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



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

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



 
                      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).

----------------------------------------------------------------------------------------------------------------
                                                                      By fiscal year, in millions of dollars
                                                                 -----------------------------------------------
                                                                   2000    2001    2002    2003    2004    2005
----------------------------------------------------------------------------------------------------------------

                                           CHANGES IN DIRECT SPENDING

Estimated budget authority......................................       0     -48       3       3       4       4
Estimated outlays...............................................       0     -48       3       3       4       4
----------------------------------------------------------------------------------------------------------------

                           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
----------------------------------------------------------------------------------------------------------------

    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.

                                
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