Senate Report 113-56 - FORT SUMNER PROJECT TITLE CONVEYANCE

[Senate Report 113-56]
[From the U.S. Government Publishing Office]

Calendar No. 110
113th Congress Report
} SENATE { 1st Session 113-56
======================================================================

FORT SUMNER PROJECT TITLE CONVEYANCE

_______

June 27, 2013.--Ordered to be printed

_______

Mr. Wyden, from the Committee on Energy and Natural Resources,
submitted the following

R E P O R T

[To accompany S. 284]

The Committee on Energy and Natural Resources, to which was
referred the bill (S. 284) to transfer certain facilities,
easements, and rights-of-way to Fort Sumner Irrigation
District, New Mexico, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.

PURPOSE

The purpose of S. 284 is to transfer certain facilities,
easements, and rights-of-way to Fort Sumner Irrigation
District, New Mexico.

BACKGROUND AND NEED

The Fort Sumner Project area was developed by private
interests in the mid-1800s. The project includes approximately
6,500 acres and is located within the Pecos River basin in
Eastern New Mexico. Some of the first irrigators were the
Apache and Navajo Indians, held in captivity by United States
troops under the command of Kit Carson. The Fort Sumner
Irrigation District (District) acquired the property in 1919.
In 1949, Congress authorized the Bureau of Reclamation
(Reclamation) to rehabilitate the project and Reclamation and
the District entered into a repayment contract to allow the
U.S. to recover the costs of the rehabilitation work.
In 2009, the District entered into a forbearance agreement
with Reclamation whereby the District has agreed not to take
all of the irrigation water it is entitled to take each year
and receives a payment for that water from Reclamation.
Reclamation stores the water and uses it to keep the Pecos
River wet in times of drought in order to comply with
Endangered Species Act flow requirements for the Pecos
bluntnose shiner. The payment the District receives for water
offsets the amount the District owes the U.S. under its
repayment agreement. The 2009 forbearance agreement includes
provisions that the U.S. will support title transfer to the
District.
A Memorandum of Agreement between Reclamation and the
District will govern the title transfer process. Upon transfer
of title, the repayment contract will terminate, but the
forbearance agreement will continue for at least ten years. S.
284 is needed to facilitate the transfer.

LEGISLATIVE HISTORY

S. 284 was introduced by Senator Udall of New Mexico and
Senator Heinrich on February 12, 2013. The Subcommittee on
Water and Power held a hearing on S. 284 on April 16, 2013. At
its business meeting on May 16, 2013, the Committee ordered S.
284 favorably reported by voice vote.
In the 112th Congress, Senators Bingaman and Udall of New
Mexico introduced similar legislation, S. 1225. The
Subcommittee on Water and Power held a hearing on June 23, 2011
(S. Hrg. 112-129).

COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in
open business session on May 16, 2013, by a voice vote of a
quorum present, recommends that the Senate pass S. 284.

SECTION-BY-SECTION ANALYSIS

Section 1 provides for the short title, the ``Fort Sumner
Project Title Conveyance Act''.
Section 2 defines key terms in the bill.
Section 3(a) and (b) authorizes the Secretary of the
Interior (Secretary) to convey United States right and title to
all works, lands, and facilities of the Fort Sumner reclamation
project to the Fort Sumner Irrigation District (District) in
accordance with the terms and conditions of the Transfer
Agreement, subject to all valid existing rights.
Subsection (c) stipulates that the costs of conveyance
including environmental compliance may be shared between the
United States and District in accordance with the Memorandum of
Agreement between the United States and the Fort Sumner
Irrigation District Concerning Principles and Elements of
Proposed Transfer of Title to Fort Sumner Irrigation District
Facilities,'' numbered 11-WC-40-406.
Subsections (d) and (e) direct the Secretary to assure
compliance with environmental laws before conveyance. The
Secretary is further directed to report to Congress if
conveyance is not completed within 2 years of completion of the
requirements stipulated above.
Section 4 requires that after the date of conveyance, the
U.S. shall have no further interest in or responsibility for
operating and maintaining the project and shall not be liable
for damages to the conveyed property, other than for damages
committed by the U.S or its agents.
Section 5 stipulates that effective beginning on the date
of conveyance, the repayment contract between the U.S. and the
District (numbered Ilr--1524 and dated November 5, 1948,
including supplements and amendments) shall terminate and the
U.S. and the District shall have no further obligations under
the contract.
Section 6 orders that the terms and conditions of the
forbearance agreement between the U.S. and the District
(numbered 08-WC-40-292, dated August 21, 2009) for the
forbearance of exercising priority water rights shall remain in
full force and effect on termination of the Repayment Contract
for not less than 10 years after the enactment of this Act and
that the U.S. shall have no payment obligation under the
agreement.
Section 7 states that after conveyance, the property shall
not be considered a Federal reclamation project and shall not
be eligible to receive benefits, except for those that would be
available to a similarly situated entity with respect to
property that is not part of a Federal reclamation project.

COST AND BUDGETARY CONSIDERATIONS

The following estimate of costs of S. 284 has been provided
by the Congressional Budget Office:

S. 284--Fort Sumner Project Title Conveyance Act

S. 284 would direct the Secretary of the Interior to convey
the title of the Fort Sumner Project, including the diversion
dam and all associated features, to the Fort Sumner Irrigation
District. Based on information from the Bureau of Reclamation,
enacting the legislation also would end the repayments the
District makes to the U.S. Treasury for certain costs of the
project. CBO estimates that those repayments will total about
$550,000 under current law over the 2014-2023 period. Because
enacting the legislation would decrease offsetting receipts,
which are treated as reductions in direct spending, pay-as-you-
go procedures apply. The legislation would not affect revenues.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending or revenues. S. 284 would decrease offsetting
receipts (thus, increasing direct spending) beginning in 2014,
for a total cost of $550,000 through 2023.

CBO ESTIMATE OF THE STATUTORY PAY-AS-YOU-GO EFFECTS FOR S. 284 AS
ORDERED REPORTED BY THE SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES
ON MAY 16,
2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------------------------------------
2013- 2013-
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2018 2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact............................... 0 0 0 0 0 0 0 0 0 0 0 0 1
--------------------------------------------------------------------------------------------------------------------------------------------------------

S. 284 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Aurora Swanson.
The estimate was approved by Theresa Gullo, 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. 284.
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. 284, as ordered reported.

CONGRESSIONALLY DIRECTED SPENDING

S. 284, as reported, does not contain any congressionally
directed spending items, limited tax benefits, or limited
tariff benefits as defined in rule XLIV of the Standing Rules
of the Senate.

EXECUTIVE COMMUNICATIONS

The testimony provided by the U.S. Department of the
Interior at the April 16, 2013, Subcommittee on Water and Power
hearing on S. 284 follows:

Statement of Robert Quint, Senior Advisor Bureau of Reclamation U.S.
Department of Interior

Chairman Schatz and members of the Subcommittee, I am
Robert Quint, Senior Advisor at the Bureau of Reclamation
(Reclamation). I am pleased to provide the views of the
Department of the Interior (Department) regarding S. 284, which
would authorize the Secretary of the Interior to convey title
to all of the works of the Fort Sumner Project (including the
diversion dam, easements, ditches, laterals, canals, drains,
and other rights) to the Fort Sumner Irrigation District
(FSID). The Department supports S. 284.
In 2011, S. 1225 was introduced in the 112th Congress,
which would have authorized the United States to convey title
to all of the works of the Fort Sumner Project to the FSID. At
the time of the hearing on June 23, 2011 before this Committee
on that bill, it was the view of the Administration that a
number of issues had yet to be resolved between the United
States and FSID, including a net financial loss to the Treasury
of approximately $250,000, the need for an open and transparent
process for the public to provide input prior to conveyance of
title, and the need for Reclamation and FSID to work through a
collaborative process to ensure that operational, fiscal,
environmental, and other issues are identified and addressed.
However, since that time, Reclamation and FSID have worked
together and a number of those issues are addressed in S. 284.
Specifically, in 2012, the ``Memorandum of Agreement between
the United States and the Fort Sumner Irrigation District
Concerning Principles and Elements of Proposed Transfer of
Title to Fort Sumner Irrigation District'' (MOA) was executed,
which addresses the issues we had with the previous legislation
as described below.

background

There are two Reclamation projects on the Pecos River
located in southeastern New Mexico: the Carlsbad and Fort
Sumner Projects. The Fort Sumner Project was developed by
private interests at the turn of the last century. In the
1950s, this project was reconstructed and rehabilitated by
Reclamation. In 1948, in order to make this happen, Reclamation
and the FSID executed a contract to provide for the repayment
of construction costs to rehabilitate the project. As part of
the process, Reclamation law required that Reclamation take
title to the Project. Currently, the FSID has an annual
repayment obligation of about $54,500 with an outstanding
balance of approximately $597,697.00
The FSID holds a senior water right for not more than 100
cubic feet per second from the natural flow of the Pecos River.
Reclamation must bypass the FSID's water through Sumner
Reservoir prior to storing water for the Carlsbad Project. Over
the past ten years, Reclamation has consulted with the U.S.
Fish and Wildlife Service (Service) to ensure that Federal
actions are not jeopardizing the existence of the Pecos
bluntnose shiner or adversely modifying its critical habitat
located below FSID's diversion dam. In these consultations,
Reclamation has committed to the Service to maintain the shiner
population level by minimizing river drying. A significant
cause of drying on the Pecos is due to the FSID diverting its
senior water right. The only way Reclamation has been able to
keep the Pecos River flowing is by purchasing water from
willing sellers and by paying the FSID not to divert water
through a forbearance agreement.
In August 2009, Reclamation and FSID entered into a
mutually beneficial agreement whereby FSID would forbear the
diversion of up to 2,500 acre-feet of water annually for ten
years when they would otherwise be in priority. Instead, this
water goes into Sumner Lake reservoir where it is stored and
delivered for Reclamation to prevent intermittency of flows on
the Pecos River in compliance with the 2006 biological opinion.
Reclamation pays FSID $60,000 annually plus $20 per acre-foot
for the water. In addition to the forbearance of this water,
FSID agreed to pursue ESA Section 10 consultation with the
Service and Reclamation agreed to assist them in this process.
Also in this agreement, FSID indicated its desire to take title
to the facilities and Reclamation agreed to work with them on
that process. The forbearance agreement further provides that
the annual payments of $60,000 from Reclamation to FSID will
cease upon both the passage of title transfer legislation and
the conveyance of title. To date, this has been a mutually
beneficial agreement. The forbearance water has afforded
Reclamation with an additional tool to meet the biological
opinion to ensure that the Pecos River does not run dry in a
cost effective manner.
As drafted, S. 284 protects the financial interests of the
taxpayers of the United States. Under the terms of the
Forbearance Agreement that is currently in place, Reclamation
pays FSID $60,000 annually plus $20 per acre-foot for water.
Under the terms of S. 284, after title transfer, the $60,000
annual payments from the United States to FSID would cease. At
the same time, FSID's repayment obligation of $597,697 to the
United States would also cease. These two revenue streams--one
to FSID and one to the United States would offset. Further, the
United States would continue to receive, in perpetuity rather
than just for the ten years, the below-market-cost of $20 per
acre-foot for up to 2,500 acre feet of water annually that they
need in order to meet the 2006 biological opinion--thereby
saving the taxpayers in costs associated with this important
water acquisition effort.

memorandum of agreement

On June 22, 2012, the United States and FSID executed MOA,
numbered 11-WC-40-406. This agreement was the culmination of a
collaborative process between Reclamation and the FSID which
articulated the principles elements for any legislation to
authorize conveyance of title to the works of the Fort Sumner
Project, as well as the steps required to complete the title
transfer process, the responsible parties for each activity and
spelled out the prerequisites to the actual conveyance of title
to FSID.
The MOA takes an important step in resolving our concern
regarding compliance with Federal and state laws--more
specifically--with the terms of agreement to be developed
between FSID and the U.S. Fish and Wildlife Service required
under Section 10 of the Endangered Species Act. While it would
be our preference to complete all of the activities required
under the National Environmental Policy Act, the National
Historic Preservation Act and the Endangered Species Act prior
to acting upon legislation to transfer title, as a compromise,
S. 284 requires that all the activities associated with these
laws, including whatever mitigation may be necessary be
completed prior to the transfer of title to these facilities.
As part of that, before the conveyance of title, Reclamation
must concur with the ESA Section 10 agreement thus ensuring
that the United States' interests are not compromised.
Because S. 284 requires National Environmental Policy Act
compliance and completion of ESA Section 7 and Section 10
consultations as prerequisites to conveyance of title,
Reclamation and FSID will have the opportunity to complete a
public process to determine whether other interested citizens
of New Mexico have concerns and any issues that arise during
that public process can be collaboratively be addressed in the
title transfer agreement that must be prepared to articulate
the terms and conditions of the title transfer as defined in
Section 2(7) of the Act.
S. 284 also authorizes Reclamation to cost-share with FSID
for both environmental compliance as well as the cost of
conveyance of title.
Lastly, Reclamation believes that S. 284 would assure the
continuation of the partnership Reclamation has developed with
FSID in meeting the 2006 Biological Opinion requirements. With
the challenges of persistent drought in the Pecos River basin
and the need for Reclamation to consult, in partnership with
FSID and the Carlsbad Irrigation District, with the Service in
obtaining a new biological opinion by 2016, this title transfer
legislation will enable us to meet this critical objective.
As a result of the efforts, hard work and compromises by
both Reclamation and FSID, we believe that we have reached an
agreement that protects the interests of FSID, the citizens of
the States of New Mexico and the interests of the United
States.
That concludes my written statement. I am pleased to answer
questions at the appropriate time.

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 S. 284, as ordered
reported.