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115th Congress   }                                       {     Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                       {    115-158

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



 
    BUREAU OF RECLAMATION PUMPED STORAGE HYDROPOWER DEVELOPMENT ACT

                                _______
                                

  June 2, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 1967]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 1967) to amend the Reclamation Project Act of 
1939 to authorize pumped storage hydropower development 
utilizing multiple Bureau of Reclamation reservoirs, having 
considered the same, report favorably thereon with an amendment 
and recommend 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 ``Bureau of Reclamation Pumped Storage 
Hydropower Development Act''.

SEC. 2. AUTHORITY FOR PUMPED STORAGE HYDROPOWER DEVELOPMENT UTILIZING 
                    MULTIPLE BUREAU OF RECLAMATION RESERVOIRS.

  Section 9(c)(1) of the Reclamation Project Act of 1939 (43 U.S.C. 
485h(c)(1)) is amended by inserting ``and pumped storage hydropower 
development exclusively utilizing Bureau of Reclamation reservoirs'' 
after ``including small conduit hydropower development''.

                          Purpose of the Bill

    The purpose of H.R. 1967 is to amend the Reclamation 
Project Act of 1939 to authorize pumped storage hydropower 
development utilizing multiple Bureau of Reclamation 
reservoirs.

                  Background and Need for Legislation

    H.R. 1967 authorizes pumped storage at Bureau of 
Reclamation (Reclamation) facilities in order to clear up 
regulatory confusion and stimulate non-federal pumped storage 
hydropower development in the seventeen western states.
    The arid western United States, once sparsely populated due 
in large part to scarce water supplies, is now home to more 
than 70 million people and is one of the most productive 
agricultural regions in the world. Reclamation, a federal 
agency created in 1902, played a pivotal role in developing and 
maintaining much of the water infrastructure in the West. Many 
of Reclamation's projects are multi-purpose in nature, and its 
reservoirs and dams further generate enough emissions-free 
electricity to serve at least 3.5 million homes annually. This 
is accomplished through the operation of 53 hydroelectric power 
plants that, according to Reclamation, have annually produced 
an average of 40 billion kilowatt (kW) hours over the last 10 
years. Nationally, hydropower accounts for almost 7% of 
domestic electricity generation, divided equally between 
federal and non-federal output.
    Pumped storage hydropower facilities pump water stored at a 
lower reservoir to an upper reservoir during periods of low 
electricity demand. During periods of high electricity demand, 
water is released from the upper reservoir and run through 
turbines to produce electricity. This not only provides power 
for baseload needs and peak times, but also serves as a backup 
generation source for other intermittent renewable energies 
such as wind and solar.
    When Reclamation allows non-federal entities to produce 
hydropower at its facilities, it uses a ``lease of power 
privilege'' (LOPP) process. A LOPP is a contractual right given 
to a non-federal entity to use a Reclamation facility for 
electric power generation that is consistent with the project's 
purposes. As part of this arrangement, the entity pays a fee 
(commonly referred to as a ``falling water charge'') to 
Reclamation for the use of the facilities, and that fee is 
credited towards the capital repayment of the Reclamation 
facility. There are currently thirteen LOPP projects at 
Reclamation facilities: seven dams and six conduits with a 
combined capacity of nearly 46,000 kW. According to 
Reclamation, the national potential for new pumped storage is 
34,000 megawatts, although it would be far less at the agency's 
facilities.
    Under the LOPP process, Reclamation solicits proposals 
through a public process and then reviews each proposal 
received. According to the Reclamation's Directives and 
Standards, some of the topic areas that must be considered 
during the review process include: public and dam safety 
impacts/modifications; site characteristics and existing 
facilities; land and water rights; project features and 
designs; power production; operations and maintenance plans; 
consultation with involved Native American tribal governments; 
and an environmental analysis suitable for Reclamation's use 
under the National Environmental Policy Act of 1969, the 
National Historic Preservation Act of 1966, and the Endangered 
Species Act of 1973. A recipient is then selected based on the 
criteria set forth in the solicitation and issued a preliminary 
lease.
    Even though the LOPP is used for Reclamation facilities 
that are authorized for hydropower development, there has been 
some historic inconsistency over which federal agency would 
manage hydropower development at Reclamation's facilities. In 
some cases, Reclamation has clear authority to develop 
hydropower at a specific project given the project's 
legislative history and authorized project purposes. In other 
cases, the Federal Energy Regulatory Commission could have 
authority if the underlying project's authorization did not 
specifically include hydropower as a component. Congress 
cleared up some of this confusion when it passed and President 
Obama signed the Bureau of Reclamation Small Conduit Hydropower 
Development and Rural Jobs Act (Public Law 113-24), which 
explicitly authorized hydropower development at Reclamation's 
canals and water pipelines.
    There is still some confusion over which agency would 
oversee pumped storage development at certain Reclamation 
facilities. Some of Reclamation's water users have expressed a 
desire to work directly with Reclamation through the LOPP 
process but have run into uncertainty. For example, Columbia 
Basin Hydropower (CBHP) is looking to develop a pumped storage 
hydropower project in central Washington State near the Grand 
Coulee Dam. Since April 2012, it has been unclear which federal 
regulatory process should apply to the project. In an April 4, 
2017, Water, Power and Oceans Subcommittee hearing on a 
discussion draft of H.R. 1967, a witness from CBHP testified: 
``Having to engage in this duplicative process would certainly 
add significant costs, certainly delay the timeframe for 
construction of our project, and the ability to meet a timeline 
for projected needs of capacity, ancillary services, and 
storage for the utilities of the Northwest.'' CBHP has 
expressed its desire to pursue the LOPP process, which would 
utilize two existing Reclamation reservoirs.
    H.R. 1967 will help clarify and bring certainty to this 
process. An Administration official testified in support of a 
discussion draft of H.R. 1967 at the Water, Power and Oceans 
Subcommittee's April 4, 2017, hearing, stating: ``The 
Department [Department of the Interior] supports the Discussion 
Draft, which aims to streamline the development and permitting 
of non-federal pumped-storage hydroelectric projects on 
Reclamation reservoirs.''
    H.R. 1967 authorizes pumped storage hydropower development 
that exclusively utilizes Reclamation reservoirs. This 
authorization makes it clear that Reclamation will be the lead 
agency that will oversee pumped storage hydropower development 
at these facilities.
    The Committee is aware that, as part of the LOPP, 
Reclamation will consult with any affected federal Power 
Marketing Administrations (PMA). As part of that consultative 
process, the Committee expects an evaluation of any operational 
or financial impact on the power customers of the PMA. Projects 
constructed under this legislation should not result in any 
uncompensated adverse impact on PMA customers.
    It is the Committee's expectation that, while a PMA may 
elect to purchase power from a project constructed under this 
legislation, no PMA is required to purchase the output of any 
project pursued under this legislation.

                      Section-by-Section Analysis

    Section 1 states the short title of the bill as the 
``Bureau of Reclamation Pumped Storage Hydropower Development 
Act.''
    Section 2 amends the Reclamation Project Act of 1939 to 
authorize pumped storage hydropower development exclusively 
utilizing Bureau of Reclamation reservoirs.

                            Committee Action

    H.R. 1967 was introduced on April 6, 2017, by Congressman 
Doug Lamborn (R-CO). The bill was referred to the Committee on 
Natural Resources, and within the Committee to the Subcommittee 
on Water, Power and Oceans. On April 26, 2017, the Natural 
Resources Committee met to consider the bill. The Subcommittee 
was discharged by unanimous consent. Congressman Doug Lamborn 
offered an amendment designated #1 to the bill; it was adopted 
by unanimous consent. No further amendments were offered, and 
the bill, as amended, was ordered favorably reported to the 
House of Representatives by unanimous consent on April 27, 
2017.

            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 and Congressional Budget Act

    1. Cost of Legislation and the Congressional Budget Act. 
With respect to the requirements of clause 3(c)(2) and (3) of 
rule XIII of the Rules of the House of Representatives and 
sections 308(a) and 402 of the Congressional Budget Act of 
1974, the Committee has received the following estimate for the 
bill from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 31, 2017.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1967, the Bureau 
of Reclamation Pumped Storage Hydropower Development Act.
    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. 1967--Bureau of Reclamation Pumped Storage Hydropower Development 
        Act

    Under current law, nonfederal entities that propose to 
develop facilities for pumped storage hydropower at reservoirs 
administered by the Bureau of Reclamation (BOR) must enter into 
a lease contract with the bureau; at some reservoirs those 
entities need to obtain a license from the Federal Energy 
Regulatory Commission (FERC). (Pumped storage hydropower is a 
type of storage for hydroelectric energy used by electric power 
systems for load balancing.) H.R. 1967 would make the BOR the 
sole regulatory authority for pumped storage developers that 
are currently subject to regulation by both BOR and FERC.
    CBO expects that BOR would need to allocate additional 
staff hours to negotiate lease agreements, but based on an 
analysis of information from BOR, CBO estimates that those 
costs would be insignificant and subject to the availability of 
appropriated funds. In addition, FERC recovers 100 percent of 
its costs, which are controlled by annual appropriations 
through user fees. Thus any reduction in FERC's cost resulting 
from shifting its licensing responsibilities to BOR would be 
offset by an equal change in fees, resulting in no net change 
in discretionary spending.
    Enacting the bill would not affect direct spending or 
revenues, therefore pay-as-you-go procedures do not apply. CBO 
estimates that enacting H.R. 1967 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    H.R. 1967 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would benefit public entities that develop storage projects at 
BOR facilities. Any costs incurred by those entities under 
agreements with the federal government would result from 
participating in a voluntary federal program.
    The CBO staff contacts for this estimate are Aurora Swanson 
(for federal costs) and Jon Sperl (for intergovernmental 
mandates). The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.
    2. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to amend the Reclamation Project Act 
of 1939 to authorize pumped storage hydropower development 
utilizing multiple Bureau of Reclamation reservoirs.

                           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. This bill does not contain any 
directed rule makings.
    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 Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

            SECTION 9 OF THE RECLAMATION PROJECT ACT OF 1939

  Sec. 9. (a) No expenditures for the construction of any new 
project, new division of a project, or new supplemental works 
on a project shall be made, nor shall estimates be submitted 
therefor, by the Secretary until after he has made an 
investigation thereof and has submitted to the President and to 
the Congress his report and findings on--
  (1) the engineering feasibility of the proposed construction;
  (2) the estimated cost of the proposed construction;
  (3) the part of the estimated cost which can properly be 
allocated to irrigation and probably be repaid by the water 
users;
  (4) the part of the estimated cost which can properly be 
allocated to power and probably be returned to the United 
States in net power revenues;
  (5) the part of the estimated cost which can properly be 
allocated to municipal water supply or other miscellaneous 
purposes and probably be returned to the United States.
If the proposed construction is found by the Secretary to have 
engineering feasibility and if the repayable and returnable 
allocations to irrigation, power, and municipal water supply or 
other miscellaneous purposes found by the Secretary to be 
proper, together with any allocation to flood control or 
navigation made under subsection (b) of this section, equal the 
total estimated cost of construction as determined by the 
Secretary, then the new project, new division of a project, or 
supplemental works on a project, covered by his findings, shall 
be deemed authorized and may be undertaken by the Secretary. If 
all such allocations do not equal said total estimated cost, 
then said new project, new division, or new supplemental works 
may be undertaken by the Secretary only after provision 
therefor has been made by Act of Congress enacted after the 
Secretary has submitted to the President and the Congress the 
report and findings involved.
  (b) In connection with any new project, new division of a 
project, or supplemental works on a project there may be 
allocated to flood control or navigation the part of said total 
estimated cost which the Secretary may find to be proper. Items 
for any such allocations made in connection with projects which 
may be undertaken pursuant to subsection (a) of this section 
shall be included in the estimates of appropriations submitted 
by the Secretary for said projects, and funds for such portions 
of the projects shall not become available except as directly 
appropriated or allotted to the Department of the Interior. In 
connection with the making of such an allocation, the Secretary 
shall consult with the Chief of Engineers and the Secretary of 
the Army, and may perform any of the necessary investigations 
or studies under a cooperative agreement with the Secretary of 
the Army. In the event of such an allocation the Secretary of 
the Interior shall operate the project for purposes of flood 
control or navigation, to the extent justified by said 
allocation therefor.
  (c)
           (1) The Secretary is authorized to enter into 
        contracts to furnish water for municipal water supply 
        or miscellaneous purposes: Provided, That any such 
        contract either (A) shall require repayment to the 
        United States, over a period of not to exceed forty 
        years from the year in which water is first delivered 
        for the use of the contracting party, with interest not 
        exceeding the rate of 3\1/2\ per centum per annum if 
        the Secretary determines an interest charge to be 
        proper, of an appropriate share as determined by the 
        Secretary of that part of the construction costs 
        allocated by him to municipal water supply or other 
        miscellaneous purposes; or (B) shall be for such 
        periods, not to exceed forty years, and at such rates 
        as in the Secretary's judgment will produce revenues at 
        least sufficient to cover an appropriate share of the 
        annual operation and maintenance cost and an 
        appropriate share of such fixed charges as the 
        Secretary deems proper, and shall require the payment 
        of said rates each year in advance of delivery of water 
        for said year. Any sale of electric power or lease of 
        power privileges, made by the Secretary in connection 
        with the operation of any project or division of a 
        project, shall be for such periods, not to exceed forty 
        years, and at such rates as in his judgment will 
        produce power revenues at least sufficient to cover an 
        appropriate share of the annual operation and 
        maintenance cost, interest on an appropriate share of 
        the construction investment at not less than 3 per 
        centum per annum, and such other fixed charges as the 
        Secretary deems proper: Provided further, That in said 
        sales or leases preference shall be given to 
        municipalities and other public corporations or 
        agencies; and also to cooperatives and other nonprofit 
        organizations financed in whole or in part by loans 
        made pursuant to the Rural Electrification Act of 1936 
        and any amendments thereof. Nothing in this subsection 
        shall be applicable to provisions in existing 
        contracts, made pursuant to law, for the use of power 
        and miscellaneous revenues of a project for the benefit 
        of users of water from such project. The provisions of 
        this subsection respecting the sales of electric power 
        and leases of power privileges shall be an 
        authorization in addition to and alternative to any 
        authority in existing laws related to particular 
        projects, including small conduit hydropower 
        development and pumped storage hydropower development 
        exclusively utilizing Bureau of Reclamation reservoirs. 
        No contract relating to municipal water supply or 
        miscellaneous purposes or to electric power or power 
        privileges shall be made unless, in the judgment of the 
        Secretary, it will not impair the efficiency of the 
        project for irrigation purposes.
                  (2)(A) When carrying out this subsection, the 
                Secretary shall first offer the lease of power 
                privilege to an irrigation district or water 
                users association operating the applicable 
                transferred conduit, or to the irrigation 
                district or water users association receiving 
                water from the applicable reserved conduit. The 
                Secretary shall determine a reasonable time 
                frame for the irrigation district or water 
                users association to accept or reject a lease 
                of power privilege offer for a small conduit 
                hydropower project.
                          (B) If the irrigation district or 
                        water users association elects not 
                        accept a lease of power privilege offer 
                        under subparagraph (A), the Secretary 
                        shall offer the lease of power 
                        privilege to other parties in 
                        accordance with this subsection.
                  (3) The Bureau of Reclamation shall apply its 
                categorical exclusion process under the 
                National Environmental Policy Act of 1969 (42 
                U.S.C. 4321 et seq.) to small conduit 
                hydropower development under this subsection, 
                excluding siting of associated transmission 
                facilities on Federal lands.
                  (4) The Power Resources Office of the Bureau 
                of Reclamation shall be the lead office of 
                small conduit hydropower policy and procedure-
                setting activities conducted under this 
                subsection.
                  (5) Nothing in this subsection shall obligate 
                the Western Area Power Administration, the 
                Bonneville Power Administration, or the 
                Southwestern Power Administration to purchase 
                or market any of the power produced by the 
                facilities covered under this subsection and 
                none of the costs associated with production or 
                delivery of such power shall be assigned to 
                project purposes for inclusion in project 
                rates.
                  (6) Nothing in this subsection shall alter or 
                impede the delivery and management of water by 
                Bureau of Reclamation facilities, as water used 
                for conduit hydropower generation shall be 
                deemed incidental to use of water for the 
                original project purposes. Lease of power 
                privilege shall be made only when, in the 
                judgment of the Secretary, the exercise of the 
                lease will not be incompatible with the 
                purposes of the project or division involved, 
                nor shall it create any unmitigated financial 
                or physical impacts to the project or division 
                involved. The Secretary shall notify and 
                consult with the irrigation district or water 
                users association operating the transferred 
                conduit before offering the lease of power 
                privilege and shall prescribe terms and 
                conditions that will adequately protect the 
                planning, design, construction, operation, 
                maintenance, and other interests of the United 
                States and the project or division involved.
                  (7) Nothing in this subsection shall alter or 
                affect any existing agreements for the 
                development of conduit hydropower projects or 
                disposition of revenues.
                  (8) Nothing in this subsection shall alter or 
                affect any existing preliminary permit, 
                license, or exemption issued by the Federal 
                Energy Regulatory Commission under Part I of 
                the Federal Power Act (16 U.S.C. 792 et seq.) 
                or any project for which an application has 
                been filed with the Federal Energy Regulatory 
                Commission as of the date of the enactment of 
                the Bureau of Reclamation Small Conduit 
                Hydropower Development and Rural Jobs Act.
                  (9) In this subsection:
                          (A) Conduit.--The term ``conduit'' 
                        means any Bureau of Reclamation tunnel, 
                        canal, pipeline, aqueduct, flume, 
                        ditch, or similar manmade water 
                        conveyance that is operated for the 
                        distribution of water for agricultural, 
                        municipal, or industrial consumption 
                        and not primarily for the generation of 
                        electricity.
                          (B) Irrigation district.--The term 
                        ``irrigation district'' means any 
                        irrigation, water conservation or 
                        conservancy, multicounty water 
                        conservation or conservancy district, 
                        or any separate public entity composed 
                        of two or more such districts and 
                        jointly exercising powers of its member 
                        districts.
                          (C) Reserved conduit.--The term 
                        ``reserved conduit'' means any conduit 
                        that is included in project works the 
                        care, operation, and maintenance of 
                        which has been reserved by the 
                        Secretary, through the Commissioner of 
                        the Bureau of Reclamation.
                          (D) Transferred conduit.--The term 
                        ``transferred conduit'' means any 
                        conduit that is included in project 
                        works the care, operation, and 
                        maintenance of which has been 
                        transferred to a legally organized 
                        water users association or irrigation 
                        district.
                          (E) Small conduit hydropower.--The 
                        term ``small conduit hydropower'' means 
                        a facility capable of producing 5 
                        megawatts or less of electric capacity.
  (d) No water may be delivered for irrigation of lands in 
connection with any new project, new division of a project, or 
supplemental works on a project until an organization, 
satisfactory in form and powers to the Secretary, has entered 
into a repayment contract with the United States, in a form 
satisfactory to the Secretary, providing among other things--
          (1) That the Secretary may fix a development period 
        for each irrigation block, if any, of not to exceed ten 
        years from and including the first calendar year in 
        which water is delivered for the lands in said block; 
        and that during the development period water shall be 
        delivered to the lands in the irrigation block involved 
        at a charge per annum per acre-foot, or other charge, 
        to be fixed by the Secretary each year and to be paid 
        in advance of delivery of water: Provided, That where 
        the lands included in an irrigation block are for the 
        most part lands owned by the United States, the 
        Secretary, prior to execution of a repayment contract, 
        may fix a development period, but in such case 
        execution of such a contract shall be a condition 
        precedent to delivery of water after the close of the 
        development period: Provided further, That when the 
        Secretary, by contract or by notice given thereunder, 
        shall have fixed a development period of less than ten 
        years, and at any time thereafter but before 
        commencement of the repayment period conditions arise 
        which in the judgment of the Secretary would have 
        justified the fixing of a longer period, he may amend 
        such contract or notice to extend such development 
        period to a date not to exceed ten years from its 
        commencement, and in a case where no development period 
        was provided, he may amend such contract within the 
        same limits: Provided further, That when the Secretary 
        shall have deferred the payment of all or any part of 
        any installments of construction charges under any 
        repayment contract pursuant to the authority of the Act 
        of September 21, 1959 (73 Stat. 584), he may, at any 
        time prior to the due date prescribed for the first 
        installment not reduced by such deferment, and by 
        agreement with the contracting organization, terminate 
        the supplemental contract by which such deferment was 
        effected, credit the construction payments made, and 
        exercise the authority granted in this section. After 
        the close of the development period, any such charges 
        collected and which the Secretary determines to be in 
        excess of the cost of the operation and maintenance 
        during the development period shall be credited to the 
        construction cost of the project in the manner 
        determined by the Secretary.
          (2) That the part of the construction costs allocated 
        by the Secretary to irrigation shall be included in a 
        general repayment obligation of the organization; and 
        that the organization may vary its distribution of 
        construction charges in a manner that takes into 
        account the productivity of the various classes of 
        lands and the benefits accruing to the lands by reason 
        of the construction: Provided, That no distribution of 
        construction charges over the lands included in the 
        organization shall in any manner be deemed to relieve 
        the organization or any party or any land therein of 
        the organization's general obligation to the United 
        States.
          (3) That the general repayment obligation of the 
        organization shall be spread in annual installments, of 
        the number and amounts fixed by the Secretary, over a 
        period of not more than 40 years, exclusive of any 
        development period fixed under paragraph (1) of this 
        subsection, for any project contract unit or, if the 
        project contract unit be divided into two or more 
        irrigation blocks, for any such block, or as near to 
        said period of not more than forty years as is 
        consistent with the adoption and operation of a 
        variable payment formula which, being based on full 
        repayment within such period under average conditions, 
        permits variance in the required annual payments in the 
        light of economic factors pertinent to the ability of 
        the organization to pay.
          (4) That the first annual installment for any project 
        contract unit, or for any irrigation block, as the case 
        may be, shall accrue, on the date fixed by the 
        Secretary, in the year after the last year of the 
        development period or, if there be not development 
        period, in the calendar year after the Secretary 
        announces that the construction contemplated in the 
        repayment contract is substantially completed or is 
        advanced to a point where delivery of water can be made 
        to substantially all of the lands in said unit or block 
        to be irrigated; and if there be no development period 
        fixed, that prior to and including the year in which 
        the Secretary makes said announcement water shall be 
        delivered only on the toll charge basis hereinbefore 
        provided for development periods.
  (e) In lieu of entering into a repayment contract pursuant to 
the provisions of subsection (d) of this section to cover that 
part of the cost of the construction of works connected with 
water supply and allocated to irrigation, the Secretary, in his 
discretion, may enter into either short- or long-term contracts 
to furnish water for irrigation purposes. Each such contract 
shall be for such period, not to exceed forty years, and at 
such rates as in the Secretary's judgment will produce revenues 
at least sufficient to cover an appropriate share of the annual 
operation and maintenance cost and an appropriate share of such 
fixed charges as the Secretary deems proper, due consideration 
being given to that part of the cost of construction of works 
connected with water supply and allocated to irrigation; and 
shall require payment of said rates each year in advance of 
delivery of water for said year. In the event such contracts 
are made for furnishing water for irrigation purposes, the 
costs of any irrigation water distribution works constructed by 
the United States in connection with the new project, new 
division of a project, or supplemental works on a project, 
shall be covered by a repayment contract entered into pursuant 
to said subsection (d).
  (f) No less than sixty days before entering into or amending 
any repayment contract or any contract for the delivery of 
irrigation water (except any contract for the delivery of 
surplus or interim irrigation water whose duration is for one 
year or less) the Secretary shall--
          (1) publish notice of the proposed contract or 
        amendment in newspapers of general circulation in the 
        affected area and shall make reasonable efforts to 
        otherwise notify interested parties which may be 
        affected by such contract or amendment, together with 
        information indicating to whom comments or inquiries 
        concerning the proposed actions can be addressed; and
          (2) provide an opportunity for submission of written 
        data, views and arguments, and shall consider all 
        substantive comments so received.

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