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115th Congress       }                              {        Report
                        HOUSE OF REPRESENTATIVES
 1st Session         }                              {         115-334

                          INCENTIVIZATION ACT


 September 27, 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

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3281]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 3281) to authorize the Secretary of the Interior 
to facilitate the transfer to non-Federal ownership of 
appropriate reclamation projects or facilities, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                          PURPOSE OF THE BILL

    The purpose of H.R. 3281 is to authorize the Secretary of 
the Interior to facilitate the transfer to non-Federal 
ownership of appropriate reclamation projects or facilities.


    H.R. 3281 seeks to reduce administrative paperwork, 
eliminate federal taxpayer liability and empower water users by 
streamlining the process governing the transfer of some Bureau 
of Reclamation (BOR) projects or facilities to non-federal 
    BOR is the nation's largest wholesale water supplier. 
According to the agency, BOR provides 1 out of 5 (or 140,000) 
Western farmers with irrigation water for 10 million farmland 
acres that produce 60 percent of the nation's vegetables and 
one quarter of its fresh fruit and nut crops. The federal 
agency also delivers 10 trillion gallons of water to more than 
31 million people annually and is the second largest domestic 
producer of hydropower. BOR's assets include 492 dams, 1,901 
buildings and over 8,000 miles of canals in the 17 western 
    BOR holds title to the individual water and power supply 
and delivery facilities it has constructed over the last 
century. The federal government provided the initial capital 
contribution to build the vast majority of these early 
projects; however, the water and power customers who benefitted 
from the facilities entered into long-term contracts with the 
federal government to repay their part of the initial taxpayer 
investment. Under the Reclamation Act of 1902 (Public Law 57-
161), BOR may transfer day-to-day operational and maintenance 
responsibilities to project beneficiaries; however, the title 
or ownership of any facility must remain in federal ownership 
until Congress enacts legislation specifically authorizing such 
a transfer. Since 1996, more than three dozen BOR projects have 
been transferred or authorized to be transferred to local 
    A title transfer can provide several benefits to water 
users. A transfer can reduce regulatory paperwork and staff 
time at both the federal and local levels, reduce the federal 
backlog on repairing and upgrading infrastructure and help 
improve the environment and public safety. Additionally, a 
title transfer can reduce federal liability since the local 
entity assumes a transferred facility's liability. At a June 8, 
2017, Water, Power and Oceans Subcommittee hearing, Mr. Dan 
Keppen, Executive Director for the Family Farm Alliance, stated 
in his written testimony, ``[Title transfers] can help reduce 
federal costs and liability, and allow for a better allocation 
of federal resources. Operational decisions are timelier and 
many times are more cost effective when made at the local 
level. Further, maintenance and rehabilitation of our aging 
federally owned facilities is more effectively financed and 
constructed by the local agencies currently responsible for 
these activities.''\1\
    Several factors influence whether a title transfer can 
occur. The local water district or beneficiary needs to assess 
whether the costs associated with the process are worth the 
benefits of taking ownership of the facility. According to 
BOR's ``Title Transfer Checklist,'' entities should consider 
transaction costs (i.e., costs to comply with the Endangered 
Species Act of 1973, National Environmental Policy Act of 1969, 
and National Historic Preservation Act of 1966), the future 
liability of the facility being transferred, the amount owed to 
the federal government and the potential impacts on third-
parties (such as power interests), among others.
    Conversely, the federal government assesses whether the 
transfer meets certain criteria including: the American 
taxpayers' financial interest must be protected; there must be 
compliance with all federal and State laws; the Secretary of 
the Interior's Native American trust responsibilities must be 
met; and the public aspects of the project must be protected. 
If the federal government and the beneficiary agree to a 
transfer, a Memorandum of Understanding or a Memorandum of 
Agreement must be signed to implement the transfer. In 
addition, Congress must codify the transfer in law, regardless 
of the size or scope of the transfer.
    At a time when many of BOR's aging facilities depend on the 
uncertain federal appropriations process, the transfer of a BOR 
facility to a local irrigation district could allow that 
district to upgrade or repair the facility by leveraging 
private financing through ownership. For example, the Provo 
River Water Users Association in Utah wanted to pipe an open 
canal to enhance public safety and reduce evaporation to 
conserve water for humans and wildlife species, but did not 
have the financial capabilities to accomplish it. Unlikely to 
receive funding from the federal government, the Association 
decided to pursue a title transfer to finance the project 
itself. Congress eventually enacted legislation to convey the 
facility, which allowed water users to use their ownership as 
collateral to acquire a loan to complete the project.
    Some view the transfer of BOR projects to local water users 
as a way to encourage new non-federal investment in water 
infrastructure, but many entities involved in such title 
transfers have been daunted by these complex and time-consuming 
administrative and Congressional processes. For example, at a 
2004 Subcommittee on Water and Power hearing, Mr. Tom Knutson, 
former General Manager of the Loup Basin Reclamation District 
testified that it took over eight years for a simple title 
transfer that he characterized as ``low hanging fruit'' in the 
Middle Loup Division in western Nebraska to become law. 
Although BOR has taken steps to streamline the process, many of 
the agency's water customers believe additional improvements 
are needed.
    H.R. 3281 underscores BOR's commitment to transfer existing 
federal infrastructure into local ownership by simplifying and 
expediting the title transfer process. Modernizing this process 
will afford water users with greater control over and more 
efficient management of their water and water-related 
facilities while also reducing liability for the American 

                      SECTION-BY-SECTION ANALYSIS

    Section 1 states the short title of the bill as the 
``Reclamation Title Transfer and Non-Federal Infrastructure 
Incentivization Act''.
    Section 2 defines key terms used throughout the Act.
    Section 3 authorizes the Secretary of the Interior to 
convey all right, title, and interest in any eligible facility 
to a qualifying entity if the following criteria are met: the 
Secretary notifies Congress in writing of the proposed 
conveyance, and the reason for the conveyance at least less 90 
days before making the conveyance, and Congress does not pass a 
joint resolution disapproving the conveyance before that date. 
In addition, there is a written agreement between the Secretary 
and the qualifying entity for the interests in water being 
conveyed (if included); and interests in eligible facilities 
shall be conveyed by a written agreement between the Secretary 
and the qualifying entity (developed in consultation with 
existing water and power customers). Entities that operate and 
maintain an eligible facility at the time that the Secretary 
attempts to facilitate a conveyance shall have the right of 
first refusal to receive the conveyance under this Act.
    Section 4 requires the Secretary to establish criteria to 
determine which facilities are eligible for title transfer 
under this Act. At a minimum, the criteria shall include: the 
qualifying entity agrees to take title; the proposed transfer 
will not have an ``unmitigated significant effect on the 
environment''; the qualifying entity intends to use the 
property for substantially the same purposes the property was 
being used prior to the transfer; the transfer is consistent 
with the Secretary's responsibility to protect land and water 
resources held in trust for federally recognized Indian Tribes; 
the transfer is consistent with the Secretary's responsibility 
to ensure compliance with international treaties and interstate 
compacts; and the qualifying entity agrees to pay any 
outstanding repayment obligation to the United States as 
consideration for the transfer.
    Section 5 states that no conveyance under this Act may 
adversely impact power rates or repayment obligations. This 
section also directs the Secretary to apply a categorical 
exclusion process under the National Environmental Policy Act 
of 1969 on eligible facilities under this Act.
    Section 6 establishes that once a conveyance takes place, 
the United States shall not be held liable for any damages, 
except for those caused by acts of negligence committed by the 
United States or its employees prior to any conveyance.
    Section 7 affirms that a conveyed property shall no longer 
be considered part of a federal reclamation project, and that 
transfers of an entire project shall not be eligible for any 
benefits other than those available to a non-federal 
reclamation project.

                            COMMITTEE ACTION

    H.R. 3281 was introduced on July 18, 2017, by Congressman 
Doug Lamborn (R-CO). The bill was referred to the Committee on 
Natural Resources. Previously, the Subcommittee on Water, Power 
and Oceans held a hearing on a discussion draft of the bill on 
June 8, 2017. On July 25, 2017, the Natural Resources Committee 
met to consider the bill. Congressman Jared Huffman offered and 
withdrew an amendment designated 087. No further amendments 
were offered, and the bill was ordered favorably reported to 
the House of Representatives by a roll call vote of 17 ayes to 
12 nays on July 26, 2017, as follows:


    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.


    1. Cost of Legislation and the Congressional Budget Act of 
1974. 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 enclosed cost estimate for 
the bill from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 29, 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. 3281, the 
Reclamation Title Transfer and Non-Federal Infrastructure 
Incentivization Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Aurora 
                                                Keith Hall,

H.R. 3281--Reclamation Title Transfer and Non-Federal Infrastructure 
        Incentivization Act

    H.R. 3281 would authorize the Bureau of Reclamation (BOR) 
to convey the title to federal water infrastructure facilities 
to nonfederal entities if the entity has a water service 
contract with BOR for the facility and if certain criteria are 
met. Based on an analysis of information from BOR, CBO 
estimates that implementing H.R. 3281 would cost about $1 
million over the 2017-2022 period for staff to establish 
criteria for conveying a title under the bill and to carry out 
the work for completing title transfers, including negotiating 
agreements and coordinating National Environmental Policy Act 
(NEPA) reviews and surveys. Such spending would be subject to 
the availability of appropriated funds.
    Enacting H.R. 3281 also would affect direct spending 
because nonfederal entities seeking title to a facility would 
pay BOR for a portion of the costs to carry out the title 
transfer. CBO estimates that the net effect on direct spending 
would be insignificant because BOR would spend those amounts to 
perform the work. Because enacting the bill would affect direct 
spending pay-as-you-go procedures apply. Enacting the bill 
would not affect revenues.
    Over the past two decades the title to 30 facilities were 
conveyed from BOR to nonfederal entities. In each of those 
cases, after BOR and the nonfederal entity negotiated the 
required agreements and completed the reviews and surveys, the 
Congress enacted legislation to convey each title to the 
nonfederal entity because under current law the title transfer 
cannot occur without an act of the Congress.
    H.R. 3281 would authorize BOR to transfer titles 
administratively in certain cases. BOR would notify the 
Congress of the proposed conveyance and the rationale for the 
conveyance. Unless the Congress passed a joint resolution 
disapproving the conveyance within 90 days of the notification, 
the transfer would proceed.
    CBO expects that removing the need for Congressional action 
to transfer the title of BOR facilities would increase the 
number of nonfederal entities seeking title transfers, Across 
the 17 western states where BOR operates there are hundreds of 
nonfederal entities and associated facilities that could be 
eligible for title transfer under the bill. Currently, about 15 
nonfederal entities are pursing title transfers and CBO expects 
that under the bill another 15 entities would seek title 
transfer in the year after enactment, as well as a few more 
each year thereafter.
    Based on an analysis of information from BOR, CBO estimates 
that BOR would need about 5 additional employees to implement 
the bill--1 for each of BOR's 5 regions--which would roughly 
double the number of employees working on title transfers. At 
an average annual cost of $90,000 per employee, those 
additional costs would total $2 million in the first 5 years 
after enactment. However, CBO estimates that because about half 
of those costs would be offset by upfront payments from 
participating nonfederal entities, implementing the legislation 
would cost the federal government about $1 million over the 
2017-2022 period.
    CBO estimates that enacting the bill would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 3281 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would benefit public entities, such as local water districts, 
by facilitating the conveyance of federal reclamation 
facilities. Any costs incurred by those entities related to 
acquiring or operating such facilities would result from 
voluntary commitments.
    The CBO staff contacts for this estimate are Aurora Swanson 
(for federal costs) and Jon Sperl (for intergovernmental 
mandates). The estimate was approved by Theresa Gullo, 
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 authorize the Secretary of the 
Interior to facilitate the transfer to non-Federal ownership of 
appropriate reclamation projects or facilities.

                           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.


    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 

                            DISSENTING VIEWS

    H.R. 3281 would authorize de facto privatization of federal 
infrastructure across the Western United States. Specifically, 
it permits the Secretary of Interior to transfer title (i.e. 
ownership) of many federally-owned Bureau of Reclamation water 
projects and facilities to non-federal entities without 
Congressional approval.
    The U.S. Bureau of Reclamation owns and operates much of 
the water-related infrastructure in the American West, 
including hundreds of dams, canals, and other associated 
infrastructure. Under existing law, transferring ownership of a 
Reclamation asset requires specific Congressional 
authorization. The bill removes this longstanding requirement 
to reduce Congressional oversight and irresponsibly incentivize 
the privatization of public infrastructure.
    H.R. 3281 also permits federal lands to be given away 
without compensation. Many federal water projects are built on 
federal lands. If enacted, H.R. 3281 would allow these federal 
lands to be given away to non-federal entities without 
requiring the new owner to compensate taxpayers.
    H.R. 3281 also fails to require consultation with all 
affected stakeholders before a federal asset is transferred. 
Many of the Bureau of Reclamation's water projects serve 
numerous stakeholders and often need to be operated in a manner 
that balances conflicting stakeholder interests. Transferring 
ownership to a single stakeholder without proper consultation 
would result in significant harm to the many other stakeholders 
impacted by the operation of federal water projects, including 
tribes, fishing groups, and environmental and recreation 
    H.R. 3281 is opposed by numerous conservation and 
environmental groups, including the Sierra Club, the Natural 
Resources Defense Council, the Center for Biological Diversity, 
Earthjustice, and Defenders of Wildlife.
    In sum, H.R. 3281 irresponsibly incentivizes the 
privatization of public resources, reduces Congressional 
oversight, limits public input in the federal decision-making 
process, and fails to protect the interests of numerous 
stakeholders including American taxpayers, tribes, fishing 
groups, and environmental and recreation interests. For these 
reasons, we oppose H.R. 3281 as written.

                                   Raul M. Grijalva,
                                           Ranking Member, Committee on 
                                               Natural Resources.
                                   A. Donald McEachin.
                                   Nanette Diaz Barragan.
                                   Grace F. Napolitano.
                                   Jared Huffman.
                                   Colleen Hanabusa.
                                   Darren Soto.