Reclamation Title Transfer and Non-Federal Infrastructure Incentivization Act - H.R.3281
Summary
H.R. 3281 authorizes the Secretary of the Interior to facilitate the transfer to non-Federal ownership of appropriate reclamation projects or facilities. Specifically, this bill authorizes the Department of the Interior to convey U.S. interest in an eligible reclamation project or facility to an agency of a state political subdivision, a joint action or powers agency, a water users association, or an Indian tribe or tribal utility authority that holds a water service contract for such property and that has the capacity to continue to manage the property for the same purposes for which it has been managed under reclamation law, if: (1) Interior notifies Congress in writing of the proposed conveyance at least 90 days in advance, and (2) Congress does not pass a joint resolution disapproving the conveyance. A facility that generates hydropower marketed by a power marketing administration shall not be eligible for such conveyance.
An entity that operates and maintains an eligible facility at the time the Department of the Interior attempts to facilitate its conveyance will have the right of first refusal to receive the conveyance.
Criteria for determining whether facilities are eligible for title transfer shall include: (1) the transfer will not have an unmitigated significant effect on the environment, (2) the qualifying entity intends to use the property for substantially the same purposes the property is being used for at the time Interior evaluates the potential transfer, and (3) the qualifying entity agrees to provide the United States the equivalent of the present value of any repayment obligation or other income stream the United States derives from the assets to be transferred. No conveyance under this bill may adversely impact power rates or repayment obligations. The Department of the Interior will submit, as part of its annual budget submission to Congress: (1) a description of the actions taken to implement this bill, and (2) a list of conveyances made or initiated by the Department of the Interior or a qualifying entity under this bill.
Background
H.R. 3281 seeks to reduce administrative paperwork, eliminate federal taxpayer liability and empower water users by streamlining the process governing the transfer of some Bureau of Reclamation (BOR) projects or facilities to non-federal interests.
BOR is the nation's largest wholesale water supplier. According to the agency, BOR provides 1 out of 5 (or 140,000) Western farmers with irrigation water for 10 million farmland acres that produce 60 percent of the nation's vegetables and one quarter of its fresh fruit and nut crops. The federal agency also delivers 10 trillion gallons of water to more than 31 million people annually and is the second largest domestic producer of hydropower. BOR's assets include 492 dams, 1,901 buildings and over 8,000 miles of canals in the 17 western states. BOR holds title to the individual water and power supply and delivery facilities it has constructed over the last century. The federal government provided the initial capital contribution to build the vast majority of these early projects; however, the water and power customers who benefitted from the facilities entered into long-term contracts with the federal government to repay their part of the initial taxpayer investment. Under the Reclamation Act of 1902 (Public Law 57-161), BOR may transfer day-to-day operational and maintenance responsibilities to project beneficiaries; however, the title or ownership of any facility must remain in federal ownership until Congress enacts legislation specifically authorizing such a transfer. Since 1996, more than three dozen BOR projects have been transferred or authorized to be transferred to local entities.
A title transfer can provide several benefits to water users. A transfer can reduce regulatory paperwork and staff time at both the federal and local levels, reduce the federal backlog on repairing and upgrading infrastructure and help improve the environment and public safety. Additionally, a title transfer can reduce federal liability since the local entity assumes a transferred facility's liability. At a June 8, 2017, Water, Power and Oceans Subcommittee hearing, Mr. Dan Keppen, Executive Director for the Family Farm Alliance, stated in his written testimony, “[Title transfers] can help reduce federal costs and liability, and allow for a better allocation of federal resources. Operational decisions are timelier and many times are more cost effective when made at the local level. Further, maintenance and rehabilitation of our aging federally owned facilities is more effectively financed and constructed by the local agencies currently responsible for these activities.''
Several factors influence whether a title transfer can occur. The local water district or beneficiary needs to assess whether the costs associated with the process are worth the benefits of taking ownership of the facility. According to BOR's “Title Transfer Checklist,'' entities should consider transaction costs (i.e., costs to comply with the Endangered Species Act of 1973, National Environmental Policy Act of 1969, and National Historic Preservation Act of 1966), the future liability of the facility being transferred, the amount owed to the federal government and the potential impacts on third-parties (such as power interests), among others. Conversely, the federal government assesses whether the transfer meets certain criteria including: the American taxpayers' financial interest must be protected; there must be compliance with all federal and State laws; the Secretary of the Interior's Native American trust responsibilities must be met; and the public aspects of the project must be protected. If the federal government and the beneficiary agree to a transfer, a Memorandum of Understanding or a Memorandum of Agreement must be signed to implement the transfer. In addition, Congress must codify the transfer in law, regardless of the size or scope of the transfer.
At a time when many of BOR's aging facilities depend on the uncertain federal appropriations process, the transfer of a BOR facility to a local irrigation district could allow that district to upgrade or repair the facility by leveraging private financing through ownership. For example, the Provo River Water Users Association in Utah wanted to pipe an open canal to enhance public safety and reduce evaporation to conserve water for humans and wildlife species, but did not have the financial capabilities to accomplish it. Unlikely to receive funding from the federal government, the Association decided to pursue a title transfer to finance the project itself. Congress eventually enacted legislation to convey the facility, which allowed water users to use their ownership as collateral to acquire a loan to complete the project.
Some view the transfer of BOR projects to local water users as a way to encourage new non-federal investment in water infrastructure, but many entities involved in such title transfers have been daunted by these complex and time-consuming administrative and Congressional processes. For example, at a 2004 Subcommittee on Water and Power hearing, Mr. Tom Knutson, former General Manager of the Loup Basin Reclamation District testified that it took over eight years for a simple title transfer that he characterized as “low hanging fruit'' in the Middle Loup Division in western Nebraska to become law. Although BOR has taken steps to streamline the process, many of the agency's water customers believe additional improvements are needed.
H.R. 3281 underscores BOR's commitment to transfer existing federal infrastructure into local ownership by simplifying and expediting the title transfer process. Modernizing this process will afford water users with greater control over and more efficient management of their water and water-related facilities while also reducing liability for the American taxpayer.
Cost
The Congressional Budget Office (CBO) estimates that this bill would cost about $1 million over the 2017-2022 period
