[House Report 118-711]
[From the U.S. Government Publishing Office]
118th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 118-711
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WESTERN WATER ACCELERATED REVENUE
REPAYMENT ACT
_______
October 22, 2024.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Westerman, from the Committee on Natural Resources, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3675]
The Committee on Natural Resources, to whom was referred
the bill (H.R. 3675) to amend the Water Infrastructure
Improvements for the Nation Act to extend certain contract
prepayment authority, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Western Water Accelerated Revenue
Repayment Act''.
SEC. 2. AMENDMENTS TO THE WIIN ACT.
(a) Offsets and Water Storage Account.--Section 4011(d)(2) of the
Water Infrastructure Improvements for the Nation Act (Public Law 114-
322) is amended by inserting ``that are directed by project-specific
statutes in effect prior to the date of passage of this Act to accounts
other than the General Reclamation Fund'' before the semicolon.
(b) Extension of Prepayment Authority.--Section 4013 of the Water
Infrastructure Improvements for the Nation Act (Public Law 114-322) is
amended--
(1) in paragraph (1), by striking ``; and'' and inserting a
semicolon;
(2) in paragraph (2), by striking the period and inserting
``; and''; and
(3) by adding at the end the following:
``(3) section 4011.''.
Purpose of the Legislation
The purpose of H.R. 3675 is to amend the Water
Infrastructure Improvements for the Nation Act to extend
certain contract prepayment authority.
Background and Need for Legislation
H.R. 3675 permanently authorizes Section 4011 of the Water
Infrastructure Improvements for the Nation (WIIN) Act, a
provision that allows agriculture and municipal water users to
prepay what they owe to the federal government.\1\
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\1\130 STAT. 1878.
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Congress created what is now the Bureau of Reclamation
(Reclamation) in 1902 to help settle the western United States
through water and power infrastructure development. In its
effort ``to make the desert bloom,'' and to capture the energy
of moving water while controlling very damaging flood cycles,
the agency's projects literally led to the creation of western
urban areas and internationally renowned farm economies. Its
traditional dams, reservoirs, canals, and other features were
built under the ``beneficiaries pay'' principle, in which the
water and power beneficiaries paid for the commensurate
benefits that these projects provided to them. These water and
power users typically entered into long-term contracts (20 to
50 years) with Reclamation to reimburse the federal government
for these capital investments.\2\ This concept continues to
this day on many of Reclamation's projects.
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\2\The Reclamation Act of 1902 (Ch. 1093, 32 Stat. 388).
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As it relates to water contracts, water users enter into
water service or capital repayment contracts with Reclamation.
A water user pays for only the water allocated and delivered
under water service contracts, whereas a capital repayment
contract is for the cost of the water and the appropriate
facility (capital) being used to store and convey the water.
Municipal and industrial water users (cities) pay these costs
with interest and irrigation districts do not under
longstanding Reclamation law. However, irrigation districts are
subject to federal land-use restrictions and paperwork
regulations under the Reclamation Reform Act of 1982 (P.L. 97-
293), as long as they owe a capital debt to Reclamation.\3\ For
example, under the Reclamation Reform Act an irrigation
district must ensure that each of its farmers cannot irrigate
more than 960 acres if Reclamation projects provide the
water.\4\ The cost of Reclamation project water is increased
substantially if a landowner irrigates more than 960 acres. In
addition, complex reporting forms subject to change by
administrative fiat, must be submitted each year to the federal
government to certify that irrigation districts and their
farmers are complying with the Reclamation Reform Act's
requirements. Many irrigation districts find these policies
restrictive and time consuming.
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\3\P. L. 97-293.
\4\Id.
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Many of the repayments described above must be paid through
annual installments and cannot be pre-paid, as opposed to how a
homeowner can pay off a mortgage early.\5\ Only Congress can
authorize pre-payment in these circumstances. To address the
issue, Section 4011 of the WIIN Act authorized these
agricultural and municipal water users to prepay outstanding
construction costs through a single lump sum payment or over a
period of three years.
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\5\Id.
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While this program was successful, with more than 80
entities deciding to prepay what they owed the federal
government, the authorities expired in 2021. H.R. 3675
permanently reauthorizes these authorities. As amended, H.R.
3675 clarifies that prepayments will not impact project-
specific statutes. This addresses a concern raised by
Reclamation that some of the prepayment funds would be taken
away from current uses, such as operations, maintenance, and
repairs.
Committee Action
H.R. 3675 was introduced on May 25, 2023, by Rep. Lauren
Boebert (R-CO). The bill was referred to the Committee on
Natural Resources, and within the Committee to the Subcommittee
on Water, Wildlife and Fisheries. On June 14, 2023, the
Subcommittee on Water, Wildlife and Fisheries held a hearing on
the bill. On July 26, 2023, the Full Natural Resources
Committee met to consider the bill. The Subcommittee on Water,
Wildlife and Fisheries was discharged by unanimous consent.
Rep. Boebert offered an amendment in the nature of a substitute
to designated Boebert ANS_112. The amendment offered by Rep.
Boebert was adopted by voice vote. The bill, as amended, was
then ordered favorably reported to the House of Representatives
by a roll call vote of 22 to 14, as follows:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Hearings
For the purposes of clause 3(c)(6) of House rule XIII, the
following hearing was used to develop or consider this measure:
hearing by the Subcommittee on Water, Wildlife and Fisheries
held on June 14, 2023.
Section-by-Section Analysis
Section 1. Short title
This Act may be cited as the ``Western Water Accelerated
Revenue Repayment Act''.
Section 2. Amendments to the WIIN Act
Clarifies that prepayments will not impact project-specific
statutes. Permanently extends authorities that allow
Reclamation project water users to prepay what they owe to the
federal government.
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.
Compliance With House Rule XIII and
Congressional Budget Act
1. Cost of Legislation and the Congressional Budget Act.
Pursuant to clause 3(c)(2) of House rule XIII and section
308(a) of the Congressional Budget Act of 1974, and pursuant to
clause 3(c)(3) of House rule XIII and section 402 of the
Congressional Budget Act of 1974, the Committee has requested
but not received from the Director of the Congressional Budget
Office a budgetary analysis and a cost estimate of this bill.
2. 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 amend the Water Infrastructure
Improvements for the Nation Act to extend certain contract
prepayment authority.
Earmark Statement
This bill does not contain any Congressional earmarks,
limited tax benefits, or limited tariff benefits as defined
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of
the House of Representatives.
Unfunded Mandates Reform Act Statement
An estimate of federal mandates prepared by the Director of
the Congressional Budget Office pursuant to section 423 of the
Unfunded Mandates Reform Act was not made available to the
Committee in time for the filing of this report. The Chair of
the Committee shall cause such estimate to be printed in the
Congressional Record upon its receipt by the Committee, if such
estimate is not publicly available on the Congressional Budget
Office website.
Existing Programs
Directed Rule Making. This bill does not contain any
directed rule makings.
Duplication of Existing Programs. This bill does not
establish or reauthorize a program of the federal government
known to be duplicative of another program. Such program was
not included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-139
or identified in the most recent Catalog of Federal Domestic
Assistance published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169) as relating to other programs.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Preemption of State, Local or Tribal Law
Any preemptive effect of this bill over state, local, or
tribal law is intended to be consistent with the bill's
purposes and text and the Supremacy Clause of Article VI of the
U.S. Constitution.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
WATER INFRASTRUCTURE IMPROVEMENTS FOR THE NATION ACT
* * * * * * *
TITLE III--NATURAL RESOURCES
* * * * * * *
Subtitle J--California Water
* * * * * * *
SEC. 4011. OFFSETS AND WATER STORAGE ACCOUNT.
(a) Prepayment of Certain Repayment Contracts Between the
United States and Contractors of Federally Developed Water
Supplies.--
(1) Conversion and prepayment of contracts.--Upon
request of the contractor, the Secretary of the
Interior shall convert any water service contract in
effect on the date of enactment of this subtitle and
between the United States and a water users'
association to allow for prepayment of the repayment
contract pursuant to paragraph (2) under mutually
agreeable terms and conditions. The manner of
conversion under this paragraph shall be as follows:
(A) Water service contracts that were entered
into under section (e) of the Act of August 4,
1939 (53 Stat. 1196), to be converted under
this section shall be converted to repayment
contracts under section 9(d) of that Act (53
Stat. 1195).
(B) Water service contracts that were entered
under subsection (c)(2) of section 9 of the Act
of August 4, 1939 (53 Stat. 1194), to be
converted under this section shall be converted
to a contract under subsection (c)(1) of
section 9 of that Act (53 Stat. 1195).
(2) Prepayment.--Except for those repayment contracts
under which the contractor has previously negotiated
for prepayment, all repayment contracts under section
9(d) of that Act (53 Stat. 1195) in effect on the date
of enactment of this subtitle at the request of the
contractor, and all contracts converted pursuant to
paragraph (1)(A) shall--
(A) provide for the repayment, either in lump
sum or by accelerated prepayment, of the
remaining construction costs identified in
water project specific irrigation rate
repayment schedules, as adjusted to reflect
payment not reflected in such schedules, and
properly assignable for ultimate return by the
contractor, or if made in approximately equal
installments, no later than 3 years after the
effective date of the repayment contract, such
amount to be discounted by \1/2\ the Treasury
rate. An estimate of the remaining construction
costs, as adjusted, shall be provided by the
Secretary to the contractor no later than 90
days following receipt of request of the
contractor;
(B) require that construction costs or other
capitalized costs incurred after the effective
date of the contract or not reflected in the
rate schedule referenced in subparagraph (A),
and properly assignable to such contractor
shall be repaid in not more than 5 years after
notification of the allocation if such amount
is a result of a collective annual allocation
of capital costs to the contractors exercising
contract conversion under this subsection of
less than $5,000,000. If such amount is
$5,000,000 or greater, such cost shall be
repaid as provided by applicable reclamation
law;
(C) provide that power revenues will not be
available to aid in repayment of construction
costs allocated to irrigation under the
contract; and
(D) continue so long as the contractor pays
applicable charges, consistent with section
9(d) of the Act of August 4, 1939 (53 Stat.
1195), and applicable law.
(3) Contract requirements.--Except for those
repayment contracts under which the contractor has
previously negotiated for prepayment, the following
shall apply with regard to all repayment contracts
under subsection (c)(1) of section 9 of that Act (53
Stat. 1195) in effect on the date of enactment of this
subtitle at the request of the contractor, and all
contracts converted pursuant to paragraph (1)(B):
(A) Provide for the repayment in lump sum of
the remaining construction costs identified in
water project specific municipal and industrial
rate repayment schedules, as adjusted to
reflect payments not reflected in such
schedules, and properly assignable for ultimate
return by the contractor. An estimate of the
remaining construction costs, as adjusted,
shall be provided by the Secretary to the
contractor no later than 90 days after receipt
of the request of contractor.
(B) The contract shall require that
construction costs or other capitalized costs
incurred after the effective date of the
contract or not reflected in the rate schedule
referenced in subparagraph (A), and properly
assignable to such contractor, shall be repaid
in not more than 5 years after notification of
the allocation if such amount is a result of a
collective annual allocation of capital costs
to the contractors exercising contract
conversion under this subsection of less than
$5,000,000. If such amount is $5,000,000 or
greater, such cost shall be repaid as provided
by applicable reclamation law.
(C) Continue so long as the contractor pays
applicable charges, consistent with section
9(c)(1) of the Act of August 4, 1939 (53 Stat.
1195), and applicable law.
(4) Conditions.--All contracts entered into pursuant
to paragraphs (1), (2), and (3) shall--
(A) not be adjusted on the basis of the type
of prepayment financing used by the water
users' association;
(B) conform to any other agreements, such as
applicable settlement agreements and new
constructed appurtenant facilities; and
(C) not modify other water service,
repayment, exchange and transfer contractual
rights between the water users' association,
and the Bureau of Reclamation, or any rights,
obligations, or relationships of the water
users' association and their landowners as
provided under State law.
(b) Accounting.--The amounts paid pursuant to subsection (a)
shall be subject to adjustment following a final cost
allocation by the Secretary of the Interior. In the event that
the final cost allocation indicates that the costs properly
assignable to the contractor are greater than what has been
paid by the contractor, the contractor shall be obligated to
pay the remaining allocated costs. The term of such additional
repayment contract shall be not less than one year and not more
than 10 years, however, mutually agreeable provisions regarding
the rate of repayment of such amount may be developed by the
parties. In the event that the final cost allocation indicates
that the costs properly assignable to the contractor are less
than what the contractor has paid, the Secretary shall credit
such overpayment as an offset against any outstanding or future
obligation of the contractor, with the exception of Restoration
Fund charges pursuant to section 3407(d) of Public Law 102-575.
(c) Applicability of Certain Provisions.--
(1) Effect of existing law.--Upon a contractor's
compliance with and discharge of the obligation of
repayment of the construction costs pursuant to a
contract entered into pursuant to subsection (a)(2)(A),
subsections (a) and (b) of section 213 of the
Reclamation Reform Act of 1982 (96 Stat. 1269) shall
apply to affected lands.
(2) Effect of other obligations.--The obligation of a
contractor to repay construction costs or other
capitalized costs described in subsection (a)(2)(B),
(a)(3)(B), or (b) shall not affect a contractor's
status as having repaid all of the construction costs
assignable to the contractor or the applicability of
subsections (a) and (b) of section 213 of the
Reclamation Reform Act of 1982 (96 Stat. 1269) once the
amount required to be paid by the contractor under the
repayment contract entered into pursuant to subsection
(a)(2)(A) has been paid.
(d) Effect on Existing Law Not Altered.--Implementation of
the provisions of this subtitle shall not alter--
(1) the repayment obligation of any water service or
repayment contractor receiving water from the same
water project, or shift any costs that would otherwise
have been properly assignable to the water users'
association identified in subsections (a)(1), (a)(2),
and (a)(3) absent this section, including operation and
maintenance costs, construction costs, or other
capitalized costs incurred after the date of the
enactment of this subtitle, or to other contractors;
and
(2) specific requirements for the disposition of
amounts received as repayments by the Secretary under
the Act of June 17, 1902 (32 Stat. 388, chapter 1093),
and Acts supplemental to and amendatory of that Act (43
U.S.C. 371 et seq.) that are directed by project-
specific statutes in effect prior to the date of
passage of this Act to accounts other than the General
Reclamation Fund;
(3) the priority of a water service or repayment
contractor to receive water; or
(4) except as expressly provided in this section, any
obligations under the reclamation law, including the
continuation of Restoration Fund charges pursuant to
section 3407(d) (Public Law 102-575), of the water
service and repayment contractors making prepayments
pursuant to this section.
(e) Water Storage Enhancement Program.--
(1) In general.--Except as provided in subsection
(d)(2), $335,000,000 out of receipts generated from
prepayment of contracts under this section beyond
amounts necessary to cover the amount of receipts
forgone from scheduled payments under current law for
the 10-year period following the date of enactment of
this Act shall be directed to the Reclamation Water
Storage Account under paragraph (2).
(2) Storage account.--The Secretary shall allocate
amounts collected under paragraph (1) into the
``Reclamation Storage Account'' to fund the
construction of water storage. The Secretary may also
enter into cooperative agreements with water users'
associations for the construction of water storage and
amounts within the Storage Account may be used to fund
such construction. Water storage projects that are
otherwise not federally authorized shall not be
considered Federal facilities as a result of any
amounts allocated from the Storage Account for part or
all of such facilities.
(3) Repayment.--Amounts used for water storage
construction from the Account shall be fully reimbursed
to the Account consistent with the requirements under
Federal reclamation law (the Act of June 17, 1902 (32
Stat. 388, chapter 1093), and Acts supplemental to and
amendatory of that Act (43 U.S.C. 371 et seq.)) except
that all funds reimbursed shall be deposited in the
Account established under paragraph (2).
(4) Availability of amounts.--Amounts deposited in
the Account under this subsection shall--
(A) be made available in accordance with this
section, subject to appropriation; and
(B) be in addition to amounts appropriated
for such purposes under any other provision of
law.
(f) Definitions.--For the purposes of this subtitle, the
following definitions apply:
(1) Account.--The term ``Account'' means the
Reclamation Water Storage Account established under
subsection (e)(2).
(2) Construction.--The term ``construction'' means
the designing, materials engineering and testing,
surveying, and building of water storage including
additions to existing water storage and construction of
new water storage facilities, exclusive of any Federal
statutory or regulatory obligations relating to any
permit, review, approval, or other such requirement.
(3) Water storage.--The term ``water storage'' means
any federally owned facility under the jurisdiction of
the Bureau of Reclamation or any non-Federal facility
used for the storage and supply of water resources.
(4) Treasury rate.--The term ``Treasury rate'' means
the 20- year Constant Maturity Treasury (CMT) rate
published by the United States Department of the
Treasury existing on the effective date of the
contract.
(5) Water users' association.--The term ``water
users' association'' means--
(A) an entity organized and recognized under
State laws that is eligible to enter into
contracts with Reclamation to receive contract
water for delivery to end users of the water
and to pay applicable charges; and
(B) includes a variety of entities with
different names and differing functions, such
as associations, conservancy districts,
irrigation districts, municipalities, and water
project contract units.
* * * * * * *
SEC. 4013. DURATION.
This subtitle shall expire on the date that is 5 years after
the date of its enactment, with the exception of--
(1) section 4004, which shall expire 10 years after
the date of its enactment[; and];
(2) projects under construction in sections 4007,
4009(a), and 4009(c)[.]; and
(3) section 4011.
* * * * * * *
DISSENTING VIEWS
H.R. 3675 is an attempt to permanently reauthorize section
4011 of the Water Infrastructure Improvements for the Nation
(WIIN) Act, enabling administrative conversions of agricultural
and municipal water service contracts into repayment contracts.
This legislation would provide contractors with discounted
repayment rates, encouraging increased water use during a time
of climate-induced drought, ultimately burdening taxpayers. At
the same time, tribes, fisheries, non-agricultural industries,
and the environment--all of which depend on shared water
resources for their livelihoods and ecosystem health--would
suffer the negative consequences of this policy.
Reclamation law is founded on the principle that
beneficiaries (contractors) are responsible for reimbursing the
federal government for construction costs of federal water
projects. Water delivery reimbursements are typically governed
by water service contracts or repayment contracts. Under water
service contracts, contractors are responsible for paying a
combined rate for capital repayment and operations and
maintenance for each acre-foot of water delivered. By contrast,
repayment contracts amortize capital costs over a long term--
generally 40 years--and are repaid in fixed annual
installments, with irrigation investments bearing no interest
and municipal and industrial investments incurring interest.
Furthermore, Reclamation law established acreage limitations
for land irrigated with water delivered from federal
reclamation projects to prevent speculation and monopolies,
thereby supporting development and expansion of the West.
Efforts to increase these acreage limits have been
longstanding, with the original limit of 160 acres having been
raised to 960 acres under the Reclamation Reform Act (RRA).
H.R. 3675 would permit the prepayment of outstanding
construction cost obligations, either through a lump sum or in
installments, to enable contract conversion. Contractors would
thus be allowed to pay the current value of their remaining
contract payments, discounted at one-half of the 20-year
Treasury securities maturity rate. Once contractors fulfill
their repayment obligations, they would be exempt from acreage
limitations and full-cost pricing for water, along with other
requirements set forth by the RRA, which could diminish the
funding returns for the Bureau of Reclamationand would
effectively authorize contractors to buy their way out of RRA
restrictions.
While Congress has supported the authorization for
prepayment on a case-by-case basis, there remain concerns
regarding the adoption of a ``one-size-fits-all'' approach, as
such is the case with this legislation. Although prepayment may
offer short-term benefits for taxpayers, it's crucial to ensure
that these arrangements provide both immediate and long-term
advantages for the public and protect taxpayer interests.
Irrigators typically receive the most significant financial
assistance from the federal government, benefiting from
subsidized financing, as they are not charged interest on their
debt. Additionally, other project beneficiaries cover the
portion of debt deemed to exceed irrigators' ``ability to
pay.'' Taxpayer watchdog groups and others have consistently
opposed the removal of acreage limitations and other RRA
requirements.
Permanent reauthorization of Section 4011 of the WIIN Act
would effectively eliminate congressional oversight and
disregard the unique circumstances of individual projects. Not
only does the bill favor House Republicans' special interest
industry friends, but the legislation also undermines
environmental water protections and fails to consider that
irrigators generally receive the largest amount of financial
assistance from the federal government.
Raul M. Grijalva,
Ranking Member.
[all]