[House Report 104-531]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-531
_______________________________________________________________________


 
            TO AMEND THE CENTRAL UTAH PROJECT COMPLETION ACT

                                _______


 April 23, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


  Mr. Young of Alaska, from the Committee on Resources, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1823]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Resources, to whom was referred the bill 
(H.R. 1823) to amend the Central Utah Project Completion Act to 
direct the Secretary of the Interior to allow for prepayment of 
repayment contracts between the United States and the Central 
Utah Water Conservancy District dated December 28, 1965, and 
November 26, 1985, and for other purposes, having considered 
the same, report favorably thereon with an amendment and 
recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. PREPAYMENT OF CERTAIN REPAYMENT CONTRACTS BETWEEN THE UNITED 
                    STATES AND THE CENTRAL UTAH WATER CONSERVANCY 
                    DISTRICT.

  Section 210 of the Central Utah Project Completion Act (106 Stat. 
4624) is amended by striking the second sentence and inserting the 
following: ``The Secretary shall allow for prepayment of the repayment 
contract between the United States and the Central Utah Water 
Conservancy District dated December 28, 1965, and supplemented on 
November 26, 1985, providing for repayment of municipal and industrial 
water delivery facilities for which repayment is provided pursuant to 
such contract, under terms and conditions similar to those contained in 
the supplemental contract that provided for the prepayment of the 
Jordan Aqueduct dated October 28, 1993. The prepayment may be provided 
in several installments to reflect substantial completion of the 
delivery facilities being prepaid and may not be adjusted on the basis 
of the type of prepayment financing utilized by the District. The 
District shall exercise its right to prepayment pursuant to this 
section by the end of fiscal year 2002. Nothing in this section 
authorizes or terminates the authority to use tax exempt bond financing 
for this prepayment.''.

                          Purpose of the Bill

    The purpose of H.R. 1823 is to amend the Central Utah 
Project Completion Act to direct the Secretary of the Interior 
to allow for prepayment of repayment contracts between the 
United States and the Central Utah Water Conservancy District.

                  Background and Need for Legislation

    In 1992, Congress enacted the Reclamation Projects 
Authorization and Adjustment Act of 1992 (Public Law 102-575). 
Titles II through VI of that Act are referred to as the Central 
Utah Project Completion Act (CUPCA). Section 210 of CUPCA 
authorized the Secretary to negotiate--on terms which were 
adequate to protect the public interest--the prepayment of the 
Jordan Aqueduct component of the Central Utah Project (CUP).
    The Jordan Aqueduct conveys water from Provo Canyon into 
Salt Lake County, Utah, for municipal and industrial uses. 
Negotiations between the Secretary and the local water users 
(Central Utah Water Conservancy District, Salt Lake County 
Water Conservancy District and Metropolitan Water District of 
Salt Lake City) concluded on October 28, 1993, when the 
Secretary and the District signed a supplemental repayment 
contract for the Jordan Aqueduct which quantified the amount of 
the prepayment for that project feature based upon a present 
value calculation of the District's future repayment 
obligation. The Jordan Aqueduct prepayment provided the Federal 
Government with a lump sum of $35.2 million and saved the 
District taxpayers and water customers millions of dollars in 
future payments.
    H.R. 1823 would authorize additional prepayments by the 
District under terms and conditions similar to those contained 
in the Jordan Aqueduct Prepayment Agreement. The bill would 
provide the Secretary of the Interior with the authority to 
accept prepayment from the Central Utah Water Conservancy 
District for the costs of project features or portions thereof 
associated with the Bonneville Unit of CUP which have been or 
will be allocated to development of the municipal and 
industrial water supply.
    Based upon information provided by the District, it is 
expected that the new prepayment authority authorized by this 
bill will facilitate lump sum prepayments to be made by the 
District totaling between $145 and $200 million. The variance 
between these numbers reflects uncertainty with respect to the 
cost of features not yet constructed and the fact that final 
cost allocations have not been made.
    Provisions similar to H.R. 1823 were included in Title IX 
of H.R. 2491, the Seven-Year Balanced Budget Reconciliation Act 
of 1995; H.R. 2491 was vetoed by the President.

                            Committee Action

    H.R. 1823 was introduced on June 13, 1995, by Congressman 
James V. Hansen of Utah. The bill was referred to the Committee 
on Resources, and within the Committee to the Subcommittee on 
Water and Power Resources. On June 15, 1995, the Subcommittee 
held a hearing on H.R. 1823. At that time, the Department of 
the Interior did not take a position on the bill, but 
subsequently transmitted a written response for the record in 
which the Department recommended a change in the legislation to 
provide the Department with more flexibility in protecting the 
interests of the United States. On March 13, 1996, the Full 
Resources Committee met to consider H.R. 1823. At that time, 
the Subcommittee on Water and Power Resources was discharged 
from further consideration of H.R. 1823. An amendment in the 
nature of a substitute was offered by Mr. Hansen to extend the 
pre-existing authority of the Secretary of the Interior to 
accept prepayment from the Central Utah Water Conservancy 
District for municipal and industrial repayment contracts 
entered into on December 28, 1965 and supplemented on November 
26, 1985. The amendment was adopted by voice vote. The bill, as 
amended, was then ordered favorably reported to the House of 
Representatives, in the presence of a quorum.

                      Section-by-Section Analysis

    As reported, H.R. 1823 amends section 210 of the Central 
Utah Project Completion Act to extend the pre-existing 
authority of the Secretary of the Interior to accept prepayment 
from the Central Utah Water Conservancy District for municipal 
and industrial repayment contracts entered into on December 28, 
1965 and supplemented on November 26, 1985.
    The bill provides that prepayment be allowed under terms 
and conditions similar to those that were negotiated in the 
Jordan Aqueduct Prepayment Agreement, dated October 28, 1993. 
The bill stipulates that the District shall exercise it right 
to prepayment by the end of fiscal year 2002. The bill 
stipulates that nothing in this provision authorizes or 
terminates the use of tax exempt bond financing for this 
prepayment. The bill does nothing with respect to title to the 
water project features for which prepayment is made. Title will 
remain in the name of the United States.
    The Committee expects that the Secretary and the District 
will use terms and conditions in the prepayment contracts 
authorized by this legislation that are similar to the terms 
and conditions of the Jordan Aqueduct Agreement, including the 
interest rate used by the Secretary to calculate the present 
value of the repayment debt. The ``similar to'' language in the 
bill is intended only to give the Secretary and the District 
flexibility in structuring the timing of these prepayment 
agreements and to allow the District, at its option, to prepay 
Bonneville Unit municipal and industrial costs which have been 
incurred, but for which repayment block notices may not yet 
have been issued and despite the fact that a final cost 
allocation for project features may not have been completed. 
The Committee expects that it may be necessary for the District 
and the Secretary to enter into several prepayment agreements 
between the date of enactment and the end of fiscal year 2002 
to prepay fully all of the municipal and industrial project 
costs.

            Committee Oversight Findings and Recommendations

    With respect to the requirements of clause 2(l)(3) of Rule 
XI of the Rules of the House of Representatives, and clause 
2(b)(1) of Rule X of the Rules of the House of Representatives, 
the Committee on Resources' oversight findings and 
recommendations are reflected in the body of this report.

                     Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of Rule XI of the Rules of the 
House of Representatives, the Committee estimates that the 
enactment of H.R. 1823 will have no significant inflationary 
impact on prices and costs in the operation of the national 
economy.

                        Cost of the Legislation

    Clause 7(a) 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 
H.R. 1823. However, clause 7(d) 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 403 of the Congressional Budget Act of 1974.

                     Compliance With House Rule XI

    1. With respect to the requirement of clause 2(l)(3)(B) of 
Rule XI of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, H.R. 
1823 does not contain any new budget authority, spending 
authority, credit authority, or an increase or decrease in tax 
expenditures. The bill will result in increased revenues to the 
Federal Government of $77 million in 1997, $147 million in 1998 
and $39 million in 2001. These revenues would be partially 
offset by a loss of offsetting revenues of approximately $5 
million in 1997 and $13 million per year in 1998-2002, plus 
additional losses in further years.
    2. With respect to the requirement of clause 2(l)(3)(D) of 
Rule XI of the Rules of the House of Representatives, the 
Committee has received no report of oversight findings and 
recommendations from the Committee on Government Reform and 
Oversight on the subject of H.R. 1823.
    3. With respect to the requirement of clause 2(l)(3)(C) of 
Rule XI 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 H.R. 
1823 from the Director of the Congressional Budget Office.

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 18, 1996.
Hon. Don Young,
Chairman, Committee on Resources,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1823, a bill to 
amend the Central Utah Project Completion Act to direct the 
Secretary of the Interior to allow for prepayment of repayment 
contracts between the United States and the Central Utah Water 
Conservancy District dated December 28, 1965, and November 26, 
1985, and for other purposes.
    Enactment of H.R. 1823 would affect direct spending and 
receipts; therefore, pay-as-you-go procedures would apply to 
the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                         June E. O'Neill, Director.

               congressional budget office--cost estimate

    1. Bill number: H.R. 1823.
    2. Bill title: A bill to amend the Central Utah Project 
Completion Act to direct the Secretary of the Interior to allow 
for prepayment of repaying contracts between the United States 
and the Central Utah Water Conservancy District dated December 
28, 1965, and November 26, 1985, and for other purposes.
    3. Bill status: As ordered reported by the House Committee 
on Resources on March 13, 1996.
    4. Bill purpose: H.R. 1823 would allow the Central Utah 
Water Conservancy District to prepay the present values of 
amounts due under construction repayment contracts for the 
Central Utah Project (CUP). The district would be authorized to 
pay for each portion of the project as it is completed. The 
authority to make such payments would expire at the end of 
fiscal year 2002.
    5. Estimated cost to the Federal Government: Based on 
information provided by the Bureau of Reclamation and the 
Central Utah Water Conservancy District, CBO estimates that the 
bill would result in gross receipts to the Federal Government 
of about $77 million in 1997, $147 million in 1998, and $39 
million in 2001. These receipts would be partially offset by a 
loss of offsetting receipts totaling about $5 million in 1997 
and $13 million annually from 1998-2002. Additional amounts 
averaging $15 million a year would be forgone over the 2003-
2048 period. The following table summarizes the estimated 
budgetary impact of H.R. 1823 from 1996 through 2002.

----------------------------------------------------------------------------------------------------------------
                                        1996       1997       1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
                                                 Direct Spending                                                
Spending Under Current Law:                                                                                     
    Estimated Budget Authority.....          2          2          2          2          2          2          2
    Estimated Outlays..............          4         -2        -10        -10        -10        -10        -10
Proposed Changes:                                                                                               
    Estimated Budget Authority.....          0        -72       -134         13         13        -26         13
    Estimated Outlays..............          0        -72       -134         13         13        -26         13
Spending Under H.R. 1823:                                                                                       
    Estimated Budget Authority.....          2        -70       -132         15         15        -24         15
    Estimated Outlays..............          4        -74       -144          3          3        -36          3
----------------------------------------------------------------------------------------------------------------

    The budgetary effects of this bill fall within budget 
function 300.
    6. Basis of estimate: CBO's estimates of repayment streams 
and prepayment amounts are based on current cost allocations 
and construction costs incurred up to September 30, 1994. 
Changes to the existing cost allocations and newly incurred 
construction costs may affect these amounts. (The Bureau of 
Reclamation expects to complete an updated cost allocation for 
this project later this year.)

Prepayment amounts

    CBO estimates that a prepayment for already completed 
segments of the CUP would total roughly $77 million in 1997. 
Prepayments for the remaining segments, the Jordanelle Unit and 
the Diamond Fork System, would occur in fiscal years 1998 and 
2001, respectively, when construction on these two sets of 
facilities is completed.
    The Central Utah Water Conservancy District would choose to 
prepay amounts due because that action would create room for 
additional borrowing under the district's voter-approved debt 
ceiling. By prepaying the discounted value of outstanding debt 
owed the federal government, the district could borrow new 
funds without exceeding its debt ceiling and thus have 
available for spending the difference between the undiscounted 
amount of CUP debt and the discounted amount reflected by any 
prepayments. In addition, if the district is able to use tax-
exempt financing for any new borrowing, its annual debt 
payments after prepayment could be lower than its current 
annual costs.

Loss of the Current Repayment Stream

    Prepayment of the Central Utah Project also would result in 
a loss of the existing repayment stream. This stream is made up 
of offsetting receipts totaling about $5 million in 1997, $13 
million annually over the following 10 years, and an additional 
$12 million to $17 million a year through 2048. About $2 
million a year out of these amounts represents collections that 
are spent annually without appropriation for mandatory payments 
to the Ute Indian Tribe. CBO assumes that payments to the tribe 
would continue after prepayment even though the receipts that 
currently cover such payments would not continue.
    7. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts through 1998. CBO estimates that enactment 
of H.R. 1823 would affect direct spending by changing the 
stream of payments received by the U.S. Treasury under an 
existing federal contract. Therefore, pay-as-you-go procedures 
would apply to the bill. The estimated pay-as-you-go effects 
are shown below.

------------------------------------------------------------------------
                                            1996       1997       1998  
------------------------------------------------------------------------
Change in outlays......................          0        -72       -134
Change in receipts.....................      (\1\)      (\1\)      (\1\)
------------------------------------------------------------------------
\1\ Not applicable.                                                     

    8. Estimated impact on state, local, and tribal 
governments: H.R. 1823 contains no intergovernmental mandates 
as defined in Public Law 104-4 and would impose no direct costs 
on state, local, or tribal governments. The repayments 
authorized by this bill would be voluntary on the part of the 
Central Utah Water Conservancy District and we assume that the 
district would prepay only if it would benefit from doing so.
    9. Estimated impact on the private sector: The bill would 
impose no new private sector mandates, as defined in Public Law 
104-4.
    10. Previous CBO estimate: On November 16, 1995, CBO 
provided an estimate for the conference report on H.R. 2491, 
the Balanced Budget Act of 1995. H.R. 2491 included a provision 
that was similar to H.R. 1823. At that time, CBO estimated that 
enactment would result in additional offsetting receipts to the 
Treasury totaling $190 million over the 1996-2000 period and 
$219 million over the 1996-2002 period. Our current estimate, 
which varies slightly from the previous estimate, reflects new 
interest rate assumptions and revised projections of receipts 
under current law.
    11. Estimate prepared by: Federal cost estimate: Gary 
Brown; State and local government impact: Marge Miller; private 
sector impact: Amy Downs.
    12. Estimate approved by: Robert A. Sunshine, for Paul N. 
Van de Water, Assistant Director for Budget Analysis.

                    compliance with public law 104-4

    H.R. 1823 contains no unfunded mandates.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

         SECTION 210 OF THE CENTRAL UTAH PROJECT COMPLETION ACT

SEC. 210. JORDAN AQUEDUCT PREPAYMENT.

    Under such terms as the Secretary may prescribe, and within 
one year of the date of enactment of this Act, the Secretary 
shall allow for the prepayment, or shall otherwise dispose of, 
repayment contracts entered into among the United States, the 
District, the Metropolitan Water District of Salt Lake City, 
and the Salt Lake County Water Conservancy District, dated May 
16, 1986, providing for repayment of the Jordan Aqueduct 
System. [In carrying out this section, the Secretary shall take 
such actions as he deems appropriate to accommodate, 
effectuate, and otherwise protect the rights and obligations of 
the United States and the obligors under the contracts executed 
to provide for payment of such repayment contracts.] The 
Secretary shall allow for prepayment of the repayment contract 
between the United States and the Central Utah Water 
Conservancy District dated December 28, 1965, and supplemented 
on November 26, 1985, providing for repayment of municipal and 
industrial water delivery facilities for which repayment is 
provided pursuant to such contract, under terms and conditions 
similar to those contained in the supplemental contract that 
provided for the prepayment of the Jordan Aqueduct dated 
October 28, 1993. The prepayment may be provided in several 
installments to reflect substantial completion of the delivery 
facilities being prepaid and may not be adjusted on the basis 
of the type of prepayment financing utilized by the District. 
The District shall exercise its right to prepayment pursuant to 
this section by the end of fiscal year 2002. Nothing in this 
section authorizes or terminates the authority to use tax 
exempt bond financing for this prepayment.