[House Report 104-770]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-770
_______________________________________________________________________


 
                  EMERGENCY DROUGHT RELIEF ACT OF 1996

                                _______
                                

 September 4, 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. 3910]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Resources, to whom was referred the bill 
(H.R. 3910) to provide emergency drought relief to the city of 
Corpus Christi, Texas, and the Canadian River Municipal Water 
Authority, Texas, 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. SHORT TITLE.

    This Act may be cited as the ``Emergency Drought Relief Act of 
1996''.

SEC. 2. EMERGENCY DROUGHT RELIEF.

    (a) Corpus Christi.--
            (1) Emergency drought relief.--For the purpose of providing 
        emergency drought relief, the Secretary of the Interior shall 
        defer all principal and interest payments without penalty or 
        accrued interest for the 5-year period beginning on the date of 
        enactment of this Act for the city of Corpus Christi, Texas, 
        and the Nueces River Authority under contract No. 6-07-01-X0675 
        involving the Nueces River Reclamation Project, Texas: 
        Provided, That the city of Corpus Christi shall commit to use 
        the funds thus made available exclusively for the acquisition 
        of or construction of facilities related to alternative sources 
        of water supply.
            (2) Issuance of permits.--If construction of facilities 
        related to alternative water supplies referred to in paragraph 
        (1) requires a Federal permit for use of Bureau of Reclamation 
        lands or facilities, the Secretary shall issue such permits 
        within 90 days after the date of enactment of this Act, 
        recognizing the environmental impact statement FES74-54 and the 
        environmental assessment dated March 1991 (relating to the 
        Lavaca-Navidad River Authority Pipeline permit).
    (b) Canadian River Municipal Water Authority.--
            (1) Recognition of transfer of lands to the national park 
        service.--All obligations and associated debt under contract 
        No. 14-06-500-485 for land and related relocations transferred 
        to the National Park Service to form the Lake Meredith National 
        Recreation Area under Public Law 101-628, in the amount of 
        $4,000,000, shall be nonreimbursable. The Secretary shall 
        recalculate the repayment schedule of the Canadian River 
        Municipal Water Authority to reflect the determination of the 
        preceding sentence and to implement the revised repayment 
        schedule within one year of the date of enactment of this Act.
            (2) Emergency drought relief.--The Secretary shall defer 
        all principal and interest payments without penalty or accrued 
        interest for the 3-year period beginning on the date of 
        enactment of this Act for the Canadian River Municipal Water 
        Authority under contract No. 14-06-500-485 as emergency drought 
        relief to enable construction of additional water supply and 
        conveyance facilities.

                          PURPOSE OF THE BILL

    The purpose of H.R. 3910 is to provide emergency drought 
relief to the city of Corpus Christ, Texas, and the Canadian 
River Municipal Water Authority, Texas.

                  BACKGROUND AND NEED FOR LEGISLATION

    This legislation would provide financial assistance to 
certain water authorities in Texas by directing the Secretary 
of the Interior to defer all principal and interest payments 
without penalty or accrued interest for a period of five years 
for the City of Corpus Christi and the Nueces River Authority 
for their payments toward the Nueces River Project, and for a 
period of three years for the Canadian River Municipal Water 
Authority with respect to its payments toward the Canadian 
River Project.
    In approving this deferral, it is not the intent of the 
Committee that the debt be forgiven, nor is it intended that 
the debt be reamortized following the deferrals so that the 
water authorities would be making higher payments over the 
remaining length of the original contract. Rather, the 
Committee intends that, following the deferrals, the payments 
would resume in accordance with the current repayment schedule, 
with additional years added beyond the current contract 
repayment length. This would have the effect of adding five 
years to the repayment of the Nueces River Project, and three 
years to the repayment of the Canadian River Project. The 
Committee would oppose the imposition of any additional terms 
and conditions on the water authorities as a result of contract 
modifications to incorporate these deferrals into the current 
repayment contracts.
    The bill also provides that if the construction of 
alternative water supplies for the City of Corpus Christ 
requires a federal permit for use of Bureau of Reclamation 
lands or facilities, the Secretary of the Interior shall issue 
such permits within 90 days of enactment. Further, the bill 
states that the cost of lands in the Canadian River Project 
that were transferred to the National Park Service to form Lake 
Meredith National Recreation Area shall be nonreimbursable, and 
the repayment obligation of the Canadian River Municipal Water 
Authority is to be recalculated accordingly.

History of legislation

    In November 1995, Congressman Solomon Ortiz (D-TX) 
introduced H.R. 2609, a bill to provide for the transfer of the 
following Bureau of Reclamation facilities in Texas to water 
authorities: the Canadian River Project; the Palmetto Bend 
Project; and the Nueces River Reclamation Project. The bill was 
cosponsored by Congressman Greg Laughlin (R-TX), Congressman 
Mac Thornberry (R-TX), and Congressman Larry Combest (R-TX), 
and was the subject of a November 16, 1995, hearing in the 
Water and Power Resources Subcommittee.
    It became apparent after the November hearing that a major 
goal of the facilities transfers was actually to free up 
capital for the water authorities to pursue other water 
supplies in the face of lower-than-expected water yields from 
the Nueces River Project and the Canadian River Project. These 
reduced yields, the size of which the Bureau of Reclamation 
disputes, have been exacerbated by the continuing drought in 
southern and western Texas.
    The Nueces River Project (Choke Canyon Reservoir) is 
located in McMullen County, Texas. Choke Canyon Reservoir is 
used in conjunction with Lake Corpus Christi to provide 
municipal and industrial supplies to serve the 500,000 people 
in Corpus Christ and surrounding communities. The Project 
provides 40,000 acre-feet of water per year for freshwater and 
return flows to the Nueces estuary for environmental purposes. 
Recreational development is provided by the Choke Canyon State 
Park and the Dauthtrey Wildlife Management Area.
    According to the City, the project yield of Choke Canyon 
Reservoir has been much lower than anticipated, although the 
Bureau of Reclamation disputes the hydrologic data, citing 
issues such as the point in the system where the data was 
collected. In addition, the City considers part of the yield 
reduction the 40,000 acre-feet of releases that the State of 
Texas is requiring the City to make for riparian habitat and 
Gulf Coast estuaries.
    The Palmetto Bend Project (Lake Texana) is located on the 
Navidad River in Jackson County, Texas. The Project was 
authorized in 1968, and provides a municipal and industrial 
water supply for the central coastal region of Texas. The 
Lavaca-Navidad River Authority, which operates and maintains 
the project, currently has a contract with the City of Corpus 
Christi and Formosa Plastics to supply water. The River 
Authority and the Texas Parks and Wildlife Department provide 
recreational areas for public use.
    The Canadian River Project (Lake Meredith) was authorized 
in 1950, and provides municipal and industrial water supplies, 
as well as flood control benefits. The project provides a water 
supply to 11 cities in the high plains area of Texas, including 
Lubbock and Amarillo. However, the reservoir has had severe 
natural salinity problems caused by brine discharges into the 
Canadian River in New Mexico. The Canadian River Municipal 
Water Authority, with assistance from the State of Texas and 
the Bureau of Reclamation, will be beginning a project to 
address these brine discharges within the next fiscal year. The 
project provides recreational benefits through the areas 
administered by the National Park Service that surround the 
reservoir. The Water Authority is responsible for the operation 
and maintenance of the project, and receives payments from the 
Bureau of Reclamation to help defray the operation and 
maintenance costs associated with the non-reimbursable elements 
of the project, such as flood control.

Drought in Texas

    At the time the legislation was considered by the Full 
Committee, severe drought conditions prevailed in much of 
Arizona, New Mexico and Southeast Texas. Although much of Texas 
escaped the West-wide drought of the late 1980s, in July 1996, 
the Palmer Drought Severity Index recorded drought status 
throughout Texas, with the most severe conditions in South 
Texas and the Gulf Coast area. San Antonio had received only 34 
percent of normal rainfall in 1996; El Paso ended a 68-day dry 
spell with 0.05 inches of rain on June 13; and in Corpus 
Christi, the dry weather has been accompanied by severe heat 
and record temperatures.
    Due to weather conditions created by Hurricane Dolly, 
southern and central Texas have received several inches of 
rainfall during August 1996. However, the impact of this 
rainfall in alleviating drought conditions and improving 
reservoir storage is unclear.
    Even without the drought, the Texas Water Development Board 
has predicted that Corpus Christi will require additional water 
supplies by 2010. The dry spell has exacerbated this water 
shortage. Reservoir levels in the two Bureau of Reclamation 
reservoirs that supply much of the city's water have dropped 
steadily since mid-1993. Prior to the August rainfall, 
projections by city officials indicated that all storage would 
be gone within two years.

An option for the city of Corpus Christi

    In approving H.R. 3910, the Committee is not endorsing any 
specific alternative water supplies for the City of Corpus 
Christi or the Canadian River Authority. Any locally-developed 
alternative water supplies would have to be developed in 
accordance with state law, including any necessary state 
permits.
    However, additional municipal and industrial water supplies 
are available from Lake Texana, part of the Bureau's Palmetto 
Bend Project, designed to supply 75,000 acre-feet annually on 
the Navidad River to the north. This reservoir has been less 
severely affected by the drought, and the Lavaca-Navidad River 
Authority, which owns the water rights, has offered to sell 
water from that facility to the City of Corpus Christi.
    The conveyance facility for that water would be a 90-mile 
pipeline which diverts water from a point near the dam on Lake 
Texana and pumps the water south to Corpus Christi. The project 
requires the Lavaca-Navidad Water Authority to obtain permits 
from the Bureau of Reclamation to construct a pumping plant and 
for a pipeline right-of-way at Lake Texana.
    City representatives have expressed concern over the time 
that may be required to obtain such permits from the Bureau. 
Therefore, H.R. 3910 provides that if the construction of 
alternative water supplies for the City of Corpus Christ 
requires a federal permit for use of Bureau of Reclamation 
lands or facilities, the Secretary of the Interior shall issue 
such permits within 90 days of enactment. In addition, the City 
of Corpus Christi faces an approximate $15 million shortfall in 
its financing for the pipeline project, which is why it is 
seeking the debt relief to which the Committee has agreed.
    The Texas Natural Resources Conservation Commission must 
approve the water permit, which has been filed by the Lavaca-
Navidad Water Authority and the Texas Water Development Board. 
The application seeks to amend an existing certificate of 
adjudication for the Palmetto Bend Project, and would permit 
the water to be diverted to the City of Corpus Christi.

                            COMMITTEE ACTION

    On July 19, 1996, the Subcommittee on Water and Power 
Resources of the Committee on Resources held an oversight field 
hearing in Corpus Christi, Texas, on drought conditions 
affecting Bureau of Reclamation facilities in Texas.
    H.R. 3910 was introduced on July 26, 1996, by Congressman 
Ortiz, for himself and Congressman Thornberry. The bill was 
referred to the Committee on Resources, and held in the Full 
Committee. On August 1, 1996, the Full Resources Committee met 
to consider H.R. 3910. An amendment to clarify that the 
deferral periods begin on the date of enactment of this Act was 
offered by Congressman Ortiz, and adopted by voice vote. The 
bill as amended was then ordered favorably reported to the 
House of Representatives by voice vote.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    The short title of the bill is the ``Emergency Drought 
Relief Act of 1996''.

Section 2. Emergency drought relief

    For the purposes of providing emergency drought relief, 
subsection (a) directs the Secretary of the Interior to defer 
all principal and interest payments for the Nueces River 
Reclamation Project, Texas, without penalty or accrued interest 
for a period of five years for the City of Corpus Christi, 
Texas, and the Nueces River Authority. The subsection 
stipulates that the funds made available are to be used 
exclusively for the acquisition of or construction of 
facilities for an alternative water supply. If construction of 
facilities related to these alternative water supplies requires 
a federal permit for use of Bureau of Reclamation lands or 
facilities, the Secretary of the Interior shall issue the 
permits within 90 days after the date of enactment of this Act, 
recognizing certain past environmental documents.
    Although paragraph 2(a)(2) places a 90-day deadline on the 
Bureau of Reclamation's issuance of permits for facilities 
constructed by the City of Corpus Christi, it is not the intent 
of this legislation to thereby avoid compliance with the 
National Environmental Policy Act(NEPA). Rather, the 
legislation is designed to set the Bureau's priorities in 
relation to this emergency and provide a date certain when the 
work must be completed. The Committee believes that the 90-day 
time period should be sufficient for completion of NEPA 
procedures, considering the extensive environmental analysis 
developed in 1991 for a related pipeline project, and the fact 
that the Bureau has already begun NEPA compliance on the Corpus 
Christi/Lavaca-Navidad River Authority permit application. The 
Committee believes the Bureau of Reclamation can and should act 
swiftly to complete the necessary environmental analysis before 
the deadline.
    Subsection (b) stipulates that all obligations and debt of 
the Canadian River Municipal Water Authority with respect to 
land and related relocations transferred to the National Park 
Service to form the Lake Meredith National Recreation Area 
under Public Law 101-628 shall be nonreimbursable. The 
subsection directs the Secretary of the Interior to recalculate 
the repayment schedule of the Authority to reflect this 
nonreimbursable determination, and to implement the revised 
repayment schedule within one year of the date of enactment of 
this Act. The subsection further directs the Secretary to defer 
all principal and interest payments for the Canadian River 
Project without penalty or accrued interest for a period of 
three years for the Authority for emergency drought relief to 
enable construction of additional water supply and conveyance 
facilities.

            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)(l) 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. 3910 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. 3910. 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. 
3910 does not contain any new budget authority, spending 
authority, credit authority, or an increase or decrease in tax 
expenditures. The bill would result in a loss of offsetting 
receipts totaling less than $500,000 a year over the 2003-2017 
time period. The bill would also shift the collection of other 
offsetting receipts from 1997-2002 until after 2017.
    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. 3910.
    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. 
3910 from the Director of the Congressional Budget Office.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 28, 1996.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3910, the 
Emergency Drought Relief Act of 1996.
    Enacting H.R. 3910 would affect direct spending. 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.
    Enclosure.

               congressional budget office cost estimate

    1. Bill number: H.R. 3910.
    2. Bill title: Emergency Drought Relief Act of 1996.
    3. Bill status: As ordered reported by the House Committee 
on Resources on August 1, 1996.
    4. Bill purpose: H.R. 3910 would direct the Secretary of 
the Interior acting through the Bureau of Reclamation to:
          Defer all principal and interest payments without 
        penalty or accrued interest for 5 years for the city of 
        Corpus Christi, Texas, and the Nueces River Authority;
          Defer all principal and interest payments without 
        penalty or accrued interest for 3 years for the 
        Canadian River Municipal River Water Authority; and;
          Designate $4 million of the remaining principal 
        balance of the Canadian River Municipal Water 
        Authority's repayment contract as non-reimbursable.
    5. Estimated cost to the Federal Government: Assuming 
enactment by the beginning of fiscal year 1997, CBO estimates 
that H.R. 3910 would shift the collection of $28 million in 
offsetting receipts from the 1997-2002 period until after 2017. 
The bill also would result in a loss of offsetting receipts 
totaling less than $500,000 a year over the 2003-2017 period. 
These receipts represent a portion of the receipts received by 
the Treasury under repayment contracts managed by the Bureau of 
Reclamation. The total of such payments for 1997 through 2002 
is shown in the following table, along with the expected change 
in payments under H.R. 3910.

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                              1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING                                                
                                                                                                                
Spending under current law:                                                                                     
    Estimated budget authority............      -186      -161      -163      -163      -174      -172      -171
    Estimated outlays.....................      -186      -161      -163      -163      -174      -172      -171
Proposed changes:                                                                                               
    Estimated budget authority............  ........         7         7         7         4         4     (\1\)
    Estimated outlays.....................  ........         7         7         7         4         4     (\1\)
Spending under H.R. 3910:                                                                                       
    Estimated budget authority............      -186      -154      -156      -156      -170      -168      -167
    Estimated outlays.....................      -186      -154      -156      -156      -170      -168     -167 
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         

    The costs of this bill fall within budget function 300.
    6. Basis of estimate: Assuming that H.R. 3910 will be 
enacted by the beginning of fiscal year 1997, the city of 
Corpus Christi, Texas, the Nueces River Authority, and the 
Canadian River Municipal Water Authority would be able to 
withhold payment of principal and interest beginning in 1997. 
All three contractors have already made or are in the process 
of making their 1996 payments.
    The city of Corpus Christi, Texas, and the Nueces River 
Authority would resume payments to the Treasury beginning in 
2002 and the Canadian River Authority would resume payments to 
the Treasury beginning in 2000. All contractors would be 
required to repay all deferred amounts at the end of their 
current repayment periods. Annual payments by the Canadian 
River Authority would reflect a $4 million reduction in the 
outstanding principal balance of the contract and would 
therefore be lower than they are under current law.
    The terms of repayment contracts for water projects managed 
by the Bureau of Reclamation, such as the projects affected by 
this bill, are essentially equivalent to the terms of a loan as 
defined in the Federal Credit Reform Act of 1990. To date, 
however, neither CBO nor the Office of Management and Budget 
(OMB) have treated new contracts as loans or changes in such 
contracts as loan modifications under the provisions of credit 
reform. Such provisions call for recording the cost of a new 
loan--or any change in cost in the case of a modification--on a 
present value basis, as opposed to the cash basis reflected in 
this estimate. CBO and OMB are reviewing the budgetary 
treatment of federal water projects with repayment contracts, 
and may decide to treat such transactions as loans for the 
purpose of scoring future legislation.
    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 enacting 
H.R. 3910 would affect direct spending by reducing offseting 
receipts. Therefore, pay-as-you-go procedures would apply to 
the bill. The following table summarizes the estimated pay-as-
you-go impact.

                [By fiscal year, in millions of dollars]                
------------------------------------------------------------------------
                                            1996       1997       1998  
------------------------------------------------------------------------
Change in outlays......................          0          7          7
Change in receipts.....................          0      (\1\)         7 
------------------------------------------------------------------------
\1\ Not applicable.                                                     

    8. Estimated impact on state, local, and tribal 
governments: In accordance with the Unfunded Mandates Reform 
Act of 1995 (Public Law 104-4), CBO has determined that this 
bill contains no intergovernmental mandates and would impose no 
costs on state, local, or tribal governments.
    9. Estimated impact on the private sector: In accordance 
with Public Law 104-4, CBO has determined that this bill would 
impose no private-sector mandates.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Federal cost estimate: Gary 
Brown; impact on state, local, and tribal governments: Marjorie 
Miller; and impact on the private sector: Amy Downs.
    12. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                    COMPLIANCE WITH PUBLIC LAW 104-4

    H.R. 3910 contains no unfunded mandates.

                         CHANGES IN EXISTING LAW

    If enacted, H.R. 3910 would make no changes in existing 
law.