[House Report 108-688]
[From the U.S. Government Publishing Office]
108th Congress Rept. 108-688
HOUSE OF REPRESENTATIVES
2d Session Part 1
======================================================================
AMEND THE TIJUANA RIVER VALLEY ESTUARY AND BEACH SEWAGE CLEANUP ACT
_______
September 15, 2004.--Ordered to be printed
_______
Mr. Young of Alaska, from the Committee on Transportation and
Infrastructure, submitted the following
R E P O R T
[To accompany H.R. 4794]
[Including cost estimate of the Congressional Budget Office]
The Committee on Transportation and Infrastructure, to whom
was referred the bill (H.R. 4794) to amend the Tijuana River
Valley Estuary and Beach Sewage Cleanup Act of 2000 to extend
the authorization of appropriations, and for other purposes,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
Purpose of the Legislation
The purpose of H.R. 4794 is to amend the Tijuana River
Valley Estuary and Beach Sewage Cleanup Act of 2000 to
reauthorize and update the authority to comprehensively address
the treatment of sewage emanating from the Tijuana, Mexico area
that flows untreated or partially treated into the United
States, causing significant adverse public health and
environmental impacts.
Background and Need for Legislation
Tijuana, Mexico is situated on elevated terrain as compared
to San Diego, California, and as a result, the Tijuana River
flows north across the U.S.-Mexico border into the San Diego
area. The wastewater infrastructure in the Tijuana border area
is inadequate to protect public health and the environment.
Because there is insufficient infrastructure to treat all of
the sewage generated in the Tijuana area, untreated or
partially treated sewage is released into the Tijuana River and
flows into the United States, leading to serious public health
and environmental concerns.
To protect the city of San Diego and surrounding areas from
the sewage emanating from Tijuana, Congress authorized, in
Public Law 100-4, the ``Water Quality Act of 1987,'' the
construction of a wastewater treatment facility in San Diego to
provide primary or more advanced treatment of municipal sewage
and industrial waste from Mexico, including the city of
Tijuana.
Then in 1990, the United States and Mexico approved
International Boundary and Water Commission (IBWC) Treaty
Minute No. 283 to the Treaty for the ``Utilization of Waters of
the Colorado and Tijuana Rivers and of the Rio Grande,'' dated
February 3, 1944. Under this treaty minute, the United States
and Mexico are to design, construct, operate, and maintain a
wastewater treatment facility for up to 25 million gallons per
day (``MGD'') of sewage from Tijuana, Mexico, to be treated to
a level that meets the United States' secondary treatment
standards under the Clean Water Act. Secondary treatment is
defined in Federal regulations as numeric effluent quality
levels attainable through physical and biological treatment of
wastewaters, and which require greater removal of certain
pollutants than primary or advanced primary treatment. To meet
this obligation, the IBWC constructed the South Bay
International Wastewater Treatment Plant (``IWTP''). However,
the IWTP treats sewage only to an advanced primary level of
treatment, failing to comply with the Clean Water Act and the
Treaty Minute. The secondary treatment module of the IWTP has
not been constructed.
In the 106th Congress, the Committee on Transportation and
Infrastructure examined the issues surrounding sewage treatment
in the San Diego, California-Tijuana, Mexico border region, and
concluded that a comprehensive solution was needed to address
both the partially treated flows from the existing IWTP and the
additional capacity needed to address raw sewage from the
Tijuana area in Mexico that is currentlyuntreated. To achieve
this goal, Congress enacted Title VIII of Public Law 106-457, the
``Tijuana River Valley Estuary and Beach Sewage Cleanup Act of 2000''
(the ``Act'').
The Act authorizes the United States, acting through the
U.S. Section of the IBWC and following conclusion of a new
treaty minute or an amendment to Treaty Minute No. 283, to
enter into a fee-for-services contract with the owner of a
privately financed secondary wastewater treatment facility
located in Mexico. Such facility would provide secondary
treatment for a total of not more than 50 MGD of both advanced
primary effluent pumped from the IWTP and any additional sewage
from the Tijuana area in Mexico. The purpose of entering into a
fee-for-services contract for wastewater treatment services
would be to ensure adequate treatment of wastewater along the
United States-Mexico border so that untreated or partially
treated sewage from Tijuana, Mexico no longer flows north into
the San Diego, California area. Under this approach, the
upfront construction costs of a treatment facility are to be
borne by a private entity, and the United States is authorized
to pay annual contract fees incorporating the costs of
developing, financing, constructing, operating, and maintaining
the wastewater treatment facility in Mexico over a period of 20
years. The Act authorized to be appropriated a total of $156
million for fiscal years 2001 through 2005 to carry out the
title.
On February 20, 2004, the United States and Mexico approved
IBWC Treaty Minute No. 311, agreeing to go forward with the new
wastewater treatment facility in Mexico authorized by the Act.
The new treatment facility is to provide the secondary
treatment that originally was to be provided by the IWTP under
Treaty Minute No. 283, and is to provide additional capacity to
treat raw sewage from the Tijuana area in Mexico. The United
States is to pay, subject to the availability of annual
appropriations, annual fees for the contracted wastewater
treatment services. Treaty Minute No. 311 also specifies
numerous other contract terms to be included in the wastewater
treatment services contract. However, before it can enter into
the contracts necessary to implement Treaty Minute No. 311, the
U.S. Section of the IBWC needs an updated authorization.
Summary of the Legislation
Section 1. Actions to be taken
Section 1 amends section 804(a) of the Tijuana River Valley
Estuary and Beach Sewage Cleanup Act of 2000 to reflect the
passage of IBWC Treaty Minute No. 311.
In addition, Section 1 amends section 804(c), in paragraph
(1), to clarify that it is the payment of a fee under a
contract that is subject to the availability of appropriations,
not the negotiation of the contract itself. This section also
amends section 804(c), in paragraph (2), to change the required
contract terms to eliminate the requirement that ownership of
the Mexican facility transfer to the United States in the case
of default and to clarify that competitive procedures governing
subcontracts must comply with applicable law, such as
applicable Mexican law, as well as be consistent with title III
of the Federal Property and Administrative Services Act of
1949.
Section 2. Implementation of new Treaty Minute
Section 2 amends section 805 of the Act to reflect the
passage of IBWC Treaty Minute No. 311 and to stress the
importance of expediting action on this issue, in light of the
continuing threat to the environment and public health and
safety within the United States.
Section 3. Authorization of appropriations
Section 3 amends section 806 of the Act to increase the
total authorization of appropriations from $156 million to $230
million and to eliminate the expiration of the authorization of
funding.
Legislative History and Committee Consideration
On February 26, 2004, the Water Resources and Environment
Subcommittee held a hearing on the budget requests and program
priorities of agencies that fall under the jurisdiction of the
Subcommittee. At that hearing, the Subcommittee received
testimony from the United States Commissioner of the
International Boundary and Water Commission on the status of
implementation of the Tijuana River Valley Estuary and Beach
Sewage Cleanup Act of 2000.
The Water Resources and Environment Subcommittee met on
July 15, 2004, to consider H.R. 4794 and other legislation. The
Subcommittee reported the bill without amendment favorably to
the Committee on Transportation and Infrastructure, by voice
vote. The Committee on Transportation and Infrastructure met in
open session on July 21, 2004, and ordered the bill reported,
without amendment, to the House by voice vote.
Rollcall Votes
Clause 3(b) of rule XIII of the House of Representatives
requires each committee report to include the total number of
votes cast for and against on each rollcall vote on a motion to
report and on any amendment offered to the measure or matter,
and the names of those members voting for and against. There
were no recorded votes taken in connection with ordering H.R.
4794 reported. A motion to order H.R. 4794 reported to the
House was agreed to by voice vote.
Committee Oversight Findings
With respect to the requirements of clause 3(c)(1) of rule
XIII of the Rules of the House of Representatives, the
Committee's oversight findings and recommendations are
reflected in this report.
Cost of Legislation
Clause 3(d)(2) of rule XIII of the Rules of the House of
Representatives does not apply where a cost estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974 has been timely submitted prior to the filing of the
report and is included in the report. Such a cost estimate is
included in this report.
Compliance With House Rule XIII
1. With respect to the requirement of clause 3(c)(2) of
rule XIII of the Rules of the House of Representatives, and
308(a) of the Congressional Budget Act of 1974, the Committee
references the report of the Congressional Budget Office
included below.
2. With respect to the requirement of clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, the
performance goals and objective of this legislation are to
resolve sanitation and water quality problems in the San Diego,
California-Tijuana, Mexico border region by providing for
adequate treatment of raw and partially treated sewage from
Tijuana, Mexico.
3. With respect to the requirement of clause 3(c)(3) of
rule XIII of the Rules of the House of Representatives and
section 402 of the Congressional Budget Act of 1974, the
Committee has received the following cost estimate for H.R.
4794 from the Director of the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 9, 2004.
Hon. Don Young,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4794, a bill to
amend the Tijuana River Valley Estuary and Beach Sewage Cleanup
Act of 2000 to extend the authorization of appropriations, and
for other purposes.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Susanne S.
Mehlman (for federal costs) and Gregory Waring (for the state
and local impact).
Sincerely,
Elizabeth M. Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
H.R. 4794--A bill to amend the Tijuana River Valley Estuary and Beach
Sewage Cleanup Act of 2000 to extend the authorization of
appropriations, and for other purposes
Summary: The International Boundary and Water Commission
(IBWC), composed of a U.S. section and a Mexican section, is
responsible for applying the boundary and water treaties
between the United States and Mexico and settling any
differences that may arise out of such treaties. Enacting H.R.
4794 would indefinitely extend the authority of the U.S.
section of the IBWC to enter into a contract to build and
operate a wastewater treatment facility in Mexico. Under
current law, such authority is available through 2005 and is
contingent on the negotiation and conclusion of a new treaty
between the governments of the United States and Mexico.
On February 20, 2004, a new treaty between the two
governments was negotiated, establishing a framework for the
development of the wastewater treatment facility. Under this
contract, the plant owner would treat wastewater to certain
U.S. standards, and the federal government would make annual
payments over a 20-year period to cover the costs of
developing, financing, constructing, operating, and maintaining
the facility. This new facility would be designed to address
the problem of untreated or partially treated sewage flowing
over the border from Tijuana, Mexico, to San Diego, California.
H.R. 4794 would authorize the appropriation of $230 million
for the wastewater treatment contract. We expect that
implementing the contract would constitute a federal lease-
purchase of the new treatment facility. CBO estimates, however,
that implementing this legislation would require appropriations
of $295 million over the 2005-2009 period. In addition, CBO
estimates that appropriations of $316 million would be needed
after 2009 to cover the costs associated with operating and
maintaining the facility through the remainder of the contract
period.
Enacting this bill would not affect direct spending or
receipts because the IBWC could not enter into a contract to
build the plant until the full amount necessary to implement
the contract is provided in advance in an appropriation act.
H.R. 4794 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments. The bill would benefit California, the City of San
Diego, and other local and tribal governments in that state by
reauthorizing and increasing federal support of a wastewater
treatment project along the U.S.-Mexico border.
Estimated cost to the Federal Government: For this
estimate, CBO assumes that the bill will be enacted near the
start of fiscal year 2005 and that the estimated amounts
necessary to build and maintain the wastewater treatment plant
will be appropriated. Estimated outlays are based on historical
spending patterns for other similar construction projects. The
estimated budgetary impact of H.R. 4794 is shown in the
following table. The costs of this legislation fall within
budget function 150 (international affairs).
------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------
2004 2005 2006 2007 2008 2009
------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Spending under current law to
build and operate wastewater
treatment facility:
Authorization level \1\... 0 0 0 0 0 0
Estimated outlays......... 0 0 0 0 0 0
Proposed changes:
Estimated authorization 0 263 0 0 16 16
level....................
Estimated outlays......... 0 66 118 79 16 16
Spending under H.R. 4794 to
build and operate wastewater
treatment facility:
Estimated authorization 0 263 0 0 16 16
level....................
Estimated outlays......... 0 66 118 79 16 16
------------------------------------------------------------------------
\1\ Current law authorizes the appropriation of $156 million over the
2001-2005 period. To date no funding has been provided.
Basis of estimate: This cost estimate is based on
information from the U.S. section of the IBWC and a firm that
is interested in constructing the new facility and has
performed limited design work for such a facility. Because a
new treaty was agreed to by the governments of Mexico and the
United States on February 20, 2004, CBO expects that design of
the wastewater treatment facility would begin in 2005. In
total, CBO estimates that implementing H.R. 4794 would cost
$295 million over the next five years and $316 over the 2010-
2025 period. The budgetary treatment of those costs as well as
the various components are described below.
Budgetary treatment of lease-purchases
CBO expects that the contract for wastewater treatment
services authorized by H.R. 4794 would meet the criteria of a
federal lease-purchase contract, meaning that the government is
effectively purchasing--not leasing--the wastewater treatment
plant. CBO bases this conclusion on the fact that the
wastewater treatment plant would be built for the special
purpose of the U.S. government, and there would be little or no
private-sector market for this particular facility.
Furthermore, the 20-year term of the lease would extend through
most of the plant's expected economic life, and the lease
payments over this period would pay for nearly all of the
facility's cost.
Despite the fact that the U.S. federal government would
provide the funding to develop, finance, construct, operate,
and maintain the facility, the legislation would require the
facility to be conveyed to ``an appropriate governmental
entity'' (apparently, a Mexican governmental entity) in the
event that either the IBWC or the plant operator fails to meet
its contractual obligations to operate the plant. CBO, however,
assumes that because the U.S. government would be providing the
necessary funding to support the facility, the U.S. government
effectively controls the facility and directs its transfer to a
Mexican governmental entity at the end of the contract period.
Funds to execute federal lease-purchase contracts receive a
special budgetary treatment (see Office of Management and
Budget Circular A-11). When the government enters into lease-
purchase contracts, the present value of all expected future
lease payments (excluding annual operating and maintenance
costs) must be provided in an appropriation act in the first
year of the contract. Because the cost of a lease-purchase
contract that involves substantial financial risk for the
government is accounted for over the project's construction
period rather than the term of the lease, the outlays
associated with the appropriation would follow the three-year
construction schedule assumed for the project.
Construction cost
CBO estimates that implementing this bill would require an
appropriation of $263 million in 2005. At this estimated level
of funding, CBO assumes that the new facility would treat up to
about 59 million gallons per day of sewage (which is the
capacity level identified in EPA's Master Plan for the Tijuana
region), construction of the facility would cost about $159
million in 2005, that the private builder would seek a 15-
percent rate of return under the lease terms to cover financing
and other costs, and that the present value of the expected
future lease payments would be discounted using CBO's
projection of Treasury's long-term borrowing rate of 5.43
percent. To the extent that different assumptions are used to
estimate the net present value associated with the cost of the
proposed project, the estimates for appropriations to support
the project could vary.
Operation and maintenance cost
In addition, after construction is completed, funding for
operating and maintaining the facility during the remainder of
the 20-year contract period could be required. While current
law would allow for such costs to be offset by payments the
owner of the facility might receive through the sale of treated
water, there is no guaranty that such an agreement would be
negotiated, according to the firm interested in designing the
facility. As a result, CBO estimates that additional
appropriations of $16 million annually could be necessary
beginning in fiscal year 2008. Adjusting for anticipated
inflation, such costs could reach as high as $23 million by
2025.
Total costs
CBO estimates that enacting this legislation would require
a total appropriation of $295 million over the next five years
and $316 million in subsequent years. This estimated cost would
exceed the amount specifically authorized by the bill by a
total of $381 million over the 2005-2025 period. CBO estimates
that the amount specifically authorized to be appropriated by
the bill would be insufficient to implement the 20-year lease-
purchase contract authorized by the legislation.
Intergovernmental and private-sector impact: H.R. 4794
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments. The bill would benefit California, the city
of San Diego, and other local and tribal governments in the
state by reauthorizing and increasing federal support of a
wastewater treatment project along the U.S.-Mexico border.
Estimate prepared by: Federal Costs: Susanne S. Mehlman;
Impact on State, Local, and Tribal Governments: Gregory Waring;
and Impact on the Private Sector: Amina Masood.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Constitutional Authority Statement
Pursuant to clause (3)(d)(1) of rule XIII of the Rules of
the House of Representatives, committee reports on a bill or
joint resolution of a public character shall include a
statement citing the specific powers granted to the Congress in
the Constitution to enact the measure. The Committee on
Transportation and Infrastructure finds that Congress has the
authority to enact this measure pursuant to its powers granted
under article I, section 8 of the Constitution.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act (Public Law 104-4).
Preemption Clarification
Section 423 of the Congressional Budget Act of 1974
requires the report of any Committee on a bill or joint
resolution to include a statement on the extent to which the
bill or joint resolution is intended to preempt state, local,
or tribal law. The Committee states that H.R. 4794 does not
preempt any state, local, or tribal law.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the 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 (Public Law
104-1).
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 italic, existing law in which no change is
proposed is shown in roman):
TIJUANA RIVER VALLEY ESTUARY AND BEACH SEWAGE CLEANUP ACT OF 2000
TITLE VIII--TIJUANA RIVER VALLEY ESTUARY AND BEACH CLEANUP
* * * * * * *
SEC. 804. ACTIONS TO BE TAKEN BY THE COMMISSION AND THE ADMINISTRATOR.
(a) Secondary Treatment.--
(1) In general.--[Subject to the negotiation and
conclusion of a new Treaty Minute or the amendment of
Treaty Minute 283 under section 1005 of this Act,]
Pursuant to Treaty Minute 311 to the Treaty for the
Utilization of Waters of the Colorado and Tijuana
Rivers and of the Rio Grande, dated February 3, 1944,
and notwithstanding section 510(b)(2) of the Water
Quality Act of 1987 (101 Stat. 81), the Commission is
authorized and directed to provide for the secondary
treatment of a total of not more than 50 mgd in
Mexico--
(A) * * *
* * * * * * *
(c) Contract.--
(1) In general.--[Subject to the availability of
appropriations to carry out this subsection and
notwithstanding] Notwithstanding any provision of
Federal procurement law[, upon conclusion of a new
Treaty Minute or the amendment of Treaty Minute 283
under section 5,] the Commission may enter into a fee-
for-services contract with the owner of a Mexican
facility in order to carry out the secondary treatment
requirements of subsection (a) and make payments under
[such contract.] such contract, subject to the
availability of appropriations for that purpose.
(2) Terms.--Any contract under this subsection shall
provide, at a minimum, for the following:
(A) * * *
* * * * * * *
(J) Provision for the transfer of ownership
of the Mexican facility to [the United States]
an appropriate governmental entity, and
provision for a cancellation fee by the United
States to the owner of the Mexican facility, if
the Commission fails to perform its obligations
under the contract. The cancellation fee shall
be in amounts declining over the term of the
contract anticipated to be sufficient to repay
construction debt and other amounts due to the
owner that remain unamortized due to early
termination of the contract.
(K) Provision for the transfer of ownership
of the Mexican facility to [the United States]
an appropriate governmental entity, without a
cancellation fee, if the owner of the Mexican
facility fails to perform the obligations of
the owner under the contract.
(L) The use of competitive procedures under
applicable law, consistent with title III of
the Federal Property and Administrative
Services Act of 1949 (41 U.S.C. 251 et seq.),
by the owner of the Mexican facility in the
procurement of property or services for the
engineering, construction, and operation and
maintenance of the Mexican facility.
* * * * * * *
SEC. 805. [NEGOTIATION OF] NEW TREATY MINUTE.
(a) * * *
* * * * * * *
(c) Implementation.--In light of the continuing threat to the
environment and to public health and safety within the United
States as a result of the river and ocean pollution in the San
Diego-Tijuana border region, the Commission is requested to
give the highest priority to the implementation of Treaty
Minute 311 to the Treaty for the Utilization of Waters of the
Colorado and Tijuana Rivers and of the Rio Grande, dated
February 3, 1944, which establishes a framework for the siting
of a treatment facility in Mexico to provide for the secondary
treatment of effluent from the IWTP at the Mexican facility, to
provide for additional capacity for advanced primary and
secondary treatment of additional sewage emanating from the
Tijuana River area, Mexico, and to meet the water quality
standards of Mexico, the United States, and the State of
California consistent with the provisions of this title, in
order that the other provisions of this title to address such
pollution may be implemented as soon as possible.
SEC. 806. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated a total of
[$156,000,000 for fiscal years 2001 through 2005] $230,000,000
to carry out this title. Such sums shall remain available until
expended.
* * * * * * *