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113th Congress                                            Rept. 113-372
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

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



 
                      WATER RIGHTS PROTECTION ACT

                                _______
                                

 March 4, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Hastings of Washington, from the Committee on Natural Resources, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3189]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 3189) to prohibit the conditioning of any 
permit, lease, or other use agreement on the transfer, 
relinquishment, or other impairment of any water right to the 
United States by the Secretaries of the Interior and 
Agriculture, having considered the same, report favorably 
thereon with amendments and recommend that the bill as amended 
do pass.
    The amendments are as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Water Rights Protection Act''.

SEC. 2. TREATMENT OF WATER RIGHTS.

  The Secretary of the Interior and the Secretary of Agriculture--
          (1) shall not condition the issuance, renewal, amendment, or 
        extension of any permit, approval, license, lease, allotment, 
        easement, right-of-way, or other land use or occupancy 
        agreement on the transfer of any water right directly to the 
        United States, or any impairment of title, in whole or in part, 
        granted or otherwise recognized under State law, by Federal or 
        State adjudication, decree, or other judgment, or pursuant to 
        any interstate water compact; and
          (2) shall not require any water user to apply for or acquire 
        a water right in the name of the United States under State law 
        as a condition of the issuance, renewal, amendment, or 
        extension of any permit, approval, license, lease, allotment, 
        easement, right-of-way, or other land use or occupancy 
        agreement.

SEC. 3. DEFINITION.

  For purposes of this Act, the term ``water right'' means any surface, 
groundwater, or storage use filed, permitted, certificated, confirmed, 
decreed, adjudicated, or otherwise recognized by a judicial proceeding 
or by the State in which the user acquires possession of the water or 
puts it to beneficial use.

SEC. 4. IMPACT ON EXISTING AUTHORITY.

  Nothing in this Act limits or expands any existing authority of the 
Secretaries to condition any permit, approval, license, lease, 
allotment, easement, right-of-way, or other land use or occupancy 
agreement on Federal lands subject to their respective jurisdictions.

    Amend the title so as to read:
    A bill to prohibit the conditioning of any permit, lease, 
or other use agreement on the transfer of any water right to 
the United States by the Secretaries of the Interior and 
Agriculture.

                          PURPOSE OF THE BILL

    The purpose of H.R. 3189 as amended is to prohibit the 
conditioning of any permit, lease, or other use agreement on 
the transfer of any water right to the United States by the 
Secretaries of the Interior and Agriculture.

                  BACKGROUND AND NEED FOR LEGISLATION

    Each western state has its own system of water law that 
governs public and private water rights within its borders. All 
western states have adopted some form of the prior 
appropriation doctrine, or ``first in time, first in right,'' 
regarding surface water and many have, to some degree, 
integrated this approach into their system of ground water law. 
Under prior appropriation, water rights are obtained by 
diverting water for ``beneficial use,'' which can include 
domestic use, irrigation, stock-watering, manufacturing, 
mining, hydropower, municipal use, agriculture, recreation, 
fish and wildlife, depending on state law. The water right is 
the amount of water that is diverted and put to beneficial use. 
Eastern states normally use riparian systems of law, under 
which rights to use water are generally tied to lands adjacent 
to waterways. Western states adopted prior appropriation since 
incentive was needed for the development and judicious use of 
water rights from sources often far away from their point of 
use. This allowed for the ownership of water rights without the 
need to own the land in direct proximity to a waterway. The 
settlement of the West and the development of water rights have 
allowed water users to invest in farming and ranching 
operations, domestic uses, recreational opportunities, energy 
development, conservation, and industrial uses. Appropriated 
waters are also a major component of most metropolitan water 
supplies in the West.
    Western states have developed water laws that work best for 
them, largely free from federal interference for more than a 
century. As the West was settled, a fairly uniform set of laws, 
customs, and judicial decisions based on beneficial use was 
established. The federal government has acquiesced to the 
western territories, later states, to control, manage, and 
allocate water. That important principle of federalism has been 
confirmed by the U.S. Supreme Court as recently as June of 
2013, in Tarrant Regional Water District v. Hermann, 133 S.Ct. 
2120, 2132 (June 13, 2013), the ``power to control . . . public 
uses of water is an essential attribute of [state] 
sovereignty.''
    Pursuant to the McCarran Amendment enacted in 1952, the 
United States has waived its sovereign immunity when sued in a 
water rights dispute, and barred the United States from 
objecting to the application of state law to such a proceeding. 
This landmark law put in place a framework under which the 
federal government validates its state granted water rights in 
the same fashion as non-federal water rights holders.
    Earlier federal attempts to erode the state water rights of 
federal land permittees resulted in agencies receiving clear 
and significant opposition. In the 1990s Congress commissioned 
a Federal Water Rights Task Force in response to the federal 
use of permitting processes to reduce state-allocated water 
rights held by the city of Boulder, Colorado and by certain 
agricultural interests in Arizona. The report produced by the 
Task Force found that federal acquisition of water for 
secondary purposes (beyond reserved water rights) must be 
obtained and exercised in accordance with state and federal law 
and that the federal government had exceeded its legal 
authority in failing to do so. Report of the Federal Water 
Rights Task Force (August 25, 1997).
    Undermining this longstanding framework upsets the 
foundation of western municipal, agriculture, recreation, 
business, environmental, and local communities' water supplies. 
Protection of Western water supplies and the state law that 
makes that end possible have been supported by generations of 
Western elected officials on a bipartisan basis.
    Contrary to this longstanding precedent, recent federal 
actions and directives are undermining the historic benefits of 
Western water law. Specifically, federal land management 
agencies, including the U.S. Forest Service have demanded the 
transfer of water rights recognized under state law directly to 
the United States as a condition of permit issuance or renewal.
    The Forest Service and other federal land management 
agencies authorize recreational, agricultural, and other non-
federal water users to operate on federal lands through the use 
of special-use permits. Such permits do not confer water rights 
on permit holders, but merely govern the terms of use for the 
federal land. Water rights arising within or outside of the 
permit area must be acquired in accordance with state law and 
paid for, developed, and maintained at the expense of the water 
user. Many water rights holders use these private water rights 
for activities critical to their operations, such as snowmaking 
in the case of ski areas and stock watering and irrigation in 
the case of farm and ranch operations. Additionally, these 
rights are often used as collateral to secure financing for 
maintenance, expansion, and to supply nearby communities.
    Despite the legal limitations of these land use 
arrangements with respect to water rights, the Forest Service 
issued an interim directive in 2011 for ski area special use 
permits which included a clause requiring applicant ski areas 
to transfer privately held water rights to the United States as 
a permit condition. The directive also required that water 
rights arising on Forest Service lands off-site be transferred 
to the United States in the event that the permit expires or is 
terminated. In 2012, the Forest Service issued an amended 
national water clause with similar requirements. Certain 
municipal permits, grazing permits and other agricultural land 
use arrangements have also included conditions requiring the 
transfer of state-recognized water rights to the United States 
on a piecemeal basis in recent years.
    Witnesses at an October 10, 2013, Water and Power 
Subcommittee hearing on H.R. 3189 testified that these actions 
would: (1) inhibit water users by limiting access to financing 
for maintenance and development of facilities; (2) potentially 
result in U.S. government diversion of water currently held by 
non-federal entities to off-permit locations, prohibiting the 
continuation of beneficial use; (3) violate state water law of 
prior appropriation; and (4) pose an immediate threat to 
Western economies which rely on the availability of water for 
snowmaking at ski areas, stock watering and irrigation, and 
municipal use. Furthermore, these actions likely constitute a 
taking under the Fifth Amendment to the United States 
Constitution for which just compensation would otherwise need 
to be paid. Many courts have recognized the compensable 
property nature of a water right if taken by the government.
    The purpose for the new clause in both the case of ski 
areas and farm and ranch operations, as expressed by the 
Administration, is to ensure that water remains at the location 
of use to perpetuate its current purpose. The Obama 
Administration's concern was and continues to be that some 
water users will sell their water rights and those sales will 
result in the diversion of waters away from federal lands. To 
date, no such sales and diversions have been documented. 
Additionally, the permits and land use arrangements in question 
have not included provisions to ensure that the federal 
government will protect the right for its current use, nor have 
such permits guaranteed that those water rights will not be 
diverted away by the government for an entirely different use. 
As such, this federal policy has the potential to exacerbate 
the very problem it purports to solve. The dangers of this 
significant departure from precedent are clearly noted in the 
Western Governors' Association (WGA) Resolution 11-7 and the 
WGA's November 14, 2013, letter to Chairman Hastings, both 
appended to this report. In their letter to Chairman Hastings, 
the WGA and Western States Water Council state that ``WGA and 
WSWC have long opposed federal agency directives that would 
adversely affect or interfere with states' primary and 
exclusive authority over water rights administration and 
allocation. The purpose of H.R. 3189 appears to be consistent 
with our support for federal deference to state water law.''
    H.R. 3189 has been advanced to counter harmful federal 
policies, provide certainty for water users, and to maintain 
the longstanding federal deference to state water law. In doing 
so, the legislation grants no new rights to any party, nor does 
it in any way infringe on existing rights of individuals, 
states, or the federal government.

                      SECTION BY SECTION ANALYSIS

Section 1. Short title

    This Act may be cited as the ``The Water Rights Protection 
Act.''

Section 2. Treatment of water rights

    Section 2, as amended, prohibits the Secretaries of the 
Interior and Agriculture from conditioning the issuance, 
renewal, amendment, or extension of any permit, approval, 
license, lease, allotment, easement, right-of-way, or other 
land use or occupancy agreement on the transfer of any water 
right directly to the United States, or any impairment of 
title, in whole or in part, granted or otherwise recognized 
under State law, by Federal or State adjudication, decree, or 
other judgment, or pursuant to any interstate water compact.
    The purpose of this prohibition is to prevent federal land 
management agencies from using these processes to require a 
non-federal water user to transfer state-recognized water 
rights directly to the United States. This prohibition is 
limited by Section 4 which provides that any other existing 
authorities, that the Secretaries of the Interior and 
Agriculture may have to otherwise condition any permit, 
approval, license, lease, allotment, easement, right-of-way, or 
other land use or occupancy agreement remain unaffected by the 
legislation. Other federal land management authority to 
condition or otherwise agree on conditions of federal land use, 
including contractual voluntary changes in water use and 
carrying out authorized projects affecting water use, is 
outside the scope of this Act.
    Section 2, as amended, also prohibits the Secretaries of 
the Interior and Agriculture from requiring any water user to 
apply for or acquire water rights in the name of the United 
States under state law as a condition of the issuance, renewal, 
amendment, or extension of any permit, approval, license, 
lease, allotment, easement, right-of-way, or other land use or 
occupancy agreement. Similar to the prohibition mentioned 
above, the purpose of this provision is to prevent the federal 
government from using the named processes to acquire a water 
right under state law for which it would otherwise have to 
acquire and pay for itself.
    Section 3 protects states' definitions of the term ``water 
right'' and includes any water right recognized under state 
law.

                            COMMITTEE ACTION

    H.R. 3189 was introduced on September 26, 2013, by 
Congressman Scott R. Tipton (R-CO). The bill was referred to 
the Committee on Natural Resources and within the Committee to 
the Subcommittee on Water and Power. The bill was also referred 
to the Committee on Agriculture. On October 10, 2013, the 
Subcommittee held a hearing on the bill. On November 14, 2013, 
the Natural Resources Committee met to consider the bill. The 
Subcommittee on Water and Power was discharged by unanimous 
consent. Congressman Tipton offered an amendment designated 
.036 to the bill; the amendment was adopted by voice vote. No 
further amendments were offered to the bill, and the bill, as 
amended, was then adopted and ordered favorably reported to the 
House of Representatives by a record vote of 19 to 14, as 
follows:


            COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                    COMPLIANCE WITH HOUSE RULE XIII

    1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(2)(B) 
of that Rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and section 
403 of the Congressional Budget Act of 1974, the Committee has 
received the following cost estimate for this bill from the 
Director of the Congressional Budget Office:

H.R. 3189--Water Rights Protection Act

    H.R. 3189 would prevent federal agencies from requiring 
certain entities to relinquish their water rights to the United 
States in order to use public lands. Because CBO expects that 
enacting the bill would not affect the number of users of 
public lands or the amount of receipts received by federal 
agencies for the use of those lands, we estimate that enacting 
the bill would have no impact on the federal budget. Enacting 
H.R. 3189 would not affect direct spending or revenues; 
therefore, pay-as-you-go procedures do not apply.
    H.R. 3189 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Jeff LaFave. The 
estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.
    2. Section 308(a) of Congressional Budget Act. As required 
by clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives and section 308(a) of the Congressional Budget 
Act of 1974, this bill does not contain any new budget 
authority, spending authority, credit authority, or an increase 
or decrease in revenues or tax expenditures. Because CBO 
expects that enacting the bill would not affect the number of 
users of public lands or the amount of receipts received by 
federal agencies for the use of those lands, it estimates that 
enacting the bill would have no impact on the federal budget.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill as amended is to prohibit the 
conditioning of any permit, lease, or other use agreement on 
the transfer of any water right to the United States by the 
Secretaries of the Interior and Agriculture.

                           EARMARK STATEMENT

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    COMPLIANCE WITH PUBLIC LAW 104-4

    This bill contains no unfunded mandates.

                       COMPLIANCE WITH H. RES. 5

    Directed Rule Making. The Chairman does not believe that 
this bill directs any executive branch official to conduct any 
specific rule-making proceedings.
    Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                PREEMPTION OF STATE, LOCAL OR TRIBAL LAW

    This bill is not intended to preempt any State, local or 
tribal law.

                        CHANGES IN EXISTING LAW

    If enacted, this bill would make no changes in existing 
law.

                            DISSENTING VIEWS

    H.R. 3189 seeks to address a narrow water rights dispute 
between the Forest Service and the National Ski Areas 
Association, but is written so broadly that it could negatively 
impact renewal of Bureau of Reclamation water contracts, 
National Park System management, mandatory conditioning 
requirements for Federal Energy Regulatory Commission 
hydropower relicenses, and grazing on public lands. Because of 
these harmful impacts on other federal activities beyond the 
intended scope of this legislation, and a reversal by the 
Forest Service on their water rights position, we oppose the 
legislation.
    The current debate on water rights centers on the United 
States Forest Service's (Forest Service) issuance of a new 
directive in 2011. Interim Directive Number 2709.11-2011-3 
requires ski area permit holders to transfer water rights 
secured by areas operating on public land to the federal 
government.
    The ski areas argue that the 2011 directive violated 
Colorado water law and the Colorado constitution. Water rights 
are a huge financial asset for ski resorts. Vail Resorts 
reports water rights as intangible assets valued at $18.3 
million. The Forest Service is concerned that the value of 
these water rights would lead permit holders to sell the water, 
leaving the Forest Service with no water to manage the land.
    This conflict led to a U.S. District Court lawsuit against 
the Forest Service, filed by the National Ski Areas Association 
(NSAA). In December 2012, Judge William Martinez ruled in favor 
of the NSAA, but not on the substantive water law issue. 
Instead, Martinez said the Forest Service had failed to follow 
federal government policies on the formation of administrative 
procedures. The Court ordered the Forest Service to withdraw 
the directive. The Forest Service is currently going through a 
public comment process and reevaluating the 2011 directive. On 
November 13, 2013, the Forest Service announced a revision to 
their water rights position, specifically stating that the 
Forest Service can meet their land management objectives 
``without requiring the transfer of privately owned water 
rights to the Government.'' Therefore the conflict this 
legislation seeks to resolve no longer exists and this 
legislation is unnecessary.
    Yet H.R. 3189 goes above and beyond the disagreement 
between the Forest Service and the Ski Resorts, and overreaches 
to apply to all actions that require a permit on federal lands. 
This includes the ability to facilitate the exchange of water 
rights, assessed at fair market value, from being included as 
part of a voluntary land exchange. There is also concern about 
the ability to impose bypass flow requirements for 
environmental protection, as outlined in testimony submitted by 
the U.S. Forest Service. This has clear implications on 
projects like the Conowingo Dam on the Susquehanna River, a key 
component to the restoration efforts in the Chesapeake Bay, and 
is currently in the Federal Energy Regulatory Commission 
relicensing process.
    H.R. 3189 also runs counter to National Park Service 
Management Practice 4.6.2, which specifies that all rights to 
the use of water diverted from or used on federal lands within 
the national park system by the United States or its 
concessioners, lessors, or permittees will be perfected in the 
name of the United States. H.R. 3189 would also prohibit the 
renewal of water contracts for the Bureau of Reclamation's 
Central Valley Project.
    The Committee has received numerous letters in opposition 
to the legislation, including letters from Grand County, Summit 
County, and Eagle County in Colorado, who oppose the 
legislation due to its potential impacts on bypass flows. The 
Committee has also received testimony in opposition from the 
National Forest Service and the Department of the Interior. The 
Committee also received a letter signed by nearly 70 
conservation Groups including: American Rivers, National 
Audubon Society, National Parks Conservation Association, 
American Whitewater, Sierra Club, and the Chesapeake Bay 
Foundation in opposition to this bill.
    This legislation creates more conflict than it solves and 
should be rejected by the House.
                                  Peter A. DeFazio,
                                            Ranking Member,
                                    Committee on Natural Resources.
                               Grace F. Napolitano,
                                            Ranking Member,
                                   Subcommittee on Water and Power.