[Senate Report 105-131]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 246
105th Congress                                                   Report
                                 SENATE

 1st Session                                                    105-131
_______________________________________________________________________


 
  TO CONVEY CERTAIN FACILITIES OF THE MINIDOKA PROJECT TO THE BURLEY 
                          IRRIGATION DISTRICT

                                _______
                                

                November 3, 1997.--Ordered to be printed

_______________________________________________________________________


  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 538]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 538) to authorize the Secretary of the 
Interior to convey certain facilities of the Minidoka project 
to the Burley Irrigation District, and for other purposes, 
having considered the same, reports favorably thereon with an 
amendment and recommends 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. CONVEYANCE OF FACILITIES.

    (a) Definitions.--In this section:
          (1) Burley.--The term ``Burley'' means the Burley Irrigation 
        District, an irrigation district organized under the law of the 
        State of Idaho.
          (2) Division.--The term ``Division'' means the Southside 
        Pumping Division of the Minidoka project, Idaho.
          (3) Secretary.--The term ``Secretary'' means the Secretary of 
        the Interior.
    (b) Conveyance.--
          (1) In general.--The Secretary shall, without consideration 
        or compensation except as provided in this section, convey to 
        Burley, by quitclaim deed or patent, all right, title, and 
        interest of the United States in and to acquired lands, 
        easements, and rights-of-way of or in connection with the 
        Division, together with the pumping plants, canals, drains, 
        laterals, roads, pumps, checks, headgates, transformers, 
        pumping plant substations, buildings, transmission lines, and 
        other improvements or appurtenances to the land or used for the 
        delivery of water from the headworks (but not the headworks 
        themselves) of the Southside Canal at the Minidoka Dam and 
        reservoir to land in Burley, including all facilities used in 
        conjunction with the Division (including the electric 
        transmission lines used to transmit electric power for the 
        operation of the pumping facilities of the Division and related 
        purposes for which the allocable construction costs have been 
        fully repaid by Burley).
          (2) Costs.--The first $80,000 in administrative costs of 
        transfer of title and related activities shall be paid in equal 
        shares by the United States and Burley, and any additional 
        amount of administrative costs shall be paid by the United 
        States.
    (c) Water Rights.--
          (1) Transfer.--The Secretary shall transfer to Burley, 
        through an agreement among Burley, the Minidoka Irrigation 
        District, and the Secretary, in accordance with and subject to 
        the law of the State of Idaho, all natural flow, waste, 
        seepage, return flow, and ground water rights held in the name 
        of the United States for the benefit of, and for use on land 
        within, the Burley Irrigation District as described in the 
        contracts between Burley and the United States including the 
        provisions on use of any waste, seepage, and return flow set 
        forth in such contracts: Provided, That, such transfer shall 
        not impair the integrated operation of the Minidoka project, 
        affect any other adjudicated rights, or result in any adverse 
        impact on any other project water user.
          (2) Allocation of storage space.--The Secretary shall provide 
        an allocation to Burley of storage space in Minidoka Reservoir, 
        American Falls Reservoir, and Palisades Reservoir, as described 
        in Burley Contract Nos. 14-06-100-2455 and 14-06-W-48, subject 
        to the obligation of Burley to continue to assume and satisfy 
        its allocable costs of operation and maintenance associated 
        with the storage facilities operated by the Bureau of 
        Reclamation.
    (d) Project Reserved Power.--The Secretary shall continue to 
provide Burley with project reserved power from the Minidoka 
Reclamation Power Plant, Palisades Reclamation Power Plant, Black 
Canyon Reclamation Power Plant, and Anderson Ranch Reclamation Power 
Plant in accordance with the terms of the existing contracts, including 
any renewals thereof as provided in such contracts.
    (e) Savings.--
          (1) Nothing in this Act or any transfer pursuant thereto 
        shall affect the right of Minidoka Irrigation District to the 
        joint use of the gravity portion of the Southside Canal, 
        subject to compliance by the Minidoka Irrigation District with 
        the terms and conditions of a contract between Burkey and 
        Minidoka Irrigation District, and any amendments or changes 
        made by agreement of the irrigation districts.
          (2) Nothing in this Act shall affect the rights of any person 
        or entity except as may be specifically provided herein.
    (f) Liability.--Effective on the date of conveyance of the project 
facilities, described in section (1)(b)(1), the United States shall not 
be held liable by any court for damages of any kind arising out of any 
act, omission, or occurrence relating to the conveyed facilities, 
except for damages caused by acts of negligence committed by the United 
States or by its employees, agents or contractors prior to the date of 
conveyance. Nothing in this section shall be deemed to increase the 
liability of the United States beyond that currently provided in the 
Federal Tort Claims Act, 28 U.S.C. 2671 et seq.
    (g) Completion of Conveyance.--
          (1) In general.--The Secretary shall complete the conveyance 
        under subsection (b) (including such action as may be required 
        under the National Environmental Policy Act of 1969 (42 U.S.C. 
        4321 et seq.)) not later than 2 years after the date of 
        enactment of this Act.
          (2) Report.--The Secretary shall provide a report to the 
        Committee on Resources of the United States House of 
        Representatives and to the Committee on Energy and Natural 
        Resources of the United States Senate within eighteen months 
        from the date of enactment of this Act on the status of the 
        transfer, any obstacles to completion of the transfer as 
        provided in this section, and the anticipated date for such 
        transfer.

                         purpose of the measure

    The legislation, if amended as recommended by the 
Committee, would provide for the transfer of the distribution 
facilities of the Southside Pumping Division of the Minidoka 
Project used by the Burley Irrigation District to the District. 
The legislation also would provide for the transfer of those 
water rights held by the United States for the benefit of the 
District and appurtenant to lands in the District and continue 
whatever contractual rights and obligations the District has 
with the United States under Reclamation law as part of the 
Minidoka Project, including the allocation of storage space and 
the obligation for allocable costs of operation and maintenance 
and receipt of project reserved power. The legislation would 
require the transfer to be completed within two years with a 
requirement that the Secretary of the Interior provide a 
progress report to the Senate and House Committees within 
eighteen months.

                          background and need

General background

    In the 104th Congress, the Committee held hearings on 
legislation (S. 620) that would provide generic authority for 
the transfer of certain Reclamation projects to project 
beneficiaries as well as legislation specific to individual 
projects. The generic legislation was introduced following the 
Department of the Interior's statement, as part of the 
Reinventing Government Initiative, that it would seek to 
transfer title to projects where there were no overriding 
concerns.
    S. 620 directed the Secretary of the Interior to transfer 
to all Federal property associated with fully paid out Bureau 
of Reclamation projects to the project beneficiaries in those 
instances where the beneficiaries have already assumed 
responsibility for operation and maintenance. The legislation 
provided that the transfer would be without cost and also made 
all revenues previously collected from project lands and placed 
in the reclamation fund available to the beneficiaries under 
the formula set forth in subsection I of the Fact Finders Act 
of 1924. The Fact Finders Act provides generally that when 
water users take over operation of a project, the net profits 
from operation of project power, leasing of project lands (for 
grazing or other purposes), and sale or use of town sites are 
to be applied first to construction charges, second to 
operation and maintenance (O&M) charges, and third ``as the 
water users may direct''.
    Proposals to transfer title to selected reclamation 
facilities have been advanced before. Some have already been 
authorized by Congress. (See most recently: Pub. L. No. 102-
575, title XXXIII transferring facilities to the Elephant Butte 
Irrigation District, New Mexico, and title XIV, dealing with 
the Vermejo Project, New Mexico.) Other title transfer 
proposals, such as ones advanced in 1992 for the Central Valley 
Project and in the late 1980s for the Solano Project and the 
Sly Park Unit, have been quite controversial.
    The Bureau of Reclamation in the Department of the Interior 
(DOI) is responsible for approximately 348 storage reservoirs, 
254 diversion dams, 268 pumping plants, 52 hydroelectric 
powerplants, and thousands of miles of canals, pipelines, 
tunnels, laterals, and project drains throughout the 17 Western 
States. Some of these facilities are part of large multipurpose 
projects, such as the Central Valley Project (CVP) in 
California. Others are parts of smaller projects, or are single 
purpose projects, such as the Platoro Dam, a closed basin unit 
which is part of the San Luis Valley Project in Colorado, and 
the Smith Fork Project in Western Colorado.
    Most Bureau water supply projects were built under the 
general authority granted to the Secretary of the Interior in 
the Reclamation Act of 1902, or through omnibus or individual 
flood control and water resources development authorizations. 
In 1991, Bureau facilities provided nearly 30 million acre-feet 
of water to 9.2 million acres and 30 million people. The agency 
estimated in 1990 that its investment in project facilities is 
$10.6 billion dollars.
    As of 1990, the Bureau had identified 415 project 
components--out of a total of 568 facilities--where operation 
and management responsibilities had been transferred or were 
scheduled to be transferred to project users. Section 6 of the 
Reclamation Act of 1902 (32 Stat. 388, 389) provides in 
pertinent part that ``when the payments required by this act 
are made for the major portion of the lands irrigated from the 
waters of the works herein provided for, then the management 
and operation of such irrigation works shall pass to the owners 
of the lands irrigated thereby * * *''. The section concludes 
with the following proviso: ``Provided, That the title to and 
the management and operations of the reservoirs and the works 
necessary for their protection and operation shall remain in 
the Government until otherwise provided by Congress.'' 
Historically, the Bureau has usually transferred operation and 
maintenance to local districts in advance of project repayment 
where the districts have expressed an interest in taking over 
management and have the capability to assume the 
responsibility.
    A transfer provision was also included in the 1955 
Distribution System Loans Act, as amended. This provision 
differs from the 1902 law in that it allows transfer of title 
to the lands and facilities upon repayment of the loan. In 
addition to the operations and management transfer 
authorization under the Reclamation Act of 1902, several other 
title transfer provisions are included in individual project 
acts. These include Section 7 of the 1928 Boulder Canyon 
Project Act (Act of Dec. 21, 1928, 45 Stat. 1057. 43 U.S.C. 617 
et seq.), which authorizes the Secretary to transfer title of 
the All-American Canal and certain other related facilities 
after repayment has been completed; provisions in the Act of 
September 22, 1959 (Pub. L. No. 86-357, 73 Stat. 641), 
regarding transfer of title for Lower Rio Grande project 
facilities; and, Pub. L. No. 83-752 (68 Stat. 1045), which 
directs the Secretary to transfer title to the Palo Verde 
Irrigation District upon repayment. Under the 1954 Act, the 
United States retained the right to build hydro power 
facilities at the site and to retain a share in energy 
production.
    The hearings on S. 620 during the 104th Congress 
demonstrated that generic legislation was not likely to deal 
with all the possible issues associated with project transfers 
and that such legislation would wind up being complex and 
overly burdensome. As a result, discussions began on the 
potential transfer of several projects, or portions thereof. 
The Committee considered the transfer of the Collbran project 
and included language in the Reconciliation measure, H.R. 2491, 
the Balanced Budget Act of 1995, which was vetoed by the 
President. The Reconciliation measure also contained language 
(section 5356) to transfer the Sly Park unit of the Central 
Valley Project. That language was included in the House 
amendments and accepted in conference. During the 
104thCongress, the Committee also conducted hearings and favorably 
reported legislation on the Carlsbad project (S. 2015), and the 
distribution portion of the Minidoka project serving the Burley 
Irrigation District (S. 1921), which was similar to S. 538. The 
Committee also held hearings on legislation for the transfer of 
Canadian River, Palmetto Bend and Nueces River projects in Texas (S. 
1719).

Minidoka Dam and Powerplant

    Minidoka project lands extend discontinuously from the town 
of Ashton in eastern Idaho along the Snake River approximately 
300 miles downstream to the town of Bliss in south-central 
Idaho. The project furnishes a full or supplemental water 
supply to more than 1 million acres of land from five 
reservoirs that have a combined active storage capacity of 
2,784,600 acre-feet. The project works consist of Minidoka Dam 
and Powerplant and Lake Walcott, Jackson Lake Dam and Jackson 
Lake, American Falls Dam and Reservoir, Island Park Dam and 
Reservoir, Grassy Lake Dam and Grassy Lake, two diversion dams, 
1,662 miles of canals, 3,929 miles of laterals, 1,249 miles of 
drains, and 177 water supply wells.
    Natural flow of the Snake River and some of its 
tributaries, and water stored in the reservoirs at Jackson 
Lake, Grassy Lake, Island Park, American Falls, and Lake 
Walcott are delivered at numerous diversion points to the 
Fremont-Madison, Burley, and Minidoka Irrigation Districts, 
American Falls Reservoir District No. 2, and Warren Act 
contractors. A full water supply is furnished to 216,796 acres 
and a supplemental supply to 946,846 acres. Water from 
Palisades Reservoir on the Palisades Project is instrumental in 
helping meet the Minidoka Project water requirements. Much of 
the power developed on the project is used for pumping water to 
lands lying above the gravity canals and for pumping drainage 
water. Power also is furnished to several small communities in 
the area.
    Minidoka Dam is a combined diversion, storage, and power 
structure located just south of Minidoka, Idaho. A key 
structure in the initial development of the project, the zoned 
earthfill dam is 86 feet high. The reservoir, Lake Walcott, has 
a storage capacity of 95,200 acre-feet. Water is diverted at 
the dam into a canal on each side of the river. The concrete 
powerplant, which forms a section of the dam, has seven 
generating units with a combined capacity of 13,400 kilowatts. 
Water is diverted on the north side of Minidoka Dam into the 
North Side Canal, a gravity canal and lateral system serving 
72,000 acres of land called the Gravity Division, in the 
vicinity of Rupert, Idaho. The 8-mile canal has an initial 
capacity of 1,700 cubic feet per second. Water is diverted on 
the south side of Minidoka Dam into the South Side Canal, a 
canal system which includes three large pumping plants. Each 
plant lifts the water about 30 feet, for a total lift of about 
90 feet. The system, known as the South Side Pumping Division, 
serves 48,000 acres adjacent to Burley and Declo. The canal is 
13 miles long and has an initial capacity of 1,325 cubic feet 
per second.
    In 1904, the lower Minidoka Project area around the present 
cities of Burley and Rupert was a nearly uninhabited sagebrush 
desert with only a few scattered ranches. After construction of 
the initial phases of the project brought water to the land, 
giving opportunity for expansion, it became a prosperous, 
highly developed farm area. By 1919, 2,208 farms were in 
operation, there were 6 towns, and the total population was 
about 17,000. Early investigations of irrigation possibilities 
in Idaho were made under the direction of the Geological Survey 
in 1889-90. These surveys included a preliminary examination of 
the Minidoka Project, when survey lines were run from 15 to 35 
miles westward on both sides of the Snake River from the 
Minidoka Dam site. Additional surveys were made in 1895. 
Private organizations became interested in developing the area 
at various times after 1887.
    At the time of passage of the Reclamation Act of June 1902, 
considerable data relative to the area were available for use 
by the State Engineer, who was responsible for cooperating with 
the Reclamation Service in Idaho. During 1902, information 
obtained about the storage potential in the headwaters of the 
Snake River indicated that suitable capacities could be 
developed at reasonable cost. On November 17, 1902, the 
Secretary of the Interior withdrew from public entry a large 
body of land embracing the proposed irrigable area of the 
Minidoka tract, rendering it subject to filing under the terms 
of the Reclamation Act. The Minidoka Project was authorized by 
the Secretary of the Interior on April 23, 1904. Investigation 
and construction funds for the Gravity Extension Unit (Gooding 
Division) were provided by act of Congress January 12, 1927 (44 
Stat. 934), and the Secretary's finding of feasibility July 2, 
1928, was approved by the President on July 3, 1928. The Upper 
Snake River storage was authorized by a finding of feasibility 
by the Secretary of the Interior, and approved by the President 
on September 20, 1935. The North Side Pumping Division was 
authorized for construction by the act of September 30, 1950 
(64 Stat. 1083, Public Law 864, 81st Congress). Replacement of 
American Falls Dam was authorized by act of December 28, 1973 
(87 Stat. 904, Public Law 93-206).
    The Gravity Division has been operated by the Minidoka 
Irrigation District since January 1, 1917: the South Side 
Pumping Division by the Burley Irrigation District since April 
1, 1926; Gooding Division by American Falls Reservoir District 
No. 2 since May 1, 1933; and the Upper Snake River Division by 
Fremont-Madison Irrigation District since November 15, 1940. 
The North Side Pumping Division, last to be developed, was 
turned over to the A&B Irrigation District for operation on 
March 1, 1966. All storage and power facilities are operated by 
the Bureau of Reclamation.
    The Burley Irrigation District was organized under the laws 
of the State of Idaho on March 5, 1918 to hold water rights for 
and operate and maintain a distribution system used for the 
delivery of water to the lands within the irrigation district. 
By contract with the Bureau of Reclamation dated March 15, 
1926, operation and maintenance of the distribution system of 
the Southside Pumping Division of the Minidoka project was 
transferred to Burley, and the district has operated and 
maintained the distribution system since that date. By contract 
with the Bureau and the Minidoka Irrigation District dated 
December 12, 1950, the Main Southside Canal was transferred to 
Burley for operation and maintenance. In 1954 certain 
electrical distribution lines were also transferred to Burley 
for operation and maintenance. In 1954 certain electrical 
distribution lines were also transferred to Burley for 
operation and maintenance. All allocable construction costs 
attributable to storage and distribution have been repaid to 
the United States. As part of the Minidoka project, Burley 
receives reserve power generated at Minidoka Power Plant for 
the operation of its pumping facilities under a contract with 
the Bureau at rates established by the Secretary of the 
Interior for the Minidoka power plant and the other federal 
power plants that are interconnected as the Reclamation 
Southern Idaho Power Pool. Excess power is provided to 
Bonneville Power Administration as required by Federal law. In 
addition to water rights held in its own name, Burley also has 
rights to a share of water rights obtained by the United States 
from Idaho pursuant to Reclamation law for the purpose of 
theMinidoka project for the benefit of the lands within the project. 
Those rights are for the benefit of lands served by Burley as well as 
for lands served by the Minidoka project and would be partitioned under 
the legislation pursuant to Idaho law as agreed to by Minidoka, Burley, 
and the Secretary of the Interior.
    While Burley has pursued discussions with the regional 
offices of the Bureau of Reclamation for a transfer of those 
facilities and rights maintained and paid for by Burley, it 
also sought to initiate legislation in the 104th Congress. The 
legislation, if amended as recommended by Committee, would 
transfer title to Burley of those facilities and rights. The 
legislation is not a part of Reclamation law and would not 
modify or amend any portion of Reclamation law applicable to 
the Minidoka project. Existing contractual rights and 
obligations would be continued and there will be no practical 
change on the operation of the Minidoka project or on any 
project water user. The only effect on adjudicated rights would 
be the need to partition the unified natural flow right held 
for the benefit of the lands within the Burley Irrigation 
District and the Minidoka Irrigation District with Burley 
obtaining title to its share and the United States continuing 
to hold title for the benefit of the Minidoka District to the 
other portion. No change in the actual rights to usage would be 
involved and shortages would continue to be shared as presently 
allotted.

                          legislative history

    Similar legislation (S. 1921) was the subject of hearings 
in the 104th Congress before the Subcommittee on Forests and 
Public Land Management on September 5, 1996 and was reported by 
the Committee on September 5, 1996.
    S. 538 was introduced by Senator Craig (for himself and 
Senator Kempthorne) on April 9, 1997. A companion measure, H.R. 
1282, was introduced in the House of Representatives. A hearing 
on S. 538 was held by the Subcommittee on Water and Power on 
June 10, 1997. At the business meeting on October 22, 1997, the 
Committee on Energy and Natural Resources ordered S. 538, as 
amended, favorably reported.

           Committee recommendations and tabulation of votes

    The Committee on Energy and Natural Resources, in open 
business session on October 22, 1997, by a unanimous voice vote 
of a quorum present, recommends that the Senate pass S. 538, if 
amended as described herein.

          Committee amendment and section-by-section analysis

    During the consideration of S. 538, the Committee adopted 
an amendment in the nature of a substitute. A description of 
the amendment follows.
    Subsection 1(a) provides a series of definitions and is 
self-explanatory.
    Subsection (b) directs the conveyance to the Burley 
Irrigation District (Burley), by quitclaim deed, all interests 
of the United States in and to the facilities used by Burley 
for the delivery of water from the headworks of the Southside 
Canal at the Minidoka Dam to the lands within the district 
including any acquired lands. The Committee amendment clarifies 
that title to the headworks themselves will remain with the 
United States. The administration expressed concern over the 
transfer of certain withdrawn lands without consideration. 
Although the Committee understands that the lands consist of 
gravel pits that had been used in the past and may be of 
limited value, the Committee is concerned over the precedent 
that a transfer without any consideration might create in the 
absence of a more definitive conclusion on the value. 
Accordingly, the Committee has deleted the transfer of any 
withdrawn lands. The legislation provides for any easements or 
rights-of-way that may be necessary for operation and 
maintenance of the facilities to be transferred. If, on review, 
the administration concludes that a transfer of the withdrawn 
lands would be in the interest of the United States, the 
Committee would be willing to consider legislation providing 
for such transfer. The section further provides that Burley 
will share the first $80,000 of administrative costs involved 
in title transfer.
    Subsection (c) provides for the transfer of those water 
rights held by the United States from the State of Idaho 
pursuant to Reclamation law for the benefit of, and for use on 
lands within, Burley and directs the Secretary to continue to 
provide an allocation of storage space as now provided subject 
to the obligation of Burley to continue to assume its allocable 
operation and maintenance costs. The Committee understands that 
the United States now holds a single natural flow right 
obtained for the benefit of the Project and that the beneficial 
use of such right is allotted between Burley and the Minidoka 
Irrigation District and the amounts and priorities of natural 
flow rights were established by decree in the 1913 decree in 
Twin Falls Canal Company v. Charles N. Foster et al. The 
Committee wants to emphasize that in directing a partition of 
the right, there is no intention to enlarge or diminish the 
beneficial rights of either District. The Committee also does 
not intend that there be any effect on integrated operations of 
the Minidoka project or on any other adjudicated rights or 
other project water users. The Committee does not believe that 
the mere transfer of title should have any such effect. The 
Committee amendment references the existing contract because 
the contract sets forth the allocation between the districts 
that will serve as the basis for a partition. The Committee 
notes that the contract also provides that with respect to 
certain waste, seepage, and return flows that they will serve 
as a source of supply first for lands within the district and 
then for other lands within the project. The intent of the 
legislation is merely to transfer title and not to change, 
alter, enlarge or diminish the respective rights of either of 
the districts to the beneficial use of the water rights held by 
the United States for the project, but it is also the intent to 
transfer to Burley all rights held for the benefit of Burley 
held by the United States.
    Subsection (d) directs the Secretary to continue to provide 
Burley with project reserved power in accordance with the terms 
of existing contracts. The Committee understands that Burley 
presently has a contractual right to project reserved power at 
a discount. The Committee has deleted language that could be 
interpreted to continue the discount under any renewal or 
extension of the contract. The Committee has also deleted 
language that would have provided a right of first refusal to 
entities with storage rights in Lake Walcott to the Minidoka 
Dam or Powerplant in the event of asale. The Committee 
understands the concern of the District, but does not see any reason to 
address that issue at this time. The Committee wants to make clear that 
future operation of the project, whatever that may be, will be subject 
to the provisions of the contract and any renewals thereof.
    Subsection (e) provides a specific savings provision to 
protect the interests of the Minidoka Irrigation District to 
joint use of the gravity portion of the Southside Canal and a 
general savings provision for all other entities except as 
specifically provided in the legislation. The legislation is 
not an amendment to Reclamation law nor is there any change in 
the authorizations for the operation of the Minidoka project.
    Subsection (f) contains language recommended by the 
administration providing that the United States will no longer 
bear any liability with respect to transferred facilities upon 
the transfer.
    Subsection (g) directs the Secretary to complete the 
conveyance within two years and requires the Secretary to 
submit an interim progress report within eighteen months. The 
legislation as introduced had provided that if the facilities 
had not been transferred within two years, the transfer would 
occur by operation of law. The Committee assumes that the 
Secretary will be able to complete the transfer expeditiously 
and that such a provision will not be necessary. The Committee 
expects that the Secretary will inform the Committee well 
within the eighteen months if there is some obstacle to 
completion within the time frame.

                   cost and budgetary considerations

    The following estimate of the cost of this measure has been 
provided by the Congressional Budget Office:

S. 538--A bill to authorize the Secretary of the Interior to convey 
        certain facilities of the Minidoka project to the Burley 
        Irrigation District, and for other purposes

    Summary: S. 538 would direct the Secretary of the Interior 
to transfer land and facilities used by the Burley Irrigation 
District (the district) within the Minidoka Project in Idaho 
from the Bureau of Reclamation (the bureau) to the district. 
The cost of the transfer would be shared equally between the 
bureau and the district up to a total cost of $80,000. 
Remaining costs would be paid by the bureau.
    CBO estimates that enacting the bill would result in new 
spending subject to appropriation of about $40,000 over fiscal 
years 1998 and 1999. Enacting the bill would not affect direct 
spending or receipts; therefore, pay-as-you-go procedures would 
not apply. The bill contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
of 1995 (UMRA), and would not impose any costs on state, local, 
or tribal governments.
    Other provisions in the bill would not have a budgetary 
impact. They include directions to the Secretary of the 
Interior to:
          transfer all natural flow, waste, seepage, return 
        flow, and ground water rights to the district and 
        provide the district with permanent storage rights in 
        the Minidoka Project reservoirs on the condition that 
        the district continue to pay all allocable costs of 
        operating and maintaining the storage facilities; and
          provide the district with a permanent right to 
        purchase reserve power from the Minidoka Project at the 
        cost of production, the same rate as under current law.
S. 538 would require the Secretary of the Interior to complete 
the transfer, including actions required under the National 
Environmental Policy Act, within two years of enactment.
    Estimated cost to the Federal Government: CBO estimates 
that enacting the bill would result in new spending subject to 
appropriation of about $40,000 over the 1998-1999 period. The 
cost of this legislation falls within budget function 300 
(natural resources and environment).
    Based on information provided by the bureau, CBO expects 
that the work required to transfer the facilities, including 
actions required under the National Environmental Policy Act, 
would cost about $80,000. The federal government's share would 
be half this amount.
    CBO estimates that completing the transfer of land and 
facilities would not result in any loss of future receipts 
because the district already has paid the federal government 
for the facilities that would be transferred. In addition, the 
water that would be transferred to the district is already 
being provided to it at no cost and the bureau is expected to 
continue this policy in the future. Finally, the district would 
continue to pay all allocable costs for operating and 
maintaining storage facilities and would continue to pay the 
rate for power that is required under current law.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: S. 538 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would require the Burley Irrigation 
District to pay up to $40,000 for its share of the cost of the 
transfer, but the district would incur this cost voluntarily.
    Estimate prepared by: Federal costs: Gary Brown. Impact on 
State, Local, and Tribal Governments: Marjorie Miller.
    Estimate approved by: Robert A. Sunshine, 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. 538.
    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. 538, as ordered reported.

                        executive communications

    On, May 15, 1997, 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. 538. These reports 
had not been received at the time the report on S. 538 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 
Commissioner of the Bureau of Reclamation at the Subcommittee 
hearing pertaining to S. 538 follows:

 Statement of Eluid Martinez, Commissioner, U.S. Bureau of Reclamation

    Thank you for the opportunity to appear today to provide 
the Administration's views on S. 538, legislation to convey 
certain facilities of the Minidoka Project to the Burley 
Irrigation District.
    Before I discuss the specifics of this proposal, I would 
like to talk briefly about Reclamation's title transfer efforts 
in general.


                             title transfer


    As you may recall, the Bureau of Reclamation's title 
transfer efforts began as part of Phase II of the 
Administration's National Performance Review (REGO II). It was 
and still is viewed as an opportunity to create a government 
that works better and costs less by transferring certain 
facilities to state or local units of government or other non-
Federal entities.
    In August, 1995, Reclamation released its Framework for the 
Transfer of Title: Bureau of Reclamation Projects. This 
framework sets out a consistent, fair, and open process for 
negotiating the transfer of title to appropriate facilities 
with all the interested stakeholders to develop an agreement 
that could be brought to Congress and supported by all the 
parties involved.
    Soon after the Administration announced the initiative more 
than sixty entities--including irrigation districts, municipal 
authorities, and cities--contacted Reclamation and expressed 
their interest in title transfer. However, the majority of 
those entities decided not to pursue title transfer at that 
time for a variety of reasons--the most common of which was 
concern about assuming liability for the facilities.
    Since that time, Reclamation's five regions have entered 
into discussions and negotiations with approximately twenty 
districts--some of those have dropped out, but many remain on-
going. Currently, there are three title transfers that are 
working their way through the Administration's review that we 
believe will be good models for others interested in title 
transfer. These include:
    (1) Clear Creek, an irrigation facility located in the 
Central Valley Project in California.
    (2) Contra Costa, a municipal district also located in the 
Central Valley Project; and
    (3) San Diego Aqueduct, a municipal facility located in 
southern California.
    The difference between the legislation before this 
Committee today and the three negotiated transfers mentioned 
above are important. Each of these three listed above will have 
gone through a full NEPA review process before coming to 
Congress, none of them is designed to diminish or circumvent 
environmental objectives, and all would include terms that 
protect the financial interests of the United States. And as 
importantly, each has gone through a public negotiations 
session and have attempted to include any interested 
stakeholders in the proposal's development.
    In the 18 months since this effort began, the most 
important lesson that we--both Reclamation and the districts--
have learned is that there is no such thing as a simple 
project. Each facility is unique and each has its own set of 
complexities that neither Reclamation nor the districts 
anticipated when we began discussions. Let me assure this 
committee, however, that transferring title to appropriate 
Reclamation facilities remains a high priority for me 
personally and for the Administration.
    There has been criticism about Reclamation's process--as 
being cumbersome and slow. I am sensitive to this concern and 
we are working to try to streamline the process to make it work 
better. Frankly, Mr. Chairman, a big part of the problem is 
that we--again both Reclamation and the entities we are 
discussing transfers with--are new to this. We don't have a lot 
of experience and are learning as we go. With each project, we 
find that we are having to identify new sets of issues that we 
did not anticipate and work to resolve them in an equitable and 
thoughtful manner. I firmly believe, however, that we are 
gaining the experience with each set of negotiations which will 
enable us to move more quickly in the future.
    Regardless of the specifics of each project and how 
negotiations proceed--whether it is through our Framework 
process, some other administrative process or directly through 
the legislative process--there are a few basic tenets that we 
need to ensure are a part of every facilities transfer 
negotiation.
    First and foremost, the process needs to be open and 
inclusive of all stakeholders. History has shown that if the 
process is not inclusive, those who are left out will derail 
the proposal at the eleventh hour and ultimately it will take 
even longer. It has been our experience that short cuts take 
significantly more time than the thorough route.
    Second, any proposal must pass the ``straight face test.'' 
To help clarify how to do that we have established six basic 
criteria that we believe satisfy that threshold: (1) The 
Federal Treasury and thereby the taxpayers' financial interest, 
must be protected; (2) there must be compliance with all 
applicable State and Federal laws; (3) Interstate compacts and 
agreements must be protected; (4) the Secretary's Native 
American trust responsibility must be met; (5) Treaty 
obligations and international agreements must be fulfilled; and 
(6) the public aspects of the project such as recreation, flood 
control, fish and wildlife and others must be protected.
    Given those broad parameters, I would like to provide our 
views on the legislation under consideration by the 
Subcommittee.


   s. 538, certain facilities of the minidoka project to the burley 
                          irrigation district


    S. 538 directs the Secretary of the Interior to convey to 
the Burley Irrigation District (BID), without consideration, 
all right, title and interest of the United States in and to 
the withdrawn and acquired lands, easements, and rights-of-way 
of or in connection with the South Side Pumping Division of the 
Minidoka project.
    For the reasons discussed below, the Administration 
strongly objects to S. 538 as drafted. While some features of 
the project may be suitable for transfer the bill would require 
significant modifications before the Department could support 
it.
    First, I would like to provide some history. On March 11, 
1996, Reclamation met with BID following their request to 
initiate discussions about title transfer and to begin the 
process to cooperatively negotiate and craft a proposal to 
bring to Congress which all parties could support. 
Unfortunately, that process did not get very far as S. 1921 was 
introduced in the 104th Congress and discussions came to an 
end.
    After the 104th Congress adjourned, Reclamation reinitiated 
discussions with BID in hopes of developing a consensus based 
proposal. These efforts were short lived and S. 538, was 
introduced in the 105th Congress. Having provided the history, 
I would now like to outline our concerns:
    (1) The legislation directs, rather than authorizes, the 
Secretary to convey the facilities of the project. This mandate 
directing the Secretary to transfer title makes any actions 
under NEPA moot, because the outcome is predetermined. The 
Administration firmly believes that the completion of 
activities under NEPA must occur prior to title transfer to 
allow the Department, the Congress, and the public to fully 
understand the impacts of a proposed transfer. The Secretary 
also must be able, prior to the transfer of title, to condition 
the transfer in ways that resolve any issues identified during 
the NEPA process. Likewise, the default language in Section 
1(f)(2) is inappropriate. If the title transfer is not 
completed within two years, we recommend that the Secretary 
report to Congress on the reason transfer has not occurred as 
is done in the Carlsbad legislation.
    In addition, the Sierra Club Legal Defense Fund recently 
filed on behalf of several organizations a 60-day Notice of 
Intent to Sue under the Endangered Species Act, based on 
current operations of the Upper Snake River Basin. There are 
endangered snail species in Lake Walcott (the reservoir created 
by Minidoka Dam), and other species are under consideration for 
listing. Appropriate consultation under Section 7 of the 
Endangered Species Act will be required prior to any transfer 
of title.
    Any proposed transfer must also be consistent with the 
Secretary's Native American trust responsibility and must meet 
U.S. treaty obligations to protect their rights to fish at 
usual and customary fishing grounds.
    (2) Withdrawn Lands: Section 1(b) proposes to transfer 13.4 
acres of land to the district which are within the Minidoka 
Irrigation District's (MID) boundaries. There are several 
problems with this provision: (A) These lands were withdrawn 
from the public domain for use by the Federal project. For this 
and all Reclamation projects, the value of withdrawn lands was 
never included in the allocation of costs to be repaid by the 
beneficiaries. Consequently, BID has not made any repayment or 
financial contribution to the Federal government for these 
lands; (B) these withdrawn lands are jointly used as a gravel 
source of BID and MID (C). These withdrawn lands also provide 
public access to the Snake River for recreational purposes 
which could be restricted under this bill.
    As a result of these problems, the 13.4 acres of withdrawn 
lands should either be removed from the proposal or 
accommodations need to be made in the language in S. 538 to 
address each of the above issues.
    (3) Other Conveyance: The headworks of the Main South Side 
Canal--proposed for transfer under S. 538--serve to supply 
water to both Minidoka and Burley Districts, and is an integral 
part of Minidoka Dam. It should be specifically understood that 
the headworks mentioned in S. 538 is not included as a specific 
facility to be transferred and that title to the headworks 
should be retained by the United States.
    (4) Valuation and Cost: S. 538 proposes to give the 
District, without compensation, the withdrawn lands, and other 
potential sources of revenue. Reclamation opposes these 
provisions. These assets should be accounted for in a valuation 
process in order to appropriately protect the financial 
interests of the Treasury.
    Section 1(b)(20) states: ``The first $80,000 in 
administrative costs of transfer of the title and related 
activities shall be paid in equal shares by the United States 
and Burley, and any additional amount of administrative costs 
shall be paid by the United States.'' We recommend that 
Congress instead require transferees to cost share all the 
transaction costs, including but not limited to those costs 
associated with the NEPA and real estate boundary surveys.
    (5) Water Rights: Section 1(c) would transfer to the 
District any water rights held by the United States for the 
benefit of the District. Currently, Reclamation holds natural 
flow water rights for the Minidoka and Burley Districts as one 
right. This natural-flow right is presently being adjudicated 
in the ongoing Snake River Basin Water Right Adjudication. 
Partitioning the water rights under S. 538 could impair 
integrated project operations, affect adjudicated rights, and 
result in third-party impacts, including impacts to other 
project water users.
    Furthermore, section 1(c) could impair the effective 
management of the water resources of the region. The Federal 
government now is able to provide irrigation deliveries in a 
manner that also enhances flows for fish and wildlife purposes. 
The proposed transfer of water rights could reduce this 
operational flexibility and hinder the salmon recovery efforts 
now underway downstream. Therefore, we strongly recommend that 
the current relationship between the United States and BID 
concerning water rights be retained.
    (6) Project Power: Section 1(d)(1) gives BID a permanent 
right to project power at the ``cost of production.'' The 
Administration does not believe it is in the best interest of 
the taxpayers and other power users to grant any transferred 
project such a permanent right. The present contractual 
arrangement between BID and Reclamation was entered in 1962. 
BID may now receive up to 10,000 kilowatts for 40 years at a 
rate that is discounted 0.7 mills/kWh below the actual cost of 
production for power used at BID's pumping plants. Following 
this 40-year period, the 1962 contract allows BID to enter into 
additional contracts without the discount. With the prospect of 
restructuring the electric utility industry, circumstances in 
the electricity market are rapidly changing. Any perpetual 
right would provide the District a windfall that other power 
customers or the general taxpayer would have to subsidize.
    (7) Right of First Refusal: Section 1(d)(2) provides BID 
and other entities entitled to storage water in Lake Walcott 
(the reservoir created by Minidoka Dam) the right of first 
refusal to acquire the power plant or dam and related 
facilities, if the United States decided to transfer these 
facilities out of Federal ownership. The language should be 
removed as it is unfair to give this district preferential 
treatment which would prejudice future actions by the Congress 
or the Executive branch with respect to privatization of 
hydroelectric generation facilities.
    Section 1(d)(2) states: ``If the United States decides to 
transfer out of Federal ownership title to the Minidoka Power 
Plant or Dam, the Secretary shall grant to entities entitled to 
storage water in Lake Walcott (the reservoir created by 
Minidoka Dam) under spaceholder contracts with the United 
States a right of first refusal to acquire the power plant or 
dams and related facilities at such reasonable cost and subject 
to such terms and conditions as may be agreed on by the 
spaceholders and the Secretary.'' We believe the provision 
could have significant negative impacts to the irrigation 
districts in southern Idaho and western Oregon that relay upon 
power for irrigation purposes from the southern Idaho system. 
In addition, this provision would have negative impacts to 
Bonneville Power Administration (BPA) customers, including 
municipal and domestic entities.
    On May 21, 1963, BPA was designated, consistent with 16 
U.S.C. 837(a) and (b), as the marketing agency for Federal 
power generation sold in southern Idaho. This action assured 
that preference customers in southern Idaho receive a fair 
share of the power produced at Federal Columbia River Power 
Systems (FCRPS) hydroelectric generating projects. Since 1963, 
the assets allocated to power for the five southern Idaho 
system hydroelectric generating projects--Minidoka, Boise 
Diversion, Black Canyon, Anderson Ranch, and Palisades--have 
been included as part of the FCRPS and as part of the BPA's 
responsibility for repayment to the Treasury. The total FCRPS 
investment in the southern Idaho system on September 30, 1995, 
was about $70 million. Of that total, $28 million is for 
existing facilities and $42 million is for replacement of worn 
out power facilities at the Minidoka project. Section 1(d)(2) 
would authorize the transfer of ownership from Reclamation, and 
presumably the power marketing and Treasury repayment 
responsibility from BPA, to ``entities entitled to storage 
water in Lake Walcott.'' Congress should delete this provision. 
S. 538 should be limited solely to the transfer of irrigation 
facilities. The transfer of any assets from the FCRPS should 
not be addressed as part of this legislation.
    (8) Liability: S. 538 should contain language to ensure 
that the purchaser accepts full liability for the transferred 
portion of the project facilities when they are conveyed, 
rather than just the lands, easements, and right-of-ways, as 
proposed in S. 538. The Administration proposes the following 
language:

          Effective on the date of conveyance of the project 
        facilities, described in section 1(b)(1), the United 
        States shall not be held liable by any court for 
        damages of any kind arising out of any act, omission, 
        or occurrence relating to the conveyed facilities, 
        except for damages caused by acts of negligence 
        committed by the United States or by its employees, 
        agents, or contractors prior to the date of conveyance. 
        Nothing in this section shall be deemed to increase the 
        liability of the United States beyond that currently 
        provided in the Federal Tort Claims Act, 28 U.S.C. 
        Section 2671 et seq.

While these are the main points of concern for the 
Administration on S. 538, there are a number of other technical 
issues which we can address--hopefully as we move forward.
    Again, Mr. Chairman, I would like to reiterate that we 
believe that this project is a potential candidate for title 
transfer, provided important modifications are made. Let me 
pledge to this Committee as well as to the bill sponsors and 
the District, my interest and willingness to see if we can work 
to make this title transfer a reality.
          * * * * *

                        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. 532, as ordered 
reported.

                                
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