[Senate Report 105-376]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 625
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-376
_______________________________________________________________________


 
                   PINE RIVER PROJECT CONVEYANCE ACT

                                _______
                                

  October 7 (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. 2142]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 2142) to authorize the Secretary of the 
Interior to convey the facilities of the Pine River Project, to 
allow jurisdictional transfer of lands between the Department 
of Agriculture, Forest Service, and the Department of the 
Interior, Bureau of Reclamation, and the Bureau of Indian 
Affairs, 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. SHORT TITLE.

    This Act may be cited as the ``Pine River Project Conveyance Act''.

SEC. 2. DEFINITIONS.

    For purposes of this Act:
          (1) The term ``Jurisdictional Map'' means the map entitled 
        ``Transfer of Jurisdiction--Vallecito Reservoir, United States 
        Department of Agriculture, Forest Service and United States 
        Department of the Interior, Bureau of Reclamation and the 
        Bureau of Indian Affairs'' dated March, 1998
          (2) The term ``Pine River Project'' or the `Project' means 
        Vallecito Dam and Reservoir owned by the United States and 
        authorized in 1937 under the provisions of the Department of 
        the Interior Appropriation Act of June 25, 1910, 36 Stat. 835; 
        facilities appurtenant to the Dam and Reservoir, including 
        equipment, buildings, and other improvements; lands adjacent to 
        the Dam and Reservoir; easements and rights-of-way necessary 
        for access and all required connections with the Dam and 
        Reservoir, including those for necessary roads; and associated 
        personal property, including contract rights and any and all 
        ownership or property interest in water or water rights.
          (3) The term ``Repayment Contract'' means Repayment Contract 
        #I1r-1204, between Reclamation and the Pine River Irrigation 
        District, dated April 15, 1940, and amended November 30, 1953, 
        and all amendments and additions thereto, including the Act of 
        July 27, 1954 (68 Stat. 534), covering the Pine River Project 
        and certain lands acquired in support of the Vallecito Dam and 
        Reservoir pursuant to which the Pine River Irrigation District 
        has assumed operation and maintenance responsibilities for the 
        dam, reservoir, and water-based recreation in accordance with 
        existing law.
          (4) The term ``Reclamation'' means the Department of the 
        Interior, Bureau of Reclamation.
          (5) The term ``Secretary'' means the Secretary of the 
        Interior.
          (6) The term ``Southern Ute Indian Tribe'' or ``Tribe'' means 
        a federally recognized Indian tribe, located on the Southern 
        Ute Indian Reservation, La Plata County, Colorado.
          (7) The term ``Pine River Irrigation District'' or 
        ``District'' means a political division of the State of 
        Colorado duly organized, existing, and acting pursuant to the 
        laws thereof with its principal place of business in the City 
        of Bayfield, La Plata County, Colorado and having an undivided 
        \5/6\ right and interest in the use of the water made available 
        by Vallecito Reservoir for the purpose of supplying the lands 
        of the District, pursuant to the Repayment Contract, and the 
        decree in Case No. 1848-B, District Court, Water Division 7, 
        State of Colorado, as well as an undivided \5/6\ right and 
        interest in the Pine River Project.

SEC. 3. TRANSFER OF THE PINE RIVER PROJECT.

    (a) Conveyance.--The Secretary is authorized to convey, without 
consideration or compensation to the District, by quitclaim deed or 
patent, pursuant to section 6, the United States' undivided \5/6\ right 
and interest in the Pine River Project under the jurisdiction of 
Reclamation for the benefit of the Pine River Irrigation District. No 
partition of the undivide \5/6\ right and interest in the Pine River 
Project shall be permitted from the undivided \1/6\ right and interest 
in the Pine River Project described in subsection 3(b) and any quit 
claim deed or patent evidencing a transfer shall expressly prohibit 
partitioning. Effective on the date of the conveyance, all obligations 
between the District and the Bureau of Indian Affairs on the one hand 
and Reclamation on the other hand, under the Repayment Contract or with 
respect to the Pine River Project are extinguished. Upon completion of 
the title transfer, said Repayment Contract shall become null and void. 
The District shall be responsible for paying 50 percent of all costs 
associated with the title transfer.
    (b) Bureau of Indian Affairs Interest.--At the option of the Tribe, 
the Secretary is authorized to convey to the Tribe the Bureau of Indian 
Affairs' undivided \1/6\ right and interest in the Pine River Project 
and the water supply made available by Vallecito Reservoir pursuant to 
the Memorandum of Understanding between the Bureau of Reclamation and 
the Office of Indian Affairs dated January 3, 1940, together with its 
Amendment dated July 9, 1964 (``MOU''), the Repayment Contract and 
decrees in Case Nos. 1848-B and W-1603-76D, District Court, Water 
Division 7, State of Colorado. In the event of such conveyance, no 
consideration or compensation shall be required to be paid to the 
United States.
    (c) Federal Dam Use Charge.--Nothing in this Act shall relieve the 
holder of the license issued by the Federal Energy Regulatory 
Commission under the Federal Power Act for Vallecito Dam in effect on 
the date of enactment of this Act from the obligation to make payments 
under section 10(e)(2) of the Federal Power Act during the remaining 
term of the present license. At the expiration of the present license 
term, the Federal Energy Regulatory Commission shall adjust the charge 
to reflect either (1) the \1/6\ interest of the United States remaining 
in the Vallecito Dam after conveyance to the District; or (2) if the 
remaining \1/6\ interest of the United States has been conveyed to the 
Tribe pursuant to section 3(b), then no federal dam charge shall be 
levied from the date of expiration of the present license.

SEC. 4. JURISDICTIONAL TRANSFER OF LANDS.

    (A) Inundated Lands.--To provide for the consolidation of lands 
associated with the Pine River Project to be retained by the Forest 
Service and the consolidation of lands to be transferred to the 
District, the administrative jurisdiction of lands inundated by and 
along the shoreline of Vallecito Reservoir, as shown on the 
Jurisdictional Map, shall be transferred, as set forth below (the 
``Jurisdictional Transfer''), concurrently with the conveyance 
described in section 3(a). Except as otherwise shown on the 
Jurisdictional Map--
          (1) for withdrawn lands (approximately 260 acres) lying below 
        the 7,665-foot reservoir water surface elevation level, the 
        Forest Service shall transfer an undivided \5/6\ interest to 
        Reclamation and an undivided \1/6\ interest to the Bureau of 
        Indian Affairs in trust for the Tribe; and
          (2) for Project acquired lands (approximately 230 acres) 
        above the 7,665-foot reservoir water surface elevation level, 
        Reclamation and the Bureau of Indian Affairs shall transfer 
        their interests to the Forest Service.
    (b) Map.--The Jurisdictional Map and legal descriptions of the 
lands transferred pursuant to subsection (a) above shall be on file and 
available for public inspection in the offices of the Chief of the 
Forest Service, Department of Agriculture, the Commissioner of 
Reclamation, Department of the Interior, appropriate field offices of 
those agencies, and the Committee on Resources of the House of 
Representatives and the Committee on Energy and Natural Resources of 
the Senate.
    (c) Administration.--Following the Jurisdictional Transfer--
          (1) All lands that, by reason of the Jurisdictional Transfer, 
        become National Forest System lands within the boundaries of 
        the San Juan National Forest, shall be administered in 
        accordance with the laws, rules, and regulations applicable to 
        the National Forest System.
          (2) Reclamation withdrawals of land from the San Juan 
        National Forest established by Secretarial Orders on November 
        9, 1936, October 14, 1937, and June 20, 1945, together 
        designated as Serial No. C-28259, shall be revoked.
          (3) The Forest Service shall issue perpetual easements to the 
        District and the Bureau of Indian Affairs, at no cost to the 
        District or the Bureau of Indian Affairs, providing adequate 
        access across all lands subject to Forest Service jurisdiction 
        to insure the District and the Bureau of Indian Affairs the 
        ability to continue to operate and maintain the Pine River 
        Project.
          (4) The undivided 5/6 interest in National Forest System 
        lands that, by reason of the Jurisdictional Transfer is to be 
        administered by Reclamation, shall be conveyed to the District 
        pursuant to section 3(a).
          (5) The District and the Bureau of Indian Affairs shall issue 
        perpetual easements to the Forest Service, at no cost to the 
        Forest Service, from National Forest System lands to Vallecito 
        Reservoir to assure continued public access to Vallecito 
        Reservoir when the Reservoir level drops below the 7,665-foot 
        water surface elevation.
          (6) The District and the Bureau of Indian Affairs shall issue 
        a perpetual easement to the Forest Service, at no cost to the 
        Forest Service, for the reconstruction, maintenance, and 
        operation of a road from La Plata County Road No. 501 to 
        National Forest System lands east of the Reservoir.
    (d) Valid Existing Rights.--Nothing in this section shall affect 
any valid existing rights or interests in any existing land use 
authorization, except that any such land use authorization shall be 
administered by the agency having jurisdiction over the land after the 
Jurisdictional Transfer in accordance with subsection (c) and other 
applicable law. Renewal or reissuance of any such authorization shall 
be in accordance with applicable law and the regulations of the agency 
having jurisdiction, except that the change of administrative 
jurisdiction shall not in itself constitute a ground to deny the 
renewal or reissuance of any such authorization.

SEC. 5. LIABILITY.

    Effective on the date of the conveyance of the remaining undivided 
\1/6\ right and interest in the Pine River Project to the Tribe 
pursuant to subsection 3(b), 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 such Project, 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.)

SEC. 6. COMPLETION OF CONVEYANCE.

    (a) In General.--The Secretary's completion of the conveyance under 
section 3 shall not occur until the following events have been 
completed:
          (1) Compliance with the National Environmental Policy Act of 
        1969 (42 U.S.C. 4321 et seq.), and other applicable Federal and 
        State laws.
          (2) The submission of a written statement from the Southern 
        Ute Indian Tribe to the Secretary indicating the Tribe's 
        satisfaction that the Tribe's Indian Trust Assets are protected 
        in the conveyance described in section 3.
          (3) Execution of an agreement acceptable to the Secretary 
        which limits the future liability of the United States relative 
        to the operation of the Project.
          (4) The submission of a statement by the Secretary to the 
        District, the Bureau of Indian Affairs, and the State of 
        Colorado on the existing condition of Vallecito Dam based on 
        Bureau of Reclamation's current knowledge and understanding.
          (5) The development of an agreement between the Bureau of 
        Indian Affairs and the District to prescribe the District's 
        obligation to so operate the Project that the \1/6\ rights and 
        interests to the Project and water supply made available by 
        Vallecito Reservoir held by the Bureau of Indian Affairs are 
        protected. Such agreement shall supercede the Memorandum of 
        Agreement referred to in section 3(b) of this Act.
          (6) The submission of a plan by the District to manage the 
        Project in a manner substantially similar to the manner in 
        which it was managed prior to the transfer and in accordance 
        with applicable Federal and State laws, including management 
        for the preservation of public access and recreational values 
        and for the prevention of growth on certain lands to be 
        conveyed hereunder, as set forth in an Agreement dated March 
        20, 1998, between the District and residents of Vallecito 
        Reservoir. Any future change in the use of the water supplied 
        by Vallecito Reservoir shall comply with applicable law.
          (7) The development of a flood control plan by the Secretary 
        of the Army acting through the Corps of Engineers which shall 
        direct the District in the operation of Vallecito Dam for such 
        purposes.
    (b) Report.--If the transfer authorized in section 3 is not 
substantially completed within 18 months from the date of enactment of 
this Act, the Secretary, in coordination with the District, shall 
promptly provide a report to the Committee on Resources of the House of 
Representatives and to the Committee on Energy and Natural Resources of 
the Senate on the status of the transfer described in section 3(a), any 
obstacles to completion of such transfer, and the anticipated date for 
such transfer.
    (c) Future Benefits.--Effective upon transfer, the District shall 
not be entitled to receive any further Reclamation benefits 
attributable to its status as a Reclamation project pursuant to the 
Reclamation Act of June 17, 1902, and Acts supplementary thereto or 
amendatory thereof.

                         purpose of the measure

    The purpose of S. 2142 is to authorize the transfer of the 
\5/6\ right to Project facilities owned by the Bureau of 
Reclamation to the Pine River Irrigation District with the 
remaining \1/6\ continuing to be held by the Bureau of Indian 
Affairs in trust for the Southern Ute Indian Tribe until the 
Tribe requests transfer. The legislation also provides for the 
Forest Service to transfer approximately 260 acres below the 
reservoir level to the Bureau of Reclamation and the Bureau of 
Indian Affairs, with about 230 acres of Bureau of Reclamation 
and Bureau of Indian Affairs lands above the level transferred 
to the Forest Service.

                          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 has identified 415 project 
components--out of the 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 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 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 for and facilities of the Wellton-Mohawk 
Division of the Gila Project, Arizona (S. 2087) and the 
Carlsbad Project New Mexico (S. 736). The Committee has also 
considered and favorably reported legislation but 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 Pine River Project in Colorado was originally 
authorized in 1937 and the only project feature is the 
Vallecito Dam and Reservoir, which has a capacity of 129,700 
acre feet. The project is fully paid out and the Pine River 
Irrigation District and the Southern Ute Indian Tribe have 
operated and managed the facility as well as the distribution 
system for he past twenty years. Repayment of all obligations 
occurred in 1984. The United States holds a decreed water right 
from the State of Colorado coveringthe Tribe's \1/6\ water 
supply while the Irrigation District holds a decreed water right 
covering its \5/6\ beneficial interest in the project's water supply. 
The project is authorized for irrigation and also provides flood 
control, recreation, and fish and wildlife benefits. In addition, 
Ptarmigan Resources and Energy Company operates a hydroelectric 
facility at the dam pursuant to a license issued by the Federal Energy 
Regulatory Commission under the Federal Power Act. The Irrigation 
District and the Bureau of Reclamation have discussed the terms of a 
transfer since 1997 and the District has had several public meetings to 
address local concerns.

                          legislative history

    S. 2142 was introduced by Senator Campbell on June 5, 1998. 
A hearing was held by the Subcommittee on June 16, 1998. 
Similar legislation (H.R. 3715) was introduced by Congressman 
McInnis on April 23, 1998.
    At the business meeting on September 23, 1998, the 
Committee on Energy and Natural Resources ordered S. 2142, 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. 
2142, if amended as described herein.

                          committee amendment

    During the consideration of S. 2142, the Committee adopted 
an amendment in the nature of a substitute to address most of 
the concerns raised by the Administration during its testimony. 
The Committee amendment also continues the present Federal dam 
charge on the license under the Federal Power Act for the 
remaining term of the license, thereby obviating the rationale 
for a prepayment by the Irrigation District to cover 
anticipated revenues to the Federal Government. 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 provides a series of definitions.
    Section 3(a) authorizes the conveyance of the \5/6\ 
interest of the United States in the project to the District 
with the remaining \1/6\ interest to be held by the Bureau of 
Indian Affairs (BIA). Partition of the interests is expressly 
prohibited. The District is required to assume 50% of the costs 
of the transfer.
    Subsection 3(b) authorizes the transfer of the Southern Ute 
Indian Tribe's \1/6\ interest to the Tribe and provides that no 
compensation will be required for the transfer.
    Subsection 3(c) provides that the current Federal dam 
charge assessed under section 10(e)(2) of the Federal Power Act 
will continue on the license issued for the use of Vallecito 
dam until the expiration of the current license term. At that 
time, the charge will be adjusted to reflect whatever ownership 
interest the Federal Government may have in the dam. If the 
Federal Government still retains a \1/6\ interest for the 
benefit of the Tribe, then the charge is to be reduced to \1/
6\. If the Federal Government has transferred that interest to 
the Tribe and no longer owns any portion of the dam, then no 
charge will be assessed.
    Section 4 provides for the transfer of lands above and 
below the reservoir level between the Bureau of Reclamation, 
BIA, and the Forest Service to consolidate administration. All 
lands above the reservoir level will become part of the San 
Juan National Forest and reclamation withdrawals will be 
revoked. All existing uses are protected and appropriate 
easements are provided for.
    Section 5 limits the liability of the United States 
whenever the remaining \1/6\ interest in the facility is 
transferred to the Tribe.
    Section 6 conditions the transfer on certain events:
          Compliance with NEPA and other applicable Federal and 
        State laws;
          Written statement from the Tribe that they are 
        satisfied that Trust assets are protected;
          An agreement acceptable to the Secretary that limits 
        the future liability of the United States relative to 
        the operation of the project;
          Statement by the Secretary on the condition of the 
        dam under Safety of Dams;
          Agreement between BIA and the District on operation 
        to protect the Tribe's \1/6\ interest;
          Submission of a plan on future management of the 
        reservoir;
          Development of a flood control plan by the Secretary 
        of the Army.
    The section also requires a report on progress within 18 
months if the transfer has not been completed and provides that 
upon transfer the District will not longer be eligible for any 
benefits under Reclamation law attributable to its 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.

                      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. 2142. 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. 2142, as ordered reported.

                        executive communications

    On June 8, 1998, 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. 2142. These 
reports had not been received at the time the report on S. 2142 
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 L. Martinez, Commissioner, U.S. Bureau of 
                Reclamation, Department of the Interior

    Thank you for the opportunity to appear today to provide 
the Administration's view on S. 2142.


             s. 2142. conveyance of the pine river project


    S. 2142 would authorize the Secretary of the Interior to 
convey the Project facilities of the Pine River Project, and 
would allow the jurisdictional transfer of lands between the 
U.S. Forest Service, the Bureau of Reclamation and the Bureau 
of Indian Affairs.
    More specifically, this legislation would transfer the \5/
6\ right to Project facilities owned by the Bureau of 
Reclamation to the Pine River Irrigation District (District), 
while the \1/6\ right currently held in trust by the Bureau of 
Indian Affairs (BIA) for the benefit of the Southern Ute Indian 
Tribe would remain under the jurisdiction of the BIA, until the 
Tribe requests title to the \1/6\ right. As a result of this 
\1/6\ right. As a result of the \1/6\ right held by the BIA for 
the Tribe, the United States, through the BIA would remain 
involved in the operation of the project.
    While the Department has not had the opportunity to 
thoroughly analyze all of the implications of this legislation, 
the process established by S. 2142 will enable the Federal 
agencies, Tribes, the local community and all the other 
stakeholders ample opportunities to identify and work towards 
protecting the public interests they represent. Therefore, with 
the amendments provided below, the Administration could support 
this legislation.
Background
    The Pine River Project, authorized for construction in 
1937, is located in La Plata and Archuleta Counties of 
southwestern Colorado. The only project feature is the 
Vallecito Dam and Reservoir with a total capacity of 129,700 
acre feet. In addition to irrigation water for the District and 
the Southern Ute Indian Tribe, this project also provides flood 
control, recreation, and fish and wildlife benefits. The 
District holds the water rights for the Project in its name.
    Currently, the Forest Service manages acquired and 
withdrawn lands along the reservoir, and provides land-based 
recreation which includes operation campgrounds alongside the 
reservoir. The District manages, through a contract with 
Reclamation under authority of the Act of July 9, 1965, all of 
the water-based recreation including management of boat ramps, 
marinas, boating and other water-based recreational activities.
    In the Fall of 1997, the District contacted Reclamation 
expressing an interest in title transfer. Since that time, the 
District has held six public scoping meetings, attended by more 
than 285 people, to identify issues and concerns and answer 
questions about their intentions for future project management. 
The District has worked with the Forest Service, the Bureau of 
Indian Affairs, the Southern Ute Indian Tribe and local 
landowners to address concerns they have identified. On April 
1, 1998, La Plata County conducted an additional public 
meeting, and the County Commissioners subsequently endorsed the 
title transfer proposal.
Sale price
    Section 3(b) of S. 2142 establishes a sale price of 
$492,000 to be paid by the District to the United States. This 
price was arrived at during negotiations between the District 
and the Bureau of Reclamation and we believe reflects a fair 
price for the Project based on the information currently 
available to us. The district completed its project repayment 
obligation in 1982. The $492,000 valuation includes a payment 
of $193,000, which represents the present value of the stream 
of payments that accounts for a conversion of 2,000 acre feet 
of water (or 1.9 percent of the water available for the 
District's use) from agricultural use to municipal and 
industrial use (M&I) as proposed by the District, but which is 
not likely to occur for some time. This $193,000 payment is 
appropriate because, when such a conversion occurs, in the 
absence of a transfer, the beneficiaries of that conversion are 
required to pay the United States at a higher rate for the use 
of the M&I water to reflect the greater value of the water.
    The sale price also includes $299,000 to account for the 
loss of Federal revenue from the Federal dams charge required 
under Section 10(e)(2) of the Federal Power Act of 1920, as 
amended. Currently Ptarmingan Resources and Energy Company 
(Ptarmigan) maintains a hydroelectric facility at Vallecito Dam 
and pays the United States an annual fee based on the annual 
generation of their hydropower plant. If \5/6\ rights to the 
Project are transferred out of Federal ownership as proposed, 
then \5/6\ of these revenues would no longer be paid to the 
United States, and the price appropriately accounts for this. 
The legislation envisions that the remaining \1/6\ of the 
revenues from the Federal dams charge would continue to be paid 
to the United States.
    During transfer negotiations, Reclamation and District 
representatives worked to identify the factors and other 
sources of revenue and potential sources of revenue that 
comprise the value of the facilities in question. Those are 
incorporated into the price established in this legislation. 
While Reclamation believes that the negotiated price specified 
in S. 2142 represents a fair price, additional information 
bearing on this issue could arise prior to resolution of the 
remaining public concerns, whether through public input or 
otherwise. Due to the importance of ensuring that the price is 
fair--both to Federal taxpayers and to the District--we urge 
the Committee to substitute the following generic language 
which sets forth the criteria that Reclamation uses, in place 
of the first sentence of Section 3(b):
    ``The Secretary, in consultation with the Secretary of the 
Treasury, shall ensure that the District pays a fair price for 
all rights, title and interest of the United States conveyed 
pursuant to this Act, considering the value of the facilities 
and lands conveyed would have had to the Federal government or 
other potential purchasers.'' In addition to this payment, 
there would be a long-term savings to the taxpayers as a result 
of the fact that the current Federal operation and maintenance 
responsibilities, which cost approximately $145,000 per year, 
will no longer be the responsibility of the United States after 
title is transferred.
Tax-exempt financing
    To ensure that the District does not finance its costs in 
ways that would generate a loss to the Treasury, the 
legislation should be amended to include the following 
language:
    (F) Any funds paid by the District pursuant to this section 
shall not be financed by the proceeds of obligations that 
qualify as federally tax obligations under Section 103 of the 
Internal Revenue Code, as amended.''
Dam safety
    Section 6 of S. 2142 requires the Secretary to provide a 
statement of the condition of the dam based on current 
knowledge and understanding. Currently, Reclamation plans to 
conduct hydrologic and seismic studies at the dam. The 
principle cost of these studies would be incurred in fiscal 
Years 2000 and 2001. Between now and then a comprehensive 
review will provide recommendations on whether these or other 
studies are warranted. If the dam were to remain in the 
ownership of the United States, Reclamation would complete the 
recommended studies. If title is transferred to the District, 
the District and the State of Colorado would determine the 
proper course of action.
Compliance with Federal laws and protection of public purposes
    S. 2142 includes a number of provisions to ensure that 
there is full compliance with NEPA and other Federal laws and 
requirements and that the public purposes for which this 
facility was developed are protected.
    Section 6 of S. 2142 establishes a number of important 
conditions that must be met before title can be transferred. 
This will ensure that the public purposes are protected and 
will ensure that interested stakeholders have the opportunity 
to participate in determining the future operations of the 
reservoir to protect their interests. These conditions are:
          (1) Compliance with NEPA and other applicable federal 
        and state laws;
          (2) A written statement from the Southern Ute Indian 
        Tribe of satisfaction that their interests are 
        protected;
          (3) The issuance of an amendment to the Federal 
        Energy Regulatory Commission (FERC) license to revise 
        the annual charges for the hydropower user;
          (4) A submission by the Secretary of a statement of 
        the existing conditions of Vallecito Dam based on 
        current knowledge and understanding;
          (5) The development of an agreement between the 
        District and the Bureau of Indian Affairs on the 
        operations of the Vallecito Dam and Reservoir for BIA's 
        \1/6\ interest;
          (6) The submission of a management plan between the 
        District and the residents of the Vallecito Reservoir 
        to address issues of recreation management, public 
        access, and for the prevention of growth on certain 
        lands to be conveyed to the District; and
         (7) The development of a flood control plan by the 
        Secretary of the Army which shall direct the operations 
        of the dam and reservoir by the District.
Outstanding concerns
    The Pine River Irrigation District has taken a number of 
important steps to address the concerns of local residents, the 
Southern Ute Indian Tribe, the Forest Service, the BIA and 
other Federal, state, and local government agencies. However, 
it is important to note that there are still some concerns 
raised by the local community. In particular, some in the local 
community and others are concerned about how quickly this 
legislation is moving and that there has not been a thorough 
analysis of the implications. For example, the transfer might 
effect options that have been proposed as a possible 
alternative to resolve Ute tribal water rights claims instead 
of constructing the Animals LaPlata project. In this case, 
Reclamation's NEPA analysis of the proposed title transfer 
would include an analysis of such effects. Furthermore, the 
bill provides additional opportunities for public comment 
before title could be transferred. Furthermore, if the 
conditions established in Section 6 are not met, then title 
will remain in the name of the United States.
Technical amendments
    Mr. Chairman, there are several technical or clarifying 
amendments that the Department recommends be made before this 
bill moves forward:
    (1) Section 2, Definitions: The definition of Repayment 
Contract needs to be modified to accurately identify all the 
existing contracts on this Project. After ``November 30, 
1953'', should insert ``and all amendments and additions 
thereto, including the Act of July 27, 1954, 68 Stat. 534.''
    (2) Section 3(d): After ``In the event of such 
conveyance,'' delete ``no'' and insert ``neither deferred 
compensation'' nor before ``additional consideration . . .''
    (3) Section 6(a)(5): At the end of the paragraph, insert 
the phrase ``Such agreement shall supersede the MOU referred to 
in Section 3(d) of this Act.'' This will clarify that the 
agreement reached between the District and the BIA will 
supersede the pre-existing MOU for operating the facilities 
that exists between Reclamation and the BIA.
    (4) Elevation: The elevation noted in Section 4(a)(1), 
4(a)(2) and Section 4(c)(5) was incorrectly identified and 
should be changed from 7,765 to 7,665.
    (5) Definitions (Section 2): Should read: ``The term 
``Repayment Contract'' means Repayment Contract #Ilr - 1204. . 
. .'' rather than ``Contract N Zilr-1204.''
    (6) Section 6(a)(3): Should read: ``The issuance by the 
Federal Energy Regulatory Commission of an amendment to license 
#3174-001'', rather than license N Z3174-001.
    (7) As drafted, the first line of Section 6(a) does not 
conform to other provisions in the bill that authorize, but do 
not require, the Secretary to complete the transfer. I assume 
this is due to an oversight. However, I should point out that 
we cannot support the bill unless this is revised. We would 
suggest the following: ``IN GENERAL--The Secretary's completion 
of the conveyances under section 3 shall not occur prior to the 
following events:''
    In summary, Mr. Chairman, Reclamation believes that this 
project is a good candidate for title transfer. And while all 
the questions have not been completely answered, the process to 
date, and that required in the future under this legislation is 
open, public, and inclusive. Furthermore, there are numerous 
safeguards established in S. 2142 to protect the public 
interests and the public purposes for which this facility has 
been constructed.

                        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. 2142, as 
ordered reported.

                                
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