[House Report 110-633]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-633

======================================================================
 
              SAN JOAQUIN RIVER RESTORATION SETTLEMENT ACT

                                _______
                                

  May 13, 2008.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Rahall, from the Committee on Natural Resources, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4074]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 4074) to authorize the implementation of the San 
Joaquin River Restoration Settlement, and for other purposes, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                          PURPOSE OF THE BILL

    The purpose of H.R. 4074 is to authorize the implementation 
of the San Joaquin River Restoration Settlement, and for other 
purposes.

                  BACKGROUND AND NEED FOR LEGISLATION

    H.R. 4074 is intended to implement the Stipulation of 
Settlement of Natural Resources Defense Council, et al., v. 
Kirk Rodgers, et al., filed with the U.S. District Court in 
Sacramento, California, on September 13, 2006. The settlement 
is often referred to as the ``San Joaquin River Settlement'' or 
the ``Friant Settlement.'' U.S. District Court Judge Lawrence 
K. Karlton approved the settlement on October 23, 2006.
    The litigation leading to the settlement was filed 19 years 
ago by the Natural Resources Defense Council (NRDC). The issues 
in the case and the settlement directly affect the Friant 
Division of the Central Valley Project, the largest water 
project built by the U.S. Bureau of Reclamation. As the 
settlement is highly complex and locally controversial, the 
implementation of the terms of the settlement will be very 
expensive and take many years to complete.
    In 1988, the NRDC and a coalition of groups originally 
challenged the Department of the Interior's proposal to renew 
40-year water service contracts for the Friant Division without 
the preparation of an Environmental Impact Statement under the 
National Environmental Policy Act. NRDC's complaint was 
subsequently amended to include other claims, including a claim 
under the Endangered Species Act, and more recently a claim 
alleging that the operation of the Friant Dam violates 
California Fish & Game Code Section 5937, which requires dams 
to release sufficient water to keep fish in good condition 
below the dam. It was the latter claim that became the focus of 
the litigation in recent years. The current settlement and 
enactment of legislation resolves all of the pending legal 
claims.
    Certain Interior Department actions called for in the 
settlement require Congressional authorization. Exhibit ``A'' 
of the Stipulation of Settlement contains legislative language 
suggested for introduction in Congress to implement the 
settlement. According to a document released by the settling 
parties on September 13, 2006, ``[p]assage of this legislation 
in substantially the same form as the exhibit is critical 
because any party could void the Settlement if the legislation 
were not enacted.''
    The actual language in the settlement regarding the need 
for this implementing legislation is found in Sec. 8 of the 
Stipulation of Settlement (beginning at page 6, line 20):

          8. The Parties acknowledge that certain actions to be 
        undertaken to implement this Settlement will require 
        additional authorizations or appropriations by 
        Congress, or both. The Plaintiffs and the Friant 
        Parties agree jointly to request that legislation in 
        the form of Exhibit A be enacted into law. The Parties 
        intend and anticipate that such legislation will 
        provide the federal legislative authorizations 
        necessary for the Secretary to carry out the federal 
        obligations under this Settlement. In the event that 
        legislation substantially in the form of Exhibit A is 
        not enacted into law by December 31, 2006, this 
        Settlement is voidable at the election of any Party. 
        Before any Party may exercise its right to void this 
        Settlement in accordance with the preceding sentence, 
        it shall provide written notice of its intent to do so 
        to the other Parties and, following receipt of such 
        notice, the Parties shall meet and confer in good faith 
        for a period of no less than 30 days. During that time, 
        the Parties shall explore the extent to which this 
        Settlement might be modified (in accordance with 
        Paragraph 48) to further the goals of this Settlement 
        in light of Congressional action or inaction on Exhibit 
        A.

    The costs of implementing the San Joaquin River Restoration 
Settlement are significant and have been the subject of 
extensive discussions and negotiations among the Settling 
Parties. House pay-as-you-go (PAYGO) rules have also affected 
progress on enactment of implementing legislation.
    When asked to prepare a preliminary analysis of an earlier 
version of this legislation (H.R. 24), the Congressional Budget 
Office (CBO) estimated that H.R. 24 as introduced would result 
in $217 million in direct spending (not subject to 
appropriation) over the 2008-2017 time frame, plus another $23 
million in forgone revenue. Of that total amount, $70 million 
is attributable to a provision that authorized the Secretary of 
the Interior to facilitate third-party financing provisions 
(including the issuance of bonds and federally guaranteed 
loans) to pay for river restoration work.
    The Settling Parties returned to the negotiating table in 
an effort to significantly reduce the $240 million direct total 
costs estimated by CBO for H.R. 24. The Settling Parties 
proposed eliminating bonding and loan guarantee provisions and 
replacing that with new language that would allow Friant 
Division water users to ``pre-pay'' their allocated share of 
construction costs for the water project. This would require 
Friant users to arrange private sector financing of their 
existing repayment obligation to the United States, and would 
necessitate a restructuring of their contracts with the Bureau 
of Reclamation. The bill's sponsors and other affected water 
agencies agreed to the conceptual approval, in which Friant, 
the Settling Parties and third party interests reserved the 
right to make a final decision on the pre-payment proposal once 
the analysis of the proposed changes is complete.
    The Settling Parties have agreed to strictly observe an 
agreement that any proposed amendment to the implementing 
legislation required the advance approval of all the Settling 
Parties as well as the ``Third Parties'' affected by 
implementation of the settlement. All the parties are keenly 
aware that failure to achieve a straightforward authorization 
for the settlement will allow any party to seek to vacate the 
settlement and let the court decide how the San Joaquin River 
should be restored. A court-ordered action could drastically 
increase the risks to the federal government and water users, 
as well as the overall cost of restoration efforts.

                            COMMITTEE ACTION

    H.R. 4074 was introduced by Representative Jim Costa (D-CA) 
on November 5, 2007. The bill is nearly identical to 
legislation (H.R. 24) introduced by Representative George 
Radanovich (R-CA) earlier in the 110th Congress to implement 
the above-referenced settlement, with amendments designed to 
reduce the overall cost and to authorize federal assistance for 
a regional water plan in Title II.
    The Subcommittee on Water and Power considered the policy 
aspects of the San Joaquin River Settlement in an oversight 
hearing on September 21, 2006. Later in the 109th Congress, 
implementing legislation (H.R. 6377) was introduced by Rep. 
George Radanovich. The legislation was not considered by the 
Committee or by the full House of Representatives prior to 
adjournment. In the 110th Congress, a legislative hearing was 
held in the Subcommittee on Water and Power on H.R. 24 on March 
1, 2007.
    On November 15, 2007, the Full Natural Resources Committee 
met to consider H.R. 4074. Subcommittee Ranking Member Cathy 
McMorris Rodgers (R-WA) offered an amendment #3* which sought 
to ensure that nothing in the legislation would result in the 
increase of water rates or project-use power and preference 
power rates. The amendment also required that the Secretary in 
consultation with the Administrator of the Western Area Power 
Administration include any cost increases in billing 
information for power and water customers. The amendment was 
not agreed to by a roll call vote of 14 yeas and 22 nays, as 
follows:


    Rep. Lamborn (R-CO) then offered an amendment (Lamborn #1) 
which would increase by $20 million the City of San Francisco's 
payments for hydropower generated by the O'Shaughnassey dam. 
This payment would be in addition to the annual payment 
required by the Raker Act and other settlements related to the 
Toulumne River. The amendment was not agreed to by a roll call 
vote of 15 yeas and 24 nays, as follows:


    A third amendment (McMorris Rodgers #6) was offered by Rep. 
McMorris Rodgers which related to the ability to use the power 
of eminent domain as part of the river restoration effort. This 
amendment was not agreed to by a roll call vote of 15 yeas and 
24 nays, as follows:


    The bill was then ordered favorably reported without 
amendment to the House of Representatives by a roll call vote 
of 25 to 15, as follows:


                      SECTION-BY-SECTION ANALYSIS

       TITLE I. THE SAN JOAQUIN RIVER RESTORATION SETTLEMENT ACT

Section 101. Short title

    Provides that this Act may be cited as the ``San Joaquin 
River Restoration Settlement Act.''

Section 102. Purpose

    States that the purpose of this Act is to authorize the 
implementation of the Stipulation of Settlement dated September 
13, 2006 (hereafter referred to as the ``Settlement'') in the 
litigation entitled Natural Resources Defense Council, et al. 
v. Kirk Rodgers, et al., United States District Court, Eastern 
District of California, No. CIV. S-88-1658-LKK/GGH.

Section 103. Definitions

    This section establishes that the definition of the terms 
``Friant Division long-term contractors,'' ``Interim Flows,'' 
``Restoration Flows,'' ``Recovered Water Account,'' 
``Restoration Goal,'' and ``Water Management Goal'' have the 
meanings given in the Settlement.

Section 104. Implementation of settlement

    (a) In General.--This subsection authorizes and directs the 
Secretary of the Interior (hereafter referred to as the 
``Secretary'') to implement the Settlement in cooperation with 
the State of California and includes a list of prescribed 
measures to be carried out.
    (b) Agreements.--This subsection authorizes and directs the 
Secretary to enter into appropriate agreements, including cost 
sharing agreements, with the State of California, and 
authorizes the Secretary to enter into contracts, memoranda of 
understanding, financial assistance agreements, and other 
appropriate agreements with State, tribal, and local 
governmental agencies, and with private parties, to achieve the 
purposes of the Settlement. This subsection also authorizes the 
Secretary to accept and expend non-federal funds in order to 
facilitate implementation of the Settlement. The Secretary is 
also required to identify measures that shall be implemented to 
mitigate the impacts of construction, improvement, operation, 
or maintenance of facilities on adjacent and downstream water 
users and landowners. This subsection further authorizes the 
Secretary to conduct any design or engineering studies that are 
necessary to implement the Settlement. Finally, this subsection 
provides that except as provided in this section 104, Central 
Valley Project long-term contractors other than the Friant 
Division long-term contractors shall not experience an 
involuntary reduction in contract water allocations due to the 
implementation of this Settlement, and that this Act shall not 
modify or amend the rights and obligations of the parties under 
existing water service, repayment, purchase or exchange 
contracts.

Section 105. Acquisition and disposal of property; title to facilities

    (a) Title to Facilities.--This subsection provides that 
unless acquired pursuant to subsection (b), title to any 
facilities, stream channels, levees, or other real property 
modified or improved in the course of implementing the 
Settlement, and title to any modifications or improvements of 
such property, shall remain with the owner of the property.
    (b) Acquisition of Property.--This subsection authorizes 
the Secretary to acquire through purchase property, interests 
in property, or options to acquire real property needed to 
implement the Settlement. The Secretary is also authorized but 
not required to exercise all of the authorities provided in 
section 2 of the Act of August 16, 1937 (50 Stat. 844, chapter 
832), which include the power of eminent domain, to carry out 
the measures authorized in this section and in section 104.
    (c) Disposal of Property.--This subsection authorizes the 
Secretary to dispose of property or interests in property 
acquired pursuant to this Act if the Secretary determines that 
the U.S. no longer needs to hold title to such property for 
furtherance of the Settlement. Under this provision, the 
Secretary could transfer title to such property to the State of 
California for purposes of implementing the Settlement if the 
Secretary determined it was in the best interest of the United 
States to do so. Further, if any property is acquired under 
this Act through the exercise of eminent domain and the 
Secretary determines such property is no longer needed for 
purposes of the Settlement, the Secretary is required to 
provide a right of first refusal to the property owner from 
whom the property was initially acquired, or his or her 
successor in interest, on the same terms on which the property 
is being offered to other parties. Proceeds from the sale or 
transfer of any such property or interests shall be deposited 
in the San Joaquin River Restoration Fund established under 
section 109(c) of this Act.

Section 106. Compliance with Applicable Law

    (a) Applicable Law.--The Secretaries of the Interior and 
Commerce are directed to comply with all applicable federal and 
state laws, rules, and regulations, including the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and 
the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.), in 
carrying out the measures authorized by this Act
    (b) Effect on State Law.--This subsection provides that 
nothing in this Act preempts state law or modifies any existing 
obligation of the United States under federal reclamation law 
to operate the Central Valley Project in conformity with state 
law.
    (c) Use of Funds for Environmental Reviews.--The Secretary 
is authorized to provide funds made available under this Act to 
affected federal, state, and local agencies, and Indian tribes 
if necessary to enable such entities to effectively participate 
in the environmental review process.
    (d) Nonreimbursable Funds.--This subsection provides that 
the United States' share of the costs of implementing this Act 
is non-reimbursable under federal reclamation law, provided 
that this provision does not limit the use of the funds 
assessed and collected pursuant to sections 3406(c)(1) and 
3407(d)(2) of the Reclamation Projects Authorization and 
Adjustment Act of 1992 (Public Law 102-575; 106 Stat. 4721, 
4727) for implementation of the Settlement. In addition, the 
subsection directs that the legislation shall not be construed 
to limit or modify existing or future Central Valley Project 
Ratesetting Policies.

Section 107. Compliance with Central Valley Project Improvement Act

    This section establishes that implementation of this 
Settlement shall satisfy and discharge all of the obligations 
of the Secretary contained in section 3406(c)(1) of the Central 
Valley Project Improvement Act (Title XXXIV of Public Law 102-
575) to address fish, wildlife, and habitat concerns on the San 
Joaquin River, including to sustain naturally reproducing 
anadromous fisheries from Friant Dam to its confluence with the 
San Francisco Bay/Sacramento-San Joaquin Delta Estuary. The 
Secretary shall continue to assess and collect the charges 
provided for in section 3406(c)(1) of the Reclamation Projects 
Authorization and Adjustment Act of 1992, in the manner 
described in the Settlement. Those collections shall continue 
to be counted toward the requirements of the Secretary in 
section 3407(c)(2) of that Act, so as to not increase costs to 
other CVP contractors.

Section 108. No private right of action

    This section states that nothing in this Act confers upon 
any person or entity not a party to the Settlement a private 
right of action or claim for relief to interpret or enforce 
this Act or the Settlement. This section also clarifies that it 
does not alter or curtail any right of action or claim for 
relief under any other applicable law.

Section 109. Appropriations; Settlement fund

    (a) Implementation Costs.--This subsection provides that 
costs of implementing this Settlement are to be shared among 
federal and non-federal entities. Non-federal funding is 
estimated to be about $200,000,000, reflecting the Friant 
contractors' agreement in the Settlement to continue to pay the 
surcharge currently imposed under section 3406(c)(1) of the 
Central Valley Project Improvement Act. An additional estimated 
$240,000,000 of capital component payments made by the Friant 
contractors under their current contracts with the United 
States, or under repayment contracts executed pursuant to 
section 110 of this Act, will also be deposited into the newly 
established San Joaquin River Restoration Fund to fund the 
Settlement. In addition, this section provides that the cost of 
implementing the provisions of section 104(a)(1) of this Act 
must be shared by the State of California, pursuant to the 
terms of a Memorandum of Understanding executed by the State of 
California and the Parties to the Settlement on September 13, 
2006, which will produce at least $110,000,000 in state funds. 
The Secretary is directed to enter into one or more agreements, 
recognizing either monetary or in-kind contributions by the 
state, to fund or implement improvements on a project-by-
project basis with the State of California. Except as provided 
in the Settlement, costs incurred solely to implement the 
Settlement that would not have otherwise been incurred by any 
entity, agency, or subdivision of the State of California shall 
not be borne by any such entity, agency, or subdivision of the 
State of California, unless such costs are incurred on a 
voluntary basis.
    (b) Authorization of Appropriations.--This subsection 
specifies that, in addition to the other funds made available 
in the San Joaquin Restoration Fund established in subsection 
(c), there are authorized to be appropriated up to $250,000,000 
(at October 2006 price levels) to implement this Act, to be 
available until expended. The Secretary may expend such 
additional appropriations only in amounts equal to amounts 
deposited into the San Joaquin River Restoration Fund, in-kind 
contributions, and other non-federal payments actually 
committed to implementation of the Settlement. Payments made 
under subsection 109(c)(2) and proceeds under subsection 
109(c)(3) of the Act shall not be counted in determining the 
amount of additional appropriations the Secretary may expend. 
The Secretary is also authorized to use monies from the Central 
Valley Project Restoration Fund created under section 3407 of 
the Reclamation Projects Authorization and Adjustment Act of 
1992 for purposes of this Act, which are in addition to the 
$250 million authorized for appropriations.
    (c) Fund.--This subsection establishes within the Treasury 
of the United States a fund to be known as the ``San Joaquin 
River Restoration Fund.'' Money in this Fund shall be used 
solely for the purpose of implementing the Settlement and is to 
be available for expenditure without further appropriation. 
Money shall be deposited into the San Joaquin River Restoration 
Fund from the following sources: (1) starting at the beginning 
of the fiscal year following enactment of this Act, all 
payments received pursuant to section 3406(c)(1) of the 
Reclamation Projects Authorization and Adjustment Act of 1992; 
(2) the capital component (not otherwise needed to cover 
operation and maintenance costs) of payments made by Friant 
Division long-term contractors pursuant to long-term water 
service contracts or repayment contracts, which includes 
construction costs as well as any other capitalized costs; (3) 
proceeds from the sale of water pursuant to the Settlement, or 
from the sale of property or interests in property as provided 
in section 105; and (4) any non-federal funds, including state 
cost-sharing funds, contributed to the United States for 
implementation of the Settlement, which the Secretary may 
expend without further appropriation for the purposes for which 
contributed.
    The Committee is also mindful of and remains committed to 
progress in implementing and funding the December 19, 2000, 
Trinity River restoration record of decision and the Hoopa 
Valley Tribe's comanagement of the decision's important goal of 
restoring the fishery resources that the United States holds in 
trust for the Hoopa Valley Tribe.
    (d) Limitation on Contributions.--This subsection directs 
that payments made by long-term contractors who receive water 
from the Friant Division and Hidden and Buchanan Units of the 
Central Valley Project pursuant to sections 3406(c)(1) and 
3407(d)(2) of the Reclamation Projects Authorization and 
Adjustment Act of 1992 and payments made pursuant to paragraph 
16(b)(3) of the Settlement and section 109(c)(2) of this Act 
shall be the maximum of the settlement parties' direct 
financial contribution to the Settlement, subject to the terms 
and conditions of paragraph 21 of the Settlement.
    (e) No Additional Expenditures Required.--This subsection 
provides that nothing in this Act shall be construed to require 
a federal official to expend federal funds not appropriated by 
Congress or to seek the appropriation of additional funds by 
Congress, for the implementation of the Settlement.
    (f) Reach 4B.--This subsection provides that, prior to 
restoring any flows other than Interim Flows in Reach 4B, the 
Secretary shall conduct a study that specifies the cost of any 
work required to ensure conveyance of at least 475 cubic feet 
per second through Reach 4B, the impact of such flows, and 
measures that are to be implemented to mitigate any such 
impacts. Reach 4B of the San Joaquin River extends from the 
Sand Slough Control Structure downstream to the Bear Creek 
confluence. The subsection also requires the Secretary to file 
a report with Congress within 90 days after issuing a 
determination on whether to expand channel conveyance capacity 
to 4500 cubic feet per second in Reach 4B of the San Joaquin 
River, or use an alternative route for pulse flows. This report 
shall address the basis for the Secretary's determination, the 
Secretary's final cost estimates for expanding Reach 4B or any 
alternative route selected, and the Secretary's plan for 
funding such costs. If the estimated federal cost for expanding 
Reach 4B would exceed remaining federal funding authorized by 
this Act, then before the Secretary commences actual 
construction work in Reach 4B to expand capacity to 4500 cubic 
feet per second, Congress must have increased the applicable 
authorization ceiling provided in this Act in an amount at 
least sufficient to cover the higher estimated federal costs. 
This limitation does not apply to planning, design, 
feasibility, or other preliminary measures.

Section 110. Repayment contracts and acceleration of repayment of 
        construction costs

    (a) Conversion of Contracts.--This subsection authorizes 
and directs the Secretary to convert, before December 31, 2010, 
all existing Friant division, Hidden Unit, and Buchanan Unit 
long-term water service contracts to repayment contracts. The 
Secretary would also be authorized, but not required, to 
convert existing long-term water service contracts for 
municipal water deliveries to repayment contracts by the same 
date. All such contracts must require the repayment of the 
remaining amount of construction costs allocated to each 
contractor no later than January 31, 2011, or by January 31, 
2014 if payment is made in approximately equal annual 
installments. The subsection also provides for payment of 
additional construction or other capitalized costs properly 
assignable to such contractor, and makes clear that power 
revenues will not be available to aid the contractors in 
fulfilling the repayment obligations, and specifies that the 
repayment contracts will continue as long as the contractors 
pay applicable charges. The Committee is aware that the 
affected contractors as well as various Third Parties have not 
yet determined whether they support the provisions that have 
been included in Section 110. The sponsors of the legislation 
have committed that the amended bill with Section 110 included 
will not progress unless the Settling Parties and the Third 
Parties support those provisions.
    (b) Final Adjustment.--This subsection directs that 
payments made under subsection a) shall be adjusted following a 
final cost allocation of the costs of the Central Valley 
Project. In the event that the costs properly assignable to a 
contractor are greater than what has been paid, the contractor 
shall be obligated to pay the remaining allocated costs. In the 
event the costs properly assignable to the contractor are less 
than what has been paid, the Secretary is authorized and 
directed to credit the overpayment as an offset against any 
outstanding or future obligation of the contractor.
    (c) Applicability of Certain Provisions.--This subsection 
provides that upon a contractor's compliance with and discharge 
of the repayment obligations set out in subsection 110(a)(1), 
the acreage and pricing provisions of the Reclamation Reform 
Act shall not apply to lands in the district, and the Secretary 
is to waive the tiered pricing provisions of section 3405(d) of 
the Reclamation Projects Authorization and Adjustment Act of 
1992. The contractor must continue to pay all applicable 
operation and maintenance costs and other charges applicable to 
the repayment contracts under then-current rate-setting policy 
and applicable law.
    (d) Reduction of Charge.--This subsection provides that 
beginning in 2019, the Secretary shall reduce the charge 
mandated in section 107(1) of the Act in recognition of 
financing costs incurred by the districts in making the 
payments under subsection 110(a)(1). As with other parts of 
this new section 110, the Committee recognizes that the 
Settling Parties and Third Parties have not yet approved this 
subsection (d) but have deferred final judgment pending more 
specific information on what reduction is envisioned in 
connection with the conversion to repayment contracts and 
accelerated payments.
    (e) Satisfaction of Certain Provisions.--
          (1) General.--This subsection provides that upon the 
        first release of Interim Flows or Restoration Flows 
        pursuant to paragraphs 13 or 15 of the Settlement, any 
        agreement to which one or more long-term Friant water 
        service or repayment contractor is a party that 
        provides for the transfer or exchange of water (other 
        than water released as Interim Flows or Restoration 
        Flows) shall be deemed to satisfy the provisions of 
        subsection 3405(a)(1)(A) and (I) of Public Law 102-575. 
        However, the contractor must provide to the Secretary, 
        not later than 90 days before commencement of the 
        transfer or exchange, written notice stating how the 
        proposed transfer or exchange is intended to reduce, 
        avoid, or mitigate impacts to water deliveries caused 
        by the Interim Flows or Restoration Flows or is 
        intended to otherwise facilitate the Water Management 
        Goal. The Secretary is to promptly make all such 
        notices publicly available.
          (2) Determination of Reductions to Water 
        Deliveries.--This subsection establishes that water 
        transferred or exchanged under an agreement that meets 
        the terms of section 110(e) shall not be counted as a 
        replacement or offset for purposes of determining 
        reductions to water deliveries to any Friant Division 
        long-term contractor except as called for by paragraph 
        16(b) of the Settlement. At least annually, the 
        Secretary must publish information about all transfers 
        and exchanges that invoke the provisions of this 
        subsection.
          (3) State Law.--This subsection provides that nothing 
        in this subsection alters state law or permit 
        conditions.
    (f) Certain Repayment Obligations Not Altered.--This 
subsection provides that nothing in the Act shall be construed 
to alter the repayment obligation of any long term water 
contractor receiving water from the CVP, other than those 
identified in subsection 110(a), because of implementation of 
section 110 of the Act.
    (g) Statutory Interpretation.--This subsection states that 
the Act does not affect the right of any Friant Division long-
term contractor to use a particular type of financing to make 
the payments required in subsection 109(a)(1). The Committee 
understands that the contractors may issue tax-exempt bonds to 
finance the obligations under this section.

Section 111. California Central Valley Spring Run Chinook salmon

    (a) Finding.--In this subsection, Congress finds that the 
implementation of the Settlement is a unique and unprecedented 
circumstance requiring clear expressions of Congressional 
intent regarding how the provisions of the Endangered Species 
Act of 1973 (16 U.S.C. 1531 et seq.) are to be utilized to 
achieve the goals of restoration of the San Joaquin River and 
the successful reintroduction of Central Valley Spring Run 
Chinook salmon.
    (b) Reintroduction in the San Joaquin River.--This 
subsection directs that California Central Valley Spring Run 
Chinook salmon shall be reintroduced in the San Joaquin River 
below Friant Dam as an experimental population pursuant to 
section 10(j) of the Endangered Species Act of 1973 (16 U.S.C. 
1539(j)) and the Settlement, provided that the Secretary of 
Commerce finds that a permit for the reintroduction of 
California Central Valley Spring Run Chinook salmon may be 
issued pursuant to section 10(a)(1)(A) of the Endangered 
Species Act of 1973 (16 U.S.C. 1539(a)(1)(A)).
    (c) Final Rule.--This subsection directs the Secretary of 
Commerce to issue a final rule pursuant to section 4(d) of the 
Endangered Species Act of 1973 (16 U.S.C. 1533(d)) governing 
the incidental take of reintroduced Central Valley Spring Run 
Chinook salmon prior to the reintroduction. This rule shall 
provide that the reintroduction will not impose more than de 
minimis water supply reductions, additional storage releases, 
or bypass flows on unwilling third parties. For purposes of 
this subsection, third parties are defined as persons or 
entities that divert or receive water pursuant to applicable 
state and federal law, including Central Valley Project 
contractors outside of the Friant Division of the Central 
Valley Project and the State Water Project. Nothing in this 
section diminishes the statutory or regulatory protections 
provided in the Endangered Species Act for listed species other 
than the reintroduced population of California Central Valley 
Spring Run Chinook salmon or precludes the Secretary or 
Secretary of Commerce from imposing protections under the 
Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.) for 
other listed species on the ground that such protections also 
provide incidental benefits to the reintroduced Central Valley 
Spring Run Chinook salmon.
    (d) Report.--This subsection provides that no later than 
December 31, 2024, the Secretary of Commerce is required to 
report to Congress on the progress made on the reintroduction 
set forth in this section and the Secretary's plans for further 
implementation of the reintroduction.
    (e) FERC Projects.--With regard to California Central 
Valley Spring Run Chinook salmon reintroduced pursuant to the 
Settlement, this subsection directs the Secretary of Commerce 
to exercise his or her authority under Section 18 of the 
Federal Power Act (16 U.S.C. 811) by reserving the right to 
file prescriptions in proceedings for projects licensed by the 
Federal Energy Regulatory Commission on the Calaveras, 
Stanislaus, Tuolumne, Merced, and San Joaquin rivers and 
otherwise consistent with the incidental take provisions 
established pursuant to subsection (c) of this Act until after 
the expiration of the term of the Settlement, December 31, 
2025, or the expiration of the designation of an experimental 
population made pursuant to subsection (b) of this Act, 
whichever ends first. Nothing in this subsection shall preclude 
the Secretary of Commerce from imposing prescriptions pursuant 
to section 18 of the Federal Power Act (16 U.S.C. 811) solely 
for other anadromous fish species on the ground that those 
prescriptions also provide incidental benefits to reintroduced 
Central Valley Spring Run Chinook salmon.
    (f) Effect of Section.--Provides that nothing in this 
section modifies or establishes a precedent with respect to any 
other application of the Endangered Species Act of 1973 or the 
Federal Power Act (16 U.S.C. 791a et seq.).

Section 112. Offsetting receipts

    This section provides additional revenues for the United 
States and treats those revenues as offsetting receipts by 
raising the fee for non-producing federal oil and gas leases in 
the Gulf of Mexico. Specifically, this section establishes a 
``conservation of resources'' fee for certain deepwater leases 
entered into in 1998 and 1999 that provided royalty relief 
regardless of the market price of oil and gas. CBO's subsequent 
preliminary analysis of the cost of Title I of H.R. 4074 
revealed that the costs of implementing the settlement 
legislation had indeed been reduced, but that Title I of H.R. 
4074 still involves between $170 million and $190 million in 
direct spending.
    In anticipation of the passage of legislation related to 
the San Joaquin Settlement, the FY 2008 House Budget Resolution 
contains a special reserve fund that allows the offset for the 
legislation to come from any source, not just those within the 
jurisdiction of the House Committee on Natural Resources. To 
meet Chairman Rahall's policy that all legislation reported out 
of the Committee meets House PAYGO guidelines, H.R. 4074 
includes an offset for the $170 million in direct spending. 
Past CBO analysis have estimated this ``conservation of 
resources'' fee would generate in excess of $170 million in 
revenues for the U.S. Treasury.

             TITLE II. STUDY TO DEVELOP WATER PLAN; REPORT

Section 201. Study to develop water plan; Report

    This section authorizes direct financial assistance to the 
California Water Institute to study coordination and 
integration of sub-regional integrated regional water 
management plans into a unified Integrated Regional Water 
Management Plan. The study area includes the San Joaquin River 
Hydrologic Region and the Tulare Lake Hydrologic Region. 
Appropriations of $1,000,000 are authorized by this section, to 
remain available until expended. The section also requires the 
Secretary of the Interior to submit a report to the authorizing 
committees of jurisdiction in the House of Representatives and 
the Senate.
    In addition to the revised text to implement the 
settlement, H.R. 4074 contains a new Title II that encompasses 
the text of the subcommittee-passed version of H.R. 2498. This 
provision authorizes appropriations in the amount of $1,000,000 
to assist in the preparation of an Integrated Regional Water 
Management Plan for an eight-county area in Central California.

            COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Article I, section 8 of the Constitution of the United 
States grants Congress the authority to enact this bill.

                    COMPLIANCE WITH HOUSE RULE XIII

    1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(3)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.
    2. Congressional Budget Act. As required by clause 3(c)(2) 
of rule XIII of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, this 
bill does not contain any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to authorize the implementation of 
the San Joaquin River Restoration Settlement, and for other 
purposes.
    4. Congressional Budget Office Cost Estimate. Under clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for this bill from the Director of the Congressional Budget 
Office:

H.R. 4074--San Joaquin River Restoration Settlement Act

    Summary: H.R. 4074 would implement a judicial settlement 
between the federal government--specifically, the Bureau of 
Reclamation's Friant Division of the Central Valley Project 
(CVP) in California--and a coalition of conservation and 
fishing groups. The bill would authorize and direct the 
Secretary of the Interior to design and construct improvements 
to the San Joaquin River; modify operations of the Friant Dam; 
acquire water or water rights; and implement terms of the 
settlement relating to recapture and reuse of water to minimize 
water supply disruptions to the Friant Dam. The bill also would 
impose a new conservation of resources fee on certain oil and 
gas leases on lands on the Outer Continental Shelf (OCS).
    CBO estimates that enacting this legislation would decrease 
net direct spending by $1.7 billion over the 2009-2018 period. 
(It also would increase direct spending by $19 million a year 
over the 2019-2030 period.) We estimate that implementing H.R. 
4074 also would increase discretionary spending $221 million 
over the 2009-2018 period, assuming appropriation of the 
authorized amounts. Additional discretionary spending would 
occur after 2018 for further construction and operation and 
maintenance of the project.
    H.R. 4074 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA). The bill would 
benefit state, local, and tribal governments, and any costs 
they incur would result from complying with conditions for 
receiving federal assistance.
    H.R. 4074 contains private-sector mandates as defined in 
UMRA. The bill would require holders of oil or gas leases of 
lands on the outer continental shelf to pay a conservation of 
resources fee. In addition, the bill would impose a mandate if 
the Secretary of the Interior acquires land from private 
landowners through eminent domain in order to implement the 
settlement. CBO estimates that the aggregate cost of the 
mandates would exceed the annual threshold established in UMRA 
for private-sector mandates ($136 million in 2008, adjusted 
annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4074 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment) and 950 (undistributed 
offsetting receipts).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in millions of dollars--
                                 -----------------------------------------------------------------------------------------------------------------------
                                   2009     2010      2011      2012      2013      2014      2015      2016      2017      2018    2009-2013  2009-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Early Repayment of Capital Debt:
    Estimated Budget Authority..       0         0       -44       -44       -44       -44        11        11        11        11       -132       -132
    Estimated Outlays...........       0         0       -44       -44       -44       -44        11        11        11        11       -132       -132
Authority to Spend Certain
 Collections:
    Estimated Budget Authority..      19        19        63        63        63        63         8         8         8         8        227        322
    Estimated Outlays...........      15        15        50        58        59        58        33        18         8         8        197        322
Conservation of Resources Fees:
    Estimated Budget Authority..     -92      -114      -121      -257      -283      -294      -178      -177      -182      -192       -867     -1,890
    Estimated Outlays...........     -92      -114      -121      -257      -283      -294      -178      -177      -182      -192       -867     -1,890
    Total Changes in Spending
     Under H.R. 4074:
    Estimated Budget Authority..     -73       -95      -102      -238      -264      -275      -159      -158      -163      -173       -772     -1,700
    Estimated Outlays...........     -77       -99      -115      -243      -268      -280      -134      -148      -163      -173       -802     -1,700

                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level...       3         2         2        62        32        52        32        42         7         7        101        241
Estimated Outlays...............       2         3         2        52        27        52        27        42         7         7         86        221
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that H.R. 
4074 will be enacted at the end of fiscal year 2008 and that 
the authorized amounts will be appropriated for each fiscal 
year.

Direct spending

    H.R. 4074 would allow the capital debt incurred for the 
original construction of the Friant Dam to be repaid early and 
would authorize the expenditure of certain federal collections 
that, under current law, cannot be spent without an 
appropriation. The bill also would impose a conservation of 
resources fee on certain oil and gas leases on OCS lands in the 
Gulf of Mexico.
    CBO estimates that enacting those changes would increase 
direct spending by $190 million over the 2008-2018 period and 
increase offsetting receipts (from new OCS fees) by about $1.9 
billion over the same period. The net effect of those changes 
would be a decrease in direct spending of $1.7 billion.
    Early Repayment of Capital Debt. Section 110 of the bill 
would require the Secretary to convert certain existing 
contracts of the Central Valley Project from water service to 
repayment contracts. Under the new agreements, the contractors 
of CVP's Friant Division would be required to repay their share 
of the capital investment in the project, either in a lump sum 
or on an accelerated schedule.
    CBO expects that enacting section 110 would cause CVP 
contractors to make four equal payments totaling $220 million 
over the 2011-2014 period, rather than paying $11 million 
annually through 2030 as they would under current law. The net 
effect of the expedited repayment schedule would be an increase 
in collections of $132 million over the 2011-2018 period and a 
loss of $11 million per year from 2019 to 2030. In addition, 
section 110 stipulates that the Secretary would be required to 
reduce a surcharge for environmental restoration paid by Friant 
contractors as a result of early repayment of the capital 
costs. CBO estimates that, beginning in 2019, the surcharge 
would be eliminated, causing a loss of offsetting receipts of 
$8 million per year through the life of the project.
    Changes in Spending Authority. H.R. 4074 would make 
available to the Bureau of Reclamation certain federal 
collections that are not currently available unless 
appropriated. CBO estimates that making those collections 
available without further appropriation would increase direct 
spending by $322 million over the 2009-2018 period.
    Under section 109, payments made by Friant contractors 
would be deposited into a new San Joaquin River Restoration 
Fund and would be available without further appropriation. The 
collections to be deposited into the new fund would include 
amounts paid for the capital cost of the Friant Dam (an 
estimated $11 million a year through 2010) and amounts 
collected from the Friant surcharge described above (about $8 
million annually). Those collections are currently deposited in 
the Reclamation Fund and the Central Valley Project Restoration 
Fund, respectively. The new fund also would receive the $220 
million to be paid under the new repayment contracts required 
by section 110. Deposits into the fund would be available, 
without further appropriation, to implement the settlement.
    Conservation of Resources Fee. Section 112 would impose a 
new conservation of resources fee on all nonproducing leases 
for OCS lands in the Gulf of Mexico and would classify those 
payments as offsetting receipts (a reduction in direct 
spending). A fee of $3.75 per acre (in 2005 dollars) would 
apply to nonproducing leases in effect on October 1, 2006, and 
beyond. Under CBO's baseline projection of the acreage under 
such leases, enacting this provision would increase offsetting 
receipts by $1.9 billion over the 2009-2018 period.

Spending subject to appropriation

    H.R. 4074 would authorize the appropriation of up to $250 
million to help pay for improvements to the Cental Valley 
watershed, contingent upon the receipt of matching funds from 
the state of California. By implementing the settlement 
agreement, the bill also would authorize the appropriation of 
up to $2 million per year from the Central Valley Project 
Restoration Fund to implement the settlement. Finally, the bill 
would require the Secretary to provide assistance to California 
State University, Fresno, to develop an Integrated Regional 
Water Management Plan. Assuming that California would match 
federal funding and that appropriation of the authorized 
amounts would be made as needed, CBO estimates that 
implementing those provisions of H.R. 4074 would cost $221 
million over the 2009-2018 period and about $75 million after 
2018.
    Estimated impact on state, local, and tribal governments: 
H.R. 4074 contains no intergovernmental mandates as defined in 
UMRA. Water restoration and management activities authorized in 
the bill would benefit state, local, and tribal governments 
that implement activities to restore wildlife and water flow of 
the San Joaquin River in the state of California. Any costs 
that the state might incur, including matching funds, would 
result from complying with conditions of federal assistance.
    Estimated impact on the private sector: H.R. 4074 contains 
private-sector mandates as defined in UMRA. CBO estimates that 
the aggregate cost of those mandates would exceed the annual 
threshold established in UMRA ($136 million in 2008, adjusted 
annually for inflation).
    The bill would impose a private-sector mandate on holders 
of oil or gas leases in the Gulf of Mexico by establishing a 
conservation of resources fee on leased acreage that is not 
producing. That fee would be set at $3.75 per acre per year 
(2005 dollars) and would apply retroactively to October 1, 
2006. Because any new leases with the fee would be entered into 
voluntarily, the fee would only constitute a mandate for 
holders of existing oil or gas leases. CBO estimates that those 
leaseholders would pay annual fees that total about $700 
million over the first five years the mandate is in effect. CBO 
expects that the fees would exceed the threshold in at least 
two of those years.
    H.R. 4074 also would impose a private-sector mandate if the 
Secretary of the Interior acquires land from private landowners 
through eminent domain in order to implement the settlement. 
The cost of the mandate would be the fair market value of the 
property and any expenses incurred by private landowners in 
transferring that property to the federal government. (The 
Department of the Interior would have to compensate landowners 
for the fair market value of the land and the original land 
owners would have the right of first refusal to repurchase such 
land if the Secretary determines that it is no longer necessary 
for implementation of the settlement.) CBO estimates that 
because the use of eminent domain would be rare, the cost of 
this mandate would be small.
    Previous estimate: On April 18, 2007, CBO transmitted a 
cost estimate for H.R. 24, the San Joaquin River Restoration 
Settlement Act, as introduced in the House of Representatives 
on January 4, 2007. The two versions of the San Joaquin River 
Restoration Settlement Act are similar but provide different 
funding mechanisms. The cost estimates reflect those 
differences.
    Estimate prepared by: Federal costs: Tyler Kruzich (Water 
resources) and Kathleen Gramp (OCS); Impact on state, local, 
and tribal governments: Lisa Ramirez-Branum; Impact on the 
private sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                    COMPLIANCE WITH PUBLIC LAW 104-4

    This bill contains no unfunded mandates.

                           EARMARK STATEMENT

    H.R. 4074 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(d), 9(e) or 9(f) of rule XXI.

                PREEMPTION OF STATE, LOCAL OR TRIBAL LAW

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

                        CHANGES IN EXISTING LAW

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

                            DISSENTING VIEWS

    We oppose H.R. 4074 in its current form. While we support 
the laudable goals of river restoration and the settlement of 
litigation, we are dismayed that the Majority has turned what 
was once a bipartisan effort into a partisan debate aimed at 
raising taxes on the American public. Further, this bill is yet 
another instance where the Majority has turned a deaf ear to a 
Member of Congress whose district is most negatively impacted 
by legislation. We hope that this is not a harbinger of how the 
Majority will operate for the remainder of this Congress.
    The mechanism used to pay for this legislation is very 
troubling. At a time when energy prices are substantially 
increasing for America's families, H.R. 4074 imposes a fee on 
oil and gas outer continental shelf leases in the Gulf of 
Mexico even though the bill's goal is related to non-coastal 
river restoration in California. This fee, an illegal breach of 
contract on existing leases, like all other fees, will only be 
passed to the consumer through higher energy costs. Despite the 
Majority's rhetorical promises to reduce costs for energy 
consumers, the only result thus far in this Congress is to 
raise energy prices and impede domestic energy production. H.R. 
4074 is yet another sad page from that book. Since the Majority 
has unilaterally imposed their own methods of paying for direct 
spending impacts, it is also important to note the bill's oil 
and gas fee has been used three times already to pay for a 
number of programs. In response, the Majority has indicated 
that the bill's offset was a mere ``placeholder'' that could be 
replaced by yet another proposal, such as energy-consumer 
financed nuclear cleanup fees. This lack of transparency and 
financial gimmickry of using the same fund to pay for other 
proposals lead many to question the legitimacy of the budget 
process being imposed by the Majority.
    Since this bill relates to San Joaquin River restoration, 
we strongly believe that Californians should pay for more of 
this effort--especially when the litigation in question 
primarily revolves around a California Game and Fish statute. 
For this reason, Rep. Doug Lamborn (R-CO) offered an amendment 
to increase the rental fees that San Francisco, California pays 
for using the Hetch Hetchy Reservoir in Yosemite National Park. 
Currently, San Francisco pays an annual $30,000 to the federal 
government for its use of the Reservoir, which flooded what 
famed conservationist John Muir called ``one of Nature's rarest 
and most precious mountain temples.'' According to the 
organization Restore Hetch Hetchy, San Francisco generates 
approximately $40 million in annual hydropower revenues from 
the Hetch Hetchy system, yet has only paid $30,000 annually or 
7 cents an acre for over 70 years. In light of this gross 
inequity and since H.R. 4074 benefits San Franciscans and many 
of the City-based organizations party to the San Joaquin River 
litigation, the Lamborn amendment sought to make Californians 
pay a fair share. Unfortunately, the amendment, and all other 
Republican amendments, were rejected on party lines nor was the 
Majority open to any negotiation on adopting or compromising on 
any of the amendments filed by Republicans.
    We also note that this bill lacks the support from many of 
the communities significantly impacted by the water losses 
resulting from this bill. This is of great concern in light of 
the economic challenges already facing these communities. In 
fact, the Congressional Research Service found that this area 
of the San Joaquin Valley in California is the poorest region 
in the country, including Appalachia. The water losses stemming 
from the San Joaquin bill will only make this bad economic 
situation worse. In testimony to the Committee earlier this 
year, Tulare County, California Supervisor Allen Ishida asked 
for ``concrete mitigation language in the implementation 
legislation.'' H.R. 4074 unfortunately contains no provisions 
helping those communities cope with what will be a historic and 
unprecedented shift in water use.
    By ignoring these concerns and the related concerns brought 
up by the Member of Congress whose district will be the most 
significantly impacted by the water shift and by engaging in 
nontransparent and faulty offsets, the Majority is setting this 
bill up for failure on all levels.
    Although we oppose H.R. 4074 in its current form because of 
its partisan nature, we are hopeful that there will be further 
debate under regular order in the House of Representatives. We 
take the Chairman at his word that this bill will be considered 
on the House floor by itself and we look forward to having 
opportunities to consider amendments under a fair and open 
rule.

                                   Don Young.
                                   Chris Cannon.
                                   Tom Tancredo.
                                   Jeff Flake.
                                   Steve Pearce.
                                   Henry Brown.
                                   Cathy McMorris Rodgers.
                                   Louie Gohmert.
                                   Tom Cole.
                                   Rob Bishop.
                                   Doug Lamborn.
                                   Mary Fallin.
                                   Elton Gallegly.
                                   Dean Heller.
                                   Bill Shuster.
                                   Bill Sali.
                                   Luis Fortuno.
                                   John J. Duncan, Jr.

                                  
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