Senate Report 106-358 - PALMETTO BEND CONVEYANCE ACT

[Senate Report 106-358]
[From the U.S. Government Publishing Office]

Calendar No. 709
106th Congress Report
SENATE
2d Session 106-358

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PALMETTO BEND CONVEYANCE ACT

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July 24, 2000.--Ordered to be printed

_______

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

R E P O R T

[To accompany S. 1474]

The Committee on Energy and Natural Resources, to which was
referred the bill (S. 1474) providing for conveyance of the
Palmetto Bend project to the State of Texas, 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 out all after the enacting clause and insert in lieu
thereof the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Palmetto Bend Conveyance Act''.

SEC. 2. DEFINITIONS.

In this Act:
(1) Project.--The term ``Project'' means the Palmetto Bend
Reclamation Project in the State of Texas authorized under
Public Law 90-562 (82 Stat. 999).
(2) Secretary.--The term ``Secretary'' means the Secretary of
the Interior.
(3) State.--The term ``State'' means the State of Texas,
acting through the Texas Water Development Board or the Lavaca-
Navidad River Authority or both.

SEC. 3. CONVEYANCE.

(a) In General.--The Secretary shall, as soon as practicable after
the date of enactment of this Act and in accordance with all applicable
law, and subject to the conditions set forth in sections 4 and 5,
convey to the State all right, title and interest (excluding the
mineral estate) in and to the Project held by the United States.
(b) Report.--If the conveyance under Section 3 has not been
completed within 1 year and 180 days after the date of enactment of
this Act, the Secretary shall submit to the Committee on Resources of
the House of Representatives and the Committee on Energy and Natural
Resources of the Senate a report that describes--
(1) the status of the conveyance;
(2) any obstacles to completion of the conveyance; and
(3) the anticipated date for completion of the conveyance.

SEC. 4. PAYMENT.

(a) In General.--As a condition of the conveyance, the State shall
pay the Secretary the adjusted net present value of current repayment
obligations on the Project, calculated 30 days prior to closing using a
discount rate equal to the average interest rate on 30-year U.S.
Treasury notes during the proceeding calendar month, which following
application of the State's August 1, 1999 payment, is currently
calculated to be $45,082,675 using a discount rate of 6.070%. The State
shall also pay interest on the adjusted net present value of current
repayment obligations from the date of State's most recent annual
payment until closing at the interest rate for constant maturity U.S.
Treasury notes of an equivalent term.
(b) Obligation Extinguished.--Upon payment by the State under
subsection (a), the obligation of the State and the Bureau of
Reclamation under the Bureau of Reclamation Contract No. 14-06-500-
1880, as amended shall be extinguished. After completion of conveyance
provided for in Section 3, the State shall assume full responsibility
for all aspects of operation, maintenance and replacement of the
Project.
(c) Additional Costs.--The State shall bear the cost of all
boundary surveys, title searches, appraisals, and other transaction
costs for the conveyance.
(d) Reclamation Fund.--All funds paid by the State to the Secretary
under this section shall be credited to the Reclamation Fund in the
Treasury of the United States.

SEC. 5. FUTURE MANAGEMENT.

(a) In General.--As a condition of the conveyance under section 3,
the State shall agree that the lands, water, and facilities of the
Project shall continue to be managed and operated for the purposes for
which the project was originally authorized; that is, to provide a
dependable municipal and industrial water supply, to conserve and
develop fish and wildlife resources, and to enhance recreational
opportunities. In future management of the Project, the State shall,
consistent with other project purposes and the provision of dependable
municipal and industrial water supply:
(1) provide full public access to the Project's lands,
subject to reasonable restrictions for purposes of Project
security, public safety, and natural resource protection;
(2) not sell or otherwise dispose of the lands conveyed under
Section 3;
(3) prohibit private or exclusive uses of lands conveyed
under Section 3;
(4) maintain and manage the Project's fish and wildlife
resource and habitat for the benefit and enhancement of those
resources;
(5) maintain and manage the Project's existing recreational
facilities and assets, including open space, for the benefit of
the general public;
(6) not charge the public recreational use fees that are more
than is customary and reasonable.
(b) Fish, Wildlife, and Recreation Management.--As a condition of
conveyance under Section 3, management decisions and actions affecting
the public aspects of the Project (namely, fish, wildlife, and
recreation resources) shall be conducted according to a management
agreement between all recipients of title to the Project and the Texas
Parks and Wildlife Department and shall extend for the useful life of
the Project that has been approved by the Secretary.
(c) Existing Obligations.--The United States shall assign to the
State and the State shall accept all surface use obligations of the
United States associated with the Project existing on the date of the
conveyance including contracts, easements, and any permits or license
agreements.

SEC. 6. MANAGEMENT OF MINERAL ESTATE.

All mineral interests in the Project retained by the United States
shall be managed consistent with Federal Law and in a manner that will
not interfere with the purposes for which the Project was authorized.

SEC. 7. LIABILITY.

(a) In General.--Effective on the date of conveyance of the
Project, the United States shall not be liable for damages of any kind
arising out of any act, omission, or occurrence relating to the
Project, except for damages caused by acts of negligence committed
prior to the date of conveyance by--
(1) the United States; or
(2) an employee, agent, or contractor of the United States.
(b) No Increase in Liability.--Nothing in this Act increases the
liability of the United States beyond that provided for in the Federal
Tort Claims Act, (28 U.S.C. 2671 et seq.).

SEC. 8. FUTURE BENEFITS.

(a) Deauthorization.--Effective on the date of conveyance of the
Project, the Project conveyed under this Act shall be deauthorized.
(b) No Reclamation Benefits.--After deauthorization of the Project
under subsection (a), the State shall not be entitled to receive any
benefits for the Project 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.).

purpose of the measure

The purpose of S. 1474 is to provide for the conveyance of
the Palmetto Bend project to the State of Texas.

background and need

The Palmetto Bend Project (Lake Texana) was authorized by
Public Law 90-562. The primary purpose of the project is to
provide municipal and industrial water to a large area along
the Texas Gulf Coast. The project was declared complete by the
Bureau of Reclamation in 1985 and was turned over to the
Lavaca-Navidad River Authority for operation and maintenance.
The Lavaca-Navidad River Authority (Authority) and the
Texas Water Development Board (Board) are signatories to the
Federal repayment contact. Since all surface water in Texas is
owned by the State, the Authority and the Board jointly hold a
State water right permit for Lake Texana.
The Authority is a political subdivision of the State,
created by the Texas legislature in 1959 for the purpose of
controlling, storing, preserving, and distribution flood waters
of the rivers and streams of the Lavaca and Navidad Basins, for
all useful and beneficial purposes. Its boundaries are
coterminous with Jackson County. The Authority is governed by a
nine member Board of Directors, appointed by the Governor and
confirmed by the State Senate. The Authority is also under the
Administrative oversight of the Texas Natural Resource
Conservation Commission.
The Texas Water Development Board is responsible for
administering the State's water resources financing programs,
and for long range water resources planning. The Board is
governed by six directors appointed by the Governor and
confirmed by the State Senate.
Lake Texana is located near the Gulf Coast about midway
between Houston and Corpus Christi. Lake Texana is capable of
supplying a dependable yield of 79,000 acre feet annually
(AFA). However, to maintain the environmental health of the
downstream bays and estuaries, the amount available for water
supply was reduced by the state to 74,500 AFA. All the
reservoir's yield has been committed, including about 42,000
AFA for municipal use (Corpus Christi and Point Comfort) and
over 32,500 AFA for industrial use, largely in the regional
petro-chemical-plastics industry. The city of Corpus Christi
service area includes a 10 county service area.
Currently, the Authority and the Board are obligated for
repayment to the Federal Government of about $70 million with
an interest rate of 3.5% over a term of 50 years. The contract
between the Texas Water Development Board and Lavaca-Navidad
River Authority permits the Authority to acquire the Board's
interest in the project, and to assume all responsibility and
potential liability of the Project.
In addition to the federally financed portion of the
project, the Authority financed, constructed, and owns and
operates a $24 million pipeline, pumping plant and distribution
system. The Authority has constructed an additional $8.9
million intake-pumping plant complex for delivery of water to
the Lake Texana-Corpus Christi pipeline. The bonds for the
Authority project are guaranteed and being repaid by the water
users. The Authority operates and maintains the entire project,
both Federal and State financed portions.
S. 1474 requires that the outstanding balance of
indebtedness be repaid and the project purchased by the State
project sponsors--the Authority and the Board. Purchase would
be accomplished by payment of the net present value of the cash
stream required to repay the current contractual indebtedness,
discounted at U.S. Treasury rates on the date of purchase. The
present value of the payment needed to repay the adjusted
repayment obligation, is estimated to be $45,082,675. Title of
the Federal portion of the project would be transferred to the
Authority and the Board.

legislative history

S. 1474 was introduced by Senator Hutchison on August 2,
1999 and a Subcommittee hearing was held on October 20, 1999.
At the business meeting on June 7, 2000, the Committee on
Energy and Natural Resources ordered S. 1474, as amended,
favorably reported.

committee recommendation and tabulation of votes

The Committee on Energy and Natural Resources, in open
business session on June 7, 2000, by a unanimous voice vote
with a quorum present, recommends that the Senate pass S. 1474,
if amended as described herein.

committee amendment

During the consideration of S. 1474, the Committee adopted
an amendment in the nature of a substitute that makes several
significant changes in the bill, First, the Committee amendment
strikes the requirement in the original bill that the Secretary
convey the Project upon receipt of payment and replaces it with
an new requirement that the Secretary convey the Project as
soon as practicable after the date of enactment, and in
accordance with all applicable law and subject to the
conditions set forth in the Committee amendment. Second, the
Committee amendment changes the purchase price for the Project
from a set dollar amount to an amount to be determined from the
adjusted net present value of current repayment obligations.
Third, the Committee amendment adds a list of six specific
management measures the State must undertake as a condition of
the conveyance. Fourth, the Committee amendment strikes a
provision that requires State approval for use of the Project's
surface estate for mineral exploration and development and
replaces it with a general direction that future mineral
development must be consistent with Project purposes.

section-by-section analysis

Section 1 is a short title.
Section 2 defines key terms used in the bill. Section 2(3)
defines ``state'' to include both the Texas Water Development
Board (TWDB) and the Lavaca Navidad River Authority (LNRA).
Both the TWDB and the LNRA are responsible for all aspects of
Project operations, including maintenance, protecting public
safety, and maintaining the authorized project purposes at a
level at least equivalent to that when the Project was owned by
the United States. When the Project was build and repayment
contracts executed, the Department of the Interior entered into
contracts with both TWDB and LNRA, thereby obligating both
entities to pay the reimbursable obligation of the Project.
Current expectations are that LNRA plans to purchase TWDB's
share of the Project. Until that time, both entities are
responsible for protecting public safety and maintaining the
public purposes of the Project. At such time as LNRA acquires
TWDB's share, then LNRA assumes all responsibility and
potential liability of the Project.
Section 3 provides that, subject to the conditions in
sections 4 and 5, the Secretary shall, ``as soon as
practicable'' after enactment, convey the Project title of the
State of Texas, subject to applicable law and the conditions
set forth in sections 4 and 5. This section also requires a
report from the Secretary if conveyance is completed later than
1 year and 180 days after date of enactment. The report shall
include status of conveyance, obstacles to conveyance and
anticipated date for completion.
Section 4 describes how payment shall be calculated and
what obligations are extinguished upon payment. It also
provides that the State bears transaction costs for conveyance
and that all funds paid by the State shall be credited to the
Reclamation Fund.
Section 5 describes the general and specific conditions for
future management of the Project. Specific conditions relating
to fish, wildlife and recreation management and existing
obligations are detailed.
Section 6 provides that mineral interests in the Project
retained by the United States shall be managed consisted with
Federal law and in a manner that will not interfere with the
purposes for which the project was authorized.
Section 7 provides that the United States shall not be
liable for any damages, effective on the date of conveyance,
except for acts of negligence committed by either the United
States or an employee, agent or contractor of the United
States.
Section 8 provides that, upon conveyance, the Project shall
be deauthorized and that after deauthorization, the Project is
no longer entitled to any benefits under Federal reclamation
law.

cost and budgetary considerations

The following estimate of costs for this measure has been
provided by the Congressional Budget Office.

S. 1474--Palmetto Bend Conveyance Act

Summary: S. 1474 would direct the Secretary of the Interior
to convey the Palmetto Bend Reclamation Project to the state of
Texas. As a condition of the conveyance, S. 1474 would require
that the state pay the net present value of its repayment
obligations on the project. This money would be deposited in
the Reclamation Fund. The bill specifies the discount and
interest rates that must be used to calculate the net present
value of this revenue stream. The state also must agree to
manage the project for its original purposes, which include
providing a municipal and industrial water supply, conserving
and developing fish and wildlife resources, and enhancing
recreational opportunities. Once the project is conveyed, the
Bureau of Reclamation would no longer pay for the operation and
maintenance of the project.
CBO estimates that enacting S. 1474 would result in a net
decrease in direct spending of $34 million over the 2001-2005
period. Estimated asset sale receipts of $51 million would
provide near-term savings in 2001, but these savings would be
offset by the loss of offsetting receipts of about $4 million a
year over the 35-year period from fiscal year 2001 through
2035. Because enacting S. 1474 would affect direct spending,
pay-as-you-go procedures would apply. CBO estimates that
implementing this bill would have no significant effect on
discretionary spending.
S. 1474 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
The state of Texas probably would incur some costs as a result
of the bill's enactment, but these costs would be voluntary.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1474 is shown in the following table.
The costs of this legislation fall within budget function 300
(natural resources and environment).

Estimated Budget Authority................................ 0 -48 3 3 4 4
Estimated Outlays......................................... 0 -48 3 3 4 4
----------------------------------------------------------------------------------------------------------------

Basis of estimate: For this estimate, CBO assumes that S.
1474 will be enacted by the end of fiscal year 2000. We expect
that the state will have paid any amounts due for fiscal year
2000 in August of this year and that the project will be
conveyed to the state of Texas in fiscal year 2001.
CBO estimates that enacting S. 1474 would reduce direct
spending by $34 million over the 2001-2005 period, but would
have very little net budgetary impact--on a present value
basis--over the life of the Palmetto project. As a condition of
conveyance, S. 1474 requires that the state pay the net present
value of its repayment obligations on the project, using a
discount rate based on the average interest rate on 30-year
U.S. Treasury bonds in the month preceding the sale. CBO
estimates that the state would pay $51 million in 2001 for the
project, based on an estimated repayment obligation of $72
million and a projected discount rate of 6.6 percent. Once
conveyed, the government would forgo payments of roughly $4
million a year for the next 35 years.
Based on information from the bureau, CBO estimates that
the agency currently spends less than $500,000 each year for
the operation and maintenance of the project. Hence, we
estimate that any discretionary savings from the conveyance
would not be significant. Likewise, implementing this bill may
change the timing of deposits to the Reclamation Fund, but CBO
expects that such changes would have a negligible effect on
discretionary spending.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays that are subject to pay-as-you procedures
are shown in the following table. For the purposes of enforcing
pay-as-you-go procedures, only the effects in the current year,
the budget year, and the succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----------------------------------------------------------------------------------------------------------------
Changes in outlays................ 0 -48 3 3 4 4 4 4 4 4 4
Changes in receipts............... Not applicable
----------------------------------------------------------------------------------------------------------------

Under the Balanced Budget Act (BBA), proceeds from
nonroutine asset sales (sales that are not authorized under
current law) may be counted for pay-as-you-go purposes only if
the sale would entail no financial cost to the government. CBO
estimates that the sale of the Palmetto Bend Project as
specified in S. 1474 would satisfy the conditions in the BBA,
and therefore, the proceeds would count for pay-as-you-go
purposes.
Intergovernmental and private-sector impact: S. 1474
contains no intergovernmental or private-sector mandates as
defined in UMRA. The conveyance authorized by this bill would
be voluntary on the part of the state, and any costs it would
incur to meet the conditions imposed by the bill also would be
voluntary. Before the property could be conveyed to the state,
the bill would require the state to pay the present value of
its outstanding obligation to the United States and to pay
certain transaction costs. It also would require the state to
assume responsibility for operating and maintaining the
project.
Estimate prepared by: Federal Costs: Rachel Applebaum.
Impact on State, Local, and Tribal Governments: Marjorie
Miller. Impact on the Private Sector: Jean Wooster.
Estimate approved by: Peter H. Fontaine, 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. 1474. 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. 1474, as ordered reported.

executive communications

On October 13, 1999, the Committee on Energy and Natural
Resources requested legislative reports from the Department of
the Interior and the Office of Management and Budget setting
forth Executive agency recommendations on S. 1474. These
reports had not been received at the time the report on S. 1474
was filed. When the reports become available, the Chairman will
request that they be printed in the Congressional Record for
the advice of the Senate. The testimony provided by the
Commissioner of the Bureau of Reclamation at the Subcommittee
hearing follows:

Statement of Eluid L. Martinez, Commissioner, U.S. Bureau of
Reclamation, Department of the Interior

My name is Eluid L. Martinez. I am Commissioner of the U.S.
Bureau of Reclamation. I am pleased to provide the
Administration's views on S. 1474, legislation providing for
the conveyance of the Palmetto Bend Project to the State of
Texas.
S. 1474--Palmetto Bend Conveyance Act
S. 1474 directs the Secretary of the Interior to convey the
Palmetto Bend Project in coastal Texas to the State of Texas,
acting through the Texas Water Development Board (TWDB) and/or
the Lavaca-Navidad River Authority (LNRA), which are
governmental entities created by the State of Texas. As
drafted, the Administration opposes S. 1474. However, let me
state that good progress has been made in the past year. This
is a complex multipurpose project. Apart from technical issues
with the language of S. 1474, it is our view that the long list
of concerns that we have raised in the past, has been narrowed
down to several issues, which I will highlight in my statement.
If these remaining issues could be resolved, the Palmetto Bend
Project could be an appropriate candidate for title transfer.
Background
The Palmetto Bend Project is a multipurpose project located
in Jackson County, Texas near Edna on the Navidad River, with
the dam site about 4 miles above the confluence of the Lavaca
and Navidad rivers. Project features consist of Palmetto Bend
Dam and Lake Texana, including recreation facilities on
approximately 7,000 acres of public land surrounding the lake.
Palmetto Bend Dam regulates natural flows of the Navidad river
to provide municipal and industrial water supplies in the
counties of Jackson and Calhoun, and to the City of Corpus
Christi. Through contract with Reclamation, the Lavaca-Navidad
River Authority has operation and maintenance responsibility
for the facilities. This project was originally authorized by
Public Law 90-562 in October 1968.
In August 1997, LNRA formally requested that Reclamation
enter into a process to consider transferring title of the land
and facilities associated with the Palmento Bend Project from
federal to non-federal ownership. In October, 1997, Reclamation
and LNRA signed an agreement to ``evaluate the Authority's
proposed transfer of title to the Palmetto Bend Project in an
Environmental Assessment in accordance with the National
Environmental Policy Act (NEPA), other applicable laws and
Reclamation policy.''
In December, 1997, as part of that NEPA process, two public
scoping meetings were conducted in the towns of Edna and
Victoria, Texas to identify issues and concerns by members of
the local community and other stakeholders. At both sessions, a
variety of viewpoints were represented and several important
issues were raised that needed to be addressed as part of the
process. In February 1998, the results of the scoping meeting,
and the NEPA document outline, were provided to LNRA.
In March 1999, Reclamation released a draft environmental
assessment (EA) and received numerous comments. These comments
were incorporated and addressed in a final EA which was
released on June 21, 1999. The issues and analysis documented
in that EA form the basis for much of my testimony today.
Concerns about S. 1474
Mr. Chairman, as I stated, a great deal of progress has
been made on Palmetto Bend in the past year. A final
environmental assessment has been completed, and productive
discussions with stakeholders are underway. However, the
Department does not have some important policy as well as
technical concerns about the proposal as drafted:
(1) Compliance with NEPA and Other Laws and Treaties: S.
1474 as introduced directs rather than authorizes the Secretary
to convey the facilities of the Project. The Administration
strongly opposes such directives. Such a mandate would severely
diminish the value of the NEPA process by removing the
Secretary's discretion to make decisions on proposed title
transfers based on the results of environmental analysis and
public involvement. The Administration firmly believes that
meaningful NEPA compliance is critical prior to title transfer,
to allow the Department, the Congress, and the public to fully
explore the impacts of the proposed transfer, its alternatives,
and opportunities to avoid undesirable effects on public
resources and values. The Secretary's authority to condition
the transfer to resolve important issues identified during the
NEPA process prior to title transfer must also be clear.
(2) Mineral Development: As introduced, S. 1474 effectively
gives the State veto authority over any development of the
retained Federal mineral estate at the Project. This is
problematic for a number of reasons. First, in the State of
Texas, as in many States, the mineral estate is dominant over
the surface estate, putting S. 1474's Section 7 in conflict
with existing law. Second, the title transfer valuation assumes
that the mineral estate would be administered by the United
States, and would be available for leasing, development, and
production consistent with applicable Federal and State laws.
As written, Section 7 is likely to change the valuation as it
effectively reduces potential Federal revenues from future
mineral development. Third, the Bureau of Land Management has
issued approximately 20 leases for the development of
Federally-owned oil and gas estate within the project boundary,
and the imposition of new restrictions would place an
unanticipated burden upon these lesses. Fourth, in its
strictest application, such as a total prohibition of surface
occupancy for mineral development, this section may result in a
taking of property interests.
To protect the rights of the State while addressing the
above concerns, we suggest the following language: ``All
mineral interests in the Project retained by the United States
shall be managed consistent with Federal law and with the
purposes for which the Project was originally authorized.''
(3) Future Management of Public Purposes: The Department
believes that this is a crucial issue that must be resolved
before title transfer can be completed. Reclamation policy for
title transfer requires that public aspects of the transferred
project be protected. In the case of multipurpose projects such
as Palmetto Bend, where more than $21 million of public Federal
funds have been invested in non-reimbursable recreation, fish
and wildlife purposes, there are a number of authorized public
purposes. They include public access to public lands and
waters; and public uses and benefits, such as recreation, fish
and wildlife. The Administration must protect the significant
taxpayer investments.
During the environmental review process for the proposed
Palmetto Bend title transfer, a number of concerns were raised
by the public and government agencies regarding the need to
protect fish, wildlife, environmental, recreation and other
public benefits of the Project to ensure that no future
degradation or diminishment occurs in these public resources
and benefits. The Department shares this concern. Reclamation
believes it is possible to develop a legally enforceable, long-
term arrangement with an agency such as the Texas Parks and
Wildlife Department (TPWD), to assure that these public
resources are protected. In essence an agency such as the TPWD
would assume Reclamation's public trust responsibilities for
the oversight and management of fish and wildlife resources and
public recreational opportunities at the project.
I understand that for several months, LNRA and TPWD have
been working on such an agreement. While a preliminary
Memorandum of Understanding has been signed between these
agencies, we have identified a number of areas where changes
are needed. We have articulatedthose concerns and are pleased
that LNRA has expressed a willingness to address them.
S. 1474 can provide an important statutory foundation to
assure protection of the public aspects of the project.
Reclamation recommends that Section 6(a) be modified to include
the following:
Assurance that full public access to the project's
lands and waters will be continued, subject only to
restrictions for purposes of project security, public
safety, and natural resource protection;
Assurance that the project's public lands will not be
sold or otherwise disposed of;
Assurance that the project's public lands will not be
made available for private or exclusive uses;
Assurance that the project's fish and wildlife
resources and habitats will continue to be managed for
the benefit and enhancement of those resources;
Assurance that the project's existing recreational
facilities and assets will be maintained for the
benefit of the general public;
Assurance that the public will be charged recreation
use fees that are no more than is customary and
reasonable.
(4) Payment: Additional Administration review is needed to
determine whether the proposed payment adequately protects the
Federal financial interest. In addition, it is important to
understand that in calculating the valuation, certain
assumptions about future management of public surface resources
and Federal mineral estate were made. Given these assumptions,
clarifications in the proposed legislation, as outlined above,
regarding management of surface resources and Federal estate
are needed.
(5) Tax Exempt Financing: It needs to be clear that
payments made to the United States should not be financed with
the proceeds of obligations that qualify as Federally tax
exempt under Section 103 of the Internal Revenue Code as
amended.
Technical amendments
In addition to those issues raised above, I have a number
of technical and clarifying modifications which I would like to
provide:
(1) Section 2(3) Definition of ``State'': As introduced, S.
1474 is not clear on which entity--the Texas Water Development
Board or the Lavaca Navidad River Authority--will actually hold
title and make the management decisions. The roles,
responsibilities and liabilities of each need to be clarified.
(2) Section 3 Conveyance: This section states that the
Project would be transferred upon payment. H.R. 2764 needs to
be clarified to show that payment is one of a number of steps
that must occur prior to transfer. Other activities, such as
NEPA compliance, must be completed prior to transfer.
Furthermore, it needs to be further clarified that the United
States will retain ownership to all Project museum properties.
(3) Section 4 Completion of Conveyance: This section needs
to make clear that in addition to NEPA, compliance with the
National Historic Preservation Act and the Endangered Species
Act must be completed prior to conveyance.
(4) Section (5) Payment: Language needs to be added to
establish a ``due date'' for the payment.
(5) Section 5(b): This subsection should be clarified to
make clear that while the contracts will be extinguished, the
obligations of the State in terms of management and operations
will not be extinguished upon payment. Therefore the title of
this subsection should be changed from ``Obligations'' to
``Contract'' Extinguished. Additionally the subsection should
be modified to make this more clear. We suggest the following
revision: ``On payment by the State under subsection (a),
Contract No. 14-06-500-1880, as amended, between the United
States and the State shall be extinguished. After completion of
conveyance provide for in Section 3, the State shall assume
full responsibility for all aspects of operation, maintenance
and replacement of the Project.''
(6) Section 6. Future Management: The State does not
currently hold, nor is it envisioned to hold, an interest in
the Federal mineral estate. Therefore the reference to
``mineral estate'' in this subsection should be deleted.
(7) Section 6(a). Future Management: This section needs to
be clarified to ensure that the Project benefits will not be
diminished after transfer. We recommend replacing the phrase
``implementation of fish, wildlife, and recreational
activities,'' with ``conservation and development of the fish
and wildlife resources and the enhancement of recreational
activities.'' We also recommend that previously discussed
concerns related to public access, land disposal, private and
exclusive uses, and recreation use fees be addressed in this
section.
We also recommend adding the following subsection in
section 6:
(b) Management Decisions.--As a condition of conveyance
under section 3, specific management decisions affecting the
public aspects of the project (namely, fish and wildlife
resources and recreation opportunities) shall be conducted
according to a management agreement between all recipients of
title to the project and TPWD. This agreement is subject to the
review and approval of the Secretary.
(8) Section 6(b) Existing Obligation: This subsection needs
to be revised to clarify that the responsibilities being
transferred are obligations to be assigned by the United
States. The nature of the obligations also needs to be
clarified. We recommend the following revision: ``As a
condition of the conveyance under Section 3, the United States
shall assign all obligations of the United States associated
with the Project existing on the date of conveyance including
for contracts, recreation, fish and wildlife easements, and any
permits, or license agreements including oil and gas.''
(9) Section 7. Mineral Development: Management of the
mineral estate, which is what is envisioned in this section,
constitutes more than development of the resources. As such,
Reclamation recommends this section be renamed: Section 7.
Management of Mineral Estate.
(10) Section 8(a) and 8(b) Liability: To make this
consistent with liability language that we have worked out with
other entities interested in title transfer, we suggest two
modifications to subsection (a) and two in subsection (b). In
8(a) delete the phrase ``except as related to retained mineral
interests,'' also, delete ``with respect'' and insert in lieu
thereof ``relating.'' In 8(b), after ``nothing in this''
replace ``section'' with ``Act'' and following the phrase
``provide for in,'' replace ``chapter 171 of title 28, United
States Code'' with ``the Federal Tort Claims Act, 28 U.S.C.
Section 2671 et seq.''
(11) Section 9(b) No Reclamation Benefits: As drafted, this
subsection can be read to say that the State would not be
eligible for any benefits under Federal Reclamation law for any
Reclamation Project throughout the State (where the Texas Water
Development Board has an interest). As such, this needs to be
clarified by inserting the words, `` for the Palmetto Bend
Project'' after ``not entitled to received any benefits.''
As you can see, Mr. Chairman, together with LNRA, we have
come a long way toward addressing the Administration's concerns
and those of the other stakeholders who have raised concerns
about this proposed title transfer.
That concludes my remarks on S. 1474. I would be pleased to
answer any questions.

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 the bill S. 1474, as
ordered reported.