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114th Congress   }                                   {   Rept. 114-197
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                   {          Part 2

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



 
          WESTERN WATER AND AMERICAN FOOD SECURITY ACT OF 2015

                                _______
                                

                 July 14, 2015.--Ordered to be printed

                                _______
                                

Mr. Bishop of Utah, from the Committee on Natural Resources, submitted 
                             the following

                          SUPPLEMENTAL REPORT

                        [To accompany H.R. 2898]

      [Including cost estimate of the Congressional Budget Office]

    This supplemental report shows the cost estimate of the 
Congressional Budget Office with respect to the bill (H.R. 
2898), as reported, which was not included in part 1 of the 
report submitted by the Committee on Natural Resources on July 
13, 2015 (H. Rept. 114-197, pt. 1).

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    In compliance with clause 3(c)(3) of rule XIII of the House 
of Representatives, the cost estimate prepared by the 
Congressional Budget Office and submitted pursuant to section 
402 of the Congressional Budget Act of 1974 is as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 14, 2015.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2898, the Western 
Water and American Food Security Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Aurora 
Swanson.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 2898--Western Water and American Food Security Act of 2015

    Summary: H.R. 2898 would direct the Bureau of Reclamation 
(BOR) to convert water service contracts with water districts 
in 17 western states to repayment contracts if a contractor 
requests it. Water users that choose to convert their contracts 
would be required to accelerate repayment of their share of the 
capital costs of constructing the affected projects. Under the 
bill, existing repayment contractors would have the option to 
repay their share of capital costs on an accelerated schedule.
    Based on information from the BOR, CBO estimates that 
enacting the bill would reduce direct spending by a total of 
$883 over the 2016-2025 period. Under the bill, offsetting 
receipts, which are treated as reductions in direct spending, 
would increase by $721 million over the next 10 years from 
accelerated repayments (net of annual payments that would 
otherwise occur under current law). H.R. 2898 also would repeal 
the authority to implement the San Joaquin River Restoration 
Settlement Act (SJRRSA) which CBO estimates would reduce 
federal costs by $162 million over the next several years. 
Additionally, because the staff of the Joint Committee on 
Taxation (JCT) expects nonfederal contractors would finance 
accelerated payments with bonds exempt from federal taxation, 
they estimate that enacting the legislation would lead to a 
decrease in revenues of $89 million over the 2016-2025 period. 
In total, CBO estimates that those changes in direct spending 
and revenues would decrease budget deficits over that 10-year 
period by $794 million. Because the legislation would affect 
direct spending and revenues, pay-as-you-go procedures apply.
    H.R. 2898 also would allow the BOR, the US Fish and 
Wildlife Service (USFWS), and the National Oceanic and 
Atmospheric Administration (NOAA) to respond to drought 
conditions in western states by authorizing appropriations for 
projects to store water and by accelerating reviews of permit 
applications and environmental studies for new water projects. 
The bill also would decrease amounts authorized to be 
appropriated by repealing the SJRRSA. Based on information from 
those agencies, and assuming the appropriation of the necessary 
amounts, CBO estimates that enacting the bill would increase 
discretionary spending by $398 million over the 2016-2020 
period and by $784 million over the next ten years.
    H.R. 2898 would impose intergovernmental mandates as 
defined in the Unfunded Mandates Reform Act (UMRA) by 
preempting the ability of the State of California to enforce 
its own water management and wildlife preservation laws. The 
bill would establish that ensuring the safety of fish required 
by state laws would be deemed satisfied by the existence of a 
warm water fishery in the San Joaquin River. The bill also 
would require two water districts to participate in a program 
to reduce non-native fish species in the Stanislaus River. 
Based on information from state and local agencies about the 
preemption and other requirements, CBO estimates that the 
aggregate cost for state and local governments to comply with 
those mandates would not exceed the annual threshold 
established in UMRA for intergovernmental mandates ($76 million 
in 2014, adjusted annually for inflation). The bill contains no 
private-sector mandates as defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 2898 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).
    Basis of estimate: For this estimate, CBO assumes that H.R. 
2898 will be enacted near the end of fiscal year 2015.

Direct Spending

    Net Change in Contract Repayments. Under current law, the 
BOR delivers water to users under 860 water service and 
repayment contracts in 17 western states. In addition to paying 
for the water, those users also pay for a portion of the 
estimated capital costs of constructing the reservoirs and 
conveyance systems that store and deliver water. In each of the 
next several years, those contractors will pay the U.S. 
Treasury about $250 million annually for their share of 
construction costs (including interest) with an outstanding 
obligation of about $5.3 billion.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, in millions of dollars--
                                              ----------------------------------------------------------------------------------------------------------
                                                 2016     2017     2018     2019     2020    2021    2022    2023    2024    2025   2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
 
Net Change in Contract Repaymentsa
    Estimated Budget Authority...............     -186     -388     -440     -188       40      90      89      88      87      87     -1,162       -721
    Estimated Outlays........................     -186     -388     -440     -188       40      90      89      88      87      87     -1,162       -721
Repeal the San Joaquin River Restoration
 Settlement Act
    Estimated Budget Authority...............      -10        0        0        0     -152       0       0       0       0       0       -162       -162
    Estimated Outlays........................       -4       -7        0        0      -53      99       0       0       0       0        -63       -162
    Total Changes
        Estimated Budget Authority...........     -196     -388     -440     -188     -112      90      89      88      87      87     -1,324       -883
        Estimated Outlays....................     -190     -395     -440     -188      -13      -9      89      88      87      87     -1,225       -883
 
                                                                   CHANGES IN REVENUES
 
Estimated Revenuesb..........................        *       -2       -5       -9      -11     -12     -12     -12     -12     -12        -27        -89
 
                                NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
 
Effect on Deficit............................     -190     -393     -435     -179       -2       4     101     100      99      99     -1,198       -794
 
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Construction of Water Storage Projects
    Estimated Authorization Level............        0        0        0      335       25       0       0       0       0       0        360        360
    Estimated Outlays........................        0        0        0      134       77      55      37      29      22       5        211        360
Water Storage at Federal Dams
    Estimated Authorization..................       60       60       60       60       60      60      60      60      60      60        300        600
    Level Estimated Outlays..................       24       36       45       51       56      59      60      60      60      60        212        511
Repeal the San Joaquin River Restoration
 Settlement Act
    Estimated Authorization Level............      -21      -21      -21      -21      -21     -21     -21     -21     -21     -21       -105       -210
    Estimated Outlays........................       -8      -13      -16      -18      -20     -21     -21     -21     -21     -21        -74       -179
Accelerating Project Reviews
    Estimated Authorization Level............        6        6        6        6        5       5       5       5       5       5         29         54
    Estimated Outlays........................        6        6        6        6        5       5       5       5       5       5         26         51
Other Provisions
    Estimated Authorization Level............       10        4        4        4        4       4       4       4       4      24         42
    Estimated Outlays........................        8        4        4        4        4       4       4       4       4       4         24         41
    Total Changes
        Estimated Authorization Level........       55       50       48      383       73      47      47      47      48      48        609        846
        Estimated Outlays....................       28       33       39      176      122     102      85      77      70      53        398        784
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not sum to totals because of rounding. * = less than $500,000.
aCBO estimates that the net loss in offsetting receipts from enacting this provision would total about $540 million over the next 35 years.
bFor revenues, negative numbers indicate a decrease in revenues and thus an increase in the deficit. Estimates prepared by the staff of the Joint
  Committee on Taxation.

    Generally, contractors receive water under service 
contracts until construction of an entire project is complete. 
At that time, new contracts are negotiated (known as repayment 
contracts) with annual payments adjusted to reflect the final 
capital costs. The repayment period under those contracts 
cannot exceed 40 years and water users typically cannot pay 
their share of construction costs on an accelerated 
schedule.\1\
---------------------------------------------------------------------------
    \1\Agreements between the federal government and water users for 
delivering water for irrigation, municipal, and industrial purposes 
from federally built projects are generally governed by either water 
service contracts or repayment contracts. Water service contracts are 
used when construction of a project is still in progress and the final 
costs--including water users' share of those costs--are not yet known. 
They are also used when a water user does not want a permanent 
contract. Repayment contracts are available to water users when final 
construction costs and the user's share of those costs are known.
---------------------------------------------------------------------------
    H.R. 2898 would authorize the BOR to convert any water 
service contract to a repayment contract if the contractor 
requests it. Amounts due under such a repayment contract would 
be based on an estimate of final costs if construction of the 
project is not yet complete. Under the bill, users that choose 
to convert would be required to repay their share of the 
capital investment in the project on an accelerated schedule. 
Contractors operating under existing repayment contracts also 
would have the option to repay on an accelerated schedule. 
Contractors that receive water for irrigation from bureau 
projects would make accelerated payments that are lower than 
the total payments they would make under current law. They 
would pay, either in one lump sum or in equal installments over 
three years, the present value of their future contract 
payments discounted at one-half of the 20-year maturity rate 
for Treasury securities. Municipal and industrial contractors 
would prepay their entire outstanding principal balance in a 
lump sum.
    Based on information from the BOR, CBO expects that about 
35 percent of the current contractors would choose to convert 
to repayment contracts in the first few years after the bill's 
enactment. CBO estimates the increase in receipts from 
accelerated payments would total $1.6 billion over the 2016-
2025 period. During the same period there would be a 
corresponding loss in regular annual repayments (including 
interest from Municipal and Industrial contractors) that would 
otherwise occur under current law totaling $874 million. On 
balance, under H.R. 2898, CBO estimates that net receipts would 
increase by $721 million over the 2016-2025 period. That 10-
year increase in net receipts would be more than offset by a 
corresponding reduction in payments that would otherwise occur 
in the years after 2025. CBO estimates that the net loss in 
offsetting receipts from enacting this provision would total 
about $540 million over the next 35 years.
    Repeal the San Joaquin River Restoration Settlement Act. 
H.R. 2898 would repeal the SJRRSA. Under current law, nearly 
all of the Friant water contractors in California's Central 
Valley repaid their portion of the estimated capital costs of 
constructing the Central Valley Project to the U.S. Treasury in 
fiscal year 2011. Information from the BOR indicates that about 
$90 million of the receipts from those repayments were made 
available immediately for implementing the settlement--of which 
$10 million remains unspent--and an estimated $152 million will 
become available to the BOR to implement the settlement in 
fiscal year 2020. Under the bill, those funds would no longer 
be authorized to be spent. Thus, CBO estimates that repealing 
SJRRSA would reduce direct spending by $162 million over the 
2016-2025 period.

Revenues

    Staff of the JCT estimates that some of the accelerated 
payments from water districts to the federal government would 
be financed with bonds that are exempt from federal taxation 
and that issuing those bonds would lead to a revenue loss of 
$89 million over the next 10 years.

Spending Subject To Appropriation

    Construction of Water Storage Projects. Beginning three 
years after enactment, H.R. 2898 would authorize the 
appropriation of 50 percent of the accelerated payments 
received from water contractors (net of annual payments that 
would otherwise occur under current law) for new water storage 
projects. Based on the repayments estimated to be received 
under the bill, the authorization level would total $360 
million over the 2019-2020 period. According to the BOR, there 
are at least four water storage projects that would be ready to 
move forward by 2019--two in the Yakima River Basin in the 
State of Washington, Temperance Flat, and the Enlargement of 
Shasta Dam in California. Based on information from the BOR, 
and assuming appropriation of the authorized amounts, CBO 
estimates that implementing those provisions would cost $211 
million over the 2016-2020 period. H.R. 2898 would require the 
nonfederal sponsors of those new projects to repay 100 percent 
of the projects' costs within 40 years. CBO expects that those 
repayments would begin after 2025 because of the amount of time 
required to construct the new projects. Funds received from 
such repayments would be available, subject to appropriation, 
for constructing additional new water projects.
    Water Storage at Federal Dams. Title X of the bill would 
authorize the BOR to develop additional storage capacity at 
federal dams if such projects are feasible and consistent with 
dam safety and other authorized purposes. The local sponsors 
would not be required to contribute to the cost of those 
projects prior to constructing them, but some of the 
construction costs would be required to be paid within 50 years 
after the project is substantially complete. Based on 
information from the BOR, seven projects to construct new or 
supplemental water storage features would be eligible to be 
funded under this provision of the bill. The largest project 
would be located at Scoggins Dam in Oregon and would cost $450 
million to raise the dam's height and increase storage 
capacity. The costs to construct the other six projects would 
range between $7 million and $40 million each. The estimated 
cost to complete all seven projects would total about $600 
million. Assuming the appropriation of necessary amounts, CBO 
estimates that spending on those projects over the 2016-2020 
period would total $212 million.
    Repeal the San Joaquin River Restoration Settlement Act. 
The SJRRSA authorized the appropriation of up to $300 million 
to implement the settlement; since 2009 when the settlement was 
enacted, $90 million has been appropriated. Repealing the 
SJRRSA would decrease amounts authorized to be appropriated by 
$210 million. If the BOR were to receive additional 
appropriations, current law requires that those funds must be 
expended only to the extent that nonfederal sponsors contribute 
payments or in-kind contributions of equal value. Whether the 
Congress will appropriate the remaining $210 million to 
implement the Settlement under current law in the next several 
years and whether non-Federal partners will match such amounts 
is uncertain. Assuming the BOR will receive appropriations of 
the amounts specifically authorized over the next 10 years, CBO 
estimates that the repeal of the settlement under the bill 
would reduce discretionary spending by $74 million over the 
2016-2020 period.
    Accelerating Project Reviews. With the aim of accelerating 
the evaluation of new projects for storing water, recycling and 
reusing wastewater, and increasing water supplies in rural 
areas, H.R. 2898 would establish the BOR as the lead federal 
agency to coordinate with states, other federal agencies, and 
the public to:
           Expedite environmental reviews and 
        evaluations of permit applications;
           Facilitate early detection and resolution of 
        environmental issues; and
           Construct a publicly accessible database 
        that would include a list of requirements for each 
        study and information on the progress toward completing 
        each requirement.
    H.R. 2898 also would require the BOR to identify water 
projects constructed across the United States that were 
excluded from environmental reviews because they were 
determined to have no significant effect on the environment. 
The agency would be tasked with developing guidelines for new 
exclusions based on the characteristics of those previous 
projects.
    H.R. 2898 would limit the BOR to spending $3 million or 
less on studies conducted as part of its reviews; those studies 
would have to be completed within three years. If a study could 
not be completed within that period for $3 million or less, the 
BOR would be required to provide written notice to the Congress 
and any other agencies involved. Finally, the bill would direct 
the BOR to annually solicit through the Federal Register 
proposals from nonfederal entities to build water projects and 
to report to the Congress on the preliminary costs and benefits 
of each of those proposals.
    Based on information from the BOR and other federal 
agencies, CBO estimates that the additional activities required 
to implement those provisions would cost about $26 million over 
the 2016-2020 period, assuming appropriation of necessary 
amounts, for additional staff to coordinate agency reviews, 
consolidate project data and documentation, and for regional 
directors of BOR to conduct reviews.
    Other Provisions. Based on information from the BOR, the 
USFWS and NOAA, and on historical spending patterns of similar 
programs, CBO estimates that implementing several other 
provisions of the bill would cost $24 million over the 2016-
2020 period.
           Delta Smelt Management. H.R. 2898 would 
        require the USFWS to study the population, location, 
        and habitats of the Delta Smelt in the Sacramento-San 
        Joaquin Delta. Based on information provided by the 
        USFWS, CBO estimates that carrying out sampling and 
        monitoring activities necessary to complete the study 
        would cost $3 million in 2016, assuming appropriation 
        of the necessary amounts.
           Salmonid Management. The bill also would 
        require NOAA and the BOR to annually reexamine how 
        those agencies manage water supplies and to gather data 
        on the long-term survival of salmonid species in 
        central California. Based on information provided by 
        the affected agencies, CBO estimates that conducting 
        those annual reviews would cost $2 million a year, 
        assuming appropriation of the necessary amounts. Those 
        amounts would be used to pay for staff to continually 
        update models used to inform policies related to 
        managing water supplies in the affected area.
           Drought Response. With an aim to maximize 
        water deliveries for non-habitat water uses, during 
        periods when water supplies fall below certain 
        specified levels, H.R. 2898 would require the BOR and 
        other federal agencies to approve permits to erect 
        temporary gates or operable gates on channels in the 
        Sacramento-San Joaquin Delta and for certain types of 
        water transfers within 30 days. Based on information 
        from the BOR, and assuming appropriation of the 
        necessary amounts CBO estimates implementing those 
        provisions would cost $2 million over the 2016-2020 
        period.
           Miscellaneous. Other costs under H.R. 2898 
        would stem from provisions that would direct the BOR to 
        establish an oversight board to make recommendations 
        each year for the use of federal funds in the Central 
        Valley Project Restoration Fund, for staff to carry out 
        studies to identify opportunities to protect water 
        resources in coordination with nonfederal partners and 
        to negotiate conversion of water contracts to repayment 
        contracts and manage the receipt of accelerated 
        repayments permitted under the bill. Assuming 
        appropriation of the necessary amounts and based on 
        information from BOR, CBO estimates that those 
        provisions would cost $8 million over the 2016-2020 
        period.
    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. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in millions of dollars--
                                ------------------------------------------------------------------------------------------------------------------------
                                   2015     2016     2017     2018     2019     2020     2021     2022     2023     2024     2025   2015-2020  2015-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact.        0     -190     -393     -435     -179       -2        4      101      100       99       99     -1,198      -794
Memorandum:
    Changes in Outlays.........        0     -190     -395     -440     -188      -13       -9       89       88       87       87     -1,225      -883
    Changes in Revenues........        0        0       -2       -5       -9      -11      -12      -12      -12      -12      -12        -27       -89
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
H.R. 2898 would impose intergovernmental mandates as defined in 
UMRA. The bill would preempt the ability of the State of 
California to enforce its own water management and wildlife 
preservation laws by establishing that the safety of fish 
required by those laws would be deemed satisfied by the 
existence of a warm water fishery in the San Joaquin River. The 
bill also would require two water districts to participate in a 
program to reduce non-native fish species in the Stanislaus 
River. Based on information from state and local agencies about 
the preemption and other requirements, CBO estimates that the 
aggregate cost for state and local governments to comply with 
those mandates would not exceed the annual threshold 
established in UMRA for intergovernmental mandates ($76 million 
in 2014, adjusted annually for inflation).
    Estimated impact on the private sector: H.R. 2898 contains 
no private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Aurora Swanson and 
Jeff LaFave; Revenues: Staff of the Joint Committee on 
Taxation; Impact on State, Local, and Tribal Governments: Jon 
Sperl; Impact on the Private Sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Director for Budget 
Analysis.

                                  [all]