House Report 106-832 - PALMETTO BEND CONVEYANCE ACT

[House Report 106-832]
[From the U.S. Government Publishing Office]

106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-832

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PALMETTO BEND CONVEYANCE ACT

_______

September 7, 2000.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed

_______

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

R E P O R T

[To accompany H.R. 2674]

[Including cost estimate of the Congressional Budget Office]

The Committee on Resources, to whom was referred the bill
(H.R. 2674) providing for conveyance of the Palmetto Bend
project to the State of Texas, 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 all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Palmetto Bend Conveyance Act''.

SEC. 2. DEFINITIONS.

In this Act:
(1) Project.--The term ``Project'' means the Palmetto Bend
Reclamation Project in the State of Texas authorized under
Public Law 90-562 (82 Stat. 999).
(2) Secretary.--The term ``Secretary'' means the Secretary of
the Interior.
(3) State.--The term ``State'' means the Texas Water
Development Board and Lavaca-Navidad River Authority jointly,
unless Lavaca-Navidad River Authority has acquired the
interests of the Texas Water Development Board prior to the
time of title transfer, in which case ``State'' shall mean
Lavaca-Navidad River Authority.

SEC. 3. CONVEYANCE.

(a) In General.--The Secretary shall, as soon as practicable after
the date of enactment of this Act and in accordance with all applicable
law, and subject to the conditions set forth in sections 4 and 5,
convey to the State all right, title, and interest (excluding the
mineral estate) in and to the Project held by the United States.
(b) Report.--If the conveyance under section 3 has not been completed
within 1 year and 180 days after the date of enactment of this Act, the
Secretary shall submit to the Committee on Resources of the House of
Representatives and the Committee on Energy and Natural Resources of
the Senate a report that describes--
(1) the status of the conveyance;
(2) any obstacles to completion of the conveyance; and
(3) the anticipated date for completion of the conveyance.

SEC. 4. PAYMENT.

(a) In General.--As a condition of the conveyance, the State shall
pay the Secretary the adjusted net present value of current repayment
obligations on the Project, calculated 30 days prior to closing using a
discount rate equal to the average interest rate on 30-year United
States Treasury notes during the preceding calendar month, which
following application of the State's August 1, 1999, payment, is
currently calculated to be $45,082,675 using a discount rate of 6.070
percent. The State shall also pay interest on the adjusted net present
value of current repayment obligations from the date of State's most
recent annual payment until closing at the interest rate for constant
maturity United States Treasury notes of an equivalent term.
(b) Obligation Extinguished.--Upon payment by the State under
subsection (a), the obligation of the State and the Bureau of
Reclamation under the Bureau of Reclamation Contract No. 14-06-500-
1880, as amended shall be extinguished. After completion of conveyance
provided for in section 3, the State shall assume full responsibility
for all aspects of operation, maintenance, and replacement of the
Project.
(c) Additional Costs.--The State shall bear the cost of all boundary
surveys, title searches, appraisals, and other transaction costs for
the conveyance.
(d) Reclamation Fund.--All funds paid by the State to the Secretary
under this section shall be credited to the Reclamation Fund in the
Treasury of the United States.

SEC. 5. FUTURE MANAGEMENT.

(a) In General.--As a condition of the conveyance under section 3,
the State shall agree that the lands, water, and facilities of the
Project shall continue to be managed and operated for the purposes for
which the Project was originally authorized; that is, to provide a
dependable municipal and industrial water supply, to conserve and
develop fish and wildlife resources, and to enhance recreational
opportunities. The State's agreement shall be reflected in the
management agreement required by subsection (b) of this section.
(b) Fish, Wildlife, and Recreation Management.--As a condition of
conveyance under section 3, management decisions and actions affecting
the public aspects of the Project (namely, fish, wildlife, and
recreation resources) shall be conducted according to a management
agreement between all recipients of title to the Project and the Texas
Parks and Wildlife Department that has been approved by the Secretary
and shall extend for the useful life of the Project.
(c) Existing Obligations.--The United States shall assign to the
State and the State shall accept all surface use obligations of the
United States associated with the Project existing on the date of the
conveyance including contracts, easements, and any permits or license
agreements.

SEC. 6. MANAGEMENT OF MINERAL ESTATE.

All mineral interests in the Project retained by the United States
shall be managed consistent with Federal law and in a manner that will
not interfere with the purposes for which the Project was authorized.

SEC. 7. LIABILITY.

(a) In General.--Effective on the date of conveyance of the Project,
the United States shall not be liable for damages of any kind arising
out of any act, omission, or occurrence relating to the Project, except
for damages caused by acts of negligence committed prior to the date of
conveyance by--
(1) the United States; or
(2) an employee, agent, or contractor of the United States.
(b) No Increase in Liability.--Nothing in this Act increases the
liability of the United States beyond that provided for in the Federal
Tort Claims Act (28 U.S.C. 2671 et seq.).

SEC. 8. FUTURE BENEFITS.

After purchase of the Project, the State shall not be entitled to
receive any benefits for the Project under Federal reclamation law (the
Act of June 17, 1902 (32 Stat. 388, chapter 1093)), and Acts
supplemental to and amendatory of that Act (43 U.S.C. 371 et seq.).

purpose of the bill

The purpose of HR. 2674 is to provide for the conveyance of
the Palmetto Bend project to the State of Texas.

background and need for legislation

The Palmetto Bend Project, locally known as Lake Texana, is
a multipurpose water project located in Jackson County, Texas,
near Edna on the Navidad River, with the dam site about 4 miles
above the confluence of the Lavaca and Navidad Rivers. Project
features consist of Palmetto Bend Dam and Lake Texanna,
including recreation facilities. Palmetto Bend Dam regulates
natural flows of the Navidad River to provide municipal and
industrial water supplies in the counties of Jackson and
Calhoun. The Lavaca-Navidad River Authority (LNRA) has overall
operation and maintenance responsibility for the facilities.
The Palmetto Bend Project was authorized for construction
in 1968. Construction was completed by the Bureau of
Reclamation in 1980 at a cost of approximately $92 million, $68
million of which is reimbursable. Besides public benefits of
fish, wildlife and recreation, the Project provides a municipal
and industrial firm yield water supply of 74,500 acre-feet/year
to the cities of Corpus Christi and Point Comfort and to
several industries. Water rights in the Project are owned 57%
by Texas Water Development Board (TWDB) and 43% by LNRA. LNRA
has operated the Project at its own expense since its
completion.
The project beneficiaries (the TWDB and LNRA jointly)
desire to obtain title to the Project from the United States to
achieve greater flexibility and efficiency in operation and
management of the Project. The Committee expects the project
beneficiaries and the Bureau of Reclamation to enter into an
agreement on how the project will be managed in the future.

committee action

H.R. 2674 was introduced on August 2, 1999, by Congressman
Ron Paul (R-TX). The bill was referred to the Committee on
Resources, and within the Committee to the Subcommittee on
Water and Power. On October 7, 1999, the Subcommittee held
legislative hearings to further investigate the bill. On July
26, 2000, the Resources Committee met to consider the bill. The
Subcommittee was discharged from further consideration of the
bill by unanimous consent. Congressman John T. Doolittle (R-CA)
offered an amendment in the nature of a substitute that
clarified the future of the project's management, as well as
made additional technical changes. The amendment passed by
voice vote and then the bill, as amended, was ordered favorably
reported to the House of Representatives by voice vote.

section-by-section analysis

Section 1. Short title

The short title of the bill is the ``Palmetto Bend
Conveyance Act''.

Section 2. Definitions

This sections defines several terms used in the language of
this bill.

Section 3. Conveyance

This section directs the Secretary to transfer the project
to the State of Texas, as soon as practicable after the date of
enactment of this bill and in accordance with all applicable
law.

Section 4. Payment

This section authorizes the Secretary to accept payment by
the State.

Section 5. Future management

This section requires the State to continue to manage the
project as well as to assume all federal responsibilities or
commitments associated with the Project.

Section 6. Management of mineral estate

This section declares that all mineral interests in the
Project retained by the United States on completion of the
conveyance under section 3 shall be managed consistent with
federal law and in a manner which will not interfere with the
purposes for which the Project was authorized.

Section 7. Liability

This section outlines the liability of the United States
once the transfer is complete.

Section 8. Future benefits

This section explains that after the transfer the State
will not be eligible to receive any benefits under federal
reclamation law.

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 of the Constitution of the United
States grants 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 tax
expenditures. According to the Congressional Budget Office,
enactment of this bill will result in a net decrease in direct
spending of $34 million over the 2001-2005 time period, with
increased revenues of $51 million in 2001 and a loss of
offsetting receipts of $4 million a year over the 2001-2035
time 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, August 10, 2000.
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. 2674, the Palmetto
Bend Conveyance Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Rachel
Applebaum.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.

H.R. 2674--Palmetto Bend Conveyance Act

SUMMARY

H.R. 2674 would direct the Secretary of the Interior to
convey the Palmetto Bend Reclamation Project to the Texas Water
Development Board and the Lavaca-Navidad River Authority (or to
just the latter, if it acquires the interests of the former).
As a condition of the conveyance, H.R. 2674 would require the
buyers to pay the net present value of the repayment obligation
of the project. This money would be deposited in the
Reclamation Fund. The bill specifies the discount and interest
rates that must be used to calculate the net present value of
the repayment obligation. The buyers would also have to agree
to manage the project for its original purposes, which include
providing water for both municipal and industrial users,
conserving and developing fish and wildlife resources, and
enhancing recreational opportunities. Once the project is
conveyed, the Bureau of Reclamation would no longer pay for the
operation and maintenance of the project.
CBO estimates that enacting H.R. 2674 would result in a net
decrease in direct spending of $34 million over the 2001-2005
period. Estimated receipts of $51 million would provide savings
in 2001, but those savings would be offset by the loss of
offsetting receipts of about $4 million a year over the 35-year
period from 2001 through 2035. Because enacting H.R. 2674 would
affect direct spending, pay-as-you-go procedures would apply.
CBO estimates that implementing this bill would have no
significant effect on discretionary spending.
H.R. 2674 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Certain local entities in the state of Texas probably would
incur some costs as a result of the bill's enactment, but those
costs would be voluntary.

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary impact of H.R. 2674 is shown in the
following table. The costs of this legislation fall within
budget function 300 (natural resources and the environment).

CHANGES IN DIRECT SPENDING

Estimated budget authority...................................... 0 -48 3 3 4 4
Estimated outlays............................................... 0 -48 3 3 4 4
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BASIS OF ESTIMATE

For this estimate, CBO assumes that H.R. 2674 will be
enacted by the end of fiscal year 2000. We expect that any
repayment obligations due in fiscal year 2000 will be paid and
that the project will be conveyed in fiscal year 2001.
CBO estimates that enacting H.R. 2674 would reduce direct
spending by $34 million over the 2001-2005 period, but would
have very little net budgetary impact--on a present value
basis--over the life of the Palmetto project. As a condition of
conveyance, H.R. 2674 would require the buyers to pay the net
present value of the repayment obligation on the project, using
a discount rate based on the average interest rate on 30-year
U.S. Treasury bonds in the month preceding the sale. CBO
estimates that the buyers would pay $51 million in 2001 for the
project, based on an estimated future repayment obligation of
$72 million and a discount rate of 6.6 percent. Once conveyed,
the government would forgo payments of roughly $4 million a
year for the next 35 years.
Based on information from the Bureau of Reclamation, CBO
estimates that the agency currently spends less than $500,000
each year for the operation and maintenance of the project.
Hence, we estimate that any discretionary savings from the
conveyance would not be significant. Likewise, implementing
this bill would change the timing of deposits to the
Reclamation Fund, but CBO expects that such changes would have
a negligible effect on discretionary spending.

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 or 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 such procedures, only the
effects in the current year, the budget year, and the
succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars
-----------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----------------------------------------------------------------------------------------------------------------
Changes in outlays................ 0 -48 3 3 4 4 4 4 4 4 4
Changes in receipts............... Not applicable
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Under the Balanced Budget Act (BBA), proceeds from
nonroutine asset sales (sales that are not authorized under
current law) may be counted for pay-as-you-go purposes only if
the sale would entail no financial cost to the government. CBO
estimates that the sale of the Palmetto Bend Project as
specified in H.R. 2674 would satisfy the conditions in the BBA,
and therefore, the proceeds would count for pay-as-you-go
purposes.

intergovernmental and private-sector impact

H.R. 2674 contains no intergovernmental or private-sector
mandates as defined in UMRA. The conveyance authorized by this
bill would be voluntary on the part of the Texas Water
Development Board and the Lavaca-Navidad River Authority, and
any costs they would incur to meet the conditions imposed by
the bill also would be voluntary. In order to acquire the
Palmetto Bend Reclamation Project, the Texas Water Development
Board and the Lavaca-Navidad River Authority would have to pay
the present value of their outstanding obligation to the United
States and certain transaction costs. One or both of these
entities also would have to assume responsibility for operating
and maintaining the project.

previous cbo estimate

On June 27, 2000, CBO transmitted a cost estimate for S.
1474, the Palmetto Bend Conveyance Act, as ordered reported by
the Senate Committee on Energy and Natural Resources on June 7,
2000. The bills are nearly identical, and their estimated costs
are the same.
Estimate prepared by: Federal Costs: Rachel Applebaum.
Impact on State, Local, and Tribal Governments: Marjorie
Miller. Impact on the Private Sector: Jean Wooster.
Estimate approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis.

COMPLIANCE WITH PUBLIC LAW 104-4

This bill contains no unfunded mandates.

EEMPTION OF STATE, LOCAL OR TRIBAL LAW

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

CHANGES IN EXISTING LAW

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