[House Report 109-588]
[From the U.S. Government Publishing Office]
109th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 109-588
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BLUNT RESERVOIR AND PIERRE CANAL LAND CONVEYANCE ACT OF 2005
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July 20, 2006.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
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Mr. Pombo, from the Committee on Resources, submitted the following
R E P O R T
[To accompany H.R. 4301]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 4301) to direct the Secretary of the Interior to convey
certain parcels of land acquired for the Blunt Reservoir and
Pierre Canal features of the initial stage of the Oahe Unit,
James Division, South Dakota, to the Commission of Schools and
Public Lands and the Department of Game, Fish, and Parks of the
State of South Dakota for the purpose of mitigating lost
wildlife habitat, on the condition that the current
preferential leaseholders shall have an option to purchase the
parcels from the Commission, and for other purposes, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
PURPOSE OF THE BILL
The purpose of H.R. 4301 is to direct the Secretary of the
Interior to convey certain parcels of land acquired for the
Blunt Reservoir and Pierre Canal features of the initial stage
of the Oahe Unit, James Division, South Dakota, to the
Commission of Schools and Public Lands and the Department of
Game, Fish, and Parks of the State of South Dakota for the
purpose of mitigating lost wildlife habitat, on the condition
that the current preferential leaseholders shall have an option
to purchase the parcels from the Commission, and for other
purposes.
BACKGROUND AND NEED FOR LEGISLATION
As part of the Pick-Sloan Missouri Basin Program, the
federal government planned numerous dams and reservoirs on the
Upper Missouri River in South Dakota. The projects would
provide irrigation water, flood control, and power generation.
Two of the four completed reservoirs (Oahe and Sharpe)
impounded over 220,500 acres of state and tribal lands.
In 1968, Congress authorized the Secretary of the Interior
to construct, operate, and maintain the Initial Stage of the
Oahe Unit (Unit), James Division, for irrigation, municipal and
industrial water supplies, flood control, fish and wildlife
conservation, and recreational activities. Known as the Oahe
Irrigation Project, it was to consist of a pumping plant, a
system of main canals (including the Pierre Canal), along with
the Blunt Dam and Reservoir roughly 35 miles east of Pierre.
The federal government was authorized to acquire 42,000
acres of land to construct and operate the Blunt Reservoir and
Pierre Canal feature of the Unit. Between 1972-1977,
approximately 19,000 acres were acquired in Hughes and Sully
Counties with an understanding that the willing sellers would
be able to lease back the land until the Project was completed.
Some lands were purchased from willing sellers, while others
were acquired through condemnation. At the time, many
landowners believed that they would be able to purchase the
land back if it was not needed for the Project. Some local
opposition to the Project surfaced in 1973 and continued to
build until a series of public meetings were held in 1977 to
determine if the Project should continue. Later that year,
Project construction was halted. All major construction
contract activities ceased, and land acquisition was halted,
though the Blunt Reservoir and Pierre Canal have remained
authorized to date.
The acquired lands have remained federal property since
Project construction ended and the Bureau of Reclamation has
administered them using preferential and nonpreferential
leases. Preferential leaseholders are the original land owners
(and their descendants) at the time of Project purchase, with
holdings of approximately 13,700 acres. The non-preferential
leaseholders consist of those who had not previously owned or
controlled the land prior to Project purchase, with holdings of
approximately 4,700 acres. Throughout the years, all of this
land has remained off local property tax rolls. Most of the
land is still used for agricultural purposes, while some is not
in original condition and contains stockpiled materials,
fences, access roads, detours, and other various items.
In order to meet aspects of Section 602 of Public Law 105-
277, known as the Cheyenne River Sioux Tribe, Lower Brule Sioux
Tribe, and State of South Dakota Terrestrial Wildlife Habitat
Restoration Act, the State developed a habitat mitigation plan
for the previously mentioned 220,500 acres of lost wildlife
habitat. This plan allows for the development of approximately
27,000 acres of wildlife habitat in the State. Transferring
approximately 4,700 acres of non-preferential lease lands in
the Blunt Reservoir feature to the State Department of Game,
Fish and Parks would constitute a step toward satisfying the
habitat mitigation obligation.
The goals of H.R. 4301 are to: deauthorize the Blunt
Reservoir feature; allow preferential leaseholders the first
option to purchase the land they currently lease; and to convey
to the State Department of Game, Fish, and Parks
nonpreferential leased parcels, unleased parcels, and any
parcels not purchased back for the purposes of mitigating lost
wildlife habitat. Preferential leaseholders will have five
years to purchase the land, via cash or 30 year financing. In
order to encourage cash purchases, the legislation fixes the
price at 10% below fair market value, as determined by Uniform
Appraisal Standards.
Related to a February 8, 2006, Water and Power Subcommittee
hearing on H.R. 4301, the State commissioned a study to
evaluate the change in land values around the Blunt Reservoir
and Pierre Canal feature lands. Between 2000, just after the
Blunt Reservoir legislation was first introduced, and 2006, the
State's report concluded that agricultural land values have
increased 88 percent around the Reservoir and canal feature
lands. This substantial increase is consistent with concerns
raised at that hearing.
COMMITTEE ACTION
H.R. 4301 was introduced on November 10, 2005, by
Congresswoman Stephanie Herseth (D-SD). The bill was referred
to the Committee on Resources, and within the Committee to the
Subcommittee on Water and Power. On February 8, 2006, the
Subcommittee held a hearing on the bill. On June 21, 2006, the
Full Resources Committee met to consider the bill. The
Subcommittee on Water and Power was discharged from further
consideration of the bill by unanimous consent. No amendments
were offered and the bill was ordered favorably reported to the
House of Representatives by unanimous consent.
SECTION-BY-SECTION ANALYSIS
Section 1. Short title
This section cites the short title of this bill as the
``Blunt Reservoir and Pierre Canal Land Conveyance Act of
2005.''
Section 2. Blunt Reservoir and Pierre Canal
Subsection (a) defines key terms used in the Act.
Subsection (b) deauthorizes the Blunt Reservoir feature of
the Oahe Irrigation Project.
Subsection (c) requires the State to accept land conveyed
to it under the bill in ``as is'' condition, assume
responsibility for any outstanding liabilities, and recognize
any outstanding obligations associated with expired easements
or other rights granted to either feature. The conveyances to
the State shall also be subject to the reservations by the
United States and the conditions specified in section 667b of
title 16, United States Code, for transfer of property to State
agencies for wildlife conservation purposes. The conveyances
shall be subject to the reservation by the United States of all
oil, gas, and mineral rights, to the condition that the
property continue to be used for wildlife conservation
Subsection (d) allows the preferential leaseholders an
option to purchase the land they lease within 5 years of
enactment. Any purchases shall be from the Commission, acting
as an agent for the Secretary. The leaseholders would have the
option of paying cash and receiving a 10 percent discount on
the land's value, or paying by installment with a 10 percent
down payment and the remainder paid over a 30-year period at 3
percent annual interest. If the preferential leaseholder fails
to purchase a parcel within the 5-year period, that parcel
would be conveyed to the State to assist in the implementation
of the wildlife habitat mitigation plan. Proceeds of the sales
shall be deposited as miscellaneous funds in the Treasury and
made available, subject to appropriation, to the State for the
establishment of a trust fund to pay the county taxes on the
lands received by the State Department of Game, Fish, and Parks
under the Act.
Subsection (e) directs the Secretary to convey to the South
Dakota Department of Game, Fish, and Parks the nonpreferential
leased parcels and unleased parcels of the Blunt Reservoir and
Pierre Canal to be used for mitigating the wildlife habitat
that was lost as a result of the development of the Pick-Sloan
project. The Commission would also be authorized, with the
Department's concurrence, to allow a person to exchange other
land in South Dakota for a nonpreferential lease parcel or
unleased parcel at Blunt Reservoir or Pierre Canal. This
subsection also reserves to the United States a perpetual
easement to the land to allow for a pipeline or other water
conveyance structure over, under, across, or through the Pierre
Canal Feature.
Subsection (f) releases the United States from liability,
except for damages from certain acts of negligence committed
prior to the date of conveyance.
Subsection (g) provides that during the interim period
prior to the beginning on the date of enactment of this Act and
ending on the date of conveyance of the parcel, the Secretary
shall continue to lease each parcel under the same lease terms
as prior to enactment of this Act.
Subsection (h) authorizes $750,000 to be appropriated to
reimburse the Secretary for expenses incurred in implementing
this Act, and such sums as are necessary to reimburse the
Commission for expenses incurred implementing this Act.
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 IV section 3, clause 2 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, credit
authority, or an increase or decrease in revenues or tax
expenditures. According to the Congressional Budget Office,
enactment of this bill would increase direct spending by about
$300,000 in 2007, but also result in $1.1 million in
collections from asset sales, with a net reduction in direct
spending of $800,000 over the 2007-2016 time period.
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 the
Interior to convey certain parcels of land acquired for the
Blunt Reservoir and Pierre Canal features of the initial stage
of the Oahe Unit, James Division, South Dakota, to the
Commission of Schools and Public Lands and the Department of
Game, Fish, and Parks of the State of South Dakota for the
purpose of mitigating lost wildlife habitat, on the condition
that the current preferential leaseholders shall have an option
to purchase the parcels from the Commission, and for other
purposes.
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. 4301--Blunt Reservoir and Pierre Canal Land Conveyance Act of 2005
Summary: H.R. 4301 would direct the Secretary of the
Interior to transfer title to the lands and facilities that
make up the nonpreferential lease parcels and unleased parcels
of the Blunt Reservoir and Pierre Canal in South Dakota to the
state. During the five years following enactment, H.R. 4301
would allow any preferential leaseholder to purchase the parcel
that is the subject of their lease for cash or on an
installment basis. After five years, the bill would direct the
Secretary to transfer any remaining parcels to South Dakota.
H.R. 4301 would authorize the appropriation of $750,000 to
implement those provisions. The bill also would authorize the
appropriation of payments to South Dakota equal to the amount
of any proceeds from sales to leaseholder.
Assuming appropriation of the necessary amounts, CBO
estimates that implementing H.R. 4301 would cost about $2
million in 2007. CBO estimates that enacting H.R. 4301 would
increase direct spending by about $300,000 in 2007. Enacting
the bill would also lead to about $1.1 million in collections
from asset sales. Thus, the net impact on direct spending over
the 2007-2016 period would be a reduction of $0.8 million.
H.R. 4301 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Accepting the land conveyance authorized in this bill would be
voluntary on the part of South Dakota and any costs to the
state would be incurred voluntarily.
Estimated cost to the Federal Government: Subject to the
appropriation of the authorized amounts, CBO estimates that
implementing H.R. 4301 would cost about $2 million in 2007. CBO
estimates that enacting the bill would increase offsetting
receipts by about $1.1 million in 2007 from land sales and
would increase direct spending by about $300,000 in 2007 for
loan subsidies for the installment purchases of certain land
parcels in the affected area. The estimated budgetary impact of
H.R. 4301 is shown in the following table. The costs of this
legislation fall within budget function 300 (natural resources
and environment).
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By fiscal year, in millions of dollars--
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2007 2008 2009 2010 2011
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CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Payments to South Dakota:
Estimated Authorization Level........................ 0 1.9 0 0 0
Estimated Outlays.................................... 0 1.9 0 0 0
CHANGES IN DIRECT SPENDING
Collections from Land Sales:
Estimated Budget Authority........................... -1.1 0 0 0 0
Estimated Outlays.................................... -1.1 0 0 0 0
Loan Subsidy Cost:
Estimated Budget Authority........................... 0.3 0 0 0 0
Estimated Outlays.................................... 0.2 0.1 0 0 0
Total:
Estimated Budget Authority....................... -0.8 0 0 0 0
Estimated Outlays................................ -0.9 0.1 0 0 0
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Basis of estimate
Spending subject to appropriation
H.R. 4301 would direct the Secretary of the Interior to
transfer title to the lands and facilities that make up the
nonpreferential lease parcels and unleashed parcels of the
Blunt Reservoir and Pierre Canal to South Dakota. During the
five years following enactment, H.R. 4301 would allow any
preferential leaseholder to purchase the parcel that is the
subject of their lease. After such time has expired, the bill
would direct the Secretary to transfer any remaining
preferential lease parcels to the state. H.R. 4301 would
authorize the appropriation of $750,000 to implement those
provisions.
The bill also would authorize the appropriation of federal
proceeds to South Dakota from sales to leaseholders. We
estimate that by selling parcels to preferential leaseholders,
the federal government would collect nearly $1.1 million in
2007. Thus, subsequent appropriations of that amount to South
Dakota would cost $1.1 million in 2007.
Direct spending
To purchase their leased lands under the bill, preferential
leaseholders would pay the value of such lands appraied for
agricultural purposes only (i.e., not including recreational
value). The bill would allow leaseholders to pay 10 percent
less than the appraised value if they pay up front in a lump
sum. The bill also would allow those leaseholders whose parcels
are valued above $10,000 to pay in installments over 30 years
with an annual interest rate of 3 percent. Based on information
from the Bureau of Reclamation, we expect that over the five-
year period, leaseholders would purchase about 14 parcels
valued at less than $10,000 each. We estimate that the
government would receive about $100,000 in 2007 from such
sales.
Because of the favorable loan terms under the bill, we
expect that leaseholders with parcels valued above $10,000
would purchase those parcels on an installment basis. Based on
information from the Bureau of Reclamation, CBO estimates that
the government would collect about $1 million from the sale of
those more-valuable leases in 2007.
The Federal Credit Reform Act of 1990 requires that
agencies record the subsidy cost of financing arrangements in
the year the assets are sold if payment is deferred for more
than 90 days. In effect, H.R. 4301 would allow the Secretary to
issue direct loans to the leaseholders with parcels valued
about $10,000. Based on the experience of similar loan programs
within the Department of Agriculture, CBO expects that very few
purchasers would default on their payments. Because the
purchasers would pay annual interest of 3 percent, an amount
below the interest rate paid by the Treasury, CBO estimates
that the loans under H.R. 4301 would have a subsidy cost of
about $300,000, or 30 percent of the purchase price. Under
credit reform procedures, this cost would be recorded in 2007.
Intergovernmental and private-sector impact: H.R. 4301
contains no intergovernmental or private-sector mandates as
defined in UMRA. Accepting the land conveyance authorized in
this bill would be voluntary on the part of South Dakota and
any costs to the state would be incurred voluntarily.
Estimate prepared by: Federal Costs: Julie Middleton;
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.