[Senate Report 106-198]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 335
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-198

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



 
          FORT PECK RESERVATION RURAL WATER SYSTEM ACT OF 1999

                                _______
                                

                October 20, 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. 624]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 624) to authorize construction of the 
Fort Peck Reservation Rural Water System in the State of 
Montana, and for other purposes, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill, as amended, do pass.
    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Fort Peck Reservation Rural Water 
System Act of 1999''.

SEC. 2. FINDINGS AND PURPOSES.

  (a) Findings.--Congress finds that--
          (1) there are insufficient water supplies available to 
        residents of the Fort Peck Indian Reservation in the State of 
        Montana, and the water systems that are available do not meet 
        minimum health and safety standards and therefore pose a threat 
        to public health and safety;
          (2) in carrying out its trust responsibility, the United 
        States should ensure that adequate and safe water supplies are 
        available to meet the economic, environmental, water supply, 
        and public health needs of the Fort Peck Indian Reservation; 
        and
          (3) the best available, reliable, and safe rural and 
        municipal water supply to serve the needs of the Fort Peck 
        Indian Reservation is the Missouri River.
  (b)  Purposes.--The purposes of this Act are--
          (1) to ensure a safe and adequate municipal, rural, and 
        industrial water supply for the residents of the Fort Peck 
        Indian Reservation in the State of Montana; and
          (2) to assist the citizens of Roosevelt, Sheridan, Daniels, 
        and Valley Counties in the State, outside the Fort Peck Indian 
        Reservation, in developing safe and adequate municipal, rural, 
        and industrial water supplies.

SEC. 3. DEFINITIONS.

  In this Act:
          (1)  Assiniboine and sioux rural water system.--The term 
        ``Assiniboine and Sioux Rural Water System'' means the rural 
        water system within the Fort Peck Indian Reservation authorized 
        by section 4.
          (2) Dry prairie rural water system.--The term ``Dry Prairie 
        Rural Water System'' means the rural water system authorized by 
        section 5 in the Roosevelt, Sheridan, Daniels, and Valley 
        Counties of the State.
          (3) Fort peck reservation rural water system.--The term 
        ``Fort Peck Reservation Rural Water System'' means the 
        Assiniboine and Sioux Rural Water System and the Dry Prairie 
        Rural Water System.
          (4) Fort peck tribes.--The term ``Fort Peck Tribes'' means 
        the Assiniboine and Sioux Indian Tribes within the Fort Peck 
        Indian Reservation.
          (5) Pick-sloan.--The term ``Pick-Sloan'' means the Pick-Sloan 
        Missouri River Basin Program (authorized by section 9 of the 
        Act entitled ``An Act authorizing the construction of certain 
        public works on rivers and harbors for flood control, and for 
        other purposes'', approved December 22, 1944 (commonly known as 
        the ``Flood Control Act of 1944'') (58 Stat. 891)).
          (6) Secretary.--The term ``Secretary'' means the Secretary of 
        the Interior.
          (7) State.--The term ``State'' means the State of Montana.

 SEC. 4. ASSINIBOINE AND SIOUX RURAL WATER SYSTEM.

  (a) Authorization.--The Secretary shall plan, design, construct, 
operate, maintain, and replace a municipal, rural, and industrial water 
system, to be known as the ``Assiniboine and Sioux Rural Water 
System'', as generally described in the report required by subsection 
(g)(2).
  (b) Components.--The Assiniboine and Sioux Rural Water System shall 
consist of--
          (1) pumping and treatment facilities located along the 
        Missouri River within the boundaries of the Fort Peck Indian 
        Reservation;
          (2) pipelines extending from the water treatment plant 
        throughout the Fort Peck Indian Reservation;
          (3) distribution and treatment facilities to serve the needs 
        of the Fort Peck Indian Reservation, including--
                  (A) public water systems in existence on the date of 
                enactment of this Act that may be purchased, improved, 
                and repaired in accordance with the cooperative 
                agreement entered into under subsection (c); and
                  (B) water systems owned by individual tribal members 
                and other residents of the Fort Peck Indian 
                Reservation;
          (4) appurtenant buildings and access roads;
          (5) all property and property rights necessary for the 
        facilities described in this subsection;
          (6) electrical power transmission and distribution facilities 
        necessary for services to Fort Peck Reservation Rural Water 
        System facilities; and
          (7) such other pipelines, pumping plants, and facilities as 
        the Secretary determines to be appropriate to meet the water 
        supply, economic, public health, and environmental needs of the 
        Fort Peck Indian Reservation, including water storage tanks, 
        water lines, and other facilities for the Fort Peck Tribes and 
        the villages, towns, and municipalities in the Fort Peck Indian 
        Reservation.
  (c) Cooperative Agreement.--
          (1) In general.--The Secretary shall enter into a cooperative 
        agreement with the Fort Peck Tribal Executive Board for 
        planning, designing, constructing, operating, maintaining, and 
        replacing the Assiniboine and Sioux Rural Water System.
          (2) Mandatory provisions.--The cooperative agreement under 
        paragraph (1) shall specify, in a manner that is acceptable to 
        the Secretary and the Fort Peck Tribal Executive Board--
                  (A) the responsibilities of each party to the 
                agreement for--
                          (i) needs assessment, feasibility, and 
                        environmental studies;
                          (ii) engineering and design;
                          (iii) construction;
                          (iv) water conservation measures; and
                          (v) administration of contracts relating to 
                        performance of the activities described in 
                        clauses (i) through (iv);
                  (B) the procedures and requirements for approval and 
                acceptance of the design and construction and for 
                carrying out other activities described in subparagraph 
                (A); and
                  (C) the rights, responsibilities, and liabilities of 
                each party to the agreement.
          (3) Optional provisions.--The cooperative agreement under 
        paragraph (1) may include provisions relating to the purchase, 
        improvement, and repair of water systems in existence on the 
        date of enactment of this Act, including systems owned by 
        individual tribal members and other residents of the Fort Peck 
        Indian Reservation.
          (4) Termination.--The Secretary may terminate a cooperative 
        agreement under paragraph (1) if the Secretary determines 
        that--
                  (A) the quality of construction does not meet all 
                standards established for similar facilities 
                constructed by the Secretary; or
                  (B) the operation and maintenance of the Assiniboine 
                and Sioux Rural Water System does not meet conditions 
                acceptable to the Secretary that are adequate to 
                fulfill the obligations of the United States to the 
                Fort Peck Tribes.
          (5) Transfer.--On execution of a cooperative agreement under 
        paragraph (1), in accordance with the cooperative agreement, 
        the Secretary may transfer to the Fort Peck Tribes, on a 
        nonreimbursable basis, funds made available for the Assiniboine 
        and Sioux Rural Water System under section 9.
  (d) Service Area.--The service area of the Assiniboine and Sioux 
Rural Water System shall be the area within the boundaries of the Fort 
Peck Indian Reservation.
  (e) Construction Requirements.--The components of the Assiniboine and 
Sioux Rural Water System shall be planned and constructed to a size 
that is sufficient to meet the municipal, rural, and industrial water 
supply requirements of the service area of the Fort Peck Reservation 
Rural Water System.
  (f) Title to Assiniboine and Sioux Rural Water System.--Title to the 
Assiniboine and Sioux Rural Water System shall be held in trust by the 
United States for the Fort Peck Tribes and shall not be transferred 
unless a transfer is authorized by an Act of Congress enacted after the 
date of enactment of this Act.
  (g) Limitation on Availability of Construction Funds.--The Secretary 
shall not obligate funds for construction of the Assiniboine and Sioux 
Rural Water System until--
          (1) the requirements of the National Environmental Policy Act 
        of 1969 (42 U.S.C. 4321 et seq.) are met with respect to the 
        Assiniboine and Sioux Rural Water System;
          (2) on or after the date that is 90 days after the date of 
        submission to Congress of a final engineering report approved 
        by the Secretary; and
          (3) the Secretary publishes a written finding that the water 
        conservation plan developed under section 7 includes prudent 
        and reasonable water conservation measures for the operation of 
        the Assiniboine and Sioux Rural Water System that have been 
        shown to be economically and financially feasible.
  (h) Technical Assistance.--The Secretary shall provide such technical 
assistance as is necessary to enable the Fort Peck Tribes to plan, 
design, construct, operate, maintain, and replace the Assiniboine and 
Sioux Rural Water System, including operation and management training.
  (i) Application of Indian Self-Determination Act.--Planning, design, 
construction, operation, maintenance, and replacement of the 
Assiniboine and Sioux Rural Water System within the Fort Peck Indian 
Reservation shall be subject to the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450 et seq.).

 SEC. 5. DRY PRAIRIE RURAL WATER SYSTEM.

  (a) Planning and Construction.--
          (1) Authorization.--The Secretary shall enter into a 
        cooperative agreement with Dry Prairie Rural Water Association 
        Incorporated (or any successor non-Federal entity) to provide 
        Federal funds for the planning, design, and construction of the 
        Dry Prairie Rural Water System in Roosevelt, Sheridan, Daniels, 
        and Valley Counties, Montana, outside the Fort Peck Indian 
        Reservation.
          (2) Use of federal funds.--
                  (A) Federal share.--The Federal share of the cost of 
                planning, design, and construction of the Dry Prairie 
                Rural Water System shall be not more than 76 percent.
                  (B) Cooperative agreements.--Federal funds made 
                available to carry out this section may be obligated 
                and expended only through a cooperative agreement 
                entered into under subsection (c).
  (b) Components.--The components of the Dry Prairie Rural Water System 
facilities on which Federal funds may be obligated and expended under 
this section shall include--
          (1) storage, pumping, interconnection, and pipeline 
        facilities;
          (2) appurtenant buildings and access roads;
          (3) all property and property rights necessary for the 
        facilities described in this subsection;
          (4) electrical power transmission and distribution facilities 
        necessary for service to Dry Prairie Rural Water System 
        facilities; and
          (5) other facilities customary to the development of rural 
        water distribution systems in the State, including supplemental 
        water intake, pumping, and treatment facilities.
  (c) Cooperative Agreement.--
          (1) In general.--The Secretary, with the concurrence of the 
        Assiniboine and Sioux Rural Water System Board, shall enter 
        into a cooperative agreement with Dry Prairie Rural Water 
        Association Incorporated to provide Federal assistance for the 
        planning, design, and construction of the Dry Prairie Rural 
        Water System.
          (2) Mandatory provisions.--The cooperative agreement under 
        paragraph (1) shall specify, in a manner that is acceptable to 
        the Secretary and Dry Prairie Rural Water Association 
        Incorporated--
                  (A) the responsibilities of each party to the 
                agreement for--
                          (i) needs assessment, feasibility, and 
                        environmental studies;
                          (ii) engineering and design;
                          (iii) construction;
                          (iv) water conservation measures; and
                          (v) administration of contracts relating to 
                        performance of the activities described in 
                        clauses (i) through (iv);
                  (B) the procedures and requirements for approval and 
                acceptance of the design and construction and for 
                carrying out other activities described in subparagraph 
                (A); and
                  (C) the rights, responsibilities, and liabilities of 
                each party to the agreement.
  (d) Service Area.--
          (1) In general.--Except as provided in paragraph (2), the 
        service area of the Dry Prairie Rural Water System shall be the 
        area in the State--
                  (A) north of the Missouri River;
                  (B) south of the border between the United States and 
                Canada;
                  (C) west of the border between the States of North 
                Dakota and Montana; and
                  (D) east of the western line of range 39 east.
          (2) Fort peck indian reservation.--The service area shall not 
        include the area inside the Fort Peck Indian Reservation.
  (e) Limitation on Availability of Construction Funds.--The Secretary 
shall not obligate funds for construction of the Dry Prairie Rural 
Water System until--
          (1) the requirements of the National Environmental Policy Act 
        of 1969 (42 U.S.C. 4321 et seq.) are met with respect to the 
        Dry Prairie Rural Water System;
          (2) on or after the date that is 90 days after the date of 
        submission to Congress of a final engineering report approved 
        by the Secretary; and
          (3) the Secretary publishes a written finding that the water 
        conservation plan developed under section 7 includes prudent 
        and reasonable water conservation measures for the operation of 
        the Dry Prairie Rural Water System that have been shown to be 
        economically and financially feasible.
  (f) Interconnection of Facilities.--
          (1) In general.--The Secretary shall--
                  (A) interconnect the Dry Prairie Rural Water System 
                with the Assiniboine and Sioux Rural Water System; and
                  (B) provide for the delivery of water to the Dry 
                Prairie Rural Water System from the Missouri River 
                through the Assiniboine and Sioux Rural Water System.
          (2) Charges.--The Secretary shall not charge for of the water 
        delivered.
  (g) Limitation on Use of Federal Funds.--
          (1) In general.--The operation, maintenance, and replacement 
        expenses associated with water deliveries from the Assiniboine 
        and Sioux Rural Water System to the Dry Prairie Rural Water 
        System shall not be a Federal responsibility and shall be borne 
        by the Dry Prairie Rural Water System.
          (2) Federal funds.--The Secretary may not obligate or expend 
        any Federal funds for the operation, maintenance, or 
        replacement of the Dry Prairie Rural Water System.
  (h) Title to Dry Prairie Rural Water System.--Title to the Dry 
Prairie Rural Water System shall be held by Dry Prairie Rural Water 
Association, Incorporated.

 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, treatment, and incidental 
operational requirements of the Dry Prairie Rural Water System and 
Assiniboine and Sioux Rural Water System, as described in sections 4 
and 5.
  (b) Conditions.--The capacity and energy described in subsection (a) 
shall be made available on the following conditions:
          (1) The Dry Prairie Rural Water System and Assiniboine and 
        Sioux Rural Water Systems shall be operated on a not-for-profit 
        basis.
          (2) The Dry Prairie Rural Water System and Assiniboine and 
        Sioux Rural Water System shall contract to purchase their 
        entire electric service requirements, including the capacity 
        and energy made available under subsection (a), from a 
        qualified preference power supplier that 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 wholesale 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.
          (4) It shall be agreed by contract among--
                  (A) the Western Area Power Administration;
                  (B) the power supplier with which the water Dry 
                Prairie Rural Water System and Assiniboine and Sioux 
                Rural Water System contract under paragraph (2);
                  (C) the power supplier of the entity described in 
                subparagraph (B);
                  (D) the Dry Prairie Rural Water Association, Inc.; 
                and
                  (E) the Fort Peck Tribes;
        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 Dry 
        Prairie Rural Water System and Assiniboine and Sioux Rural 
        Water System, except that the power supplier of the Dry Prairie 
        Rural Water System and Assiniboine and Sioux Rural Water 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.
  (c) Additional Power.--If power in addition to that made available 
under subsection (a) is required to meet the pumping requirements of 
the service area of the Fort Peck Reservation Rural Water System 
described in sections 4 and 5, the Administrator of the Western Area 
Power Administration may purchase the necessary additional power under 
such terms and conditions as the Administrator determines to be 
appropriate.
  (d) Recovery of Expenses.--
          (1) Assiniboine and sioux rural water system.--In the case of 
        the Assiniboine and Sioux Rural Water System, expenses 
        associated with power purchases under subsection (a) shall be 
        recovered through a separate power charge, sufficient to cover 
        expenses, applied to the Assiniboine and Sioux Rural Water 
        System's operation and maintenance cost.
          (2) Dry prairie rural water system.--In the case of the Dry 
        Prairie Rural Water System, expenses associated with power 
        purchases under subsections (a) shall be recovered through a 
        separate power charge, sufficient to cover expenses, to be paid 
        fully by the Dry Prairie Rural Water Association, Inc.

 SEC. 7. WATER CONSERVATION PLAN.

  (a) In General.--The Fort Peck Tribes and Dry Prairie Rural Water 
Association Incorporated shall develop a water conservation plan 
containing--
          (1) a description of water conservation objectives;
          (2) a description of appropriate water conservation measures; 
        and
          (3) a time schedule for implementing the measures and this 
        Act to meet the water conservation objectives.
  (b) Purpose.--The water conservation plan under subsection (a) shall 
be designed to ensure that users of water from the Assiniboine and 
Sioux Rural Water System and the Dry Prairie Rural Water System will 
use the best practicable technology and management techniques to 
conserve water.
  (c) Public Participation.--Section 210(c) of the Reclamation Reform 
Act of 1982 (43 U.S.C. 390jj(c)) shall apply to an activity authorized 
under this Act.

 SEC. 8. WATER RIGHTS.

  This Act does not--
          (1) impair the validity of or preempt any provision of State 
        water law or any interstate compact governing water;
          (2) alter the right of any State to any appropriated share of 
        the water of any body of surface or ground water, whether 
        determined by any past or future interstate compact or by any 
        past or future legislative or final judicial allocation;
          (3) preempt or modify any Federal or State law or interstate 
        compact concerning water quality or disposal;
          (4) confer on any non-Federal entity the authority to 
        exercise any Federal right to the water of any stream or to any 
        ground water resource;
          (5) affect any right of the Fort Peck Tribes to water, 
        located within or outside the external boundaries of the Fort 
        Peck Indian Reservation, based on a treaty, compact, executive 
        order, agreement, Act of Congress, aboriginal title, the 
        decision in Winters v. United States, 207 U.S. 564 (1908) 
        (commonly known as the ``Winters Doctrine''), or other law; or
          (6) validate or invalidate any assertion of the existence, 
        nonexistence, or extinguishment of any water right held or 
        Indian water compact entered into by the Fort Peck Tribes or by 
        any other Indian tribe or individual Indian under Federal or 
        State law.

 SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

  (a) Assiniboine and Sioux Rural Water System.--There are authorized 
to be appropriated--
          (1) over a period of 10 fiscal years, $124,000,000 for the 
        planning, design, and construction of the Assiniboine and Sioux 
        Rural Water System in accordance with subsections (b), (d), and 
        (e) of section 4; and
          (2) such sums as are necessary for the operation, 
        maintenance, and replacement of the Assiniboine and Sioux Rural 
        Water System, including power costs of the Western Area Power 
        Administration.
  (b) Dry Prairie Rural Water System.--There is authorized to be 
appropriated, over a period of 10 fiscal years, $51,000,000 for the 
planning, design, and construction of the Dry Prairie Rural Water 
System.
  (c) Cost Indexing.--The funds authorized to be appropriated may be 
increased or decreased by such amounts as are justified by reason of 
ordinary fluctuations in development costs incurred after October 1, 
1998, as indicated by engineering cost indices applicable for the type 
of construction involved.

                         purpose of the measure

    The purpose of S. 624 is to authorize an on-reservation 
water system to serve rural and municipal water to the Fort 
Peck Indian Reservation in Montana. S. 624 also authorizes the 
Dry Prairie Rural Water System, to be interconnected with the 
Fort Peck System, to provide rural and municipal water to 
Roosevelt, Sheridan, Daniels, and Valley counties, Montana, 
outside the Fort Peck Reservation.

                          background and need

    The Fort Peck Reservation is located in northeastern 
Montana and includes large parts of Roosevelt and Valley 
Counties. The reservation is approximately 100 miles long by 40 
miles wide and lies along the Missouri River about 20 miles 
south of the Canadian border. The reservation is home to the 
Assiniboine and Sioux Tribes and about 6,000 of the 11,000 
enrolled members live on the Reservation. The reservation 
includes slightly over two million acres, 400,413 (19 percent) 
of which are in Tribal ownership, 543,346 (26 percent) of which 
are owned by Tribal members, and 1,158,540 (55 percent) of 
which are held in fee by non-Indians.
    The Fort Peck Reservation suffers from the same problem of 
inadequate quantity and quality of groundwater supplies as do 
most areas in the High Plains. The Bureau of Reclamation 
participated in a needs assessment which documented that 
groundwater supplies did not meet EPA requirements and that 
available supplies were not adequate. The Indian Health Service 
and the Tribal Health Office have issued several public health 
alerts. The Bureau also participated in a feasibility study 
that included review of the use of Missouri River water as a 
supply source for a reservation-wide distribution system. The 
adjacent communities have the same problems, and the 
legislation contemplates that the Reservation system would be 
sized to connect to a distribution system for the surrounding 
communities. The legislation is based on a cost analysis done 
by the engineering firm of WEinc, based on the Bureau's report 
and estimates. The bill authorizes $103 million over five years 
for the Reservation system and $60 million for the Dry Prairie 
system. All costs of the Reservation system, including 
operations and maintenance would be a federal responsibility. 
Federal costs for the Dry Prairie system shall not exceed 76% 
and the Federal government may not expend any Federal funds for 
operations, maintenance and replacement costs for the Dry 
Prairie system.

                          legislative history

    S. 624 was introduced on March 16, 1999 by Senators Burns 
and Baucus. A hearing was held in the Water and Power 
Subcommittee on July 28, 1999. At the business meeting on 
September 22, 1999, the committee on Energy and Natural 
Resources ordered S. 624, as amended, favorably reported.

           committee recommendations and tabulation of votes

    The Committee on Energy and Natural Resources, in open 
business session on September 22, 1999, by a unanimous vote of 
a quorum present, recommends that the Senate pass S. 624, if 
amended as described herein.

                          committee amendment

    During the consideration of S. 624, the Committee adopted a 
substitute amendment that includes a number of technical 
corrections suggested by the Bureau of Reclamation. In 
addition, the substitute makes it clear that the parties do not 
intend to make the United States potentially liable for money 
damages; provides that the rate for all power made available to 
the System shall be at the wholesale firm power rate; changes 
the period of construction from five years to ten years; and 
provides that any cost indexing will be done in 1998 dollars, 
rather than 1996 dollars.

                      section-by-section analysis

    Section 1 is a short title.
    Section 2 provides a series of findings and purposes.
    Section 3 defines terms used in the Act.
    Section 4 authorizes the Secretary of the Interior to plan, 
design, construct, operate, maintain and replace a municipal, 
rural, and industrial water system for the Fort Peck 
Reservation. This section describes the components of the 
system, provides for a cooperative agreement between the 
Secretary and the Fort Peck Tribes, and provides that title to 
the system shall be held in trust by the United States for the 
Fort Peck Tribes.
    Section 5 authorizes the Secretary of the Interior to enter 
into a cooperative agreement with the Dry Prairie Rural Water 
Association Incorporated to provide Federal funds for the 
planning, design, and construction of the Dry Prairie Rural 
Water System. This section limits the Federal share to not more 
than 76%, describes the components of the system, the 
cooperative agreement, the service area of the system, 
limitations on availability of construction funds, and 
interconnections between this system and the system authorized 
in section 4.
    Section 6 provides that the Western Area Power 
Administration shall make available power designated for future 
irrigation and drainage for the Pick-Sloan Missouri River Basin 
for pumping, treatment, and incidental operational requirements 
of both water systems. This section also provides conditions 
for the use of such capacity and energy.
    Section 7 requires that the Fort Peck Tribes and the Dry 
Prairie Rural Water Association Incorporated shall develop a 
water conservation plan and describes the components of that 
plan.
    Section 8 addresses water rights issues.
    Section 9 authorizes $124,000,000 over a period of 10 
fiscal years for the planning, design, and construction of the 
Assiniboine and Sioux Rural Water System and such sums as 
necessary for OM&R and power costs. This section also 
authorizes $51,000,000 over a period of 10 fiscal years for the 
planning, design, and construction of the Dry Prairie Rural 
Water System. Cost indexing is permitted.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of the cost of this measure has been 
provided by the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 8, 1999.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 624, the Fort Peck 
Reservation Rural Water System Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kathleen 
Gramp (for federal costs) and Marjorie Miller (for the state 
and local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 624--Fort Peck Reservation Rural Water System Act of 1999

    Summary: S. 624 would authorize appropriations for a water 
supply system serving the Fort Peck Indian Reservation and the 
Dry Prairie Rural Water System in Montana. This bill would 
authorize a total of $175 million (in 1999 dollars) over a 10-
year period for the construction of the system and would 
authorize such sums as may be necessary for the operation and 
maintenance of the facilities on the reservation. It would 
direct the Secretary of the Interior to enter into cooperative 
agreements with the Fort Peck Tribal Executive Board and the 
Dry Prairie Rural Water Association that would allow those 
entities to implement the project if they comply with certain 
terms and conditions in the bill. All costs associated with the 
tribal portion of the project would be the responsibility of 
the Secretary. The Dry Prairie Rural Water System would be 
required to pay for operations and maintenance of its portion 
of the system but would not be obligated to repay the federal 
contribution to the project.
    Adjusting for inflation, CBO estimates that implementing 
the bill would require appropriations of $209 million over the 
2000-2009 period and additional amounts thereafter. We estimate 
that $66 million of this total would be spent over the 2000-
2004 period and $143 million over fiscal years 2005 through 
2009. Outlays for operation and maintenance costs in subsequent 
years would average about $2 million a year (in 1999 dollars) 
and would continue over the life of the tribal water system, or 
through at least fiscal year 2050. Because S. 624 would not 
affect direct spending or receipts. pay-as-you-go procedures 
would not apply.
    S. 624 contains an intergovernmental mandate as defined in 
the Unfunded Mandates Reform Act (UMRA). CBO estimates that 
complying with this mandate would impose no significant costs 
on state, local, or tribal governments, so the threshold 
established by that act ($50 million in 1996, adjusted annually 
for inflation) would not be exceeded. The bill contains no new 
private-sector mandates as defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 624 is shown in the following table. The 
costs of this legislation fall within budget function 300 
(natural resources and environment).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2000     2001     2002     2003     2004
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization level................................................        3        5       15       21       22
Estimated outlays..................................................        3        5       15       21       22
----------------------------------------------------------------------------------------------------------------

    Basis of Estimate: For purposes of this estimate, CBO 
assumes that appropriations would be provided as needed to 
design, construct, and operate this water supply system. We 
also assume that the Secretary would complete the cooperative 
agreements with the Fort Peck Tribes and the Dry Prairie Rural 
Water Association in fiscal year 2000.
    Our estimate of project costs is based on a preliminary 
construction schedule prepared by the tribes and the 
association that is consistent with the amounts and conditions 
specified in S. 624. CBO adjusted those estimates to reflect 
the impact of anticipated inflation during the time between the 
authorization and appropriation of project funding. We expect 
that outlays would occur as funds are obligated, because, under 
the bill project implementation would be the responsibility of 
the tribes and the association.
    Pay-as-you-go consideration: None.
    Estimated impact on State, local, and tribal governments: 
S. 624 contains an intergovernmental mandate as defined in 
UMRA. CBO estimates that complying with this mandate would 
impose no significant costs on state, local, or tribal 
governments, so the threshold established by that act ($50 
million in 1996, adjusted annually for inflation) would not be 
exceeded.
    Mandates.--The bill would require the Fort Peck Tribes and 
the Dry Prairie Rural Water Association (a public entity) to 
develop a water conservation plan. This requirement would be an 
intergovernmental mandate as defined in UMRA. Because these 
organizations have already developed a plan, however, complying 
with this mandate would result in no significant additional 
costs.
    Other Impact.--The Dry Prairie Rural Water Association and 
the state of Montana would probably incur some additional costs 
as a result of this bill's enactment, but these costs would be 
voluntary. S. 624 would require nonfederal participants to pay 
part of the cost of constructing the Dry Prairie system and to 
pay all the costs of operating and maintaining this system.
    Estimated impact on the private sector: This bill contains 
no new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Kathleen Gramp; Impact 
on State, local, and tribal governments: Marjorie Miller.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      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. 624. 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. 624, as ordered reported.

                        Executive Communications

    On July 19, 1999 the Committee on Energy and Natural 
Resources requested legislative reports form the Department of 
the Interior and the Office of Management and Budget setting 
forth Executive agency recommendations on S. 624. These reports 
had not been received at the time the report on S. 624 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 testimony provided by the 
Department of the Interior at the Subcommittee hearing follows:

     Statement of Steve Richardson, Chief of Staff, U.S. Bureau of 
                Reclamation, Department of the Interior

    My name is Steve Richardson. I am Chief of Staff of the 
U.S. Bureau of Reclamation. I am pleased to be here today to 
provide the Administration's views on S. 624, the Fort Peck 
Reservation Rural Water System.
    Mr. Chairman, the Department supports efforts to meet the 
water needs of the Fort Peck Reservation. We recognize that the 
project would provide a reliable and good quality drinking 
water supply to meet the current and future needs of the 
approximately 24,000 residents of northeastern Montana. However 
given the concerns that I will discuss in my statement, the 
Department opposes S. 624 as introduced. However, the 
Department is committed to working with the Montana delegation, 
the Committee and the project sponsors to try to resolve our 
remaining concerns.
    Before I address the Department's concerns with S. 624, I 
would like to acknowledge and commend the proponents of S. 624 
for their work to address some of the issues we raised in the 
past. For example: (1) S. 624 now includes a water conservation 
program; (2) Indexing of construction costs was appropriately 
included; (3) S. 624 clarifies that no Federal funds are to be 
used for operations, maintenance and replacement of the Dry 
Prairie Rural Water System; and (4) S. 624 was clarified to 
ensure that the provisions of the National Environmental Policy 
Act (NEPA) will be carried out for the entire project, 
including the Dry Prairie Water System.
    However, Mr. Chairman, the legislation raises a number of 
general and specific concerns and it remains difficult to 
justify the non-Reservation component of S. 624 as a Federal 
reclamation project.
    The following are our concerns regarding S. 624.
    First, the Administration strongly believes the proposed 
cost share provisions are inadequate. At a minimum, the non-
reservation component should be fully reimbursable with 
interest.
    Second, the finding with respect to trust responsibility 
may have unintended legal consequences with respect to federal 
monetary liability. As written, the language invites litigation 
and unless Congress intends to make the United States 
potentially liable for money damages, the finding should be 
modified or deleted altogether.
    Third, S. 624 should be revised to require the Fort 
Reservation Rural Water System to reimburse the Western Area 
Power Administration fully for the costs associated with all 
power purchased through it. In particular, subsection 6(c) 
should be revised to provide that the rate for all power made 
available to the System shall be at the wholesale firm power 
rate.
    Fourth, the Department does not support the use of Pick 
Sloan irrigation pumping power for non-irrigation purposes as 
is proposed in Section 6(b). The 2.5 mill/kilowatt hour rate 
for irrigation pumping power recovers only a fraction of the 
actual cost of making power available (approximately 10.29 
mills). Power made available for rural water systems should be 
provided at the firm wholesale rate of 14.54 mills/kilowatt 
hour.
    Fifth, the Administration is concerned about the budgetary 
implications of this bill. S. 624 proposes to authorize $103 
million over a five year period for design and construction for 
the Fort Peck Reservation Rural Water System, plus ``such sums 
as are necessary for operations and maintenance'' for these 
features. In addition, S. 624 would authorize an additional $60 
million for the Dry Prairie Rural Water System. Given the 
fiscal constraints that we face at the Bureau of Reclamation, 
the number of projects that are already under construction, 
those that are authorized but not underway, and those that are 
proposed to be developed, the Federal cost of this Project is 
unsustainable in the current and projected budgetary climate 
and will create unrealistic expectations on the part of the 
project beneficiaries.
    Sixth, I would also like to bring to your attention a 
growing concern with the trend towards Reclamation being 
obligated for operations and maintenance (O&M) costs for MR&I 
projects such as these. Paying the O&M for these projects, as 
is proposed in S. 624 for the Assiniboine and Sioux Rural Water 
System, and as occurred in the case of the Mni Wiconi Project 
and others since, could ultimately limit Reclamation's ability 
to fund O&M of its infrastructure and to help Indian tribes and 
others to address their water resources problems throughout the 
West. The Administration believes that where possible, Tribes 
should be responsible for the operations, maintenance and 
replacement expenses of their MR&I projects. We would like to 
open a dialog with the committee on how this concern may be 
addressed.
    In addition to these general concerns, we have a number of 
specific technical concerns with S. 624 as drafted.
     Section 4(a) references the May 1996 report 
entitled, ``Technical Report for the Fort Peck Reservation 
Rural Water System.'' This report was prepared as an initial 
investigation to give the Tribe a sense of the possible 
configuration and cost of a reservation water system. The 
configuration and costs have been revised by the Project 
sponsors since the 1996 report was completed. Therefore, it is 
out of date and inadequate for the purposes of guiding the 
development of a rural water supply system. A final engineering 
report is appropriately the next generation of project 
configuration and scoping and should be the only documents on 
which to base future activities. As such, reference to the 1996 
report should be deleted.
     S. 624 should be clarified to explicitly state 
that the local sponsors will hold title, or ownership, to the 
Dry Prairie System.
     S. 624 should address the allocation of project 
cost between the Reservation and the Dry Prairie systems 
including the upsizing of the Reservation system to supply 
water to the Dry Prairie water system to ensure that the 
counties pay the appropriate share of capital and operation, 
maintenance and replacement (OM&R) costs attributable to the 
benefits they receive from the Reservation system. Costs 
associated with parts of the systems used by both systems 
should be shared.
     Facilities to allow for future interconnections to 
areas outside the Fort Peck Reservation should not be included 
or funded through the Tribal system as is proposed in Section 
4(b)(3). Instead, this interconnection should be included in 
the Dry Prairie Rural Water System portion of the bill and 
should be fully reimbursable with interest.
     Section 5(g)(1), should be clarified to ensure 
that it includes the replacement of facilities, which is an 
integral part of O&M activities. As such the phrase 
``operations and maintenance'' should be replaced with 
``operations, maintenance and replacement''
     In previous versions of this legislation, the 
Secretary was given responsibility for approving the Project's 
final engineering reports. That provision has been removed in 
S. 624. Instead, sections 4(g)(2) and 5(e)(2) simply require 
that the reports be submitted to Congress. Approval of this 
report by the Secretary should be restored. As the responsible 
entity for this Project, the Secretary should be required to 
approve the final engineering report.
     Sections 4(b)(1) and 4(b)(2) clearly spell out 
where the pumping and treatment facilities and the pipeline 
should be located. This language unduly binds the sponsors. The 
final site selection should not be predetermined, but should go 
through the engineering review and the review process required 
under the National Environmental Policy Act.
     The authorized cost ceiling of $103 million needs 
to be further clarified to make clear how the cost estimate was 
developed and what it includes, i.e. rights-of-way, land 
purchases and existing system upgrade costs. Furthermore, it is 
our understanding that these estimates are based on 1996 cost 
indices. As it is now nearly the year 2000, the ceilings should 
reflect more up to date costs to give the Congress a more 
accurate picture of the budgetary obligation that this project 
represents and to avoid unexpected overruns.
    In summary, Mr. Chairman, based on Reclamation's budgetary 
situation and the other concerns raised in my statement, it is 
difficult to justify S. 624, particularly the non-Reservation 
component, as a Reclamation project.
    Reclamation remains prepared to continue to work with the 
project proponents to develop a proposal to meet the needs of 
the Fort Peck Reservation.
    That concludes my testimony, I would be pleased 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. 624, as ordered 
reported.

                                  
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