[House Report 106-259]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-259

======================================================================



 
                      SLY PARK UNIT CONVEYANCE ACT

                                _______
                                

 July 26, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


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

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 992]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Resources, to whom was referred the bill 
(H.R. 992) to convey the Sly Park Dam and Reservoir to the El 
Dorado Irrigation District, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Sly Park Unit Conveyance Act''.

 SEC. 2. DEFINITIONS.

  For purposes of this Act:
          (1) District.--The term ``District'' means the El Dorado 
        Irrigation District, a political subdivision of the State of 
        California that has its principal place of business in the city 
        of Placerville, El Dorado County, California.
          (2) Original construction contract.--The term ``original 
        construction contract'' means the repayment contract between 
        the District and the Secretary numbered 14-06-200-949, as 
        amended and renewed.
          (3) Project.--The term ``Project'' means all of the right, 
        title, and interest in and to the Sly Park Dam and Reservoir, 
        the Camp Creek Diversion Dam and Tunnel, and other conduits, 
        canals, facilities, and property held by the United States 
        pursuant to or related to the authorization in the Act entitled 
        ``An Act to authorize the American River Basin Development, 
        California, for irrigation and reclamation, and for other 
        purposes'', approved October 14, 1949 (63 Stat. 852 chapter 
        690).
          (4) Secretary.--The term ``Secretary'' means the Secretary of 
        the Interior.
          (5) Supplemental contracts.--The term ``supplemental 
        contracts'' means the repayment contracts between the District 
        and the Secretary numbered 14-06-200-7734, 14-06-200-4282A, and 
        14-06-200-8536A.

SEC. 3. CONVEYANCE OF PROJECT.

  (a) In General.--In consideration of the District accepting the 
obligations of the Federal Government for the Project and upon the 
payment by the District of the net present value of the remaining 
repayment obligation of the District under the original construction 
contract, determined in accordance with Office of Management and Budget 
Circular A-129 (as in effect on the date of enactment of this Act), the 
Secretary shall convey the Project to the District. Such conveyance 
shall be subject to a reversion in favor of the United States if the 
remaining repayment obligations of the District under the supplemental 
contracts are not completed in accordance with those contracts.
  (b) Deadline.--
          (1) In general.--If no changes in Project operations are 
        expected following the conveyance under subsection (a), the 
        Secretary shall complete the conveyance expeditiously, but not 
        later than 180 days after the date of the enactment of this 
        Act.
          (2) Deadline if changes in operations intended.--If the 
        District notifies the Secretary that it intends to change 
        Project operations as a result of the conveyance under 
        subsection (a), the Secretary--
                  (A) shall take into account those potential changes 
                for the purpose of completing any required 
                environmental evaluation associated with the 
                conveyance; and
                  (B) shall complete the conveyance by not later than 2 
                years after the date of the enactment of this Act.
          (3) Administrative costs of conveyance.--If the Secretary 
        fails to complete the conveyance under this Act before the 
        applicable deadline under paragraph (1) or (2), the full cost 
        of administrative action and environmental compliance for the 
        conveyance shall be paid by the Secretary. If the Secretary 
        completes the conveyance before that deadline, \1/2\ of such 
        cost shall be paid by the District.

SEC. 4. RELATIONSHIP TO EXISTING OPERATIONS.

  (a) In General.--Nothing in this Act shall be construed as 
significantly expanding or otherwise changing the use or operation of 
the Project from its current use and operation.
  (b) Future Alterations.--If the District alters the use or operation 
of the Project it shall comply with all applicable laws or regulations 
governing such changes at that time (subject to section 5).

SEC. 5. RELATIONSHIP TO CONTRACT OBLIGATIONS.

  (a) Original Construction Contract.--Provision of consideration by 
the District in accordance with section 3(a) shall extinguish all 
repayment obligations under the original construction contract.
  (b) Subsequent Construction Contracts.--
          (1) Payment obligations not affected.--Subject to paragraph 
        (2), the conveyance of the Project under this Act does not 
        affect the repayment obligations of the District under the 
        subsequent construction contracts.
          (2) Prepayment.--The District may at any time prepay its 
        remaining repayment obligations under the subsequent 
        construction contracts by tendering to the Secretary the net 
        present value, at that time, of the remaining repayment 
        obligations under those contracts, determined in accordance 
        with Office of Management and Budget Circular A-129 (as in 
        effect on the date of enactment of this Act). Effective on the 
        date of such tender, or on the date of completion of all 
        repayment obligations under the subsequent construction 
        contracts, whichever occurs first, any reversionary interest of 
        the United States in and to the Project is extinguished.

SEC. 6. RELATIONSHIP TO OTHER LAWS.

  (a) Reclamation Laws.--Except as provided in subsection (b), upon 
conveyance of the Project under this Act, the Reclamation Act of 1902 
(82 Stat. 388) and all Acts amendatory thereof or supplemental thereto 
shall not apply to the Project.
  (b) Payments Into the Central Valley Project Restoration Fund.--The 
El Dorado Irrigation District shall continue to make payments into the 
Central Valley Project Restoration Fund until the year 2029. The 
District's obligation shall be calculated in the same manner as Central 
Valley Project water contractors.

SEC. 7. LIABILITY.

  Except as otherwise provided by law, effective on the date of 
conveyance of the Project under this Act, the United States shall not 
be liable for damages of any kind arising out of any act, omission, or 
occurrence based on its prior ownership or operation of the conveyed 
property.

                          PURPOSE OF THE BILL

    The purpose of H.R. 992 is to convey the Sly Park Dam and 
Reservoir to the El Dorado Irrigation District, and for other 
purposes.

                  BACKGROUND AND NEED FOR LEGISLATION

    Bureau of Reclamation (BOR) facility transfers has been of 
particular interest to the Congress, local irrigation 
districts, and the Administration in recent years. Facility 
transfers represent an effort to shrink the federal government 
and shift the responsibilities for ownership into the hands of 
those who can more efficiently operate and maintain them. As a 
result of the National Performance Review (Reinventing 
Government II), BOR, which is part of the Department of the 
Interior, initiated a program in 1995 to transfer ownership of 
some of its facilities to non-federal entities. However, to 
date, the Administration has not presented a legislative 
proposal for project transfers. During the 105th Congress, two 
legislatively initiated BOR transfers bills were signed into 
law that directed the Secretary of Interior to convey all 
right, title, and interest of the United States in and to 
specified project facilities.
    Much of the momentum for these transfers comes from local 
irrigation districts that are seeking title to these projects. 
The federal government holds title to more than 600 BOR water 
projects throughout the West. A growing number of these 
projects are now paid out and operated and maintained by local 
irrigation districts. The districts seek to have the facilities 
transferred to them since many of the districts now have the 
expertise needed to manage the systems and can do so more 
efficiently then the federal government. BOR has already 
transferred operation and maintenance responsibilities for 
about 400 of the projects to local irrigation districts. Under 
the provisions of Section VI of the Reclamation Act of 1902, 
title to project facilities remain with the United States 
unless otherwise provided by Congress, even if project 
beneficiaries have completed their repayment obligation. 
Section VI of the Reclamation Act of 1902 states:

          The Secretary of the Interior is hereby authorized 
        and directed to use the reclamation fund for the 
        operation and maintenance of all reservoirs and 
        irrigation works constructed under the provisions of 
        this act: Provided, That when the payments required by 
        this act are made for the major portion of the lands 
        irrigated from the waters of any 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, to be maintained at their expense 
        under such form of organization and under such rules 
        and regulations as may be acceptable to the Secretary 
        of the Interior: Provided, That the title to and the 
        management and operation of the reservoirs and the 
        works necessary for their protection and operation 
        shall remain in the Government until otherwise provided 
        by Congress.

32 Stat. 389; 43 U.S.C. Sec. Sec. 491, 498

    Many of these projects were constructed in remote locations 
and at a time when there were no local communities and 
utilities near the BOR project. Furthermore, many of the States 
in which the projects were built did not have a sufficient tax 
base to fund them. However, as the West became more populated, 
and with the urbanization of these areas, the BOR now owns and 
operates public facilities that would be owned, operated, and 
funded by private corporations or local government agencies if 
they were constructed today.
    Legislative initiatives to transfer the title of BOR 
facilities have been in play for many years. Two bills enacted 
during the 105th Congress and signed into law directed the 
Secretary of the Interior to convey all right, title, and 
interest of the United States in and to selected project 
features to the Burley Irrigation District and the Canadian 
River Project. See Public Law 105-351 and Public Law 105-316. 
In addition, Title XIV of Public Law 102-575 directed the 
Secretary to transfer the Rio Grande Project in New Mexico to 
the local irrigation district, once the local irrigation 
district consented to amend a contract.

Background of the Sly Park Project

    The Sly Park Unit was originally authorized under the 
American River Act of October 14, 1949. The Unit includes Sly 
Park Dam and Jenkinson Lake on Sly Park Creek, Camp Creek 
Diversion Dam on Cam Creek, and Camino Conduit. Upon completion 
in 1955, the operation of the facilities was transferred to the 
El Dorado Irrigation District. The District is the major water 
supplier in El Dorado County, providing service throughout a 
200 square-mile area in the western part of the County. In 
cooperation with BOR, the District operates the Sly Park 
Recreation Area, which offers camping, boating, swimming, 
picnicking and fishing.

                            COMMITTEE ACTION

    H.R. 992 was introduced on March 4, 1999, by Congressman 
John T. Doolittle (R-CA). The bill was referred to the 
Committee on Resources, and within the Committee to the 
Subcommittee on Water and Power. On February 2, 1999, the 
Subcommittee held a hearing concerning BOR title transfers. The 
Commissioner of the BOR, Eluid Martinez, testified that Sly 
Park could be a good candidate for title transfer.
    On March 11, 1999, the Subcommittee met to mark up the 
bill. Mr. Doolittle offered an amendment in the nature of a 
substitute, technical in nature, designed to make the bill 
easier to read. The primary feature of the amendment included 
definitions for the contracts being paid off by the District 
and how the contracts with remaining repayment obligations 
would be identified. The new definitions included ``original 
construction contract'' and ``supplemental contracts.'' The 
amendment also provided for the minor rewording for several 
provisions with no intent to change the policy directives of 
the bill itself. The amendment was adopted by voice vote. The 
bill was then ordered favorably reported to the Full Committee 
by voice vote. On March 17, 1999, the Full Resources Committee 
met to consider the bill. Congressman George Miller (D-CA) 
offered an amendment in the nature of a substitute to 
authorize, rather than direct, the Secretary to convey the Sly 
Park Unit. The amendmentfailed on a voice vote. The bill was 
then ordered favorably reported to the House of Representatives by 
voice vote.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    The short title of this bill is the Sly Park Unit 
Conveyance Act.

Section 2. Definitions

    This section defines five terms used in the Act.

Section 3. Conveyance of project

    This section directs the Secretary of Interior to convey 
the Sly Park Dam and Reservoir to the El Dorado Irrigation 
District. However, the sale of the Sly Park Unit would not 
affect the payment obligation of the District under additional, 
supplemental contracts it has with the Secretary of the 
Interior. Payments under those contracts will continue under 
the terms of those contracts.
    The supplemental contracts are 9(D) loans, administered by 
BOR. The BOR has other loans with public entities where the 
title to the facilities are held in the name of the local 
entity. Like any other federal loan program, the money needs to 
be paid back at predetermined rate, regardless of whether the 
water is used for agricultural or municipal purposes. 
Additionally, the legislation collateralizes the loan by making 
the conveyance subject to a reversion in favor of the United 
States if the remaining repayment obligations of the District 
under the supplemental contracts are not completed in 
accordance with those contracts.

Section 4. Relationship to existing operations

    The operation and use of water from the Sly Park Project 
after a proposed transfer is governed by various State and 
local regulatory agencies. The current water rights for the 
project are under the jurisdiction of the California State 
Water Resources Control Board. Any change in storage volume, 
diversions and environmental release is governed by the State 
Board.
    Land use decisions in the Sly Park Service Area are under 
the jurisdiction of El Dorado County. All growth or development 
decisions are the responsibility of the County and its adopted 
General Plan and zoning regulations. Full California 
environmental law compliance, as well as a full public review 
process, is required for any development project.
    The Committee expects that title transfer should occur in 
an open and fair public process within the affected community. 
The Committee does not want to establish a one size fits all 
statutory procedure that would limit a State, or community from 
developing a process to address issues surrounding each 
individual project, and how it should be transferred. 
Furthermore, it is not the intent of the Committee to use the 
National Environmental Policy Act as a means to stall, or halt 
a project from transferring to a local entity. If environmental 
documentation is needed to facilitate a transfer, it is the 
intent of the Committee to have it done in a timely manner. For 
example, H.R. 992 contains a provision that, if no changes in 
Project operations are expected following the conveyance of 
title then the Secretary shall complete the conveyance 
expeditiously, but not later than 180 days after the date of 
the enactment. If the District intends to change Project 
operations as a result of conveyance of the Project the 
Secretary shall take that into consideration and complete the 
conveyance within two years. If the Secretary fails to meet the 
conveyance deadlines the full costs of administrative action 
and environmental compliance for the conveyance shall be borne 
by the Secretary. If the Secretary completes the conveyance 
before the deadlines, one half of the cost will be paid by the 
District.

Section 5. Relationship to contract obligations

    This section clarifies the obligations of the District 
under its original construction contract and its subsequent 
construction contracts.

Section 6. Relationship to other laws

    Power customers of the Central Valley Project (CVP) had 
raised concerns that since their contributions to the CVP 
Restoration Fund are not capped, their contributions would be 
increased to compensate for the fact that the El Dorado 
Irrigation District would no longer be paying into the Fund. 
Last year, the Committee addressed this concern by requiring 
the El Dorado Irrigation District to continue making payments 
into the Fund until 2029 (the remaining period of their 
repayment obligation), as required under Public Law 102-575.

Section 7. Liability

    This section clarifies the liability of the United States 
regarding the conveyed property.

            COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Resources' oversight findings and recommendations 
are reflected in the body of this report.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Article I, section 8 and Article IV, section 3 of the 
Constitution of the United States grant Congress the authority 
to enact this bill.

                    COMPLIANCE WITH HOUSE RULE XIII

    1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(3)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.
    2. Congressional Budget Act. As required by clause 3(c)(2) 
of rule XIII of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, this 
bill does not contain any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures. According to the Congressional 
Budget Office, enactment of this bill would result in a net 
decrease in direct spending of $2.1 million in 2000. However, 
this savings would be offset on a present-value basis by a loss 
of receipts over the 2000-2022 period.
    3. Government Reform Oversight Findings. Under clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives, the Committee has received no report of 
oversight findings and recommendations from the Committee on 
Government Reform on this bill.
    4. Congressional Budget Office Cost Estimate. Under clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for this bill from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 19, 1999.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman; The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 992, the Sly Park 
Unit Conveyance Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Gary Brown 
(for federal costs), and Marjorie Miller (for the state and 
local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 992--Sly Park Unit Conveyance Act

    Summary; H.R. 992 would direct the Secretary of the 
Interior, acting through the Bureau of Reclamation, to convey 
the Sly Park Unit of the Central Valley Project in California 
to the El Dorado Irrigation District. The following conditions 
would apply to the transfer:
     The Secretary would be directed to complete the 
conveyance within 180 days of enactment if project operations 
are not expected to change following the conveyance and within 
two years if they are. The federal government and the district 
would split the cost of the conveyance if it occurs by the 
relevant deadline; otherwise, the federal government would bear 
the full cost.
     The transfer would be contingent upon the district 
paying the net present value of a portion of its outstanding 
financial obligations to the bureau. The federal government 
would hold a reversionary interest in the Sly Park Unit if the 
remaining obligations are not repaid.
    CBO estimates that implementing H.R. 992 would cost less 
than $50,000 in appropriated funds over the 2000-2004 period. 
CBO also estimates that enacting H.R. 992 would yield a net 
decrease in direct spending of $2.1 million in 2000, but that 
this near-term cash savings would be offset on a present-value 
basis by the loss of receipts over the 2000-2022 period. 
Because the bill would affect direct spending, pay-as-you-go 
procedures would apply.
    H.R. 992 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
Local governments might incur some costs as a result of the 
bill's enactment, but these costs would be voluntary.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 992 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal years, in millions of dollars--
                                                                 -----------------------------------------------
                                                                   1999    2000    2001    2002    2003    2004
----------------------------------------------------------------------------------------------------------------
                                         CHANGES IN DIRECT SPENDING \1\

Estimated Budget Authority......................................       0      -2   (\2\)   (\2\)   (\2\)   (\2\)
Estimated Outlays...............................................       0      -2   (\2\)   (\2\)   (\2\)   (\2\)
----------------------------------------------------------------------------------------------------------------
\1\ Implementing the bill also would require new spending subject to appropriation of less than $50,000 in 2000.
\2\ Less than $500,000.

    Basis of estimate: For the purpose of this estimate, CBO 
assumes that H.R. 992 will be enacted by the end of fiscal year 
1999 and that the estimated amounts necessary to implement the 
bill (less than $50,000) will be appropriated in fiscal year 
2000.

Direct spending

    H.R. 992 would direct the El Dorado Irrigation District to 
pay the net present value of its outstanding obligations to the 
United States for its existing share of water storage at the 
Central Valley Project. CBO estimates that such payments would 
total $2.3 million in 2000. Those receipts would be offset by 
the loss of currently scheduled repayments of about $200,000 a 
year over the 2000-2022 period.
    H.R. 992 would not require the district to prepay its 
outstanding obligations for water delivery facilities. However, 
the bill would provide for returning ownership of the Sly Park 
Unit if the district fails to repay these amounts. Based on 
information provided by the bureau, CBO estimates that 
approximately $16 million in debt would remain outstanding 
after the transfer. All amounts are scheduled to be repaid 
(under current law), mostly without interest, by 2019. CBO does 
not estimate any significant change in the likely stream of 
payments to the United States if this bill is enacted.

Spending subject to appropriation

    Based on information provided by the bureau, CBO 
anticipates that the transfer would occur within 180 days of 
enactment and that the bureau and the district would split the 
cost of conveying the facilities. CBO estimates that completing 
the conveyance would require new spending subject to 
appropriation of less than $50,000 in fiscal year 2000. This 
amount would be used for preparing transfer documents and 
conducting environmental reviews.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table. For the purposes of enforcing 
pay-as-you-go procedures, only the effects in the current year, 
the budget year, and the succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal years, in millions of dollars
                                    ----------------------------------------------------------------------------
                                      1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0     -2      0      0      0      0      0      0      0      0      0
Changes in receipts................                                 Not applicable
----------------------------------------------------------------------------------------------------------------

    Estimated impact on State, local, and tribal governments: 
H.R. 992 contains no intergovernmental mandates as defined in 
UMRA. The conveyance authorized by this bill would be voluntary 
on the part of the district, and any costs incurred by it as a 
result of the conveyance would be accepted on that basis. 
Before the unit could be conveyed, the bill would require the 
district to pay the present value of certain outstanding 
obligations to the United States and to pay half the cost of 
the conveyance. CBS estimates that the prepayment would be 
about $2.3 million in fiscal year 2000 and that the district's 
share of the conveyance cost would be less than $50,000.
    Estimated impact on the private sector: This bill contains 
no new private-sector mandates as defined in UMRA.
    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.

                    COMPLIANCE WITH PUBLIC LAW 104-4

    This bill contains no unfunded mandates.

               PREEMPTION OF STATE, LOCAL, OR TRIBAL LAW

    This bill is not intended to preempt State, local, or 
tribal law.

                        CHANGES IN EXISTING LAW

    If enacted, this bill would make no changes in existing 
law.

                            DISSENTING VIEWS

    Since the Committee first considered the Sly Park transfer 
more than 10 years ago, we have never been afforded an 
opportunity to look into the implications of the District's 
plans for use of the project after transfer. Will the District 
divert additional water from the American River? Could the 
transfer fuel urbanization pressures in the District's service 
area and possibly jeopardize habitat for endangered or 
threatened species? These and other matters are significant and 
they should be examined closely before transfer decisions are 
made final. Unfortunately, the District has carefully avoided 
discussion of this transfer proposal in local public forums, 
and opportunities for stakeholder participation and public 
review have been stifled. The District has even avoided 
opportunities to discuss the terms of the project transfer with 
he Bureau of Reclamation, apparently preferring to take its 
chances in Congress. And the current legislation would allow 
the District to avoid compliance with almost all standards 
procedures, administrative reviews, and environmental law. As a 
result, the legislation continues to languish after a full 
decade.
    H.R. 992 directs, rather than authorizes, the Secretary of 
the Interior to convey the Sly Park Unit to the Central Valley 
Project to the El Dorado Irrigation District. The bill as 
reported effectively eliminates the discretion of he Secretary 
of the Interior in determining whether to proceed with the 
project transfer. Normal procedural requirements, including 
environmental reviews, could easily be bypassed or subverted by 
the mandatory transfer requirement.
    H.R. 992 also does not set a fixed transfer price for the 
project. Instead, the bill assumes that the eventual repayment 
of current debts will somehow replace the concept of a transfer 
price based on the actual or negotiated value of the project 
assets. This notion was rejected in 1991 by the Interior 
Department's Inspector General, who concluded, we do not 
believe, therefore, that the reimbursable costs should be used 
as the basis for establishing the sales price of Federal assets 
because use of this pricing methodology does not protect he 
interests of the Federal taxpayer or fully recover the 
Government's investment in the facilities.'' (IG report No. 91-
I-822, p. 8).
    The bill also leaves in place the El Dorado Irrigation 
District's current repayment obligation for its share of the 
capital costs of construction of he Sly Park Unit, a debt of 
approximately $9.7 million. The Commissioner of Reclamation has 
correctly noted that this language, in effect, would require 
the Bureau of Reclamation to serve a banker for the El Dorado 
Irrigation District. In a March 10, 1999 letter to the Chairman 
and Ranking Minority Members of the Subcommittee on Water and 
Power, Commissioner Martinez stated:

          By structuring the transfer in this manner, the 
        District would not have to raise funds in the market, 
        nor would it be required to use existing reserves to 
        finance the payout of its obligation. The Federal 
        government would, in essence, be subsidizing the 
        District's transfer with below market interest rates 
        for the municipal and industrial portion of its 
        repayment obligation and with no interest rate 
        applicable to the agricultural portion of the repayment 
        obligation.

    H.R. 992 as reported ensures that taxpayers subsidies to 
the El Dorado Irrigation District will continue. Under the 
bill, the United States will not receive a fair return on the 
taxpayers' investment in this project.
    There is also no limitation in H.R. 992 regarding how the 
district might obtain funds to pay off the remaining repayment 
obligations. Under the bill as reported, Federal funds could be 
used to pay off this federal debt. Tax advantaged funds 
(municipal bond financing) could be used to the additional 
detriment of the federal tax payer and treasury. The 
beneficiaries of Reclamation project transfers should be 
prohibited from using federal funds, or tax advantaged funding, 
to pay the costs of acquiring their projects. Use of public 
funds or financing, combined with the inherent interest subsidy 
and artificially low transfer price, is triple dippling into 
the federal treasury.
    The bill also attempts to limit the scope of NEPA analysis 
by stating that the Act shall not be construed as expanding or 
other wise changing the use and operation of the Project. Yet 
is goes on to imply that the District may change operations and 
uses if it complies with applicable law. The NEPA analysis may 
therefore be constrained by the bill's requirement that the Act 
shall not be construed as changing operations of the Project, 
but the District is under no limitations as to future use.
    The El Dorado Irrigation District could easily resolve the 
issues identified herein by agreeing to participate in open 
discussions regarding project transfer opportunities with the 
Bureau of Reclamation and other stakeholders in the project 
area. A transfer agreement incorporating full public 
disclosure, reasonable project transfer terms, and honest 
compliance with procedural requirements would in all probably 
easily be enacted by Congress.

                                   George Miller.
                                   Peter DeFazio.

                                  
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