[Senate Report 105-370]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 612

105th Congress                                                   Report
                                 SENATE
 2d Session                                                     105-370
_______________________________________________________________________


 
         CARLSBAD IRRIGATION PROJECT ACQUIRED LAND TRANSFER ACT

                                _______
                                

  October 6 (legislative day, October 2), 1998.--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. 736]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 736) to convey certain real property 
within the Carlsbad Project in New Mexico to the Carlsbad 
Irrigation District, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill, as amended, do pass.
    The amendment is as follows:
    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 ``Carlsbad Irrigation Project Acquired 
Land Transfer Act''.

SEC. 2. CONVEYANCE.

    (a) Lands and Facilities.--
          (1) In general.--Except as provided in paragraph (2), and 
        subject subsection (c), the Secretary of the Interior (in this 
        Act referred to as the ``Secretary'') may convey to the 
        Carlsbad Irrigation District (a quasi-municipal corporation 
        formed under the laws of the State of New Mexico and in this 
        Act referred to as the ``District''), all right, title, and 
        interest of the United States in and to the lands described in 
        subsection (b) (in this Act referred to as the ``acquired 
        lands'') and all interests the United States holds in the 
        irrigation and drainage system of the Carlsbad Project and all 
        related lands including ditch rider houses, maintenance shop 
        and buildings, and Pecos River Flume.
          (2) Limitation.--
                  (A) Retained surface rights.--The Secretary shall 
                retain title to the surface estate (But not the mineral 
                estate) of such acquired lands which are located under 
                the footprint of Brantley and Avalon dams or any other 
                project dam or reservoir diversion structure.
                  (B) Storage and flow easement.--The Secretary shall 
                retain storage and flow easements for any tracts 
                located under the maximum spillway elevations of Avalon 
                and Brantley Reservoirs.
    (b) Acquired Lands Described.--The lands referred to in subsection 
(a) are those lands (including the surface and mineral estate) in Eddy 
County, New Mexico, described as the acquired lands in section (7) of 
the ``Status of Lands and Title Report: Carlsbad Project'' as reported 
by the Bureau of Reclamation in 1978.
    (c) Terms and Conditions of Conveyance.--Any conveyance of the 
acquired lands under this Act shall be subject to the following terms 
and conditions:
          (1) Management and use, generally.--The conveyed lands shall 
        continue to be managed and used by the District for the 
        purposes for which the Carlsbad Project was authorized, based 
        on historic operations and consistent with the management of 
        other adjacent project lands.
          (2) Assumed rights and obligations.--Except as provided in 
        paragraph (3), the District shall assume all rights and 
        obligations of the United States under--
                  (A) the agreement dated July 28, 1994, between the 
                United States and the Director, New Mexico Department 
                of Game and Fish (Document No. 2-LM-40-00640), relating 
                to management of certain lands near Brantley Reservoir 
                for fish and wildlife purposes; and
                  (B) the agreement dated March 9, 1977, between the 
                United States and the New Mexico Department of Energy, 
                Minerals, and Natural Resources (Contract No. 7-07-57-
                X0888) for the management and operation of Brantley 
                Lake State Park.
          (3) Exceptions.--In relation to agreement referred to in 
        paragraph (2)--
                  (A) the District shall not be obligated for any 
                financial support agreed to by the Secretary, or the 
                Secretary's designee, in either agreement; and
                  (B) the District shall not be entitled to any 
                receipts for revenues generated as a result of either 
                agreement.
    (d) Completion of Conveyance.--If the Secretary does not complete 
the conveyance within 180 days from the date of enactment of this Act, 
the Secretary shall submit a report to the Congress within 30 days 
after that period that includes a detailed explanation of problems that 
have been encountered incompleting the conveyance, and specific steps 
that the Secretary has taken or will take to complete the conveyance.

SEC. 3. LEASE MANAGEMENT AND PAST REVENUES COLLECTED FROM THE ACQUIRED 
                    LANDS.

    (a) Identification and Notification of Leaseholders.--Within 120 
days after the date of enactment of this Act, the Secretary of the 
Interior shall--
          (1) provide to the District a written identification of all 
        mineral and grazing leases in effect on the acquired lands on 
        the date of enactment of this Act; and
          (2) notify all leaseholders of the conveyance authorized by 
        this Act.
    (b) Management of Mineral and Grazing Leases, Licenses, and 
Permits.--The District shall assume all rights and obligations of the 
United States for all mineral and grazing leases, licenses, and permits 
existing on the acquired lands conveyed under section 2, and shall be 
entitled to any receipts from such leases, licenses, and permits 
accruing after the date of conveyance. All such receipts shall be used 
for purposes for which the Project was authorized and for financing the 
portion of operations, maintenance, and replacement of the Summer Dam 
which, prior to conveyance, was the responsibility of the Bureau of 
Reclamation, with the exception of major maintenance programs in 
progress prior to conveyance which shall be funded through the cost 
share formulas in place at the time of conveyance. The District shall 
continue to adhere to the current Bureau of Reclamation mineral leasing 
stipulations for the Carlsbad Project.
    (c) Availability of Amounts Paid Into Reclamation Fund.--
          (1) Existing receipts.--Receipts in the reclamation fund on 
        the date of enactment of this Act which exist as construction 
        credits to the Carlsbad Project under the terms of the Mineral 
        Leasing Act for Acquired Lands (30 U.S.C. 351-359) shall be 
        deposited in the General Treasury and credited to deficit 
        reduction or retirement of the Federal debt.
          (2) Receipts after enactment.--Of the receipts from mineral 
        and grazing leases, licenses, and permits on acquired lands to 
        be conveyed under section 2, that are received by the United 
        States after the date of enactment and before the date of 
        conveyance--
                  (A) not to exceed $200,000 shall be available to the 
                Secretary for the actual costs of implementing this Act 
                with any additional costs shared equally between the 
                Secretary and the District; and
                  (B) the remainder shall be deposited into the General 
                Treasury of the United States and credited to deficit 
                reduction or retirement of the Federal debt.

SEC. 4. VOLUNTARY WATER CONSERVATION PRACTICES.

    Nothing in this Act shall be construed to limit the ability of the 
District to voluntarily implement water conservation practices.

SEC. 5. LIABILITY.

    Effective on the date of conveyance of any lands and facilities 
authorized by this Act, 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 property, except for damages caused 
by acts of negligence committed by the United States or by its 
employees, agents, or contractors, prior to conveyance. Nothing in this 
section shall be considered to increase the liability of the United 
States beyond that provided under chapter 171 of title 28, United 
States Code, popularly known as the Federal Tort Claims Act.

SEC. 6. FUTURE BENEFITS.

    Effective upon transfer, the lands and facilities transferred 
pursuant to this Act shall not be entitled to receive any further 
Reclamation benefits pursuant to the Reclamation Act of June 17, 1902, 
and Acts supplementary thereof or amendatory thereto attributable to 
their status as part of a Reclamation Project.

                         purpose of the measure

    The purpose of S. 736, as reported is to authorize the 
transfer of the Carlsbad Project to the Carlsbad Irrigation 
District.

                          background and need

    In the 104th Congress, the Committee held hearings on 
legislation (S. 620) that would have provided 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 appropriate projects where there were no 
overriding concerns.
    S. 620 would have directed the Secretary of the Interior to 
transfer title 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 would have provided that the transfer would be 
without cost and would have 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.
    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 
U.S. 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 the 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 104th 
Congress, 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). The Committee also held hearings 
on legislation for the transfer of Canadian River, Palmetto 
Bend and Nueces River projects in Texas (S. 1719). However, 
none of the measures was enacted into law.
    During this Congress, the Committee has considered 
legislation providing for the transfer of certain features of 
the Minidoka Project, Idaho (S. 538), which was favorably 
reported from the Committee on November 3, 1997 and which 
passed the Senate on June 25, 1998. The Committee has also 
considered and favorably reported legislation providing for the 
transfer of the lands and facilities of the Wellton-Mohawk 
Division of the Gila Project, Arizona (S. 2087) and the Pine 
River Project, Colorado (S. 2142). The Committee has also 
considered and favorably reported legislation that authorizes 
the prepayment of outstanding obligations on the Canadian River 
Project, Texas, which would permit the transfer of those 
facilities as provided in the 1950 legislation authorizing the 
project.
    The Carlsbad Project is located in southeastern New Mexico 
on the Pecos River near the city of Carlsbad. Project features 
include Sumner Dam and Lake Sumner (previously Alamogordo Dam 
and Reservoir), McMillan Dam, Avalon Dam, and a drainage and 
distribution system. In addition to irrigation benefits, the 
project facilities also provide flood control and recreation 
benefits. Irrigation in the area dates to Spanish settlements 
around 1600 and flourished during the Spanish land grant 
colonization system in the early 19th century. In 1888, a large 
ranch was located in the general area of the present Carlsbad 
Project. The ranch manager initiated the first large-scale 
irrigation attempt. Since the natural characteristics of the 
area required a more comprehensive treatment than the 
enterprise could afford, it failed. For the next 17 years, 
various private interests attempted to make this project 
financially profitable, but without success.
    During this period, project facilities were built to 
include McMillan Dam for water storage, Avalon Dam for both 
storage and diversion, the Main Canal, and a distribution 
system that irrigated 15,000 acres. Private operation of the 
project ended in 1904 when a Pecos River flood destroyed the 
central canal and much of the irrigation system and swept away 
Avalon Dam. Without water for the land, the project settlers 
faced complete ruin. Upon their request, in 1905 the 
Reclamation Service was authorized to purchase the system. 
Reclamation then began investigations prior to rehabilitating 
the project.
    The original Carlsbad Project was authorized by the 
Secretary of the Interior on November 28, 1905. Sumner Dam was 
authorized for construction by the President on November 6, 
1935, initial funds having been approved on August 14, 1935 
under the Emergency Relief Appropriations Ace of 1935. Section 
7 of the Flood Control Act of August 11, 1939, declared Sumner 
Dam and Lake Sumner were to be used first for irrigation, then 
for flood control, river regulation, and other beneficial uses. 
Brantley Dam and Reservoir were authorized on October 20, 1972, 
by Public Law 92-514, to replace the depleted capacity of 
McMillan Reservoir and provide flood control, fish and 
wildlife, and recreation benefits. The Carlsbad Irrigation 
District has also entered into loans under the Rehabilitation 
and Betterment program of the Bureau of Reclamation for 
concrete lining and improvement of the irrigation system which 
have significantly reduced water losses and provided a more 
efficient delivery of water.

                          legislative history

    S. 736 was introduced on May 13, 1997 by Senator Domenici. 
A similar measure, H.R. 1943, was introduced by Congressman 
Skeen on June 17, 1997. A hearing was held by the Subcommittee 
on Water and Power on June 10, 1997.
    At the business meeting on September 23, 1998, the 
Committee on Energy and Natural Resources ordered S. 736, as 
amended, favorably reported.

           committee recommendations and tabulation of votes

    The Committee on Energy and Natural Resources, in open 
business session on September 23, 1998, by a unanimous voice 
vote of a quorum present, recommends that the Senate pass S. 
736, if amended as described herein.

                          committeee amendment

    During the consideration of S. 736, the Committee adopted 
an amendment in the nature of a substitute to address concerns 
raised by the Administration during its testimony. The specific 
provisions of the amendment are discussed in the section-by-
section analysis.

                      section-by-section analysis

    Section 1 provides a short title.
    Section 2 authorizes the conveyance of the project except 
for the surface estate under the footprint of Brantley and 
Avalon dams and the retention of storage and flow easements for 
any tracts located under the maximum spillway elevations of the 
reservoirs. The District is required to manage all lands for 
project purpose and will assume all rights and obligations of 
the United States for the management of certain lands near 
Brantley for fish and wildlife purposes and the management of 
Brantley Lake State Park, except that the District will not be 
obligated for financial support nor entitled to any revenues. 
The section provides that if the project has not been 
transferred within 180 days from the date of enactment, the 
Secretary of the Interior shall submit a report to Congress 
explaining why the project has not been conveyed and what steps 
the Secretary will take to complete the conveyance.
    Section 3 provides for the District to assume all mineral 
and grazing leases and requires that any income be used for 
project purposes and that the District adhere to Bureau of 
Reclamation leasing stipulations. The section provides for the 
transfer of existing credits of the Carlsbad Project in the 
Reclamation Fund to be credited to the General Treasury and 
provides that the first $200,000 of receipts received after the 
date of enactment to be used to offset the costs of transfer 
with all further costs shared equally between the United States 
and the District.
    Section 4 provides that nothing in the Act will constitute 
a limit on any water conservation measures the District may 
choose to implement.
    Section 5 provides for a limitation on future liability of 
the United States subsequent to transfer of the project.
    Section 6 provides that upon transfer, land and facilities 
will no longer be eligible for Reclamation benefits available 
solely as a result of their status as a Reclamation project.

                   cost and budgetary considerations

    An estimate of the cost of this measure has been requested 
from the Congressional Budget Office, but has not been received 
as of the date of filing of this report. When the estimate is 
received, the Chairman will have it printed in the 
Congressional Record for the advice of the Senate. CBO 
estimated that a similar measure, S. 736, which was reported by 
the Committee during the last Congress would result in costs of 
$1.7 million in the year following enactment and $200,000 each 
year thereafter.

                      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. 736. 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. 736, 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. 736. These reports 
had not been received at the time the report on S. 736 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 pertinent portions of the 
testimony provided by the Commissioner of the Bureau of 
Reclamation, Department of the Interior at the Subcommittee 
hearing 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 four bills before this 
Subcommittee. These bills are S. 538, legislation to convey 
certain facilities of the Minidoka Project to the Burley 
Irrigation District; S. 736, legislation to convey the acquired 
lands and the distribution and drainage system of the Carlsbad 
Irrigation Project to the Carlsbad Irrigation District; and S. 
744, the Fall River Water Users District Rural Water System Act 
of 1997. The Administration also has concerns about S. 439 and 
will submit a statement for the hearing record.
    Before I discuss the specifics of each legislative 
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 transfer 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 
sessions 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 species 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. 736 carlsbad irrigation project acquired land transfer act


    S. 736 would authorize the Secretary to convey, without 
cost all right, title and interest of the United States in the 
irrigation and drainage system of the Carlsbad Project and 
acquired lands described in the ``Status of Lands and Title 
Report: Carlsbad Project'' to the Carlsbad Irrigation District 
(CID).
    Since the end of the 104th Congress, Reclamation and CID 
have continued to discuss and negotiate title transfer of these 
facilities and lands in the hopes of finding resolution to the 
issues raised during the 104th Congress. Although these 
negotiations and discussions brought us closer together, they 
have not yet been successful. And, while it will be desirable 
to transfer title to the irrigation and distribution facilities 
to CID, the Administration cannot support S. 736 in its current 
form.
    Before identifying our concerns, I would like to note the 
progress and some areas where we believe improvements have been 
made from earlier drafts:
    (1) S. 736 authorizes the Secretary to convey title rather 
than directing him to do so as in S. 538 and S. 725. This 
legislation envisions that actions under NEPA would be carried 
out. Although we do not anticipate encountering significant 
environmental issues in this transfer we believe the 
legislation should provide that the Secretary may establish 
such conditions for the transfer as he deems appropriate to 
resolve issues identified during the NEPA process.
    (2) Section 2 directs the Secretary to notify CID of all 
mineral and grazing leases on acquired lands. Under previous 
draft, such notification was required within 45 days. In 
testimony presented in the 104th Congress, the Department 
recommended that 120 days would be appropriate. S. 736 has 
provided 120 days as requested.
    Unfortunately, other provisions of S. 736 do not 
sufficiently protect the interests of the Treasury and 
therefore, the Administration cannot support this proposal. 
Like the other bills under consideration today, Reclamation 
believes that Carlsbad is a good candidate for title transfer. 
Furthermore, with some modifications, we believe we could 
support passage of S. 736. Let me outline the concerns of the 
Administration:
    (1) Dam Safety. Section 2 reserves for the Secretary title 
to the surface estate for lands which are located under the 
footprint of Brantley and Avalon dams. We recommend an 
important technical amendment to clarify that no mineral 
extraction will occur one mile from the center axis of the dam, 
unless approved by the Secretary.
    (2) Pay-As-You-Go. Section 3(b) and 3(c) would reduce 
expected receipts to the Treasury and increase the Federal 
deficit. As these provisions are not offset, S. 7316 would be 
subject to the Pay-As-You-Go requirements of the Omnibus Budget 
Act of 1990.
    (1) Reclamation Fund. Section 3(b) and 3(c) would require 
the United States to make available approximately $1.6 million 
in the Reclamation Fund and all future oil, gas, and grazing 
revenues to the CID. Under the Mineral Leasing Act for Acquired 
Lands of 1947, these revenues are placed in the Reclamation 
Fund and are credited in the Carlsbad construction account 
towards repayment of any future project construction 
obligation. However, no additional construction is authorized 
or contemplated. We are concerned that under the bill the 
District is not being asked to pay a fair price for the revenue 
producing assets that it seeks to acquire considering the value 
that the lands and mineral estate would have to the Federal 
government or other potential purchaser.
    (4) Water Conservation. The Administration recommends the 
deletion of section 4, as it provides a new authorization for 
the expenditure of monies. Reclamation needs to retain the 
flexibility to determine the appropriate Federal share of water 
conservation costs for this project. In addition, the language 
if adopted should be clarified to ensure the District's water 
conservation practices comply with Federal and State laws, and 
are consistent with the existing management of such lands and 
other adjacent project lands.
    (5) Liability Language S. 736 should be amended to contain 
language to ensure that the recipients accept full liability 
for the property when it is conveyed. We recommend that S. 736 
include the following:

          Effective on the date of conveyance of the lands and 
        facilities described in Section 2(a), 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 lands and 
        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.

    (6) Water Rights. Unlike the provisions of the Collbran 
transfer, the Carlsbad legislation does not attempt to transfer 
title to any project water rights obtained by the United States 
by purchase or appropriation for the Carlsbad project. Carlsbad 
project water is provided to the CID by contract and the 
District is in agreement with the ownership of title to all 
project water rights remaining in the name of the United 
States.
    The flowage easement retained by the United States in 
Section 2(a)(2)(B) needs to include a right of access to the 
conveyed property to operate and maintain and construct and 
reconstruct the facilities and lands and interests in lands and 
facilities retained by the United States. Such an easement will 
allow the United States access to the dams for safety of dams 
and other purposes as well as the ability to perform such 
functions as dredging and other operations in the reservoir.

                        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. 736, as ordered 
reported.

                                
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