayment of the
repayment obligations in the amended contract. According to the
District, prepayment of the contract will substantially reduce
the cost of water to the District. The bill provides that the
Bureau of Reclamation will receive the net present value of the
full amount that would be due from the District without any
early repayment.
LEGISLATIVE HISTORY
Senator Hatch introduced S. 808 on April 13, 2011. The bill
is co-sponsored by Senator Lee. The Subcommittee on Water and
Power held a hearing on S. 808 on May 19, 2011 and considered
the bill at its business meeting on July 14, 2011. The
Committee ordered S. 808 favorably reported without amendment
at its business meeting on July 14, 2011.
During the 111th Congress, the Committee considered
identical legislation, S. 1757, sponsored by Senator Bennett.
The Subcommittee on Water and Power held a hearing on S. 1757
on November 5, 2009 (S. Hrg. 111-339) and the Committee ordered
the bill favorably reported without amendment on December 16,
2009 (S. Rpt. 111-143). A companion measure, H.R. 2950,
sponsored by Representative Matheson, passed the House of
Representatives by a voice vote on September 29, 2009.
COMMITTEE RECOMMENDATION
The Senate Committee on Energy and Natural Resources, in
open business session on July 14, 2011, by voice vote of a
quorum present, recommends that the Senate pass S. 808.
SECTION-BY-SECTION ANALYSIS
Section 1 provides that the Secretary of the Interior shall
allow the Uintah Water Conservancy District to prepay the
Federal government for the cost of municipal and industrial
water delivery facilities that were financed by the United
States (contract no. 6-05-01-00143). The section further
provides that prepayment shall reflect the net present value of
the debt the District owes to the government, and that the
District may prepay the debt in several installments, though
the debt must be prepaid in full by September 30, 2022. The
prepayment shall be adjusted to conform to any final cost
allocation, as determined by the Bureau of Reclamation, and may
not be adjusted based on the type of financing used by the
District to prepay the debt.
COST AND BUDGETARY CONSIDERATIONS
The following estimate of costs of this measure has been
provided by the Congressional Budget Office:
S. 808--A bill to direct the Secretary of the Interior to allow for
prepayment of repayment contracts between the United States and
the Uintah Water Conservancy District
S. 808 would allow the Uintah Water Conservancy District in
Utah to prepay the present value of certain amounts the
district owes to the U.S. Treasury for its share of the cost to
build the Jensen Unit of the Central Utah Project. Based on
information from the Bureau of Reclamation and the Uintah Water
Conservancy District, CB0 estimates that enacting the
legislation would have no impact on the federal budget. Because
the legislation would not affect direct spending or revenues,
pay-as-you-go procedures do not apply.
The Uintah Water Conservancy District is currently paying
the federal government about $227,000 a year on a balance of
$3.9 billion in project construction costs that have been
allocated to the district for repayment. However, if the
district chose to prepay its debt to the government under the
bill, it also would have to pay for additional construction
costs--totaling $7.4 million--that have not yet been assigned
to the district for repayment. Information from the district
indicates that it would be unable to prepay that additional
amount. Therefore, if the bill were enacted, CB0 expects that
the district would continue to make the annual payments it does
under current law and the legislation would have no impact on
the federal budget.
S. 808 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CB0 staff contact for this estimate is Aurora Swanson.
The estimate was approved by Theresa Gullo, 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. 808.
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. 808, as ordered reported.
CONGRESSIONALLY DIRECTED SPENDING
S. 808, as ordered reported, does not contain any
congressionally directed spending items, limited tax benefits,
or limited tariff benefits as defined in rule XLIV of the
Standing Rules of the Senate.
EXECUTIVE COMMUNICATIONS
The testimony provided by the Bureau of Reclamation, at the
May 19, 2011, Subcommittee hearing on S. 808 follows:
Statement of David Murillo, Deputy Commissioner, Operations, Bureau of
Reclamation, Department of the Interior
Madam Chairman and Members of the Subcommittee, I am David
Murillo, Deputy Commissioner of Operations of the Bureau of
Reclamation (Reclamation). Thank you for the opportunity to
provide the views of the Department of the Interior
(Department) on S. 808, as introduced on April 13, 2011. This
legislation allows for prepayment of the current and future
repayment contract obligations of the Uintah Water Conservancy
District (District) of the costs allocated to their municipal
and industrial water (M&I) supply on the Jensen Unit of the
Central Utah Project (CUP) and provides that the prepayment
must result in the United States recovering the net present
value of all repayment streams that would have been payable to
the United States if S. 808 were not enacted. S. 808 would
amend current law to change the date of repayment to 2022 from
2037. The legislation would also allow repayment to be provided
in several installments and requires that the repayment be
adjusted to conform to a final cost allocation. The Department
supports S. 808.
The District entered into a repayment contract dated June
3, 1976, in which they agreed to repay all reimbursable costs
associated with the Jensen Unit of the CUP. The Jensen Unit's
total water supply was envisioned at this time to be roughly
18,000 acre-feet because plans anticipated completion of
another pumping plant at a location on the Green River known as
Burns Bench.
However, for a variety of reasons, the Burns Bench feature
was never built. And with the enactment of language in Section
203(g) of the Central Utah Project Completion Act of 1992 (P.L.
102-575), the District's contract was amended in 1992 to reduce
the project M&I supply subject to repayment to 2,000 acre-feet
annually, and temporarily fix repayment for this supply based
upon a reduced interim cost allocation developed for the still-
uncompleted project. The amended 1992 contract required the
District to repay about $5.545 million through the year 2037 at
the project interest rate of 3.222% with annual payments of
$226,585. The current balance due, without discounting, is
$3,949,058 as of 2011.
It is important to note that this $3,949,058 figure
reflects a repayment amount that is statutorily lowered by the
1992 legislation, and does not reflect the true repayment costs
of the Jensen Unit. The costs allocated to the 2,000 acre-feet
of contracted M&I supply, and the M&I supply available through
additional incomplete project features, may be significantly
revised upward in the future upon project completion or
enactment of this bill, both of which would require a Final
Cost Allocation. An additional currently unallocated cost of
$7,419,513 is expected to be allocated to the contracted 2,000
acre-feet in order to achieve a full and final project
repayment.\1\
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\1\This allocation will be subject to revision should there be
additions to the project.
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These are the costs that paragraph 3 of S. 808 requires to
be included in the prepayment. The 2011 balance on the 1992 M&I
repayment contract is $3,949,058 and the adjustment amount when
factoring in the total project cost including interest on that
debt is $7,419,513. Therefore, in total non-discounted dollars,
the Conservancy District owes the Federal government
$11,368,571.
Under Reclamation law, water districts are not authorized
to prepay their M&I repayment obligation based upon a
discounted value of their remaining annual payments.
This legislation would authorize early repayment by the
Uintah Conservancy District to the Federal government. Because
there is an interest component to the M&I repayment streams to
be repaid early, early repayment without an adjustment for
interest would result in lower overall repayment to the United
States. To keep the United States whole, the Bureau of
Reclamation would collect the present value of the whole amount
that would be due without early repayment.
The language in S. 808 has been amended from the language
contained in an earlier version of this legislation, S. 1757
(111th Congress). The amended language clarifies that this
legislation requires that the Federal government be paid what
it is owed by the Conservancy District. Because the United
States supports the goals of providing for early repayment
under this contract so long as the United States is kept whole,
and S. 808 clearly establishes that early repayment under this
legislation must be of an amount equal to the net present value
of the foregone revenue stream, the Department supports this
legislation.
This concludes my testimony. I will 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 S. 808, as ordered
reported.