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                                                       Calendar No. 359
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-203

======================================================================



 
                   DAKOTA WATER RESOURCES ACT OF 1999

                                _______
                                

                November 1, 1999.--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. 623]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 623) to amend Public Law 89-108 to 
increase authorization levels for State and Indian tribal, 
municipal, rural, and industrial water supplies, to meet 
current and future water quantity and quality needs of the Red 
River Valley, to deauthorize certain project features and 
irrigation service areas, to enhance natural resources and fish 
and wildlife habitat, and for other purposes, having considered 
the same, reports favorably thereon with amendments and 
recommends that the bill, as amended, do pass.
    The amendments are as follows:
    1. On page 4, lines 7 through 11, strike paragraph (3) in 
its entirety and insert in lieu thereof the following:

          (3) Operation and maintenance costs.--Except as 
        otherwise provided in this Act or Reclamation Law--
                  (A) The Secretary shall be responsible for 
                the costs of operation and maintenance of the 
                proportionate share of unit facilities in 
                existence on the date of enactment of the 
                Dakota Water Resources Act of 1999 attributable 
                to the capacity of the facilities (including 
                mitigation facilities) that remain unused;
                  (B) The State of North Dakota shall be 
                responsible for costs of operation and 
                maintenance of the proportionate share of 
                existing unit facilities that are used and 
                shall be responsible for the full costs of 
                operation and maintenance of any facility 
                constructed after the date of enactment of the 
                Dakota Water Resources Act of 1999;
                  (C) The State of North Dakota shall be 
                responsible for the costs of providing energy 
                to authorized unit facilities.

    2. On page 4, line 19 through page 5, line 6, strike 
paragraph (h)(1) in its entirety and insert in lieu thereof the 
following:

          (1) Delivery of water into the hudson bay basin.--
        Prior to construction of any water systems authorized 
        under this Act to deliver Missouri River water into the 
        Hudson Bay basin, the Secretary, in consultation with 
        the Secretary of State and the Administrator of the 
        Environmental Protection Agency, must determine that 
        adequate treatment can be provided to meet the 
        requirements of the Treaty between the United States 
        and Great Britain relating to Boundary Waters Between 
        the United States and Canada, signed at Washington, 
        January 11, 1909 (26 Stat. 2448; TS 548) (commonly 
        known as the Boundary Waters Treaty of 1909).

    3. On page 11, lines 7 through 12, strike paragraph (5) in 
its entirety and insert in lieu thereof the following:

          (5) Principal supply works.--The Secretary shall 
        maintain the Snake Creek Pumping Plant, New Rockford 
        Canal, and McClusky Canal features of the principal 
        supply works. As appropriate, the Secretary shall 
        rehabilitate or complete such features consistent with 
        the purposes of this Act. Subject to the provisions of 
        sections (8)(c) and (8)(d)(1) of this Act, the 
        Secretary shall select a preferred alternative to 
        implement the Dakota Water Resources Act of 1999. In 
        making this selection one of the alternatives the 
        Secretary shall consider is whether to connect the 
        principal supply works in existence on the date of 
        enactment.

    4. On page 12, line 9, insert ``economic,'' before 
``financial''.
    5. On page 14, line 16, insert after the period the 
following: ``Proceeds from loan repayments and any interest 
thereon shall be treated as Federal funds.''
    6. On page 22, line 11, strike ``4739)--'' and insert in 
lieu thereof ``4739) is amended--''.
    7. On page 24, line 11, strike ``$300,000,000'' and insert 
in lieu thereof, ``$200,000,000''.
    8. On page 27, line 19, strike ``$300,000,000'' and insert 
in lieu thereof, ``$200,000,000''.
    9. On page 28, lines 3 through 7, strike subsection (f) in 
its entirety.
    10. On page 29, lines 14 through 21, strike paragraph (C) 
in its entirety.

                                Purpose

    As ordered reported, S. 623 amends Public Law 89-109, 
relating to the Garrison Diversion Project in North Dakota, to 
increase authorized funding levels for State and Indian tribal, 
municipal, rural, and industrial water supplies; to meet 
current and future water quantity and quality needs of the Red 
River Valley; to deauthorize certain project features and 
irrigation service areas; to enhance natural resources and fish 
and wildlife habitat; and to assist the United States in 
meeting its obligations under the Boundary Waters Treaty of 
1909.
    S. 623 authorizes a multipurpose Federally assisted water 
project to meet the water needs of North Dakota and to 
compensate the State and tribes for the loss of 550,000 acres 
under the Garrison and Oahe Reservoirs, but changes the focus 
of water development from large-scale irrigation to the 
delivery of municipal, rural, and industrial water to 
communities and the four Indian reservations located in North 
Dakota. S. 623 will allow for the completion of the Garrison 
Diversion Project, while enhancing wildlife habitat and water 
conservation in North Dakota.

                          Background and Need

    The Pick-Sloan Missouri River Flood Control Act of 1944 
authorized the construction of six mainstem dams and reservoirs 
and numerous reclamation projects along the Missouri River and 
its tributaries. In North Dakota, the plan included the 
Garrison Dam and Reservoir. While providing flood control and 
water storage benefits for downstream states, the Dams 
inundated approximately 550,000 acres of farm and tribal lands 
in North Dakota under Lake Sakakawea (the reservoir behind 
Garrison Dam) and Lake Oahe. As part of the Pick-Sloan 
compromise, the Bureau of Reclamation would provide irrigation 
for over 1.2 million acres of land in central and western North 
Dakota, originally from the Fort Peck reservoir, and later from 
Lake Sakakawea as compensation to the State and the tribes for 
the losses incurred.
    For various reasons, however, Congressional authorization 
for construction of the Garrison Diversion Project did not 
occur until 1965, when Congress enacted the 250,000 acre 
Garrison Diversion Unit as the initial stage of a project 
encompassing over a million acres. Construction on the project 
began in 1968. Although major sections of the main water 
storage and delivery facilities were built shortly after the 
1965 authorization, the project became embroiled in controversy 
over environmental and cost issues, and much of the Garrison 
project was never completed.
    During the 1970's, additional concerns were raised from 
opponents of irrigated agriculture, environmentalists, and the 
Canadian government about water flowing from the Missouri Basin 
into the Hudson Bay basin. Progress slowed during the Carter 
Administration as part of its general opposition to the 
Reclamation program. In 1984, the Reagan Administration halted 
construction and directed the Secretary of the Interior to 
establish a review commission to reformulate the project.
    In addition to the concerns noted above, it became apparent 
that the large-scale irrigation purpose for which the project 
was originally intended no longer addressed the contemporary 
water needs of North Dakota, as water use priorities within the 
State had changed over time from irrigation to primarily 
municipal and industrial uses.
    In 1984 Congress established a special commission to 
examine the water needs of North Dakota. Its charge was to 
recommend how to reformulate the existing project in order to 
meet the contemporary water needs of the State. In 1986 
Congress enacted the Garrison Diversion Unit Reformulation Act 
(Public Law 99-294) to amend the 1965 authorization and to 
implement the commission's recommendations, unless otherwise 
specified.
    The amended Act reduced the irrigation component to 130,940 
acres and gave greater emphasis to municipal, rural, and 
industrial (MR&I;) water needs. The reformulated project 
provided a comprehensive MR&I; program for 130 towns and cities, 
rural areas, and three Indian reservations. The amended Act 
also minimized environmental impacts associated with 
construction and operation of the reformulated project and 
assisted the United States in meeting its responsibilities 
under the Boundary Waters Treaty of 1909 by authorizing a water 
treatment facility to treat Missouri River Water transferred to 
the Hudson Bay drainage via the Sheyenne River and the Red 
River to Fargo and Grand Forks. Moreover, the amended Act 
provided for more timely repayment of project costs, the 
preservation of existing rights of the State of North Dakota to 
use water from the Missouri River, and the offset of inundated 
lands resulting from the construction of the Garrison Dam with 
a multi-purpose water development project.
    As a result of the passage of the 1986 Reformulation Act, a 
Wetlands Trust was established to provide funding for the 
protection of the wetland resources in the State of North 
Dakota. Funding for the Trust was to be a combination of State 
and Federal funds. The authorized Federal funding has been 
fully appropriated, and the State funding is in accordance with 
agreements reached between the Secretary and the State. The 
Lonetree Wildlife Management Area was established subject to 
the possible reauthorization of the area as a reservoir site. 
An additional enhancement area, known as the Kraft Slough 
project, has been funded but not all the land acquisition has 
been completed as yet; however, nearly 90 percent of the actual 
wetlands associated with the project have been acquired. 
Development of this enhancement to the wildlife resources of 
the State has been fully funded. Non-refuge mitigation has been 
fully funded under revised criteria and now stands at 140 
percent of actual need. Refuge mitigation is well underway and 
is expected to be finished within the next few years.
    Passage of the 1986 Reformulation Act did not lead to 
completion of the project. In 1990, a task force created by 
then-Secretary of Interior Manuel Lujan recommended that all 
irrigation and M&I; facilities for Indian tribes be completed, 
but there be no further funding for non-tribal project features 
and related supply works. This policy has continued under the 
Clinton Administration.
    President Bush did not request any funds for the project in 
his 1991 budget because of concerns with the economic viability 
of the irrigation component of the project. Funding has been 
appropriated annually for the MR&I; program, for environmental 
mitigation purposes, for the Wetlands Trust, and for operation 
and maintenance and other costs of the unit. However, many of 
the features authorized by the 1986 Reformulation Act, 
including the Sykeston Canal and James River Feeder Canal, were 
not constructed. Additionally, except for the 5,000-acre Oakes 
Test Area, none of the authorized irrigation development has 
been constructed because of concerns about the ability of 
project beneficiaries to meet even the costs of operating and 
maintaining the facilities.
    A 1990 Task Group, appointed by the Secretary of the 
Interior, recommended that funding continue to be provided only 
to those features in the reformulated project that were 
consistent with the contemporary water needs of the state, with 
national priorities, and the history of the project--
essentially irrigation and MR&I; facilities for Indian tribes. 
The present Administration has continued the policy recommended 
by the 1990 Task Group report, with respect to project funding. 
In 1993, the Bureau of Reclamation participated in a 
``collaborative process'' with the State of North Dakota to 
again define a new direction for the project. That process 
identified certain areas for which studies were initiated, 
focusing on MR&I; water development needs as outlined by North 
Dakota as the priority for the State.

Transboundary issues

    In 1975 the Canadian government, particularly the Province 
of Manitoba, raised several concerns about the potential 
environmental impact of the project that was authorized in the 
1965 legislation. The Canadian government alleged a potential 
violation of the 1909 Boundary Waters Treaty between the United 
States and Great Britain. The two countries agreed to refer the 
issues to the International Joint Commission (IJC), which was 
established by the Boundary Waters Treaty. The IJC issued its 
findings and recommendations in a report dated August 12, 1977, 
``Transboundary Implications of the Garrison Diversion Unit.''
    Incorporating the recommendations of the IJC, the 1986 
Reformulation Act included authorization for a water treatment 
plant to treat any water transferred into the Hudson Bay 
drainage. It provided protective language providing that the 
Secretary of the Interior must determine compliance before 
water is delivered to the Hudson Bay drainage. It also barred 
any return flows from irrigation into the Hudson Bay drainage. 
Canada praised the plan in a Diplomatic Note and declared that 
the project ``does not pose threats to Canadian waters* * *'' 
The two countries continued to review the plans for the project 
through a Joint Technical Committee established for that 
purpose by the two countries. As a result of those 
deliberations several design changes occurred and tests were 
run to assure the parties that all reasonable steps were taken 
to avoid harm and to comply with the Boundary Waters Treaty.
    In addition, the Bureau of Reclamation, the State of North 
Dakota and the Garrison Diversion Conservancy District provided 
funding for additional research and examination into the 
potential injury to Canadian waters if Missouri River water was 
transferred for use in the North Dakota portion of the Hudson 
Bay drainage. The research was administered by the North Dakota 
Water Research Institute and involved researchers and 
scientists from both countries. A compendium of the study 
results will soon be published.
    S. 623 goes one step further and permanently deauthorizes 
the Lonetree Reservoir, a primary feature of the project, which 
has been a major concern of the Canadian government and 
conservation interests in the United States, and converts it 
into a wildlife enhancement feature.
    As ordered reported, S. 623 will allow for the completion 
of a much-reduced irrigation component, while addressing many 
of the concerns that were raised about previous project 
authorizations, including project costs, environmental issues, 
and project feasibility requirements. The bill reflects lengthy 
negotiations in North Dakota among the State, water users, 
Indian tribes, and local environmentalists and as amended, 
incorporates an agreement between the State, the North Dakota 
Congressional delegation, and the Administration.

                          Legislative History

    S. 623 was introduced by Senators Conrad and Dorgan on 
March 16, 1999. A hearing was held in the Water and Power 
Subcommittee on May 27, 1999.
    At the business meeting on September 22, 1999, the 
Committee on Energy and Natural Resources ordered S. 623 
favorably reported, as amended.

           Committee Recommendations and Tabulation of Votes

    The Committee on Energy and Natural Resources, in open 
business session of September 22, 1999, by a majority voice 
vote of a quorum present, recommends that the Senate pass S. 
623, if amended as described herein. Senator Bunning asked to 
be recorded in opposition to the measure.

                          Committee Amendments

    During the consideration of S. 623, the Committee adopted a 
series of amendments. Explanations of those amendments follow:
    The first amendment provides for clearer and more detailed 
cost-sharing of operation and maintenance costs between the 
State of North Dakota and the Bureau of Reclamation. The State 
costs represent the proportionate share of use for existing 
facilities and for all new facilities. The State is also 
responsible for the costs of providing energy to authorized 
facilities.
    The second amendment regarding the Hudson Bay Basin retains 
the requirement in S. 623 and current law that any inter-basin 
transfers of water from the Missouri River Basin to the Hudson 
Bay Basin comply with the Boundary Waters Treaty of 1909. The 
amendment further requires that the Secretary of the Interior ( 
in consultation with the Secretary of State and the 
Administrator of EPA) determine such compliance before 
construction of any inter-basin conveyance. The underlying bill 
requires such action before the operation of the system. The 
effect is to provide earlier assurances to Canada of U.S. 
compliance with the Treaty.
    The third amendment regarding the principal supply works 
details what facilities the Secretary shall maintain and 
clarifies that any rehabilitation or new construction of 
facilities be carried out consistent with other provisions of 
the bill. Those provisions describe the process of selecting 
water supply features for the Red River Valley. The amendment 
also sets out that one alternative feature to be considered is 
whether to connect the supply works in existence on the date of 
enactment.
    The fourth amendment adds ``economic'' to the feasibility 
tests for irrigation projects for which a report by the 
Secretary of the Interior is required under section 5(e). The 
requirements inthe underlying bill are for ``financial and 
engineering'' feasibility.
    The fifth amendment clarifies how loan proceeds shall be 
treated. The underlying bill authorizes the State to use MR&I; 
funds to set up a revolving loan program. The amendment 
specifically ensures that proceeds from MR&I; loan repayments 
and related interest earnings will be treated as federal funds. 
In other words, when loans are repaid, the requirements of law 
pertaining to the use of federal funds will continue to apply 
to any new loans.
    The sixth amendment is a technical correction.
    The seventh amendment reduces the $300 million 
authorization in S. 623 to $200 million for the State's MR&I; 
program in the Dakota Water Resources Act.
    The eighth amendment is a conforming amendment and applies 
the customary indexing of accounts to the reduced State MR&I; 
authority of $200 million rather than the $300 million in the 
underlying bill.
    The ninth amendment strikes the authorization of $40 
million for construction of a bridge to replace the existing 
structure across the Missouri River on the Fort Berthold 
Reservation.
    The tenth amendment removes the link between construction 
of the selected Red River Supply System and the funding for the 
Resources Trust Fund. The authorization for the Trust is no 
longer contingent upon construction of unrelated features.

                      Section-by-Section Analysis


                          sec. 1. short title

    Section 1 contains the short title of the bill, the 
``Dakota Water Resources Act of 1999''.

                   sec. 2. purposes and authorization

    Section 2 amends section 1 of Public Law 89-108, the 
authorizing legislation for the Garrison Diversion Project in 
North Dakota. As amended, this section sets forth the purposes 
of the Act, which are to meet the water needs of North Dakota 
and the four Indian reservations located within the State by 
development of a multi-purpose water project. The project would 
develop MR&I; water systems; authorize reduced irrigation 
development; enhance fish and wildlife habitat; promote ground 
water recharge and augmented stream flows; enhance recreation; 
assure appropriate repayment of Federal funds; and assure 
compliance with environmental laws and the Boundary Water 
Treaty of 1909.
    This section makes fish and wildlife enhancement a specific 
project purpose. It also strikes language from the 1986 
Garrison Diversion Unit Reformulation Act directing the 
Secretary of the Interior (the ``Secretary'') to construct all 
supply works to the capacity identified in the 1984 Commission 
Report. This section also authorizes the Secretary to enter 
into the necessary agreements with the State to carry out the 
Act.
    This section requires the State of North Dakota to repay 
the Federal government for the proportionate share of the cost 
of features constructed prior to the Dakota Water Resources Act 
(DWRA) that are used. This section also specifies how operation 
and maintenance costs will be divided between the State and 
Federal government. For existing features, the Secretary shall 
be responsible for the proportionate share of O&M; costs 
attributable to unused capacity of project features. The State 
shall be responsible for the proportionate share of O&M; costs 
of existing features that are used, for O&M; on all features 
constructed after the date of enactment of the DWRA, and for 
the full costs of providing energy to unit facilities.
    Finally, this section specifies that the Secretary of 
Interior, after consulting with the Secretary of State and 
Administrator of the Environmental Protection Agency, must 
determine that the Boundary Waters Treaty with Canada will not 
be violated prior to construction of project features to 
deliver water from the Missouri River into the Hudson Bay 
drainage basin. The costs of constructing water treatment and 
related facilities to meeting the requirements of the Boundary 
Waters Treaty continue to be nonreimbursable.

                       sec. 3. fish and wildlife

    Section 3 amends section 2 of Public Law 89-108 to require 
all fish and wildlife enhancement costs for waterfowl refuges, 
waterfowl production areas, and wildlife conservation areas 
continue to be a federal responsibility. Further, the bill 
requires the Secretary to consult with the State of North 
Dakota before approving recreation areas, and adds ``services 
in kind'' as an acceptable form of repayment for recreation 
areas.
    This section also moves existing language, that 
deauthorizes the Taayer Reservoir and authorized the Kraft and 
Pickell Slough as a component of the National Wildlife Refuge 
System, from section 8 of current law to this section. This 
section also clarifies that the Bureau of Reclamation is 
authorized to acquire land in the Kraft and Pickell Slough 
areas through donation or exchange of land.
    Finally, this section deauthorizes the Lonetree Dam and 
Reservoir, and designates the lands as a wildlife conservation 
area to provide additional wildlife habitat. The intent of the 
term ``wildlife conservation area'' is that the area not become 
part of the National Wildlife Refuge System, but that the State 
of North Dakota would continue to manage it as a State Wildlife 
Management Area, the costs of which would be paid by the 
Secretary. If the feature selected under section 8 to meet the 
water needs of the Red River Valley includes a buried pipeline 
between the McClusky Canal and New Rockford Canal, the bill 
authorizes the use of the wildlife conservation area and 
Sheyenne Lake National Wildlife Refuge for a route for the 
pipeline.

                      sec. 4. interest calculation

    Section 4 amends section 4 of Public Law 89-108 to provide 
that interest on repayable capital costs shall only be 
calculated until such time as the feature is substantially 
complete.

                     sec. 5. irrigation facilities

    Section 5 amends section 5 of Public Law 89-108. The bill 
retains authorization for the existing 5,000-acre Oakes Test 
area. In addition, the bill authorizes the Secretary to develop 
irrigation on 13,700 acres at Turtle Lake, 10,000 acres at 
McClusky Canal, and 1,200 acres of canal-side irrigation along 
the New Rockford Canal provided the full investment costs are 
repaid by the users at New Rockford (without ``aid-to-
irrigation''). Also, the bill authorizes development of 
irrigation on 28,000 undesignated acres in the Missouri River 
basin. No other irrigation is authorized. This section also 
authorizes irrigation units under this bill to receive project 
pumping power.
    Prior to development of any projects in the undesignated 
28,000 acres, the Secretary must report to Congress on the 
costs and benefits of the proposed irrigation and the economic, 
financial and engineering feasibility of the proposed unit. The 
Committee intends that the Secretary's investigation and report 
should be conducted expeditiously and without unnecessarily 
formal or costly reviews. Compliance with the National 
Environmental Policy Act is also required before developing any 
projects. This section specifically prohibits any irrigation 
development authorized under the bill in the Hudson Bay/Devils 
Lake drainage basin.
    This section retains irrigation authorization on the Fort 
Berthold Indian Reservation (7,700 acres at Lucky Mound and 
7,500 acres at Upper Six Mile Creek, but allows for other areas 
of equal acreage if approved by the Tribe and Secretary) and on 
the Standing Rock Sioux Reservation (2,380 acres).
    Finally, this section directs the Secretary to maintain the 
Snake Creek Pumping Plant, New Rockford Canal, and McClusky 
Canal, and to rehabilitate or complete those features as 
appropriate. In selecting the preferred alternative under 
section 8, the Secretary is directed to consider connecting the 
existing supply works as an alternative to meet the 
comprehensive water quality and quantity needs of the Red River 
Valley.

                             sec. 6. power

    Section 6 amends section 6 of Public Law 89-108 to 
harmonize the repayment required by power users of power from 
the Garrison Dam with how other power users repay capital costs 
for other power generating facilities. Additionally, this 
section specifically prohibits any increase in power rates for 
Pick-Sloan Program customers that would result from any 
provisions in the Dakota Water Resources Act.

         sec. 7. municipal, rural, and industrial water service

    Section 7 amends section 7 of Public Law 89-108. This 
section maintains the 25 percent non-Federal cost-share for 
MR&I; projects developed under this section, and allows the 
State to credit amounts that exceed the 25 percent minimum 
toward future cost-shares for MR&I; development projects. This 
section also permits the State to make loans and to grants, and 
requires that proceeds from repaid loans be recycled back only 
into the MR&I; grant or loan program. It also includes a 
provision clarifying that any loans repaid to the state under 
the revolving loan program will continue to be treated as 
Federal funds for purposes of compliance with applicable 
Federal laws. The Southwest Pipeline Project, Northwest Area 
Water Supply Project, Red River Valley Water Supply Project, 
and other MR&I; systems in the State are eligible.
    Section 7 also authorizes the State to develop a water 
conservation program, and calls on the Secretary and State to 
establish water conservation goals. If the State meets the 
goals of the program, the 25 percent on-federal cost share for 
MR&I; systems is reduced to 24.5 percent. The section also makes 
the cost of features previously constructed on the Missouri 
River by the Army Corps of Engineers nonreimbursable. Finally, 
it maintains the authority for the Secretary to develop MR&I; 
systems on the four Indian reservations located in North 
Dakota, and adds adjacent areas to that authorization to permit 
water systems to serve tribal members living outside the 
reservation boundaries.

                       sec. 8. specific features

    Section 8 amends section 8 of Public Law 89-108 by deleting 
the existing authority in section 8 to construct the Sykeston 
Canal, which was to be a connecting link between the existing 
McClusky and New Rockford Canals to deliver water from the 
Missouri River to the Red River Valley. Instead, the DWRA 
authorizes a Red river Valley Water Supply project and 
establishes a formal process of evaluating the water quantity 
and quality needs of the Red river Valley and the options for 
meeting those needs, and makes the Secretary responsible for 
the decision on which feature (or features) to construct to 
meet those needs. The Secretary and the State are to be 
partners in developing these studies.
    The Secretary and the State of North Dakota are required to 
complete a draft environmental impact statement within one year 
of the date of enactment of the DWRA (or, if unable to meet 
that deadline, to report to Congress on the status of the 
DEIS). The Secretary and the State are required to submit a 
final EIS within one year of filing the DEIS (or, if unable to 
meet that deadline, to report to Congress on the status of the 
FEIS). The Secretary, in consultation with the State of North 
Dakota, is then authorized to select a feature (or features) to 
meet the comprehensive water development needs of the Red River 
Valley, after reviewing the water needs report, the report on 
options for meeting those needs, and the EIS, and after 
consulting with the State (which will coordinate with affected 
local communities). Within 180 days of the Secretary signing 
the Record of Decision, the Secretary is required to enter an 
agreement with the State to construct the feature (or features) 
selected. If the feature selected includes delivering Missouri 
River water to the Red river Valley, the Sheyenne River water 
supply and release feature remains authorized to deliver 10 cfs 
of water (or another amount determined by the reports in this 
section) to the cities of Fargo and Grand forks.

                 sec. 9. oakes test area title transfer

    Section 9 amends section 9 of Public Law 89-108. This 
section deletes existing language relating to ``surplus crop 
production charges'' because changes to the Farm Program 
contained in the 1996 Farm Bill made the existing language 
obsolete. The new language authorizes the Secretary totransfer 
the Oakes Test Area (OTA) to the State not later than 2 years after 
signing the Record of Decision required under Section 8 (relating to 
meeting the needs of the Red River Valley), under terms that the 
Secretary believes would protect the public interest. If the Secretary 
and the State do not reach an agreement for a transfer by the time 
limit, the Secretary is directed to dispose of the OTA in accordance 
with the Federal Property and Administrative Services Act of 1949.

                SEC. 10. AUTHORIZATION OF APPROPRIATIONS

    Section 10 amends section 10 of Public Law 89-108 to reduce 
the authorization ceiling for irrigation and related facilities 
from $270,395,000 to $164,000,000. It also authorizes $200 
million for the Red River Valley Water supply project, to be 
used for the project feature (or features) selected by the 
Secretary pursuant to section 8. This project is reimbursable.
    Section 10 authorizes an additional $200 million for 
statewide MR&I; systems authorized under section 7, and an 
additional $200 million for MR&I; systems on the four Indian 
reservations located within North Dakota (allocated as follows: 
$30 million for Fort Totten Reservation, $70 million for Fort 
Berthold, $80 million for Standing Rock, and $20 million for 
Turtle Mountain).
    This section authorizes an additional $6.5 million for 
recreation projects, and permits up to $1.5 million of the 
amount to develop a Wetlands Interpretive Center in North 
Dakota. The bill also authorizes an additional $25 million for 
the Natural Resources Trust (authorized in section 11). It also 
authorizes creation of a separate account (after the features 
selected under section 8 are operational) within the Trust for 
operation and maintenance costs of mitigation and enhancement 
lands, but does not authorize appropriations for that account.
    Finally, section 10 includes a provision to index certain 
construction costs for inflation from the date of enactment of 
the DWRA, to reflect normal fluctuations in construction costs 
consistent with current Bureau of Reclamation practices. The 
section also includes a provision which prohibits counting 
funds spent since 1986 on operations and maintenance against 
the construction authorization ceilings in this section.

                    SEC. 11. NATURAL RESOURCES TRUST

    Section 11 amends section 11 of Public Law 89-108. The name 
of the current Wetlands Trust is changed to the Natural 
Resources Trust. In addition, the section establishes that the 
Trust is to be operated to preserve, enhance, restore, and 
manage wetlands and associated wildlife habitat, grassland 
conservation and riparian areas in the State of North Dakota. 
This section authorizes the Trust, in addition to its existing 
authorities, to fund incentives for conservation practices by 
landowners.
    Section 11 also establishes a schedule for annual 
appropriations for the Trust determined by a formula at 5 
percent of the annual funds appropriated for the Statewide MR&I; 
program and the Red River Valley Water Supply project.

                   Cost and Budgetary Considerations

    The Congressional Budget Office cost estimate report had 
not been received at the time the report was filed. When the 
report becomes available, the Chairman will request that it be 
printed in the Congressional Record for the advice of the 
Senate.

                      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. 623. 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. 623, as ordered reported.

                        Executive Communications

    On April 21, 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. 623. These reports 
had not been received at the time the report on S. 623 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 
Department of the Interior at the Subcommittee hearing follows:

  Statement of Patricia J. Beneke, Assistant Secretary for Water and 
                  Science, Department of the Interior

    My name is Patricia Beneke. I am Assistant Secretary for 
Water and Science within the U.S. Department of the Interior. 
The Bureau of Reclamation is one of the bureaus that I oversee. 
I am pleased to provide the Administration's testimony on S. 
623, the Dakota Water Resources Act of 1999.
    Mr. Chairman, S. 623 would alter the Garrison Diversion 
Unit of the Pick Sloan Missouri Basin Program as currently 
authorized to increase the funding authorization levels for 
State and Indian tribal, municipal, rural, and industrial water 
supplies, to meet current and future water quantity and quality 
needs of the Red River Valley, to reauthorize certain project 
features and irrigation service areas, to enhance natural 
resources and fish and wildlife habitat, and for other 
purposes.
    First, I would like to express my appreciation to the North 
Dakota delegation for their continued willingness to work with 
the Bureau of Reclamation and the Administration on these 
important matters. In the past several years, a great deal of 
progress has been made on a number of longstanding and 
extremely difficult issues. The delegation, as well as the 
North Dakota Governor's office, State legislative leaders, the 
State Engineer, the Conservancy District and others have worked 
hard along with the Administration, Reclamation and other 
stakeholders to find solutions. The Administration supports 
many elements of the bill as introduced.
    Since the bill was introduced, the Administration has had 
many hours of discussions with the North Dakota delegation 
working to address the significant issues that are associated 
with this legislation.
    We believe we have reached agreement on nearly all of these 
issues. If the bill is amended to address these issues as set 
out below, the Administration would be able to support this 
legislation.
Background
    Mr. Chairman, the Garrison Diversion Unit (GDU) has had a 
long history. I will not go into great detail, but there are 
several things that are important to note in order to provide 
context for consideration of this legislation and for the 
issues associated with it.
    The Garrison Diversion Unit in North Dakota, is part of the 
Pick Sloan Missouri Basin Program (PSMBP) which was originally 
authorized as part of the Flood Control Act of 1944. Originally 
known as the Missouri-Souris project, the authorization 
envisioned irrigation development of 1,275,000 acres in the 
state of North Dakota.
    In 1957, the Bureau of Reclamation completed the 
feasibility report on the Garrison Unit of the PSMBP. In that 
report, submitted to Congress, Reclamation recommended the 
development of 1,007,000 acres of irrigation and in 1965, P.L. 
98-108 authorized construction of 250,000 acres as the initial 
stage of the project.
    Over the next several years, it became increasingly evident 
that the level of development envisioned in the 1965 Act raised 
environmental and economic concerns. Concerns were also raised 
that the Act might result in violations of the International 
Boundary Water Treaty of 1990 with Canada. Consequently, in 
1984, P.L. 98-360 directed the Secretary of the Interior to 
appoint a commission to examine the water supply needs in North 
Dakota and to make recommendations on how to reformulate the 
project.
    In December 1984, the Commission issued its final report 
which included the following major recommendations: (1) Reduce 
irrigation development to 130,940 acres of which none would be 
located in the Hudsons Bay Drainage and 17,580 of which would 
be developed on two Indian Reservations that were most impacted 
by the initial development; (2) Develop Municipal, Rural and 
Industrial (MR&I;) water service for as many as 130 towns and 
rural areas, and three Reservations in the State; (3) Develop a 
water treatment facility to provide MR&I; water to Fargo and 
Grand Forks; (4) Mitigate impacts to fish and wildlife, and (5) 
Develop recreational sites.
    In 1986, Congress passed the Garrison Diversion Unit 
Reformulation Act of 1986 (P.L. 99-294) which generally 
authorized the recommendations of the GDU Commission's final 
report.
    In 1990, The Department of the Interior's Office of the 
Inspector General completed a review (OIG Report 90-49) of the 
financial issues associated with the project. The report stated 
that the ``operating costs assigned to irrigators will exceed 
their ability to pay because the project as reformulated does 
not appear to be financially feasible.'' In other words, it 
concluded that the farmers would be unable to pay their 
estimated operations, maintenance and replacement (OM&R;) costs 
as is required under Reclamation law. This fact led to the 
Inspector General's conclusion that the irrigation component of 
the Garrison Diversion Unit was economically infeasible.
    In response to the OIG Report, Secretary Lujan appointed a 
GDU Task Group to evaluate and make recommendations on how to 
proceed with this project, given the findings of the OIG 
report. In October 1990, the GDU Task Group Report recommended 
termination of Federal funding for the development and 
construction of non-Indian irrigation facilities and for the 
principle supply works, but recommended continuation of the 
MR&I; program. Since that time, the recommendations of this Task 
Group have been the basis for the policies of both the Bush and 
Clinton Administrations with respect to this Project, and has 
guided subsequent budget requests.
    In 1993, in an attempt to develop a consensus solution to 
meeting the contemporary water needs of the State, the North 
Dakota Water Management Collaborative Process was initiated 
whereby all interested stakeholders were convened.
    In 1995, after the initiation of several studies, and a 
great deal of hard work by the parties, the Collaborative 
Process was terminated without reaching a consensus on how GDU 
should be completed to best meet the contemporary water 
resource needs of the State. However, Reclamation continued to 
work towards completion of the studies it had agreed to 
undertake.
    In 1998, the delegation introduced a revised and 
reformulated Dakota Water Resources Act that altered the 
Garrison Diversion Unit of the Pick Sloan Missouri Basin 
Program as authorized in 1986 to increase the funding 
authorization levels for State and Indian tribal, municipal, 
rural, and industrial water supplies, to meet current and 
future water quantity and quality needs of the Red River 
Valley, to deauthorize certain project features and irrigation 
service areas, to enhance natural resources and fish and 
wildlife habitat, and for other purposes.
    In summary, Mr. Chairman, the Pick Sloan Missouri Basin 
Program when conceived foresaw a comprehensive system of flood 
control, navigation improvement, irrigation, municipal and 
industrial (M&I;) water supplies, and hydroelectric power 
generation for ten states. That plan envisioned 213 multi-
purpose projects providing over 1.1 million kilowatts of power 
and irrigation of more than 5 million acres.
    Since that time, changes in both the national economy and 
priorities, combined with the development of refined analytical 
tools and criteria have resulted in a significantly different 
project than was originally planned. Six dams have been 
constructed on the mainstem of the Missouri River, and numerous 
multi-purpose projects on the tributaries have been completed. 
Flood control and navigation benefits are greater than 
anticipated with navigation benefits estimated to be about 
$17.7 million per year. Power development has exceeded 
expectations with an installed plant capacity of 220 percent of 
original estimates and hydropower sales averaging $200 million 
annually. Benefits from recreational development have also 
exceeded the original plan. Irrigation development, on the 
other hand, has fallen well short of original goals with less 
than 600,000 (11%) of the planned 5.3 million acres having been 
developed.

Amendments to S. 623

    Since S. 623 was introduced, the Administration and the 
delegation have met several times and have made significant 
progress in resolving the Administration's serious concerns 
about the proposal. The following describes amendments to S. 
623 that would resolve outstanding issues mentioned in past 
Administration testimony on the Dakota Water Resources Act:
    MR&I; Facility Funding.--The Administration recognizes that 
there is additional need for good quality water for domestic 
and other purposes in a large portion of the State. Since the 
Administration last provided testimony on the Dakota Water 
Resources Act in September 1998, we have been working closely 
with the North Dakota delegation, the State Engineer and the 
Governor's office to find ways to address this problem in a way 
that also recognizes Federal budget constraints. The 
Administration supports the bill's proposed $200 million 
authorization of MR&I; funding for Indian communities, and the 
proposed $200 million authorization subject to repayment at the 
project's original authorization interest rate for construction 
of facilities in the Red River Valley. In addition, the 
Administration would support extending the current grant 
authorization to address other State-wide MR&I; needs by an 
additional $200 million, with a 25 percent local cost-sharing.
    This combination of authorizations provides a total of $600 
million in new Federal funding authority to address priority 
needs within the State for quality water in a way that 
addresses continuing Federal budget constraints. We also 
believe it is important that this package of programs includes 
repayment of funding provided for Red River Valley facilities. 
This repayment reflects the Administration's long-standing 
policy that in the case of non-Indian rural water supply system 
development, non-Federal interests should repay 100 percent of 
allocated project construction costs with interest.
    We believe we have reached agreement with the North Dakota 
delegation on amendments to address several other key issues:
    Status of MR&I; Funds.--All MR&I; funds would continue to be 
managed as ``Federal'' funds for the purpose of the compliance 
with Federal laws such as the National Environmental Policy Act 
(NEPA) and the National Historic Preservation Act (NHPA).
    Operation and Maintenance.--Consistent with long-standing 
cost-allocation procedures, the State would pay: (1) a pro-rata 
share of OM&R; on existing principle supply works, including 
associated mitigation, based on a percentage of capacity used; 
(2) 100 percent of OM&R; on all new facilities with the 
exception of facilities required to meet treaty obligations or 
comply with Reclamation law; and (3) all energy costs with the 
same exceptions.
    Irrigation Development.--The development of 28,000 acres of 
undesignated irrigation ``not located in the Hudson's Bay, 
Devils Lake or James River drainage basins'' would be required 
to meet an economic feasibility test with respect national 
economic development (NED) benefits--thereby holding this 
project to the same standard as other Federal projects.
    International Treaty Compliance.--Before any construction 
is undertaken on any part of the system capable of moving water 
into the Hudson Bay basin, the Secretary of the Interior, in 
consultation with the Secretary of State and the Administrator 
of the Environmental Protection Agency, must determine that 
adequate treatment has been provided to meet requirements of 
the U.S.-Canada Boundary Waters Treaty. We welcome this 
recognition of the United States' obligation under the Treaty 
not to pollute water flowing into Canada. We also believe it is 
important in this case to ensure that transboundary pollution 
and the United States' obligations under the Boundary Waters 
Treaty are considered as the NEPA process is carried out.
    Four Bears Bridge.--Reconstruction of Four Bears Bridge 
would not be accomplished through the Department of the 
Interior.
    Red River Valley Water Needs Assessment Studies.--
Completion of a report by the Secretary of the Interior and the 
State of North Dakota on the comprehensive water quality and 
quantity needs of the Red River Valley and options for meeting 
those needs, including delivery of Missouri River water to the 
Red River Valley, would include consultations with the 
Environmental Protection Agency, the U.S. Department of State, 
and the U.S. Army Corps of Engineers. The Administration will 
continue to work with the North Dakota delegation concerning 
consultation with other interested and affected entities, 
including the states of South Dakota, Iowa, Missouri, 
Minnesota, and the appropriate Federally recognized Indian 
tribes.
    Status of MR&I; Grant Funds.--All MR&I; grant funds, 
including accrued interest, would be managed as ``Federal'' for 
the purpose of the compliance with Federal laws such as the 
NEPA and NHPA.
    Completion of the Principal Supply Works.--Completing and 
maintaining the principal supply works identified in the 1984 
Garrison Diversion Unit Commission Final Report would not be a 
requirement of law, but would be one of the alternatives to be 
reviewed to meet the comprehensive water quality and quantity 
needs of the Red River Valley.
    We have not yet resolved, despite considerable time and 
attention from the North Dakota delegation and the 
Administration, concerns with the Natural Resources Trust. 
While we support expanding the Wetlands Trust, which was 
originally authorized in 1986, to include other natural 
resources as well as wetlands, the Administration is concerned 
about several other changes to this Section of the Act. First, 
the substitute amendment increases the Federal contributions to 
the Trust by $25 million, but proposes to eliminate the state 
and local contribution that was required in the 1986 
reformulation, thereby giving the State no financial stake in 
the Fund. Second, the substitute amendment restricts annual 
Federal appropriations to the Trust Fund to no more than 5 
percent of appropriations made for the Red River Valley Water 
Supply Project. Third, it also prohibits both the appropriation 
of $15 million of the total amount authorized for the Trust 
Fund and the establishment of an OM&R; account for the 
mitigation and enhancement lands associated with the Project 
until the Red River Valley Supply Project is operational.
    The Administration does not support, or agree with, this 
linkage and believes that each activity should be weighed on 
its own merits during the budget and appropriations process. We 
continue to be optimistic that these issues can be 
satisfactorily resolved.
    We note that S. 623, as current drafted, may affect 
revenues and therefore, may have PAYGO implications. We also 
have additional technical changes that we would like to work 
with the Committee to address.
    Mr. Chairman, I would like to reiterate my appreciation to 
the North Dakota delegation and others for working with the 
Administration to address the significant issues that are 
associated with this legislation. A great deal of hard work has 
taken place and significant progress has been made. I would 
like to continue that effort to work with the project sponsors 
and supporters as well as the opponents to try to find an 
appropriate solution to what has become a long standing and 
difficult issue.
    That concludes my statement, I would be happy to answer any 
questions.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 623, as ordered 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):

The Act of August 5, 1965 (Public Law 89-108, 79 Stat. 443) as Amended 
 by Sec. Sec. 1-9 of the Garrison Diversion Reformulation Act of 1986 
     (Public Law 99-294, 100 Stat. 418) and as Further Amended by 
 Sec. Sec. 3510 and 1701 of the Reclamation Projects Authorization and 
      Adjustment Act of 1992 (Public Law 102-575, 106 Stat. 4600)


SECTION 1.

    (a) The Congress declares that the purposes of this Act are 
to:
          (1) implement the recommendations of the Garrison 
        Diversion Unit Commission Final Report (dated December 
        20, 1984) in the manner specified by this Act;
          (2) meet the water needs [of] within the State of 
        North Dakota, including municipal, rural and industrial 
        water needs, as identified in the Garrison Diversion 
        Unit Commission Final Report,
          (3) minimize the environmental impacts associated 
        with the construction and operation of the Garrison 
        Diversion Unit;
          (4) assist the United States in meeting its 
        responsibilities under the Boundary Waters Treaty of 
        1909;
          (5) assure [more timely] appropriate repayment of 
        Federal funds expended for the Garrison Diversion Unit;
          (6) preserve any existing rights of the State of 
        North Dakota to use water from the Missouri River; and
          (7) offset the loss of farmland within the State of 
        North Dakota resulting from the construction of major 
        features of the Pick-Sloan Missouri Basin Program, by 
        means of a [federally-assisted water resource 
        development project providing irrigation for 130,940 
        acres of land] multipurpose federally assisted water 
        resource project providing irrigation, municipal, 
        rural, and industrial water systems, fish, wildlife and 
        other natural resource conservation and development, 
        recreation, flood control, ground water recharge, and 
        augmented stream flows.
    (b) The Secretary of the Interior (hereafter referred to as 
``the Secretary'') is authorized to plan and construct, jointly 
with the State of North Dakota, a multi-purpose water resource 
development project within the State of North Dakota providing 
for [the irrigation of 130,940 acres] irrigation, municipal, 
rural, and industrial water, [fish and wildlife conservation] 
fish, wildlife, and other natural resource conservation and 
development, recreation, flood control augmented stream flows, 
ground water recharge, and other project purposes in accordance 
with Federal reclamation laws (Act of June 17, 1902, 32 Stat. 
388, and Acts amendatory thereof and supplementary thereto) and 
substantially in accordance with the plans set out in the 
Garrison Diversion Unit Commission Final Report dated December 
20, 1984 (as modified by the Dakota Water Resources Act of 
1999).
    (c) Nothing in this Act is intended, nor shall be 
construed, to preclude the State of North Dakota from seeking 
Congressional authorization to plan, design, and construct 
additional Federally-assisted water resource development 
projects in the future.
    (d) Nothing in this Act shall be deemed to diminish the 
quantity of water from the Missouri River which the State of 
North Dakota may beneficially use, pursuant to any right or 
rights it may have under Federal law existing immediately 
before the date of enactment of this Act and consistent with 
the treaty obligations of the United States.
    (e) The authorization for all features of the Missouri-
Souris Unit of the Pick-Sloan Missouri Basin Program located in 
the State of North Dakota, heretofore authorized in section 9 
of the Flood Control Act of December 22, 1944 (58 Stat. 891), 
for which no funds have been appropriated for construction, and 
which are not authorized for construction by this Act, is 
hereby [terminated, and sections 1 and 6 of the Act of August 
5, 1965 (Public Law 89-108, 79 Stat. 433) are hereby repealed] 
terminated.
    [(f) In implementing the provisions of this Act, the 
Secretary is directed to construct all supply works to the 
capacity identified in the Garrison Diversion Unit Commission 
Final Report, except that the Secretary is directed to 
construct the JamesRiver Feeder Canal to a capacity of no more 
than 450 cubic feet per second, and the Sykeston Canal to the capacity 
specified in section 8(a)(1) of this Act.
    [(g) Where features constructed by the Secretary are no 
longer used to full capacity pursuant to the recommendations of 
the Garrison Diversion Unit Commission Final Report, that 
portion of the Secretary's investment attributable to the 
construction of such unused capacity shall be nonreimbursable.]
    (f) Costs.--
          (1) Estimate.--The Secretary shall estimate--
                  (A) the actual construction costs of the 
                facilities (including mitigation facilities) in 
                existence as of the date of enactment of the 
                Dakota Water Resources Act of 1999; and
                  (B) the annual operation, maintenance, and 
                replacement costs associated with the used and 
                unused capacity of the features in existence as 
                of that date.
          (2) Repayment contract.--An appropriate repayment 
        contract shall be negotiated that provides for the 
        making of a payment for each payment period in an 
        amount that is commensurate with the percentage of the 
        total capacity of the project that is in actual use 
        during the payment period.
          (3) Operation and maintenance costs.--Except as 
        otherwise provided in this Act or in Reclamation law--
                  (A) The Secretary shall be responsible for 
                the costs of operation and maintenance of the 
                proportionate share of unit facilities in 
                existence on the date of enactment of the 
                Dakota Water Resources Act of 1999 attributable 
                to the capacity of the facilities (including 
                mitigation facilities) that remain unused;
                  (B) The State of North Dakota shall be 
                responsible for costs of operation and 
                maintenance of the proportionate share of 
                existing unit facilities that are used and 
                shall be responsible for the full costs of 
                operation and maintenance of any facility 
                constructed after the date of enactment of the 
                Dakota Water Resources Act of 1999;
                  (C) The State of North Dakota shall be 
                responsible for the costs of providing energy 
                to authorized unit facilities.
    (g) Agreement Between the Secretary and the State.--The 
Secretary shall enter into 1 or more agreements with the State 
of North Dakota to carry out this Act, including operation and 
maintenance of completed unit facilities and the design and 
construction of authorized new unit facilities by the State.
    (h) Boundary Waters Treaty of 1909.--
          (1) Delivery of water into the hudson bay basin.--
        Prior to construction of any water systems authorized 
        under this Act to deliver Missouri River water into the 
        Hudson Bay basin, the Secretary, in consultation with 
        the Secretary of State and the Administrator of the 
        Environmental Protection Agency, must determine that 
        adequate treatment can be provided to meet the 
        requirements of the Treaty between the United States 
        and Great Britain relating to Boundary Waters Between 
        the United States and Canada, signed at Washington 
        January 11, 1909 (26 Stat. 2448; TS 548) (commonly 
        known as the `Boundary Waters Treaty of 1909').
          (2) Costs.--All costs of construction, operation, 
        maintenance, and replacement of water treatment and 
        related facilities authorized by this Act and 
        attributable to meeting the requirements of the treaty 
        referred to in paragraph (1) shall be nonreimbursable.

SEC. 2.

    (a) Subject to the provision of subsections (b), (c), (d), 
and (e) of this section, the Secretary is authorized in 
connection with the Garrison diversion unit (i) to construct, 
operate, and maintain or provide for the construction, 
operation, and maintenance of public outdoor recreation and 
fish and wildlife enhancement facilities, (ii) to acquire or 
otherwise to include within the unit area such adjacent lands 
or interest in land as are necessary for present or future 
public recreation or fish and wildlife use, (iii) to allocate 
water and reservoir capacity to recreation and fish and 
wildlife enhancement, and (iv) to provide for the public use 
and enjoyment of unit lands, facilities, and water areas in a 
manner coordinated with other unit purposes. The Secretary is 
further authorized to enter into agreements with Federal 
agencies or State or local public bodies for the operation, 
maintenance, and replacement of unit facilities, and to 
transfer unit lands orfacililties to Federal agencies or State 
or local public bodies by lease or exchange, upon such terms and 
conditions as will best promote the development and operation of such 
lands or facilities in the public interest for recreation and fish and 
wildlife enhancement purposes.
    [(b) All costs allocated to fish and wildlife enhancement 
and incurred in connection with waterfowl refuges and waterfowl 
production areas proposed for Federal administration shall be 
nonreimbursable.
    [(c)(1) If, before commencement of construction of the 
unit, non-Federal public bodies agree to administer for 
recreation or fish and wildlife enhancement or for both of 
these purposes pursuant to the plan for the development of the 
unit approved by the Secretary land and water areas which are 
not included within Federal waterfowl refuges and waterfowl 
production areas and to bear not less than one-half the 
separable costs of the unit allocated to either or both of said 
purposes, as the case may be, and attributable to such areas 
and all the costs of operation, maintenance, and replacement 
incurred in connection therewith, the remainder of the 
separable capital costs so allocated and attributed shall be 
nonreimbursable.
    [(2) In the absence of such a preconstruction agreement 
recreation and fish and wildlife enhancement facilities (other 
than minimum facilities for the public health and safety at 
reservoir access points and facilities related to Federal 
waterfowl refuges and waterfowl production areas) shall not be 
provided, and the allocation of unit costs shall reflect only 
the number of visitor days and the value per visitor day 
estimated to result from such diminished recreation development 
without reference to lands which may be provided pursuant to 
subsection (e) of this section.
    [(d) The non-Federal share of the separable capital costs 
of unit allocated to recreation and fish and wildlife 
enhancement shall be borne by non-Federal interests, under 
either or both of the following methods as may be determined 
appropriate by the Secretary: (i) payment, or provision of 
lands, interests therein, or facilities for the unit; or (ii) 
repayment, with interest, within fifty years of first use of 
unit recreation or fish and wildlife enhancement facilities: 
Provided, That the source of repayment may be limited to 
entrance and user fees for charges collected at the unit by 
non-Federal interests if the fee schedule and the portion of 
fees dedicated to repayment are established on a basis 
calculated to achieve repayment as aforesaid and are made 
subject to review and renegotiation at intervals of not more 
than five years.]
    (b) Fish and Wildlife Costs.--All fish and wildlife 
enhancement costs incurred in connection with waterfowl 
refuges, waterfowl production areas, and wildlife conservation 
areas proposed for Federal or State administration shall be 
nonreimbursable.
    (c) Recreation Areas.--
          (1) Costs.--If non-Federal public bodies continue to 
        agree to administer land and water areas approved for 
        recreation and agree to bear not less than 50 percent 
        of the separable costs of the unit allocated to 
        recreation and attributable to those areas and all the 
        costs of operation, maintenance, and replacement 
        incurred in connection therewith, the remainder of the 
        separable capital costs so allocated and attributed 
        shall be nonreimbursable.
          (2) Approval.--The recreation areas shall be approved 
        by the Secretary in consultation and coordination with 
        the State of North Dakota.
    (d) Non-Federal Share.--The non-Federal share of the 
separable capital costs of the unit allocated to recreation 
shall be borne by non-Federal interests, using the following 
methods, as the Secretary may determine to be appropriate:
          (1) Services in kind.
          (2) Payment, or provision of lands, interests 
        therein, or facilities for the unit.
          (3) Repayment, with interest, within 50 years of 
        first use of the unit recreation facilities.
    (e)(1) Notwithstanding the absence of preconstruction 
agreements as specified in subsection (c) of this section lands 
may be acquired in connection with construction of the unit to 
preserve the recreation and fish and wildlife enhancement 
potential of the unit.
    [(1)](2) If non-Federal public bodies agree [within ten 
years after the initial unit operation to administer for 
recreation and fish and wildlife enhancement] to administer for 
recreation pursuant to the plan for development of the unit 
approved by the Secretary land and water areas [which are not 
included within Federal waterfowl refuges and waterfowl 
production areas] and to bear not less than one-half the costs 
of lands acquired therefor pursuant to this subsection and 
facilities and project modifications provided for those 
purposes and all costs of operation, maintenance, and 
replacement incurred therefor, the remainder of the costs of 
such lands, facilities, and project modifications shall be 
nonreimbursable. Such agreement and subsequent development 
shall not be the basis for any allocation of joint costs of the 
unit to recreation [or fish and wildlife enhancement].
    [(2)](3) [ within ten years after initial operation of the 
unit,] there is not an executed agreement as specified in 
[paragraph (1) of this subsection] paragraph (2), the Secretary 
may utilize the lands for any lawful purpose within the 
jurisdiction of the Department of the Interior, or may transfer 
custody of the land to another Federal agency for use for any 
lawful purpose within the jurisdiction of that agency, or may 
lease the lands to a non-Federal public body, or may transfer 
the lands to the Administrator of General Services for 
disposition in accordance with the surplus property laws of the 
United States. In no case shall the lands used or made 
available for use for any purpose in conflict with the purposes 
for which the project was constructed, and in every case 
preference shall be given to uses which will preserve and 
promote the recreation and fish and wildlife enhancement 
potential of the project or, in the absence thereof, will not 
detract from that potential.
    (f) Subject to the limitations hereinbefore stated, joint 
capital costs allocated to recreation [and fish and wildlife 
enhancement] shall be nonreimbursable.
    (g) Costs of means and measures to prevent loss of and 
damage to fish and wildlife shall be treated as unit costs and 
allocated among all unit purposes.
    (h) As used in this Act, the term ``nonreimbursable'' shall 
not be construed to prohibit the imposition of entrance, 
admission, and other recreation user fees or charges.
    (i) Notwithstanding any other provisions of this section, 
the mitigation for fish and wildlife losses incurred as a 
result of construction of the project shall be on an acre-for-
acre basis, based on ecological equivalency, concurrent with 
project construction.
    (j) The Secretary is directed to implement the provisions 
of the Garrison Diversion Unit Commission Final Report with 
respect to fish and wildlife conservation, including habitat 
impacts, mitigation procedures, and enhancement, except for the 
following:
          (1) The Secretary shall take no action to alter the 
        status of Sheyenne Lake National Wildlife Refuge [prior 
        to the completion of construction of Lonetree Dam and 
        Reservoir].
          (2) Development and implementation of the mitigation 
        and enhancement plan for fish and wildlife resources 
        impacted by construction and operation of the Garrison 
        Diversion Unit shall not be limited by the cost 
        constraints based on estimates contained in the 
        Garrison Diversion Unit Commission Final Report.
          (3) Credit toward mitigation recommended by the 
        Garrison Diversion Unit Commission Final Report for 
        reservoir sites is not authorized.
          (4) Taayer reservoir.--Taayer Reservoir is 
        deauthorized as a project feature. The Secretary acting 
        through the Commissioner of Reclamation shall acquire 
        (including acquisition through donation or exchange) up 
        to 5,000 acres in the Kraft and Pickell Slough areas 
        and to manage the area as a component of the National 
        Wildlife Refuge System giving consideration to the 
        unique wildlife values of the area. In acquiring the 
        lands which comprise the Kraft and Pickell Slough 
        complex, the Secretary shall acquire wetlands in the 
        immediate vicinity which may be hydrologically related 
        and nearby uplands as may be necessary to provide for 
        proper management of the complex. The Secretary is also 
        authorized to provide for appropriate visitor access 
        and control at the refuge.
          (5) Deauthorization of lonetree dam and reservoir.--
        The Lonetree Dam and Reservoir is deauthorized, and the 
        Secretary shall designate the lands acquired for the 
        former reservoir site a wildlife conservation area. The 
        Secretary shall enter into an agreement with the State 
        of North Dakota providing for the operation and 
        maintenance of the wildlife conservation area as an 
        enhancement feature, the costs of which shall be paid 
        by the Secretary. If the features selected under 
        section 8 include a buried pipeline and appurtenances 
        between the McClusky Canal and New Rockford Canal, the 
        use of the wildlife conservation area and Sheyenne Lake 
        National Wildlife Refuge for such route is hereby 
        authorized.

SEC. 3.

    The Garrison diversion unit shall be integrated physically 
and financially with the other Federal works constructed or 
authorized to be constructed under the comprehensive plan 
approved by Section 9 of the Act of December 22, 1944, as 
amended and supplemented. The Secretary shall give 
consideration to returning to the Missouri River to the fullest 
extent practicable such of the return flows as are not required 
for beneficial purposes. (79 Stat. 434)

SEC. 4.

    (a) The interest rate used for computing interest during 
construction and interest on the unpaid balance of the capital 
costs allocated to interest-bearing features of the Garrison 
diversion unit as authorized in this Act shall be determined by 
the Secretary of the Treasury as of the beginning of the fiscal 
year in which construction is initiated, on the basis of the 
computed average interest rate payable by the Treasury upon its 
outstanding marketable public obligations, which are neither 
due nor callable for redemption for fifteen years from date of 
issue. Interest during construction shall be calculated only 
until such date as the Secretary declares any particular 
feature to be substantially complete, regardless of whether the 
feature is placed into service.
    (b) From and after July 1, 1965, the interest rate on the 
unamortized balance of the investment allocated to commercial 
power in facilities construction or under construction on June 
30, 1965, by the Department of the Army in the Missouri River 
Basin, the commercial power from which is marketed by the 
Department of the Interior, and in the transmission and 
marketing facilities associated therewith, shall be 2\1/2\ per 
centum per annum. (79 Stat. 435)

[SEC. 5.

    [(a)(1) Subject to the provisions of subsection (a)(2) of 
this section, the Secretary is authorized to develop irrigation 
in the following project service areas: Turtle Lake (13,700 
acres), McClusky Canal (4,000 acres), Lincoln Valley (6,515 
acres), Harvey Pumping (2,000 acres), New Rockford (20,935 
acres), New Rockford Canal (1,200 acres), LaMoure (13,350 
acres), West Oakes Extension (4,000 acres), and West Oakes 
(19,660 acres). The Secretary is prohibited from developing 
irrigation in these areas in excess of the acreage specified 
herein, except that the Secretary is authorized and directed to 
develop up to 28,000 acres of irrigation in other areas of 
North Dakota, not located in the Hudson Bay, Devils Lake, or 
James River drainage basins.
    [(2) The Secretary is prohibited from obligating any funds 
for construction of irrigation service facilities in the areas 
listed in subsection (a)(1) of this section prior to September 
30, 1990. After that date, the Secretary may obligate funds 
only after completing and submitting to the Congress, the 
report required by section 5(c) of this Act.
    [(b)(1) The Secretary may not commence construction of the 
Sykeston Canal, the James River Feeder Canal, and James River 
channel improvements until 60 days after the report required by 
section 5(c) of this Act has been completed and submitted to 
the Congress.
    [(2) The Secretary is directed to proceed immediately with 
the construction of--
          [(A) the New Rockford Canal;
          [(B) the Oakes Test Area; and
          [(C) project features authorized in section 7 of this 
        Act.
    [(c)(1) The Secretary is directed to submit a comprehensive 
report to the Congress as soon as practicable, but not later 
than the end of fiscal year 1988 on the effects on the James 
River in North Dakota and South Dakota of water resource 
development proposals recommended by the Garrison Diversion 
Unit Commission and authorized in this Act. The report shall 
include the findings of the Secretary with regard to:
          [(A) the feasibility of using the Oakes Aquifer as a 
        water and recharge facility, and an evaluation of the 
        need for offstream regulatory storage in the lower 
        James River basin;
          [(B) the capability of the river to handle irrigation 
        return flows, project water supplies, and natural 
        runoff without causing flooding, property damage, or 
        damage to wildlife areas, and mechanisms or procedures 
        for compensation or reimbursement of affected 
        landowners for damages from project operation;
          [(C) the impacts of Garrison Diversion Unit 
        irrigation return flows on the river and on adjacent 
        riverine wetland areas and components of the National 
        Wildlife Refuge System, with regard to water quality, 
        and fish and wildlife values;
          [(D) the need to channelization of the James River 
        under the irrigation and municipal, rural, and 
        industrial water development programs authorized by 
        this Act;
          [(E) the cost and efficiency of measures required to 
        guarantee that irrigation return flows from the New 
        Rockford (Robinson Coulee) irrigation service areas 
        will not enter the Hudson Bay drainage and the impact 
        these return flows will have on the James River;
          [(F) the feasibility of conveying project flows into 
        the lower James River via Pipestem Creek; and
          [(G) alternative management plans for operation of 
        Jamestown and Pipestem Reservoirs to minimize impacts 
        on the lower James River.
    [(2) The costs of the study authorized by this subsection 
shall be nonreimbursable.
    [(3) The study authorized by this subsection shall be 
carried out in accordance with the requirements of the National 
Environmental Policy Act.]

SEC. 5. IRRIGATION FACILITIES.

    (a) In General.--
          (1) Authorized development.--In addition to the 
        5,000-acre Oakes Test Area in existence on the date of 
        the enactment of the Dakota Water Resources Act of 
        1999, the Secretary may develop irrigation in--
                  (A) the Turtle Lake service area (13,700 
                acres);
                  (B) the McClusky Canal service area (10,000 
                acres); and
                  (C) if the investment costs are fully 
                reimbursed without aid to irrigation from the 
                Pick-Sloan Missouri Basin Program, the New 
                Rockford Canal service area (1,200 acres).
          (2) Development not authorized.--None of the 
        irrigation authorized by this section may be developed 
        in the Hudson Bay/Devils Lake Basin.
          (3) No Excess Development.--The Secretary shall not 
        develop irrigation in the service areas described in 
        paragraph (1) in excess of the acreage specified in 
        that paragraph, except that the Secretary shall develop 
        up to 28.000 acres of irrigation in other areas of 
        North Dakota (such as the Elk/Charbonneau, Mon-Dak, 
        Nesson Valley, Horsehead Flats, and Olvier-Mercer 
        areas) that are not located in the Hudson Bay/Devils 
        Lake drainage basin or James River drainage basin.
          (4) Pumping power.--Irrigation development authorized 
        by this section shall be considered authorized units of 
        the Pick-Sloan Missouri Basin Program and eligible to 
        receive project pumping power.
          (5) Principal supply works.--The Secretary shall 
        maintain the Snake Creek Pumping Plant, New Rockford 
        Canal, and McClusky Canal features of the principal 
        supply works. As appropriate, the Secretary shall 
        rehabilitate or complete such features consistent with 
        the purposes of this Act. Subject to the provisions of 
        Section 8 (c) and (d)(1) of this Act, the Secretary 
        shall select a preferred alternative to implement the 
        Dakota Water Resources Act of 1999. In making this 
        selection, one of the alternatives the Secretary shall 
        consider is whether to connect the principal supply 
        works in existence on the date of enactment.
    [(d)] (b) The Secretary is prohibited from obligating fund 
to construct irrigation facilities in the service areas listed 
in subsection [(a)(1)] (a) until a contract or contracts, in a 
form approved by the Secretary, providing for the appropriate 
payment of the costs allocated to irrigation have been properly 
executed by a district or districts organized under State law. 
Such contract or contracts shall be consistent with the 
requirements of the Reclamation Reform Act of 1982 (title II, 
Public Law 97-293, 96 Stat. 1263).
    [(e)] (c) The Secretary is authorized to develop irrigation 
in the following project service areas within the boundaries of 
the Fort Berthold and Standing Rock Indian Reservations: [Lucky 
Mound (7,700 acres), Upper Six Mile Creek (7.500 acres)] Lucky 
Mound (7,700 acres) and Upper Six Mile Creek (7,500 acres), or 
such other lands at Fort Berthold of equal acreage as may be 
selected by the tribe and approved by the Secretary. and one or 
more locations within the Standing Rock Indian Reservation 
(2,380 acres), except that, no funds are authorized to be 
appropriated for construction of these projects until the 
Secretary has made a finding of irrigability of the lands to 
receive water as required by the Act of July 31, 1953 (67 Stat. 
266; 43 U.S.C. 390a). Repayment for the units authorized under 
this subsection shall be made pursuant to the Leavitt act (25 
U.S.C. 386a).
    [(f)] (d) The Secretary shall not permit the use of project 
facilities for non-project drainage not included in project 
design or required for project operations.
    (e) Irrigation Report to Congress.--
          (1) In general.--The Secretary shall investigate and 
        prepare a detailed report on the undesignated 28,000 
        aces in subsection (a)(3) as to the costs and benefits 
        for any irrigation units to be developed under 
        Reclamation law.
          (2) Finding.--The report shall include a finding on 
        the economic, financial and engineering feasibility of 
        the proposed irrigation unit, but shall be limited to 
        the undesignated 28,000 acres.
          (3) Authorization.--If the Secretary finds that the 
        proposed construction is feasible, such irrigation 
        units are authorized without further Act of Congress.
          (4) Documentation.--No expenditure for the 
        construction of facilities authorized under this 
        section shall be made until after the Secretary, in 
        cooperation with the State of North Dakota, has 
        prepared the appropriate documentation in accordance 
        with section 1 and pursuant to the National 
        Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
        seq.) analyzing the direct and indirect impacts of 
        implementing the report.

SEC. 6.

    (a) Municipal, rural, and industrial water systems 
constructed with funds authorized by section 7 of this Act 
shall utilize power from the Pick-Sloan Missouri Basin Program, 
as established by section 9 of the Flood Control Act of 1944 
(Act of December 22, 1944), for the operation of such systems.
    (b) [Notwithstanding the provisions of] Pursuant to the 
provisions of section 302(a)(3) of the Department of Energy 
Organization Act (42 U.S.C. 7152(a)(3)), any portion of the 
costs properly chargeable to irrigation for the Garrison 
Diversion Unit which are beyond the ability of water users to 
repay as authorized by Reclamation law may be repaid from power 
[revenues, except repayment of investment in irrigation for the 
Garrison Diversion Unit made after the date of enactment of 
this Act may not exceed forty years from the year in which 
irrigation water is first delivered for use by the contracting 
party and shall be made in equal annual installments.] 
revenues.
    [(c) Pursuant to the provisions of the last sentence of 
section 302(a)(3) of the Department of Energy Organization Act 
of 1978 (42 U.S.C. 7152(a)(3)), any reallocation of costs to 
project purposes other than irrigation as a result of section 
1(e) of this Act shall not result in increased rates to Pick-
Sloan Missouri Basin Program customers unless: (1) full use has 
been made of the current development method of ratesetting in 
analyzing the repayment status and cost allocations for the 
Garrison Diversion Unit and (2) the resulting rate increase, if 
any, is made in equal amounts over the ten year period 
beginning on the date of any such reallocation pursuant to this 
Act. Costs reallocated to project purposes other than 
irrigation as a result of section 1(e) of this Act shall be 
repaid, if reimbursable, with interest at the rate specified in 
section 4(b) of this Act beginning on the date of any such 
reallocation without retroactive interest. Nothing in this Act 
shall alter or affect in any way the current repayment 
methodology for other features of the Pick-Sloan Missouri Basin 
Program.]
    (c) No Increase in Rates or Affect on Repayment 
Methodology.--In accordance with the last sentence of section 
302(a)(3) of the Department of Energy Organization Act (42 
U.S.C. 7152(a)(3), section 1(e) shall not result in any 
reallocation of project costs and shall not result in increased 
rates to Pick-Sloan Missouri Basin Program customers. Nothing 
in the Dakota Water Resources Act of 1999 alters or affects in 
any way the repayment methodology in effect as of the date of 
enactment of that Act for other features of the Pick-Sloan 
Missouri Basin Program.

SEC. 7.

    (a)(1) The Secretary of the Interior is authorized to 
construct municipal, rural, and industrial water systems to 
serve areas throughout the State of North Dakota.
    (2) All planning, design, construction and operation of the 
municipal, rural, and industrial water systems authorized by 
this section shall be undertaken in accordance with a 
cooperative agreement between the Secretary and the State of 
North Dakota. Such cooperative agreement shall set forth in a 
manner acceptable to the Secretary the responsibilities of the 
State for:
          (A) needs assessment;
          (B) feasibility studies;
          (C) engineering and design;
          (D) construction;
          (E) operation and maintenance; and
          (F) the administration of contracts pertaining to any 
        of the foregoing.
    (3) Upon execution of the cooperative agreement required 
under this subsection, the Secretary is authorized to convey to 
the State of North Dakota, on a nonreimbursable basis, the 
funds authorized in section 10(b)(1) of this Act. [The non-
Federal share] Unless otherwise provided in this Act, the non-
Federal share of the total cost of construction of [each water 
system] water systems for which the State of North Dakota 
receives funding pursuant to this section shall be 25 percent, 
committed prior to the initiation of construction. The State 
may use the Federal and non-Federal funds to provide grants or 
loans for municipal, rural, and industrial water systems. The 
State shall use the proceeds of repaid loans for municipal, 
rural, and industrial water systems. Proceeds from loan 
repayments and any interest thereon shall be treated as federal 
funds. The non-Federal share of the cost of operation, 
maintenance, and replacement of each municipal, rural, and 
industrial water system funded by this section shall be 
100percent. [The Southwest Pipeline Project shall be deemed to be 
eligible for funding under the terms of this section.] The Southwest 
Pipeline Project, the Northwest Area Water Supply Project, the Red 
River Valley Water Supply Project, and other municipal, industrial, and 
rural water systems in the State of North Dakota shall be eligible for 
funding under this section. Funding provided under this section for the 
Red River Valley Water Supply Project shall be in addition to funding 
for that project under section 10(a)(1)(B). The amount of non-Federal 
contributions after May 12, 1986 that exceeds the 25 percent 
requirement shall be credited to the State for future use in municipal, 
rural, and industrial projects under this section.
    [(b) The Secretary is authorized and directed to construct, 
operate, and maintain a Sheyenne River water supply and release 
feature (including a water treatment plant) capable of 
delivering 100 cubic feet per second of water for the cities of 
Fargo and Grand Forks and surrounding communities. The costs of 
the construction, operation, maintenance, and replacement of 
this feature, exclusive of conveyance shall be nonreimbursable 
and deemed attributable to meeting the requirements of the 
Boundary Waters Treaty of 1909.
    [(c) The Secretary is authorized and directed to construct, 
operate, and maintain such municipal, rural, and industrial 
water systems as he deems necessary to meet the economic, 
public health and environmental needs of the Fort Berthold, 
Standing Rock, and Fort Totten Indian Reservations and Fort 
Totten Indian Reservations.
    [(d) Municipal, rural, and industrial water systems 
constructed with funds authorized under this Act may deliver 
Missouri River water into the Hudson Bay drainage only after 
the Secretary of the Interior, in consultation with the 
Secretary of State and the Administrator of the Environmental 
Protection Agency, has determined that adequate treatment has 
been provided to meet the requirements of the Boundary Waters 
Treaty of 1909.]
    (b) Water Conservation Program.--The State of North Dakota 
may use funds provided under subsection (a) and (b)(1)(A) of 
section 10 to develop and implement a water conservation 
program. The Secretary and the State shall jointly establish 
water conservation goals to meet the purposes of the State 
program and to improve the availability of water supplies to 
meet the purposes of this Act. If the states achieves the 
established water conservation goals, the non-Federal cost 
share for future projects under subsection (a)(3) shall be 
reduced to 24.5 percent.
    (c) Nonreimbursability of Costs.--With respect to the 
Southwest Pipeline Project, the Northwest Area Water Supply 
Project, the Red River Valley Water Supply Project, and other 
municipal, industrial, and rural water systems in North Dakota, 
the costs of the features constructed on the Missouri River by 
the Secretary of the Army before the date of enactment of the 
Dakota Water Resources Act of 1999 shall be nonreimbursable.
    (d) Indian Municipal, Rural, and Industrial Water Supply.--
The Secretary shall construct, operate, and maintain such 
municipal, rural, and industrial water systems as the Secretary 
determines to be necessary to meet the economic, public health 
and environmental needs of the Fort Berthold, Standing Rock, 
Turtle Mountain (including the Trenton Indian Service Area) and 
Fort Totten Indian Reservations, and adjacent areas.

[SEC. 8.

    [(a) In accordance with the recommendations of the Garrison 
Diversion Unit Commission Final Report and section 1 of this 
Act, the Sykeston Canal shall be constructed as a functional 
replacement for the Lonetree Dam and Reservoir. The Sykeston 
Canal shall be designed and constructed to meet only the water 
delivery requirements of the irrigation areas and municipal, 
rural, and industrial water supply needs authorized in this 
Act. The Sykeston Canal shall be located, constructed, and 
operated so that, in the opinion of the Secretaries of the 
Interior and State, no violation of the Boundary Waters Treaty 
of 1909 would result. The Secretary may not commence 
construction on the Sykeston Canal until a master repayment 
contract consistent with the provisions of this Act between the 
Secretary and the appropriate non-Federal entity has been 
executed.
    [(2) The Lonetree Dam and Reservoir shall remain an 
authorized feature of the Garrison Diversion Unit; however, 
construction funds may be requested by the Secretary for 
Lonetree Dam and Reservoir only after:
          [(A) the Secretary has determined that there is a 
        need for the dam and reservoir based on a contemporary 
        appraisal using procedures such as those employed in 
        the preparation of feasibility studies for water 
        resources development projects submitted to Congress;
          [(B) consultations with the Government of Canada have 
        reached a conclusion satisfactory to the Secretary of 
        State, after consultation with the Administrator of the 
        Environmental Protection Agency, that no violation of 
        the Boundary Waters Treaty of 1909 would result from 
        the construction and operation of the dam and 
        reservoir; and
          [(C) the Secretaries of the Interior and State have 
        submitted the determinations required by subparagraphs 
        (A) and (B) above to the Congress and 90 calendar days 
        have elapsed.
          [(b) Taayer Reservoir is deauthorized as a project 
        feature. The Secretary is directed to acquire up to 
        5,000 acres in the Kraft and Pickell Slough areas and 
        to manage the area as a component of the National 
        Wildlife Refuge System giving consideration to the 
        unique wildlife values of the area. In acquiring the 
        lands which comprise the Kraft and Pickell Slough 
        complex, the Secretary is authorized to acquire 
        wetlands in the immediate vicinity which may be 
        hydrologically related and nearby uplands as may be 
        necessary to provide for proper management of the 
        complex. The Secretary is also authorized to provide 
        for appropriate visitor access and control at the 
        refuge.]

SEC. 8. SPECIFIC FEATURES.

    (a) Red River Valley Water Supply Project.--
          (1) In general.--The Secretary shall construct a 
        feature or features to deliver Missouri River water to 
        the Sheyenne River water supply and release facility or 
        such other feature or features as are selected under 
        subsection (d).
          (2) Design and construction.--The feature shall be 
        designed and constructed to meet only the water 
        delivery requirements of the irrigation areas, 
        municipal, rural, and industrial water supply needs, 
        ground water recharge, and streamflow augmentation (as 
        described in subsection (b)(2)) authorized in this Act.
          (3) Commencement of construction.--The Secretary may 
        not commence construction on the feature until a master 
        repayment contract or water service agreement 
        consistent with this Act between the Secretary and the 
        appropriate non-Federal entity has been executed.
    (b) Report on Red River Valley Water Needs and Delivery 
Options.--
          (1) In general.--Pursuant to section 1(g), not later 
        than 90 days after the effective date of the Dakota 
        Water Resources Act of 1999, the Secretary and the 
        State of North Dakota shall jointly submit to Congress 
        a report on the comprehensive water quality and 
        quantity needs of the Red River Valley and the options 
        for meeting those needs, including the delivery of 
        Missouri River water to the Red River Valley.
          (2) Needs.--The needs addressed in the report shall 
        include such needs as--
                  (A) augmenting streamflows;
                  (B) groundwater recharge; and
                  (C) enhancing--
                          (i) municipal, rural, and industrial 
                        water supplies;
                          (ii) water quality;
                          (iii) aquatic environment; and
                          (iv) recreation.
          (3) Studies.--Existing and ongoing studies by the 
        Bureau of Reclamation on Red River Water Supply needs 
        and options shall be deemed to meet the requirements of 
        this section.
    (c) Environmental Impact Statement.--
          (1) Draft.--
                  (A) Deadline.--Pursuant to an agreement 
                between the Secretary and State of North Dakota 
                as authorized under section 1(g), not later 
                than 1 year after the date of enactment of the 
                Dakota Water Resources Act of 1999, the 
                Secretary and the State of North Dakota shall 
                jointly prepare and complete a draft environmental 
                impact statement concerning all feasible options 
                to meet the comprehensive water quality and quantity 
                needs of the Red River Valley and the options for 
                meeting those needs, including the delivery of Missouri 
                River water to the Red River Valley.
                  (B) Report on status.--If the Secretary and 
                State of North Dakota cannot prepare and 
                complete the draft environmental impact 
                statement within 1 year after the date of 
                enactment of the Dakota Water Resources Act of 
                1999, the Secretary, in consultation and 
                coordination with the State of North Dakota, 
                shall report to Congress on the status of this 
                activity, including an estimate of the date of 
                completion.
          (2) Final.--
                  (A) Deadline.--Not later than 1 year after 
                filing the draft environmental impact 
                statement, a final environmental impact 
                statement shall be prepared and published.
                  (B) Report on status.--If the Secretary and 
                State of North Dakota cannot prepare and 
                complete a final environmental impact statement 
                within 1 year of the completion of the draft 
                environmental impact statement, the Secretary, 
                in consultation and coordination with the State 
                of North Dakota, shall report to Congress on 
                the status of this activity, including an 
                estimate of the date of completion.
    (d) Process for Selection.--
          (1) In general.--After reviewing the final report 
        required by subsection (b)(1) and complying with 
        subsection (c), the Secretary, in consultation and 
        coordination with the State of North Dakota in 
        coordination with affected local communities, shall 
        select 1 or more project features described in 
        subsection (a) that will meet the comprehensive water 
        quality and quantity needs of the Red River Valley.
          (2) Agreements.--Not later than 180 days after the 
        record of decision has been executed, the Secretary 
        shall enter into a cooperative agreement with the State 
        of North Dakota to construct the feature or features 
        selected.
    (e) Sheyenne River Water Supply and Release or Alternate 
Features.--The Secretary shall construct, operate, and maintain 
a Sheyenne River water supply and release feature (including a 
water treatment plant) capable of delivering 100 cubic feet per 
second of water or any other amount determined in the reports 
under this section, for the cities of Fargo and Grand Forks and 
surrounding communities, or such other feature or features as 
may be selected under subsection (d).

[SEC. 9.

    [Until the construction costs of the facilities authorized 
in section 5 are repaid, the Secretary is directed to charge a 
``surplus crop production charge'' equal to 10 percent of full 
cost, as defined in section 202(3)(A)-(C) of the Reclamation 
Reform Act of 1982 (Public Law 97-293, 96 Stat. 1263), for the 
delivery of project water used in the production of any basic 
agricultural commodity if the total supply of such commodity 
for the marketing years in which the bulk of the crop would 
normally be marketed is in excess of the normal supply as 
determined by the Secretary of Agriculture. The Secretary of 
the Interior shall announce the amount of the surplus crop 
production charge for the succeeding year on or before July 1 
of each year. The surplus crop production charge shall not 
apply to crops produced in the 5,000 acre Oakes Test Area for 
research purposes under the direction of the Secretaries of the 
Interior or Agriculture.]

SEC. 9. OAKES TEST AREA TITLE TRANSFER.

    (a) In General.--Not later than 2 years after the execution 
of a record of decision under section 8(d) on whether to use 
the New Rockford Canal as a means of delivering water to the 
Red River Basin as described in section 8, the Secretary shall 
enter into an agreement with the State of North Dakota, or its 
designee, to convey title and all or any rights, interests, and 
obligations of the United States in and to the Oakes Test Area 
as constructed and operated under Public Law 99-294 (100 Stat. 
418) under such terms and conditions as the Secretary believes 
would fully protect the public interest.
    (b) Terms and Conditions.--The agreement shall define the 
terms and conditions of the transfer of the facilities, lands, 
mineral estate, easements, rights-of-way and water rights 
including the avoidance costs that the Federal Government 
wouldotherwise incur in the case of a failure to agree under provisions 
described in subsection (d).
    (c) Compliance.--The action of the Secretary under this 
section shall comply with all applicable requirements of 
Federal, State, and local law.
    (d) Failure To Agree.--If an agreement is not reached 
within the time limit specified in subsection (a), the 
Secretary shall dispose of the Oakes Test Area facilities under 
the Federal Property and Administrative Services Act of 1949 
(40 U.S.C. 471 et seq.).

SEC. 10.

    [(a)(1) There are authorized to be appropriated 
$270,395,000 for carrying out the provisions of section 5(a) 
through section 5(c) and section 8(a)(1) of this Act]
    (a) Water Distribution Features.--
          (1) In general.--
                  (A) Main stem supply works.--There is 
                authorized to be appropriated $164,000,000 to 
                carry out section 5(a).
                  (B) Red river valley water supply project.--
                There is authorized to be appropriated to carry 
                out section 8(a)(1) $200,000,000.
                  (C) Availability._Such sums [Such sums] shall 
                remain available until expended.
          (2) Indian irrigation._
                  (A) In general._There is [There is] 
                authorized to be appropriated $12,570,000 [for 
                carrying out the provisions of section 5(e)] to 
                carry out section 5(c) of this Act
                  (B) Availability._Such sums [Such sums] shall 
                remain available until expended.
    (b) Municipal, Rural, and Industrial Water Supply._
          (1) Statewide._
                  (A) Initial amount._There is [(b)(1) There 
                is] authorized to be appropriated $200,000,000 
                to carry out the provisions of section 7(a) of 
                this Act.
                  (B) Additional amount._In addition to the 
                amount under subparagraph (A), there is 
                authorized to be appropriated to carry out 
                section 7(a) $200,000,000.
                  (C) Availability._Such sums [Such sums] shall 
                remain available until expended.
          [(2) There are authorized to be appropriated 
        $61,000,000 to carry out the provisions of section 7(b) 
        through section 7(d) of this Act.]
          (2) Indian municipal, rural, and industrial water and 
        other delivery features.--
                  (A) Initial amount.--There is authorized to 
                be appropriated--
                          (i) to carry out section 8(a)(1), 
                        $40,500,000; and
                          (ii) to carry out section 7(d), 
                        $20,500,000.
                  (B) Additional amount.--
                          (I) In general.--In addition to the 
                        amount under subparagraph (A), there is 
                        authorized to be appropriated to carry 
                        out section 7(d) $200,000,000.
                          (ii) Allocation.--The amount under 
                        clause (i) shall be allocated as 
                        follows:
                                  (I) $30,000,000 to the Fort 
                                Totten Indian Reservation.
                                  (II) $70,000,000 to the Fort 
                                Berthold Indian Reservation.
                                  (III) $80,000,000 to the 
                                Standing Rock Indian 
                                Reservation.
                                  (IV) $20,000,000 to the 
                                Turtle Mountain Indian 
                                Reservation.
                  (C) Availability._Such sums [Such sums] shall 
                remain available until expended.
    (c) Resources Trust and Other Provisions._
          (1) Initial amount._There is [There is] authorized to 
        be appropriated for carrying out the remaining 
        provisions of this Act $80,535,000. [No funds are 
        authorized for the construction of the Lonetree Dam and 
        Reservoir. There are also authorized to be appropriated 
        such additional funds as may be necessary for operation 
        and maintenance of the unit.]
          (2) Additional amount.--In addition to the amount 
        under paragraph (1), there are authorized to be 
        appropriated--
                  (A) $6,500,000 to carry out recreational 
                projects; and
                  (B) an additional $25,000,000 to carry out 
                section 11; to remain available until expended.
          (3) Recreational projects.--Of the funds authorized 
        under paragraph (2) for recreational projects, up to 
        $1,500,000 may be used to fund a wetland interpretive 
        center in the State of North Dakota.
          (4) Operation and maintenance.--
                  (A) In general.--There are authorized to be 
                appropriated such sums as are necessary for 
                operation and maintenance of the unit 
                (including the mitigation and enhancement 
                features).
                  (B) Authorization limits.--Expenditures for 
                operation and maintenance of features 
                substantially completed and features 
                constructed before the date of enactment of the 
                Dakota Water Resources Act of 1999, including 
                funds expended for such purposes since the date 
                of enactment of Public Law 99-294, shall not be 
                counted against the authorization limits in 
                this section.
          (5) Mitigation and enhancement land.--On or about the 
        date on which the features authorized by section 8(a) 
        are operational, a separate account in the Natural 
        Resources Trust authorized by section 11 shall be 
        established for operation and maintenance of the 
        mitigation and enhancement land associated with the 
        unit.
    (d) Any funds previously appropriated for the Garrison 
Diversion Unit may be expended to carry out any of the 
provisions of this Act.
    [(e) The portion of the $61,000,000 authorized for Indian 
municipal, rural, and industrial water features shall be 
indexed as necessary to allow for ordinary fluctuations of 
construction costs incurred after October 1, 1986, as indicated 
by engineering costs indices applicable for the type of 
construction involved. All other authorized cost ceilings shall 
remain unchanged.]
    (e) Inexing.--The $200,000,000 amount under subsection 
(b)(1)(B), the $200,000,000 amount under subsection (a)(1)(B), 
and the funds authorized under subsection (b)(2) shall be 
indexed as necessary to allow for ordinary fluctuations of 
construction costs incurred after the date of enactment of the 
Dakota Water Resources Act of 1999 as indicated by engineering 
cost indices applicable for the type of construction involved. 
All other authorized cost ceilings shall remain unchanged.

SEC. 11.

    [(a) Federal Contributions.--From the sums appropriated 
under section 10 of this Act for the Garrison Diversion Unit, 
the Secretary of the Interior shall make an annual Federal 
contribution to a Wetlands Trust established by non-Federal 
interests in accordance with subsection (b), and operated in 
accordance with subsection (c), of this section. The amount of 
each such annual contribution shall be as follows:
          [(1) For fiscal year 1986: $2,000,000.
          [(2) For each of the fiscal years 1987 through 1990: 
        3 percent of the total amount appropriated under 
        section 10 of this Act, but not to exceed $500,000 for 
        each such fiscal year.
          [(3) For each fiscal year after 1990: 5 percent of 
        the total amount appropriated under section 10 of this 
        Act, but only if a contribution to the Trust equal to 
        10 percent of all Federal contributions is provided or 
        contracted for by the State of North Dakota from non-
        Federal funds. The contributions of the State of North 
        Dakota may be paid to the Trust in such amounts and in 
        such manner as may be agreed upon by the Governor and 
        the Secretary.
          [(4) The total Federal contributions pursuant to the 
        Act shall not exceed $12,000,000.]
    (a) Contribution.--
          (1) Initial authoriation.--
                  (A) In general.--From the sums appropriated 
                under section 10 for the Garrison Diversion 
                Unit, the Secretary shall make an annual 
                Federal contribution to a Natural Resources 
                Trust established by non-Federal interests in 
                accordance with subsection (b) and operated in 
                accordance with subsection (c).
                  (B) Amount.--The total amount of Federal 
                contribution under subparagraph (A) shall not 
                exceed $12,000,000.
          (2) Additional authorization.--
                  (A) In general.--In addition to the amounts 
                authorized in paragraph 1, the Secretary shall 
                make annual Federal contributions to the 
                Natural Resources Trust until the amount 
                authorized by section 10(c)(2)(B) is reached, 
                in the manner stated in subparagraph (B).
                  (B) Annual amount.--The amount of the 
                contribution under subparagraph (A) for each 
                fiscal year shall be the amount that is equal 
                to 5 percent of the total amount that is 
                appropriated for the fiscal year under 
                subsections (a)(1)(B) and (b)(1)(B) of section 
                10.
    (b) Structure of the Trust.--A [Wetlands Trust] Natural 
Resources Trust shall be eligible to receive Federal 
contributions pursuant to subsection (a) if it complies with 
each of the following requirements:
          (1) The Trust is established by non-Federal interests 
        as a non-profit corporation under the laws of North 
        Dakota with its principal office in North Dakota.
          (2) The Trust is under the direction of a Board of 
        Directors which has the power to manage all affairs of 
        the corporation, including administration, data 
        collection, and implementation of the purposes of the 
        Trust.
          (3) The Board of Directors of the Trust is comprised 
        of 6 persons appointed as follows, each for a term of 2 
        years:
                  (A) 3 persons appointed by the Governor of 
                North Dakota.
                  (B) 1 person appointed by the National 
                Audubon Society.
                  (C) 1 person appointed by the National 
                Wildlife Federation.
                  (D) 1 person appointed by the North Dakota 
                Chapter of the Wildlife Society.
        Vacancies on the board are filled in the manner in 
        which the original appointments were made. Any member 
        of the Board of Directors is eligible for reappointment 
        for successive terms. Any member appointed to fill a 
        vacancy occurring before the expiration of the term for 
        which his or her predecessor was appointed is appointed 
        only for the remainder of such term. A member may serve 
        after the expiration of his or her term until his or 
        her successor has taken office.
          (4) Members of the Board of Directors serve without 
        compensation.
          (5) The corporate purposes of the Trust are to 
        preserve, enhance, restore, and manage wetland and 
        associated wildlife habitat in the State of North 
        Dakota.
    (c) Operations of the Trust.--A [Wetland Trust] Natural 
Resources Trust established by non-Federal interests as 
provided in subsection (b) shall be deemed to be operating in 
accordance with this subsection if, in the opinion of the 
Secretary, each of the following requirements [are met] is met:
          (1) The Trust is operated to preserve, enhance, 
        restore, and manage wetlands and associated wildlife 
        habitat, grassland conservation and riparian areas in 
        the State of North Dakota in accordance with its 
        corporate purpose as provided in subsection (b)(5).
          (2) Pursuant to its corporate charter, the Trust has 
        the authority to exercise each of the following powers:
                  (A) The power to acquire lands and interests 
                in land and power to acquire water rights. 
                Lands or interests in lands may be acquired by 
                the Trust only with the consent of the owner 
                thereof and with the approval of the Governor 
                of North Dakota.
                  (B) The power to finance wetland 
                preservation, enhancement, restoration, and 
                management of wetland habitat programs.
                  (C) The power to fund incentives for 
                conservation practices by landowners.
          (3) All funds received by the Trust under subsection 
        (a) are invested in accordance with the requirements of 
        subsection (d). No part of the principal amount of such 
        funds may be expended for any purpose. The income 
        received by the Trust from the investment of such funds 
        shall be used by the Trust exclusively for its purposes 
        and operations in accordance with this subsection or, 
        to the extent not required for current operations, 
        reinvested in accordance with subsection (d).
          (4) The Trust agrees to provide such reports as may 
        be required by the Secretary or the Governor of North 
        Dakota and makes its records available for audit by 
        Federal and State agencies.
    (d) Investment of Trust Funds.--The Secretary of the 
Interior, in consultation with the Secretary of the Treasury 
and the Governor of North Dakota, shall establish requirements 
for the investment of all amounts received by the Trust under 
subsection (a) or reinvested under subsection (c)(3). Such 
requirements shall ensure that such amounts are invested in 
accordance with sound investment principles and shall ensure 
that persons managing such investments will exercise their 
fiduciary responsibilities in appropriate manner.