[Senate Report 106-21]
[From the U.S. Government Publishing Office]




                                                        Calendar No. 48

106th Congress                                                   Report
  1st Session                    SENATE                          106-21

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


 
                      WELLTON-MOHAWK TRANSFER ACT

                                _______
                                

                 March 17, 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. 356]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 356) to authorize the Secretary of the 
Interior to convey certain works, facilities, and titles of the 
Gila Project, and designated lands within or adjacent to the 
Gila Project, to the Wellton-Mohawk Irrigation and Drainage 
District, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                         purpose of the measure

    The purpose of S. 356, as ordered reported, is to provide 
for the transfer of Gila Project-Wellton-Mohawk Division 
facilities and lands pursuant to a Memorandum of Agreement 
entered into between the Wellton-Mohawk Irrigation and Drainage 
District and the Secretary of the Interior dated July 10, 1998.

                          background and need

History of facility transfers

    In the 104th Congress, the Committee held hearings on 
legislation (S. 620) that would provide generic authority for 
the transfer of certain Reclamation projects to project 
beneficiaries as well as legislation specific to individual 
projects. The generic legislation was introduced following the 
Department of the Interior's statement, as part of the 
Reinventing Government Initiative, that it would seek to 
transfer title to appropriate projects where there were no 
overriding concerns.
    S. 620 directed the Secretary of the Interior to transfer 
title to all Federal property associated with fully paid out 
Bureau of Reclamation projects to the project beneficiaries in 
those instances where the beneficiaries have already assumed 
responsibility for operation and maintenance. The legislation 
provided that the transfer would be without cost and also made 
all revenues previously collected from project lands and placed 
in the reclamation fund available to the beneficiaries under 
the formula set forth in subsection I of the Fact Finders Act 
of 1924. The Fact Finders Act provides generally that when 
water users take over operation of a project, the net profits 
from operation of project power, leasing of project lands (for 
grazing or other purposes), and sale or use of town sites are 
to be applied first to construction charges, second to 
operation and maintenance (O&M) charges, and third ``as the 
water users may direct.''
    Proposals to transfer title to selected reclamation 
facilities have been advanced before. Some have already been 
authorized by Congress. (See: Pub. L. No. 102-575, title XXXIII 
transferring facilities to the Elephant Butte Irrigation 
District, New Mexico, and title XIV, dealing with the Vermejo 
Project, New Mexico.) Other title transfer proposals, such as 
ones advanced in 1992 for the Central Valley Project and in the 
late 1980's for the Solano Project and the Sly Park Unit, have 
been quite controversial.
    As of 1990, the Bureau had identified 415 project 
components--out of a total of 568 facilities--where operation 
and management responsibilities had been transferred or were 
scheduled to be transferred to project users. Section 6 of the 
Reclamation Act of 1902 (32 Stat. 388, 389) provides in 
pertinent part that ``when the payments required by this act 
are made for the major portion of the lands irrigated from the 
waters of the works herein provided for, then the management 
and operation of such irrigation works shall pass to the owners 
of the lands irrigated thereby * * *''. The section concludes 
with the following proviso: ``Provided, That the title to and 
the management andoperations of the reservoirs and the works 
necessary for their protection and operation shall remain in the 
Government until otherwise provided by Congress.'' Historically, the 
Bureau has usually transferred operation and maintenance to local 
districts in advance of project repayment where the districts have 
expressed an interest in taking over management and have the capability 
to assume the responsibility.
    A transfer provision was also included in the 1955 
Distribution System Loans Act, as amended. This provision 
differs from the 1902 law in that it allows transfer of title 
to the lands and facilities upon repayment of the loan. In 
addition to the operations and management transfer 
authorization under the Reclamation Act of 1902, several other 
title transfer provisions are included in individual project 
acts. These include Section 7 of the 1928 Boulder Canyon 
Project Act (Act of Dec. 21, 1928, 45 Stat. 1057. 43 U.S.C. 617 
et seq.), which authorizes the Secretary of the Interior to 
transfer title of the All-American Canal and certain other 
related facilities after repayment has been completed; 
provisions in the Act of September 22, 1959 (Pub. L. No. 86-
357, 73 Stat. 641), regarding transfer of title for Lower Rio 
Grande project facilities; and, Pub. L. No. 83-752 (68 Stat. 
1045), which directs the Secretary to transfer title to the 
Palo Verde Irrigation District upon repayment. Under the 1954 
Act, the U.S. retained the right to build hydro power 
facilities at the site and to retain a share in energy 
production.
    The hearings on S. 620 during the 104th Congress 
demonstrated that generic legislation was not likely to deal 
with all the possible issues associated with project transfers 
and that such legislation would wind up being complex and 
overly burdensome. As a result, discussions began on the 
potential transfer of several projects, or portions thereof. 
The Committee considered the transfer of the Collbran project 
and included language in the Reconciliation measure, H.R. 2491, 
the Balanced Budget Act of 1995, which was vetoed by the 
President. The Reconciliation measure also contained language 
(section 5356) to transfer the Sly Park unit of the Central 
Valley Project. That language was included in the House 
amendments and accepted in conference. During the 104th 
Congress, the Committee also conducted hearings and favorably 
reported legislation on the Carlsbad project (S. 2015), and the 
distribution portion of the Minidoka project serving the Burley 
Irrigation District (S. 1921), which was similar to S. 538. The 
Committee also held hearings on legislation for the transfer of 
Canadian River, Palmetto Bend and Nueces River projects in 
Texas (S. 1719). However, none of the measures was enacted into 
law.
    During the 105th Congress, the Committee considered 
legislation providing for the transfer of certain features of 
the Minidoka Project, Idaho (S. 538), which was favorably 
reported from the Committee on November 3, 1997 and which 
passed the Senate on June 25, 1998. The Committee also 
considered and favorably reported legislation providing for the 
transfer of the lands and facilities of the Carlsbad Project in 
New Mexico (S. 291), the Wellton-Mohawk Division of the Gila 
Project, Arizona (S. 2087) and the Pine River Project, Colorado 
(S. 2142). The Committee also considered and favorably reported 
legislation that authorizes the prepayment of outstanding 
obligations on the Canadian River Project, Texas, which would 
permit the transfer of those facilities as provided in the 1950 
legislation authorizing the project.

Background of Gila Project

    The Gila Project in western Arizona was originally 
authorized for construction under a finding of feasibility 
approved by the President on June 21, 1937, pursuant to section 
4 of the Act of June 25, 1910 (36 Stat. 836), and subsection B 
of section 4 of the Act of December 5, 1924 (43 Stat. 701). It 
was reauthorized and reduced in area to 115,000 acres by the 
Act of July 30, 1947 (61 Stat. 628). Further reduction in 
irrigable acreage of the Wellton-Mohawk Division was authorized 
by the Colorado River Basin Salinity Control Act of June 24, 
1974 (88 Stat. 266). Project construction was begun in 1936, 
and the first water was available for irrigation from the Gila 
Gravity main Canal on November 4, 1943. Construction of the 
Wellton-Mohawk Division features was started in August 1949. On 
May 1, 1952, water from the Colorado River was turned onto the 
Wellton-Mohawk fields for the first time. The project was 
essentially complete by June 30, 1957. The Wellton-Mohawk 
Irrigation and Drainage District operates the irrigation 
facilities in the Wellton-Mohawk Division.
    Wellton-Mohawk is one of the Reclamation Project Districts 
that have sought agreement with the Bureau of Reclamation for a 
transfer and is similar to the situation of the Burley 
Irrigation District, which sought transfer of its portion of 
the Minidoka Project in Idaho. Initial drafts of the 
legislation were modeled after the Burley legislation reported 
by the Committee during the first session. Wellton-Mohawk has 
fully repaid its project costs and was provided a certificate 
of discharge on November 27, 1991. On July 10, 1998, the 
District and the Bureau signed a Memorandum of Agreement that 
covers the details of the transfer of title. It includes 
transfer of lands between the Federal Government and the 
District, including the acquisition of additional lands for 
exchange. All transfers will be at fair market value. No change 
in project operation is contemplated by the transfer and the 
District will continue to limit irrigated acreage to 62,875 as 
provided in P.L. 93-320. The transfer would include all 
facilities and works for which full repayment has been made.

                          legislation history

    S. 356 was introduced by Senators Kyl and McCain on 
February 3, 1999. S. 356 is identical to the version of S. 2087 
that passed the Senate in the 105th Congress. A hearing was 
held on S. 2087 by the Subcommittee on Water and Power on June 
16, 1998 and the measure was ordered favorably reported by the 
Committee on July 29, 1998. (Report 105-289.) S. 2087 passed 
the Senate by Unanimous Consent on October 9, 1998.
    At its business meeting on March 4, 1999, the Committee on 
Energy and Natural Resources ordered S. 356 favorably reported.

                       committee recommendations

    The Committee on Energy and Natural Resources, in open 
business session on March 4, 1999 by a unanimous voice vote of 
a quorum present, recommends that the Senate pass S. 356 as 
described herein.

                      section-by-section analysis

    Section 1 provides a short title.
    Section 2 authorizes the Secretary of the Interior to carry 
out all provisions of the Memorandum of Agreement covering the 
transfer of title, including the authority to convey lands as 
required under section 2 of the Memorandum.
    Section 3 requires the Secretary of the Interior and the 
Secretary of Energy to continue to provide water and power as 
provided under existing contracts and as provided under the 
Memorandum.
    Section 4 is a savings clause.
    Section 5 requires a report from the Secretary if the 
transfer has not occurred by July 1, 2000.
    Section 6 authorizes such sums as are necessary.

                   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, March 11, 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. 356, the Wellton-
Mohawk Transfer Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Gary Brown 
(for federal costs), and Marjorie Miller (for the state and 
local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

S. 356--Wellton-Mohawk Transfer Act

    Summary: S. 356 would authorize the appropriation of such 
sums as are necessary to implement a memorandum of agreement 
between the Bureau of Reclamation (the bureau) and the Wellton-
Mohawk Irrigation and Drainage District (the district) 
regarding transfer of the federally owned Gila Irrigation 
Project to the district. The bill would give each party the 
discretion to exchange with each other, or purchase at fair 
market value, lands relating to the project.
    CBO estimates that implementing this bill would result in 
additional spending of about $500,000 by the bureau over the 
2000-2001 period, assuming appropriation of the necessary 
amounts. In addition, CBO estimates that the district would pay 
a minimum of about $2 million in 2002 for certain federally 
owned lands. Because the bill would affect direct spending by 
increasing offsetting receipts from the sale of federal land, 
pay-as-you-go procedures would apply.
    S. 356 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
Local governments might incur some costs as a result of the 
bill's enactment, but these costs would be voluntary.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 356 if 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--
                                                                 -----------------------------------------------
                                                                   1999    2000    2001    2002    2003    2004
----------------------------------------------------------------------------------------------------------------
                                         CHANGES IN DIRECT SPENDING \1\
Estimated budget authority......................................       0       0       0      -2       0       0
Estimated outlays...............................................       0       0       0      -2       0       0
----------------------------------------------------------------------------------------------------------------
\1\ Implementing the bill would also affect spending subject to appropriation, but in amounts less than $500,000
  a year (for 2000 and 2001).

    Basis of estimate: For the purpose of this estimate, CBO 
assumes that S. 356 will be enacted by the end of fiscal year 
1999 and that the estimated amounts necessary to implement the 
bill will be appropriated for fiscal year 2000. Based on 
information from the bureau, CBO estimates that the federal 
share of costs for implementing the transfer of the federally 
owned irrigation project would be about $500,000, spread over 
fiscal years 2000 and 2001. These funds would pay for necessary 
environmental studies and legal transactions. The estimate of 
outlays is based on historical rates of spending for these 
activities.
    S. 356 would give the district and the bureau the 
discretion to exchange, or purchase at fair market value, lands 
relating to the project. Based on information provided by the 
bureau, CBO estimates that the district would pay a minimum of 
about $2 million in 2002 for certain lands. That payment would 
be recorded as offsetting receipts (a credit against direct 
spending). Based on information provided by the bureau, CBO 
estimates that the government would not forgo any income by 
completing these transactions. In addition, we estimate that 
completing the land transfers would have no significant impact 
on spending subject to appropriation.
    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 
pay-as-you-go 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--
                                    ----------------------------------------------------------------------------
                                      1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0      0      0     -2      0      0      0      0      0      0      0
Changes in receipts................                                 Not applicable
----------------------------------------------------------------------------------------------------------------

    Under the Balanced Budget Act of 1997, 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. 
Based on information provided by the bureau, CBO estimates that 
the sale proceeds would exceed any net revenues currently 
projected to accrue from these lands; therefore, selling these 
assets would result in a net savings for pay-as-you-go 
purposes.
    Estimated impact on State, local and tribal governments: S. 
356 contains no intergovernmental mandates as defined in UMRA. 
The district has agreed to pay a share of the costs to 
implement this transfer as part of its memorandum of agreement 
with the bureau. These costs, which CBO estimates would be 
about $1 million, were voluntarily accepted by the district as 
part of that agreement. The decision to purchase land from the 
federal government also would be voluntary on the part of the 
district.
    Estimated impact on the private sector: This bill contains 
no new private-sector mandates as defined in UMRA.

                      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. 356. 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. 356, as ordered reported.

                        Executive Communications

    On March 3, 1999, the Committee received the following 
communication from the Department of the Interior:

                        Department of the Interior,
                                     Bureau of Reclamation,
                                     Washington, DC, March 3, 1999.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: I am writing to express the 
Administration's position on two bills scheduled for 
consideration by the Committee on Energy and Natural Resources 
on Wednesday, March 3, 1999, which could result in the transfer 
of title to projects constructed and owned by the Bureau of 
Reclamation (Reclamation). The Administration supports S. 291, 
to convey certain lands and facilities of the Carlsbad Project 
in New Mexico. In addition, the Administration could support S. 
356 to convey certain works and facilities of the Gila Project, 
and designated lands within or adjacent to the Gila Project, if 
it were clarified that the District could not use revenues from 
municipal bonds to finance this transfer.
    As you may know, in 1995, Reclamation, as part of the 
second phase of the Vice President's National Performance 
Review, undertook an initiative to transfer title for 
appropriate Reclamation projects and facilities to non-Federal 
entities. Since that time, Reclamation has been working closely 
with the water users, the other stakeholders, and the sponsors 
in both the House and Senate to address the issues of concern. 
As a result of that hard work on all sides, tremendous progress 
has been made.
    S. 291 is identical to S. 736, as amended, and S. 356 is 
identical to S. 2087, as amended, from the 105th Congress. Both 
these bills passed the Senate but were not considered by the 
House of Representatives before it adjourned sine die for the 
105th Congress. As you may recall, the Administration supported 
both last year. While these represent very different 
approaches, we view them as good examples of the progress that 
has been made.
    While we were once far apart on the terms of the 
legislation for both these projects, the Carlsbad Irrigation 
District and the Wellton Mohawk Irrigation and Drainage 
District both worked closely with the Administration and the 
other stakeholders to address the issues of concern and to 
craft creative proposals which will ensure compliance with 
Federal environmental laws, protect the interests of the United 
States, potentially save the taxpayers money in the long term 
and give responsibility for operational control and management 
to the local beneficiaries and interests. Enactment of S. 291 
would affect receipts: therefore it is subject to the pay-as-
you-go requirement of the Omnibus Budget Reconciliation Act of 
1990.
    The Office of Management and Budget advises that there is 
no objection to the submission of this report from the 
standpoint of the Administration's program.
    We look forward to working closely with you and the 
Committee to complete consideration of these proposals. If I 
can provide any additional information or assistance, please do 
not hesitate to contact me.
            Sincerely,
                                   Eluid L. Martinez, Commissioner.

                        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. 356, as ordered 
reported.

                                
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