[House Report 109-380]
[From the U.S. Government Publishing Office]
109th Congress Rept. 109-380
HOUSE OF REPRESENTATIVES
2d Session Part 1
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DESALINATION WATER SUPPLY SHORTAGE PREVENTION ACT OF 2005
_______
February 28, 2006.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Pombo, from the Committee on Resources, submitted the following
R E P O R T
[To accompany H.R. 1071]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 1071) to direct the Secretary of Energy to make incentive
payments to the owners or operators of qualified desalination
facilities to partially offset the cost of electrical energy
required to operate such facilities, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend 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 ``Desalination Water Supply Shortage
Prevention Act of 2005''.
SEC. 2. DEFINITIONS.
(a) Qualified Desalination Facility.--The term ``qualified
desalination facility'' means a facility that--
(1) produces for sale to domestic customers desalinated
seawater, brackish groundwater, or surface water whose source
water is greater than 1000 parts per million total dissolved
solids; and
(2) is owned or operated by--
(A) a State or any political subdivision, agency,
authority, or instrumentality of a State;
(B) an Indian tribe; or
(C) a corporation responsible for providing municipal
water service pursuant to State or tribal law;
(3) is first used to produce commercial desalinated water for
sale during the 10-year period beginning on October 1 of the
first fiscal year occurring after the date of the enactment of
this Act; and
(4) uses the best available technology as determined by the
Secretary.
(b) Indian Tribe.--The term ``Indian Tribe'' means with respect to
the contiguous 48 states, any federally recognized Indian tribe,
organized band, pueblo, or community and with respect to Alaska, the
Metlakatla Indian Community.
(c) Secretary.--The term ``Secretary '' means the Secretary of
Energy.
(d) State.--The term ``State'' means the several States, the District
of Columbia, Puerto Rico, American Samoa, the Virgin Islands, Guam, and
the Northern Mariana Islands.
SEC. 3. DESALINATED WATER PRODUCTION INCENTIVE PAYMENTS.
(a) Incentive Payments.--The Secretary shall make incentive payments
in an amount determined under subsection (d) to the owners or operators
of qualified desalination facilities to partially offset the cost of
electrical energy required to operate such facilities.
(b) Agreement; Deadline.--The Secretary may not make any payment to
the owner or operator of a qualified desalination facility under this
section, unless, not later than the end of fiscal year 2016, the
Secretary enters into a written agreement with the owner or operator to
make such payment.
(c) Payment Period.--The Secretary may make payments to the owner or
operator of a qualified desalination facility under this section for a
period not to exceed 10 years--
(1) beginning on the date on which the facility is first used
to produce desalinated water; and
(2) ending not later than September 30, 2026.
(d) Amount of Payment.--
(1) In general.--Payments made by the Secretary under this
section to the owner or operator of any qualified desalination
facility shall be based on the amount of desalinated water
produced by the facility during the payment period described in
subsection (c). For any facility, the amount of such payment
shall be 62 cents for every thousand gallons of desalinated
water produced and sold, adjusted as provided in paragraph (2).
(2) Adjustments.--The amount of the payment made to any
person under this subsection as provided in paragraph (1) shall
be adjusted for inflation for each fiscal year beginning after
calendar year 2006 in the same manner as provided in the
provisions of section 29(d)(2)(B) of the Internal Revenue Code
of 1986 (26 U.S.C. 29(d)(2)(B)), except that in applying such
provisions the calendar year 2006 shall be substituted for
calendar year 1979.
(e) Application.--The Secretary may not make a grant to the owner or
operator of a qualified desalination facility under this section unless
the facility submits an application to the Secretary in such form, at
such time, and containing such information and assurances as the
Secretary may require.
(f) Limitation.--In any fiscal year not more than 60 percent of the
funds made available by the Secretary under this section shall be made
available to the owners or operators of qualified desalination
facilities that obtain source water directly from the sea, an estuary,
or from in-bank extraction wells that are of seawater origin
(g) Priority.--In awarding incentive payments under this section, the
Secretary shall give priority to any application for a project that--
(1) uses innovative technologies to reduce the energy demand
of the project;
(2) uses renewable energy supplies in the desalination
process;
(3) provides regional water supply benefits;
(4) provides a secure source of new water supplies for
national defense activities;
(5) reduces the threat of a water supply disruption as a
result of a natural disaster or acts of terrorism;
(6) uses technologies that minimize the damage to marine
life; or
(7) provides significant water quality benefits.
(h) Budget Act Compliance.--The authority provided by this section
may be exercised only in such amounts or to such extent as provided in
advance in appropriations Acts.
(i) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary $200,000,000 to carry out this section
from fiscal year 2006 through fiscal year 2016.
SEC. 4. NOVEL DESALINATION TECHNOLOGY.
(a) In General.--The Secretary shall support research and development
of promising novel technology approaches for the cost-effective
desalination of water.
(b) Authorization of Appropriation.--There are authorized to be
appropriated to the Secretary for carrying out this section $10,000,000
from fiscal year 2006 through fiscal year 2016.
PURPOSE OF THE BILL
The purpose of H.R. 1071 is to direct the Secretary of
Energy to make incentive payments to the owners or operators of
qualified desalination facilities to partially offset the cost
of electrical energy required to operate such facilities, and
for other purposes.
BACKGROUND AND NEED FOR LEGISLATION
As water supplies become more scarce, communities are
increasingly looking to desalination as a way to create new
potable water. The Federal Government first recognized the
potential benefits desalination could bring with passage of the
Saline Water Act of 1952, and since that time has continued to
fund research and development into new technologies.
Desalination, which is accomplished through various methods,
separates the water into two parts: fresh water and brine
(water with high concentrations of salts). There are over 1,000
desalination plants in operation nationwide; most are small and
designed to treat brackish water. In light of growing regional
water scarcity, large scale desalination of seawater and
brackish water is being developed in California, Texas, and
Florida.
Major hurdles in the widespread use of desalinated water
include, but are not limited to, high energy costs, federal and
state permitting procedures and disposal of salt by-products.
Total desalination costs can vary considerably from one site to
another based on a number of factors, such as the amount of
salts to be removed, capacity of the desalting plant, treatment
process, brine disposal, land costs, permitting procedures, and
water conveyance. Over the past twenty years, costs associated
with desalination have dropped due to improved membrane
efficiencies, but energy costs still continue to be the largest
component of desalination's total water costs (sometimes over
40%). This legislation addresses high energy costs.
H.R. 1071 authorizes the Secretary of Energy to make
incentive payments to the owners and operators of qualified
desalination facilities that are built after the bill's
enactment. These facilities can be owned or operated by any
state, municipal agency, Indian tribe, or private corporation
responsible for providing municipal water service. The payments
would partially offset the cost of electrical energy required
for operation. The facility has up to ten years after enactment
to submit an application to the Secretary for incentive
payments. These incentive payments will then be available up to
ten years after the written agreement is finalized.
In many situations, development of large-scale desalinated
water supplies has been cost prohibitive when compared to other
sources of water. The energy payments in this bill could be an
incentive for water providers to construct more desalination
plants and use future economies of scale to bring the costs
down to the level of other water sources. The bill authorizes
$200 million to carry out this program. Under H.R. 1071,
incentive payments from the Secretary of Energy to qualified
facilities would be $0.62 per thousand gallons (or
approximately $200 per acre foot) of desalinated water
produced.
COMMITTEE ACTION
H.R. 1071 was introduced on March 3, 2005, by Congressman
Jim Davis (D-FL). The bill was referred to the Committee on
Resources, and within the Committee to the Subcommittee on
Water and Power. On May 24, 2005, the Subcommittee held a
hearing on the bill. On November 16, 2005, the Full Resources
Committee met to consider the bill (Printed Hearing 109-14).
The Subcommittee on Water and Power was discharged from further
consideration of the bill by unanimous consent. Congressman
George Radanovich (R-CA) offered an amendment in the nature of
a substitute to change the short title of the bill and add
provisions involving definitions and grant priority criteria.
The amendment was adopted by unanimous consent. The bill, as
amended, was then ordered favorably reported to the House of
Representatives by unanimous consent.
SECTION-BY-SECTION ANALYSIS OF THE BILL AS ORDERED REPORTED
Section 1. Short title
This section cites the short title as the ``Desalination
Water Supply Shortage Prevention Act of 2005.''
Section 2. Definitions
This section defines various terms in the bill.
Section 3. Desalinated water production incentive payments
This section authorizes a total of $200 million to be
appropriated through fiscal year 2016 for the Secretary of
Energy to make incentive payments to owners or operators of
qualified desalination facilities to partially offset the cost
of electrical energy required to produce desalinated water. The
qualified facilities shall receive 62 cents for every thousand
gallons of desalinated water produced. Each facility will have
ten years to apply to the Secretary and enter into a written
agreement, then have up to ten years to collect those payments.
This section places a limitation on how much funding will go to
particular types of desalination facilities, while also giving
the Secretary discretion to prioritize how those incentive
payments will be disbursed. The Congressional Research Service
has indicated that the Secretary has considerable discretion on
the implementation of this section, as set forth in Sections
3(e) and 3(g) of the bill. Since this legislation primarily
impacts electricity payments provided after construction of a
qualified desalination facility, it is generally expected that
most federal and state permits required for construction will
cover many of the analyses required under applicable federal
environmental laws.
Section 4. Novel desalination technology
This section authorizes a total of $10 million through
fiscal year 2016 for the Secretary of Energy to support
research and development of promising novel technology for the
cost-effective desalination of water.
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 Resources' oversight findings and recommendations
are reflected in the body of this report.
CONSTITUTIONAL AUTHORITY STATEMENT
Article I, section 8 of the Constitution of the United
States grants Congress the authority to enact this bill.
COMPLIANCE WITH HOUSE RULE XIII
1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the
Rules of the House of Representatives requires an estimate and
a comparison by the Committee of the costs which would be
incurred in carrying out this bill. However, clause 3(d)(3)(B)
of that Rule provides that this requirement does not apply when
the Committee has included in its report a timely submitted
cost estimate of the bill prepared by the Director of the
Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974.
2. Congressional Budget Act. As required by clause 3(c)(2)
of rule XIII of the Rules of the House of Representatives and
section 308(a) of the Congressional Budget Act of 1974, this
bill does not contain any new budget authority, spending
authority, credit authority, or an increase or decrease in
revenues or tax expenditures.
3. 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 direct the Secretary of Energy to
make incentive payments to the owners or operators of qualified
desalination facilities to partially offset the cost of
electrical energy required to operate such facilities.
4. Congressional Budget Office Cost Estimate. Under clause
3(c)(3) of rule XIII of the Rules of the House of
Representatives and section 403 of the Congressional Budget Act
of 1974, the Committee has received the following cost estimate
for this bill from the Director of the Congressional Budget
Office:
H.R. 1071--Desalination Water Supply Shortage Prevention Act
Summary: H.R. 1071 would authorize the appropriation of up
to $200 million over the 2006-2016 period for the Department of
Energy (DOE) to subsidize the operating costs of new water
desalination projects. Under this bill, DOE would make payments
of 62 cents (adjusted annually for inflation) per thousand
gallons of desalinated water produced and sold from eligible
projects for a period of 10 years. The bill also would
authorize the appropriation of a total of $10 million over the
2006-2016 period for DOE research and development (R&D) on
desalination technologies.
Assuming appropriation of the authorized amounts, CBO
estimates that implementing this bill would cost $8 million
over the 2006-2010 period and a total of $201 million after
2010. Enacting H.R. 1071 would have no effect on direct
spending or revenues.
H.R. 1071 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 water agencies that produce
desalinated water by authorizing incentive payments that
partially offset their operating costs. Any costs those
agencies might face would be incurred voluntarily.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1071 is shown in the following table.
The costs of this legislation fall within budget function 270
(energy).
------------------------------------------------------------------------
By fiscal year, in millions of
dollars--
---------------------------------------
2006 2007 2008 2009 2010
------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATlON
Subsidy for Desalination Plants
a:
Estimated Authorization 0 0 50 50 50
Level......................
Estimated Outlays........... 0 0 0 0 5
Research and Development:
Estimated Authorization 0 1 1 1 1
Level......................
Estimated Outlays........... 0 * 1 1 1
Total Changes:
Estimated Authorization 0 51 51 51 51
Level......................
Estimated Outlays........... 0 * 1 1 6
------------------------------------------------------------------------
a. Most of the authorized cost for this activity would occur after 2010.
Note: * = Less than $500,000.
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted in fiscal year 2006 and that the
authorized amounts will be appropriated as necessary to
implement the subsidy and R&D programs. The cost estimate
assumes that the $10 million authorized for R&D by DOE would be
spread evenly over the 2007-2016 period.
CBO expects that the subsidies authorized by the bill would
facilitate the financing of desalination projects. Thus, we
anticipate that DOE would obligate funds for the subsidies when
a project's financing is arranged, which is likely to occur
after sponsors complete the planning and permitting process but
before the facility is built. Although several projects are on
the drawing boards in California, Florida, Texas, and other
states, it is unclear how many projects would secure financing
by 2010. Given the lead times needed for planning and
permitting a desalination project, CBO expects that DOE would
not begin obligating funds for the subsidies until 2008.
Most of the projects currently under consideration would
range in size from about 10 million to 25 million gallons per
day, with output likely range from 50 percent to 90 percent of
the design capacity. At 62 cents per thousand gallons (adjusted
annually for inflation), CBO estimates the cost of subsidizing
a project with a daily capacity of 25 million gallons for 10
years would total about $50 million. For this estimate, CBO
assumes that three such projects would be approved over the
2008-2010 period, one in each of those fiscal years. CBO
estimates that the remaining $50 million in subsidies would be
obligated after 2010.
DOE would not make any payments from this subsidy program
until a plant actually produced and sold desalinated water.
Because the construction and initial testing of such facilities
typically takes two or three years, most of the outlays for
this program would occur after 2010.
Intergovernmental and private-sector impact: H.R. 1071
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 water agencies that
produce desalinated water by authorizing incentive payments
that partially offset their operating costs. Any costs those
agencies might face would be incurred voluntarily.
Estimate prepared by: Federal Costs: Kathleen Gramp. Impact
on State, Local, and Tribal Governments: Lisa Ramirez-Branum.
Impact on the Private Sector: Craig Cammarata.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
COMPLIANCE WITH PUBLIC LAW 104-4
This bill contains no unfunded mandates.
PREEMPTION OF STATE, LOCAL OR TRIBAL LAW
This bill is not intended to preempt any State, local or
tribal law.
CHANGES IN EXISTING LAW
If enacted, this bill would make no changes in existing
law.