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                                                       Calendar No. 294
111th Congress                                                   Report
                                 SENATE
 2d Session                                                     111-144

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



 
                    WATER TRANSFER FACILITATION ACT

                                _______
                                

                 March 2, 2010.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1759]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1759) to authorize certain transfers of 
water in the Central Valley Project, and for other purposes, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill, as amended, do pass.
    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Water Transfer Facilitation Act of 
2009''.

SEC. 2. AUTHORIZATION OF WATER TRANSFERS, CENTRAL VALLEY PROJECT.

  (a) In General.--Subject to subsection (b), the following voluntary 
water transfers shall be considered to meet the conditions described in 
subparagraphs (A) and (I) of section 3405(a)(1) of the Reclamation 
Projects Authorization and Adjustment Act of 1992 (Public Law 102-575; 
106 Stat. 4709):
          (1) A transfer of irrigation water among Central Valley 
        Project contractors from the Friant, San Felipe, West San 
        Joaquin, and Delta divisions.
          (2) A transfer from a long-term Friant Division water service 
        or repayment contractor to a temporary or prior temporary water 
        service contractor within the place of use in existence on the 
        date of the transfer, as identified in the Bureau of 
        Reclamation water rights permits for the Friant Division.
  (b) Condition.--A transfer under subsection (a) shall comply with all 
applicable Federal and State law.

SEC. 3. FACILITATION OF WATER TRANSFERS, CENTRAL VALLEY PROJECT.

  As soon as practicable after the date of enactment of this Act, the 
Secretary of the Interior, acting through the Director of the United 
States Fish and Wildlife Service and the Commissioner of the Bureau of 
Reclamation, using such sums as are necessary, shall initiate and 
complete, on the most expedited basis practicable, programmatic 
documentation to facilitate voluntary water transfers within the 
Central Valley Project, consistent with all applicable Federal and 
State law.

SEC. 4. REPORT ON CENTRAL VALLEY PROJECT WATER TRANSFERS.

  (a) In General.--Not later than 180 days after the date of enactment 
of this Act, the Commissioner of the Bureau of Reclamation (referred to 
in this section as the ``Commissioner'') shall submit to the 
appropriate committees of Congress a report that--
          (1) describes the status of efforts to help facilitate and 
        improve the water transfers under this Act;
          (2) evaluates potential effects of this Act on Federal 
        programs, Indian tribes, Central Valley Project operations, the 
        environment, groundwater aquifers, refuges, and communities; 
        and
          (3) provides recommendations on ways to facilitate, and 
        improve the process for--
                  (A) water transfers within the Central Valley 
                Project; and
                  (B) water transfers between the Central Valley 
                Project and other water projects in the State of 
                California.
  (b) Updates.--Not later than the end of the water year in which the 
report is submitted under subsection (a) and each of the 4 water years 
thereafter, the Commissioner shall update the report.

                                PURPOSE

    The purpose of S. 1759 is to authorize certain transfers of 
water in the Central Valley Project.

                          BACKGROUND AND NEED

    The Central Valley Project (CVP) was originally authorized 
in the 1930s to provide a water supply for irrigation and some 
municipal purposes, for flood control, to improve navigation, 
and to generate power. The Bureau of Reclamation manages and 
operates the project. The Central Valley Project Improvement 
Act (CVPIA) (sections 3401 et seq. of Public Law 102-575) was 
enacted in 1992 and required certain changes in management of 
the CVP, particularly for the protection, restoration, and 
enhancement of fish and wildlife, and for other purposes, 
including the facilitation of transfers of water within and 
outside the CVP service area. Together with the California 
State Water Code, section 3405(a)(1) of the CVPIA prescribes 
the conditions under which CVP water is transferable.
    S. 1759, as amended, provides that transfers of irrigation 
water among CVP contractors from the Friant, San Felipe, West 
San Joaquin, and Delta divisions, which are primarily located 
south of the San Joaquin Delta, and certain transfers within 
the Friant Division service area, shall be considered to meet 
the existing requirements of subparagraphs (A) and (I) of 
section 3404(a)(1) of the CVPIA. Those subparagraphs relate to 
historical and consumptive water use. S. 1759 does not affect 
any other provisions of the CVPIA and does not change the 
status quo regarding the Bureau of Reclamation's programs to 
transfer CVP water that is not covered by this bill. Testimony 
provided to the Committee indicates that S. 1759, as amended, 
will expedite the approval of additional transfers of certain 
CVP water without adverse impact to CVP operations, other water 
users, federal programs, Indian tribes, the environment or 
existing requirements of the CVPIA.

                          LEGISLATIVE HISTORY

    Senator Feinstein and Senator Boxer introduced S. 1759 on 
October 7, 2009. On November 5, 2009, the subcommittee on Water 
and Power held a hearing on S. 1759. At its meeting on December 
16, 2009, the Committee on Energy and Natural Resources ordered 
S. 1759 favorably reported, with an amendment in the nature of 
a substitute.

                        COMMITTEE RECOMMENDATION

    The Committee on Energy and Natural Resources, in open 
business session on December 16, 2009, by voice vote of a 
quorum present, recommends that the Senate pass S. 1759, if 
amended as described herein.

                          COMMITTEE AMENDMENT

    During its consideration of S. 1759, the Committee adopted 
an amendment in the nature of a substitute. The amendment 
includes a number of technical changes and new provisions that 
clarify the intent of the original bill. The amendment is 
explained in detail in the section-by-section analysis, below.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 identifies the short title of the bill as the 
``Water Transfer Facilitation Act of 2009''.
    Section 2(a) provides that transfers of water among 
specific categories of CVP contractors shall be considered to 
meet the existing requirements of subparagraphs (A) and (I) of 
section 3404(a)(1) of the CVPIA.
    Section 2(a)(1) relates to transfers of irrigation water 
among CVP contractors from the Friant, San Felipe, West San 
Joaquin, and Delta divisions and irrigation water transferred 
pursuant to this provision would remain within a particular 
division.
    Section 2(a)(2) relates to transfers of water from a long-
term Friant Division water service or repayment contractor to 
certain temporary or prior temporary water service contractors.
    Section 2(b) requires that transfers of water that occur 
pursuant to the terms of the legislation must comply with all 
applicable state and federal law. Section 2(b) of S. 1759, as 
introduced, included a specific reference to the San Joaquin 
River Settlement and the San Joaquin River Restoration 
Settlement Act. The amendment of section 2(b) to a more general 
provision is intended to include the original provisions and 
also ensure that transfers of water pursuant to the provisions 
of S. 1759 comply with all other applicable state and federal 
law.
    Section 3 requires the Department of the Interior to 
complete programmatic documentation, on the most expedited 
basis practicable, to facilitate voluntary water transfers 
within the CVP consistent with all applicable state and federal 
law. The programmatic documentation would include environmental 
documentation relating to the Endangered Species Act.
    Section 4 requires the Bureau of Reclamation to submit a 
report, within 180 days of enactment, to the appropriate 
committees of Congress that describes the status of efforts to 
help facilitate and improve the water transfers included under 
the act, evaluates potential effects of the act on Federal 
programs, Indian tribes, CVP operations, the environment, 
groundwater, aquifers, refuges, and communities, and provides 
recommendations on ways to facilitate and improve the process 
for water transfers within the CVP and water transfers between 
the CVP and other water projects. The report shall be updated 
every year for 5 years following enactment.

                   COST AND BUDGETARY CONSIDERATIONS

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

S. 1759--Water Transfer Facilitation Act of 2009

    Summary: S. 1759 would facilitate voluntary transfers of 
water supplies between certain users of the Central Valley 
Project (CVP) in California. Based on information from the 
Bureau of Reclamation (the Bureau) and assuming the 
availability of appropriated funds, CBO estimates that 
implementing S. 1759 would increase discretionary spending by 
$4 million over the 2011-2015 period. In addition, CBO 
estimates that the bill would increase offsetting receipts (a 
credit against direct spending) by $7 million over the 2011-
2015 period and $12 million over the 2011-2020 period. Enacting 
this legislation would not affect revenues.
    Pay-as-you-go procedures apply because enacting the 
legislation would reduce direct spending.
    S. 1759 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1759 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2011    2012    2013    2014    2015    2016    2017    2018    2019    2020   2011-2015  2011-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level.....................       4       0       0       0       0       0       0       0       0       0         4          4
Estimated Outlays.................................       2       1       1       0       0       0       0       0       0       0         4          4

                                                               CHANGES IN DIRECT SPENDING

Estimated Budget Authority........................      -2      -2      -1      -1      -1      -1      -1      -1      -1      -1        -7        -12
Estimated Outlays.................................      -2      -2      -1      -1      -1      -1      -1      -1      -1      -1        -7        -12
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that this 
legislation will be enacted in fiscal year 2010. Under current 
law, CVP contractors pay certain fees to the Reclamation Fund 
for water they consume. Amounts in the Reclamation Fund are 
available to federal agencies subject to provisions in 
appropriation acts. Contractors who are not able to consume all 
the water they are entitled to under their contracts with the 
CVP may transfer water to other contractors, subject to review 
and approval by the Bureau. Such transfers often result in 
additional payments to the Reclamation Fund.
    In 2009, about 600,000 acre-feet of water--about 10 percent 
of the water supplied in the CVP that year--was transferred 
among water users. Those transfers generally occurred under an 
expedited process using streamlined procedures for 
environmental reviews. (The expedited process allows certain 
water transactions to be automatically deemed to meet necessary 
requirements for transfers.) However, under current law, that 
expedited process is not available to all contractors in the 
CVP.
    S. 1759 would expand the number of contractors eligible to 
participate in transfers using the expedited process and CBO 
estimates that the volume of water voluntarily transferred 
would increase. Based on information from the Bureau, CBO 
estimates that developing streamlined procedures would cost $4 
million, assuming appropriation of the necessary amounts. 
Information from the Bureau also indicates that voluntary 
transfers would increase by between 200,000 and 300,000 acre-
feet of water a year. In 2008 (the last year detailed 
information is available), the Reclamation Fund received 
incremental revenue of about $7 per acre-foot of water from 
transfers. (Most transfers result in some incremental payment, 
but occasionally result in a loss of receipts.) On balance, CBO 
estimates that under S. 1759, the Reclamation Fund would 
receive an additional $1 million to $2 million more per year.
    Pay-as-you-go Considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. CBO estimates that enacting S. 1759 would reduce 
direct spending.

  CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 1759, THE WATER TRANSFER FACILITATION ACT OF 2009, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON ENERGY
                                                       AND NATURAL RESOURCES ON DECEMBER 16, 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2010    2011    2012    2013    2014    2015    2016    2017    2018    2019    2020   2010-2015  2010-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact............       0      -2      -2      -1      -1      -1      -1      -1      -1      -1      -1        -7        -12
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: S. 1759 
contains no intergovernmental or private-sector mandates as 
defined in the UMRA and would impose no costs on state, local, 
or tribal governments.
    Estimate prepared by: Federal Costs: Aurora Swanson; Impact 
on State, Local, and Tribal Governments: Melissa Merrell; 
Impact on the Private Sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 1757.
    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. 1757, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 1759, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        EXECUTIVE COMMUNICATIONS

 Statement of Michael L. Connor, Commissioner, Bureau of Reclamation, 
                       Department of the Interior

    I am Mike Connor, Commissioner of the Bureau of 
Reclamation. I am pleased to be here today to provide the views 
of the Department of the Interior (Department) on S. 1759, the 
``Water Transfer Facilitation Act.'' The Department supports S. 
1759 with modification as explained below. Further analysis 
would help to determine the role that this bill could play in 
providing improved flexibility and efficiency for water 
management in the Central Valley.
    The Central Valley of California is experiencing a third 
year of drought which has strained the resources of both the 
State Water Project under the jurisdiction of the State of 
California, and the Central Valley Project (CVP) operated by 
Reclamation. The prolonged drought has created severe hardship 
especially to farmers, farm workers, and related economies on 
the west side of the San Joaquin River valley. The Department 
is cognizant of the need for creativity and flexibility in 
meeting the water demands of Californians served by the Central 
Valley Project. The Department supports facilitating the 
transfer of water from those areas having available water 
supplies to areas experiencing shortage to the extent that 
water transferred is not detrimental to the operations of the 
CVP, does not cause harm to third parties, and does not create 
adverse environmental consequences.
    When they are done right, water transfers move water from 
willing sellers to willing buyers in transactions that can 
improve economic well-being, increase efficiency in water use, 
and protect against negative externalities. There are many 
situations where water transfers during periods of drought can 
be used to ensure that available water is used in areas where 
it is most needed, and S. 1759 is aimed at facilitating these 
efficient water transfers. We recognize the potential of 
voluntary water transfer as a mechanism to increase flexibility 
into our water management system and respond to changes in 
available water resources. However, we are also committed to 
implementing review processes for all water transfers that will 
effectively protect the broad range of interests that can be 
impacted by changes in water use. Our goals as a Department 
include ensuring efficient use of available water 
infrastructure as well as maintaining vibrant communities and 
protecting the environment.
    Together with the California State Water Code, current 
Federal law in Section 3405(a)(1) of the Central Valley Project 
Improvement Act of 1992 (CVPIA) (Public Law 102-575, 106 Stat. 
4709) prescribes those conditions under which CVP water is 
transferable. While the proposed legislation establishes that 
water transfers between and among specified South of Delta 
divisions are presumed to meet the historical and consumptive 
use requirements of subparagraphs (A) and (I) of section 
3405(a)(1) of Public Law 102-575, the proposed legislation does 
not change the obligation of the Department to protect the 
public interest and the integrity of the CVP, and to otherwise 
act in accordance with the provisions of the CVPIA. To this 
end, if the proposed legislation is enacted, Reclamation will 
review its procedures and ensure that administrative guidelines 
are in place as necessary to assure that transfers of water 
continue to serve the overall public interest. Specifically, 
Reclamation will continue to ensure that transfers take place 
without significant adverse impacts to other water users, 
federal programs, Indian tribes, CVP operations, or the 
environment. We suggest that these guidelines be expressly 
incorporated into the items we report to Congress under Section 
4(a) of the bill, under which Reclamation would submit reports 
to Congress on the status of efforts to help facilitate and 
improve the process for water transfers within the Central 
Valley and water transfers between the CVP and the State Water 
Project.
    Under the CVPIA and contract provisions, Reclamation must 
approve proposed water transfers and cannot approve transfers 
unless the transfer is consistent with California water law. 
Transfers are on a willing buyer, willing seller basis, and 
Reclamation facilities can be used to deliver transferred water 
only when approved by Reclamation. Reclamation collects various 
charges, including operation and maintenance charges, 
incremental conveyance costs, and CVPIA restoration fund 
charges, together with the cost of service rates, as required 
by law from the entities that transfer the water (the 
transferors). Because of the diversity of CVP contractors and 
the many different scenarios under which water transfers take 
place, if S. 1759 were enacted there would probably be some 
financial impacts that Reclamation would only be able to fully 
calculate upon completion of a given transfer. For example, 
depending on the contract in place with specific CVP 
contractors, the legislation could generate additional revenue 
for the CVPIA restoration fund and for the San Joaquin River 
Restoration fund in some years in the Friant Unit of the CVP. 
In this area in 2008, Friant contractors could have transferred 
about 40,000 acre-feet to west-side CVP contractors in the San 
Luis Unit under the proposed legislation. The transferred water 
would have been subject to the CVPIA restoration fund charges 
(about $9) under Title X of Public Law 111-11, Section 
10009(c)(1)(B), as well as Friant surcharges, resulting in 
additional revenues to the Restoration Fund.
    If enacted, S. 1759 could strengthen Reclamation's ability 
to facilitate appropriate water transfers. We would note, 
additionally, that Reclamation already has a robust water 
transfer program. This year in the CVP, Reclamation has 
facilitated the transfer of over 600,000 acre feet of water by 
and among CVP contractors, as well as users of State Water 
Project water. This has been a record for the Reclamation since 
on average there are approximately 250,000 acre feet of 
transfers which are processed by the CVP and State Water 
Project. For figures specific to only the federal CVP, 
Reclamation has signed off on a total of 168 individual 
transfers totaling approximately 435,286 acre feet of federal 
contract water. All were accomplished within the accelerated 
water transfers program using programmatic environmental 
documentation. An additional 9,156 acre feet was transferred 
among Sacramento Valley contractors using transaction-specific 
environmental documentation.
    Separate from the transfer program, a large volume of water 
was delivered that was ``rescheduled,'' or held over in 
storage, from the 2008 water year. Of the 337,307 acre feet of 
water rescheduled in San Luis Reservoir from 2008 into 2009, 
approximately 12,518 acre feet were eventually transferred, 
approximately 50,000 acre feet remains in San Luis, and the 
remainder was delivered to the party rescheduling it. Friant 
Division contractors rescheduled approximately 55,615 acre feet 
in Millerton Reservoir, and of that, 11,848 acre feet were 
transferred. Cross Valley Contractors rescheduled 6,063 acre 
feet of water from 2008, all of which together with 11,550 acre 
feet of 2009 contract supply was transferred to Westside 
contractors. These transfers were in addition to the 
accelerated transfers described above.
    In addition to the suggested change to Section 4(a) above, 
the Department would also like to offer a technical change to 
the proposed legislation. The Department suggests that the 
initial reporting in Section 4(a) be set at six months from the 
date of enactment to provide adequate time for meaningful 
information to be available to Congress. Accordingly, we 
suggest editing the reference in Section 4(b) to delete ``Not 
later than July 15, 2010'' and to call for Reclamation to 
update the report every 180 days after the date on which the 
initial report is submitted to Congress.
    With regard to Section 3 of S. 1759, the Fish and Wildlife 
Service has confirmed that the Service could provide a 
programmatic biological opinion to Reclamation on water 
transfers if this is determined to be appropriate. The 
consultation process would begin with a request from 
Reclamation for consultation accompanied by a biological 
assessment that describes Reclamation's water transfer program 
and evaluates the potential effects of the program on listed 
and proposed species and designated and proposed critical 
habitat and determines whether any such species or habitat are 
likely to be adversely affected by the program. The Service 
could potentially expedite a programmatic biological opinion, 
subject to the availability of appropriations.
    I would also like to note that Reclamation is currently 
working with the California Department of Water Resources in 
developing consistent evaluation criteria for a long-term, 
programmatic water transfer program designed to provide for 
water transfers from State and Federal contractors North of the 
Delta to contractors South of the Delta. These transfers will 
continue to be subject to the consumptive and beneficial use 
requirements in the State Water Code.
    That concludes my prepared remarks. I would be pleased to 
answer any questions.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 1759, as 
ordered reported.