[Senate Report 106-130]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 242
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-130

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



 
           THE LEWIS AND CLARK RURAL WATER SYSTEM ACT OF 1999

                                _______
                                

                 July 30, 1999.--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. 244]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 244) to authorize the construction of the 
Lewis and Clark Rural Water System and to authorize assistance 
to the Lewis and Clark Rural Water System, Inc., a nonprofit 
corporation, for the planning and construction of the water 
system, 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 
therefor the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Lewis and Clark Rural Water System Act 
of 1999''.

SEC. 2. DEFINITIONS.

  In this Act:
          (1) Environmental enhancement.--The term ``environmental 
        enhancement'' means the wetland and wildlife enhancement 
        activities that are carried out substantially in accordance 
        with the environmental enhancement component of the feasibility 
        study.
          (2) Environmental enhancement component.--The term 
        ``environmental enhancement component'' means the proposals 
        described in the report entitled ``Wetlands and Wildlife 
        Enhancement for the Lewis and Clark Rural Water System'', dated 
        December 1994.
          (3) Feasibility study.--The term ``feasibility study'' means 
        the study entitled ``Feasibility Level Evaluation of a Missouri 
        River Regional Water Supply for South Dakota, Iowa and 
        Minnesota'', dated September 1993, that includes a water 
        conservation plan, environmental report, and environmental 
        enhancement component.
          (4) Incremental cost.--The term ``incremental cost'' means 
        the cost of the savings to the project were the city of Sioux 
        Falls not to participate in the water supply system.
          (5) Member entity.--The term ``member entity'' means a rural 
        water system or municipality that meets the requirements for 
        membership as defined by the Lewis and Clark Rural Water 
        System, Inc. bylaws, dated September 6, 1990.
          (6) Project construction budget.--The term ``project 
        construction budget'' means the description of the total amount 
        of funds needed for the construction of the water supply 
        project, as contained in the feasibility study.
          (7) Pumping and incidental operational requirements.--The 
        term ``pumping and incidental operational requirements'' means 
        all power requirements that are necessary for the operation of 
        intake facilities, pumping stations, water treatment 
        facilities, reservoirs, and pipelines up to the point of 
        delivery of water by the water supply system to each member 
        entity that distributes water at retail to individual users.
          (8) Secretary.--The term ``Secretary'' means the Secretary of 
        the Interior.
          (9) Water supply project.--
                  (A) In general.--The term ``water supply project'' 
                means the physical components of the Lewis and Clark 
                Rural Water Project.
                  (B) Inclusions.--The term ``water supply project'' 
                includes--
                          (i) necessary pumping, treatment, and 
                        distribution facilities;
                          (ii) pipelines;
                          (iii) appurtenant buildings and property 
                        rights;
                          (iv) electrical power transmission and 
                        distribution facilities necessary for services 
                        to water systems facilities; and
                          (v) such other pipelines, pumping plants, and 
                        facilities as the Secretary considers necessary 
                        and appropriate to meet the water supply, 
                        economic, public health, and environment needs 
                        of the member entities (including water storage 
                        tanks, water lines, and other facilities for 
                        the member entities).
          (10) Water supply system.--The term ``water supply system'' 
        means the Lewis and Clark Rural Water System, Inc., a nonprofit 
        corporation established and operated substantially in 
        accordance with the feasibility study.

SEC. 3. FEDERAL ASSISTANCE FOR THE WATER SUPPLY SYSTEM.

  (a) In General.--The Secretary shall make grants to the water supply 
system for the planning and construction of the water supply project.
  (b) Service Area.--The water supply system shall provide for the 
member entities safe and adequate municipal, rural, and industrial 
water supplies, environmental enhancement, mitigation of wetland areas, 
and water conservation in--
          (1) Lake County, McCook County, Minnehaha County, Turner 
        County, Lincoln County, Clay County, and Union County, in 
        southeastern South Dakota;
          (2) Rock County and Nobles County, in southwestern Minnesota; 
        and
          (3) Lyon County, Sioux County, Osceola County, O'Brien 
        County, Dickinson County, and Clay County, in northwestern 
        Iowa.
  (c) Amount of Grants.--Grants made available under subsection (a) to 
the water supply system shall not exceed the amount of funds authorized 
under section 9.
  (d) Limitation on Availability of Construction Funds.--The Secretary 
shall not obligate funds for the construction of the water supply 
project until--
          (1) the requirements of the National Environmental Policy Act 
        of 1969 (42 U.S.C. 4321 et seq.) are met; and
          (2) a final engineering report and a plan for a water 
        conservation program are prepared and submitted to Congress not 
        less than 90 days before the commencement of construction of 
        the water supply project.

SEC. 4. FEDERAL ASSISTANCE FOR THE ENVIRONMENTAL ENHANCEMENT COMPONENT.

  (a) Initial Development.--The Secretary shall make grants and other 
funds available to the water supply system and other private, State, 
and Federal entities, for the initial development of the environmental 
enhancement component.
  (b) Nonreimbursement.--Funds provided under subsection (a) shall be 
nonreimbursable and nonreturnable.

SEC. 5. MITIGATION OF FISH AND WILDLIFE LOSSES.

  Mitigation for fish and wildlife losses incurred as a result of the 
construction and operation of the water supply project shall be on an 
acre-for-acre basis, based on ecological equivalency, concurrent with 
project construction, as provided in the feasibility study.

SEC. 6. USE OF PICK-SLOAN POWER.

  (a) In General.--From power designated for future irrigation and 
drainage pumping for the Pick-Sloan Missouri River Basin Program, the 
Western Area Power Administration shall make available the capacity and 
energy required to meet the pumping and incidental operational 
requirements of the water supply project during the period beginning 
May 1 and ending October 31 of each year.
  (b) Conditions.--The capacity and energy described in subsection (a) 
shall be made available on the following conditions:
          (1) The water supply system shall be operated on a not-for-
        profit basis.
          (2) The water supply system shall contract to purchase the 
        entire electric service requirements of the project, including 
        the capacity and energy made available under subsection (a), 
        from a qualified preference power supplier that itself 
        purchases power from the Western Area Power Administration.
          (3) The rate schedule applicable to the capacity and energy 
        made available under subsection (a) shall be the firm power 
        rate schedule of the Pick-Sloan Eastern Division of the Western 
        Area Power Administration in effect when the power is delivered 
        by the Administration to the qualified preference power 
        supplier.
          (4) It is agreed by contract among--
                  (A) the Western Area Power Administration;
                  (B) the power supplier with which the water supply 
                system contracts under paragraph (2);
                  (C) the power supplier of the entity described in 
                subparagraph (B); and
                  (D) the water supply system;

        that in the case of the capacity and energy made available 
        under subsection (a), the benefit of the rate schedule 
        described in paragraph (3) shall be passed through to the water 
        supply system, except that the power supplier of the water 
        supply system shall not be precluded from including, in the 
        charges of the supplier to the water system for the electric 
        service, the other usual and customary charges of the supplier.

SEC. 7. NO LIMITATION ON WATER PROJECTS IN STATES.

  This Act does not limit the authorization for water projects in the 
States of South Dakota, Iowa, and Minnesota under law in effect on or 
after the date of enactment of this Act.

SEC. 8. WATER RIGHTS.

  Nothing in this Act--
          (1) invalidates or preempts State water law or an interstate 
        compact governing water;
          (2) alters the rights of any State to any appropriated share 
        of the waters of any body of surface or ground water, whether 
        determined by past or future interstate compacts or by past or 
        future legislative or final judicial allocations;
          (3) preempts or modifies any Federal or State law, or 
        interstate compact, governing water quality or disposal; or
          (4) confers on any non-Federal entity the ability to exercise 
        any Federal right to the waters of any stream or to any ground 
        water resource.

SEC. 9. COST SHARING.

  (a) Federal Cost Share.--
          (1) In general.--Except as provided in paragraph (2), the 
        Secretary shall provide funds equal to 80 percent of--
                  (A) the amount allocated in the total project 
                construction budget for planning and construction of 
                the water supply project under section 3; and
                  (B) such amounts as are necessary to defray increases 
                in development costs reflected in appropriate 
                engineering cost indices after September 1, 1993.
          (2) Sioux falls.--The Secretary shall provide funds for the 
        city of Sioux Falls, South Dakota, in an amount equal to 50 
        percent of the incremental cost to the city of participation in 
        the project.
  (b) Non-Federal Cost Share.--
          (1) In general.--Except as provided in paragraph (2), the 
        non-Federal share of the costs allocated to the water supply 
        system shall be 20 percent of the amounts described in 
        subsection (a)(1).
          (2) Sioux falls.--The non-Federal cost-share for the city of 
        Sioux Falls, South Dakota, shall be 50 percent of the 
        incremental cost to the city of participation in the project.

SEC. 10. BUREAU OF RECLAMATION.

  (a) Authorization.--At the request of the water supply system, the 
Secretary may allow the Commissioner of Reclamation to provide project 
construction oversight to the water supply project and environmental 
enhancement component for the service area of the water supply system 
described in section 3(b).
  (b) Project Oversight Administration.--The amount of funds used by 
the Commissioner of Reclamation for oversight described in subsection 
(a) shall not exceed the amount that is equal to 1 percent of the 
amount provided in the total project construction budget for the entire 
project construction period.
  (c) Operation and Maintenance.--The water supply system shall be 
responsible for annual operation and maintenance of the project.

SEC. 11. AUTHORIZATION OF APPROPRIATIONS.

  There is authorized to be appropriated to carry out this Act 
$223,987,700, to remain available until expended, of which not more 
than $10,100,000 shall be used for the initial development of the 
environmental enhancement component under section 4.

                         purpose of the measure

    S. 244 authorizes grants for the construction of the Lewis 
and Clark Rural Water System and authorizes assistance to the 
Lewis and Clark Rural Water System, Inc., a nonprofit 
corporation, for the planning and construction of the water 
supply system, and for other purposes.

                          background and need

    The Lewis and Clark Rural Water System is designed to 
provide replacement or supplemental water supplies from the 
Missouri River to areas in southeastern South Dakota, 
northwestern Iowa, and southwestern Minnesota serving about 
180,000 people. The Lewis and Clark system is made up of 22 
rural water systems and communities in the three States that 
have joined together in an effort to cooperatively address the 
dual problems facing the residents of the region--inadequate 
quantities of water and the poor quality of that water.
    This region has seen substantial growth and development in 
recent years, and studies conducted by project supporters have 
shown that future water needs will be significantly greater 
than the current available supply. Most of the residents served 
by ten of the water utilities in the proposed Lewis and Clark 
project area currently enforce water restrictions on a seasonal 
basis. Almost half of the membership has water of such poor 
quality it does not meet present or proposed standards for 
drinking water. More than two-thirds of the membership rely on 
shallow aquifers as the primary source of drinking water--
aquifers which are very vulnerable to contamination by surface 
activities.
    The Lewis and Clark system will provide a supplemental 
source of drinking water for its 22 members, serving as a 
treated, bulk delivery system. Member utilities' existing 
systems will continue to deliver water to individual users. 
According to the bill sponsors, this ``regionalization 
approach'' to solving the water supply and quality problems 
utilizes the Missouri River as source of clean, safe drinking 
water to more than 180,000 individuals.
    The estimated Federal cost of the project is $223,987,700, 
with a twenty percent local cost share. Funding for the Sioux 
Falls component is limited to fifty percent of the incremental 
cost to the city of participation in the project. Annual 
operating costs are estimated at $4.7 million. The Bureau of 
Reclamation participated in the planning and ability to pay 
analyses, and agreed with the need for a project to meet both 
supply and water quality needs. At the Subcommittee hearing on 
this bill, the Assistant Secretary of the Interior for Water 
and Science indicated that the Administration supported the 
concept of the project, but was opposed to the legislation as 
drafted. The Committee believes this legislation, as amended by 
the Committee, is an appropriate and useful approach to address 
the region's water quality and supply needs.
    The members of the System collectively provide an average 
of about 30 million gallons per day (78% in South Dakota) and 
the proposal would provide an average of 16.5 million gallons 
of supplemental supply, with a maximum delivery of 23.5 million 
gallons. The raw water would be diverted from the Missouri 
River near Vermillion, South Dakota, treated and discharged 
through 400 miles of piping with a series of storage reservoirs 
and pumping stations. The project is estimated to take about 8 
years to complete.

                          legislative history

    S. 244 was introduced by Senators Johnson, Daschle, Grams, 
Wellstone, Grassley and Harkin on January 19, 1999 and a 
hearing was held in the Water and Power Subcommittee on May 27, 
1999. S. 244 is similar to a measure introduced last Congress, 
S. 777, which had a hearing on October 7, 1997, and was 
reported out of Committee (S. Rept. No. 105-381). A House 
companion measure, H.R. 297, was introduced on January 6, 1999. 
At the business meeting on July 28, 1999, the Committee on 
Energy and Natural Resources ordered S. 244, as amended, 
favorably reported.

           committee recommendations and tabulation of votes

    The Committee on Energy and Natural Resources, in open 
business session on July 28, 1999, by a unanimous vote of a 
quorum present, recommends that the Senate pass S. 244, if 
amended as described herein.

                          committee amendments

    During the consideration of S. 244, the Committee adopted a 
substitute amendment which included the following substantive 
changes:
          (1) The amendment retains the requirement for a water 
        conservation plan, but deletes the detailed 
        requirements and approval since the responsibility for 
        water management in the three States resides in the 
        three States;
          (2) The authorization for appropriations is reduced 
        by $2,342,300 to reflect an increase in the Sioux Falls 
        cost share. In addition, spending for the initial 
        development of the environmental enhancement component 
        is limited to not more than $10,100,000--an increase of 
        $1,613,000 that reflects recent updates in cost; and
          (3) Language is added to clarify that annual O&M is 
        the responsibility of the System.
    The Committee wants to make clear that since this is not a 
Reclamation project subject to Reclamation law, the Federal 
government does not, and will not, hold title to this project. 
The Committee understands that Pick-Sloan irrigation-power 
customers will not be negatively affected by the use of 
irrigation power for pumping and incidental operational 
requirements of the water supply project.

                      section-by-section analysis

    Section 1 is a short title.
    Section 2 provides a series of definitions and is self-
explanatory.
    Section 3 explains the conditions for Federal financial 
assistance.
    Section 4 provides for funding of the initial development 
of the environmental enhancement component of the system.
    Section 5 provides standard language on mitigation for fish 
and wildlife losses.
    Section 6 describes the use of Pick-Sloan Power for the 
System and is self-explanatory.
    Section 7 provides that this legislation does not limit any 
other authorization for water projects in South Dakota, Iowa, 
or Minnesota.
    Section 8 is a savings clause and is self-explanatory.
    Section 9 provides a cost share formula.
    Section 10 defines the role of the Bureau of Reclamation.
    Section 11 authorizes $223,987,700 for the System of which 
not more than $10,100,000 shall be used for the initial 
development of the environmental enhancement component.

                   cost and budgetary considerations

    The Congressional Budget Office cost estimate report had 
not been received at the time the report was filed. When the 
report becomes available, the Chairman will request that it be 
printed in the Congressional Record for the advice of the 
Senate. The legislation authorizes $223.9 million as the 
Federal share of the costs of the system.

                      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. 244. 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. 244, as ordered reported.

                        executive communications

    On April 21, 1999, 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. 244. These reports 
had not been received at the time the report on S. 244 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 written testimony provided by the 
Assistant Secretary for Water and Science from the Department 
of the Interior at the Subcommittee hearing follows:
  Statement of Patricia J. Beneke, Assistant Secretary for Water and 
                  Science, Department of the Interior

    My name is Patricia J. Beneke, I am Assistant Secretary for 
Water and Science within the U.S. Department of the Interior. 
The Bureau of Reclamation is one of the bureaus that I oversee. 
I am pleased to be here today to provide the Administration's 
views on S. 244 to authorize the construction of the Lewis and 
Clark Rural Water System and to authorize assistance to the 
Lewis and Clark Rural Water System Inc.
    S. 244, the Lewis and Clark Rural Water System Act of 1997, 
authorizes the Secretary of the Interior to make grants and 
provide project construction oversight to the Lewis and Clark 
Rural Water System, Inc. for the planning and construction of a 
domestic and industrial water supply system that would serve 
over 180,000 persons in southern South Dakota, including the 
City of Sioux Falls with a metropolitan population of 153,466 
and people in southwestern Minnesota and northwestern Iowa. The 
project would provide drinking water supply to meet the current 
and future needs of the project beneficiaries. A small part of 
the project's construction budget would be dedicated to fish, 
wildlife, and wetland enhancement features. The Department 
opposes S. 244 for reasons I will discuss.
    The bill would authorize the appropriation of $226.3 
million, of which not less than $8.4 million would be used for 
the environmental enhancement component set forth in Section 4. 
With the exception of the City of Sioux Falls component, the 
Federal government would fund 80 percent of the project 
planning and construction costs, and non-Federal interests 
would provide the remaining 20 percent. For the City of Sioux 
Falls component, non-Federal interests would provide 50 
percent, an increase over the 20 percent specified in a 
previous version of this bill.
    Mr. Chairman, the Bureau of Reclamation has worked closely 
with proponents of the Lewis and Clark Rural Water System to 
provide technical assistance on the environmental and economic 
studies. Reclamation believes the project would meet local and 
regional water supply needs. However, we cannot support this 
bill as drafted due to a number of concerns--including cost 
sharing restrictions on the level of planning expenditures, and 
the expansion of Reclamation's responsibilities outside of the 
seventeen western states. Most notably, Section 10 directs the 
Federal government to provide 80 percent of the design and 
construction costs through grants (50 percent for the Sioux 
Falls component). The Department's long-standing policy 
relative to non-Indian municipal and rural water system 
development is that non-Federal interests should repay 100 
percent of allocated project construction costs at current 
interest rates, and that they pay 100 percent of operation and 
maintenance costs. In addition, urban areas like Sioux Falls 
should have a sufficient population base and economic resources 
to finance its own water system.
    We are also concerned that Section 11(b) restricts the use 
of funding for planning and construction by the Bureau of 
Reclamation to one percent of the amount provided in the 
construction budget. Recent experience with similar projects in 
South Dakota (Mni Wiconi and Mid-Dakota) have been that this 
level of funding is not adequate to provide the necessary 
oversight and administration activities to ensure compliance 
with the National Environmental Policy Act and the National 
Historic Preservation Act, which are necessary activities that 
are authorized in the legislation. Furthermore, the Feasibility 
Study that was completed on this project and is referenced in 
S. 244, provided for three percent of the project's 
construction budget for these activities. We believe this is a 
more realistic and appropriate level.
    Additionally, this legislation authorized and directs the 
Bureau of Reclamation to carry out these activities in the non-
Reclamation states of Minnesota and Iowa, which are east of the 
100 meridian, and therefore are not among the 17 western states 
where Reclamation has relationships with the states and has 
other on-going legal and contractual responsibilities.
    In summary, Mr. Chairman, Reclamation recognizes that the 
project authorized by S. 244 would improve the water supply in 
the region. However, it is difficult to justify this water 
supply system as a Federal project with its minimal costs 
sharing. Also, considering the already tight competition for 
funding of ongoing projects in the region, it will be difficult 
to fund this project.
    That concludes my testimony. I would be happy to answer any 
questions.

                        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. 244, as ordered 
reported.

                                  
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