H.R. 818: To direct the Secretary of the Interior to allow for prepayment of repayment contracts between the United States and the Uintah Water Conservancy District

H.R. 818

To direct the Secretary of the Interior to allow for prepayment of repayment contracts between the United States and the Uintah Water Conservancy District

Sponsor
Rep. Jim Matheson

Date
October 24, 2011 (112th Congress, 1st Session)

Staff Contact
Communications

Floor Situation

On Monday, October 24, 2011, the House is scheduled to consider H.R. 818 under a suspension of the rules requiring a two-thirds majority vote for approval.  H.R. 818 was introduced by Rep. Jim Matheson (D-UT) on February 18, 2011, and was referred to the House Committee on Natural Resources, which reported the bill by unanimous consent on July 20, 2011.

Bill Summary

H.R. 818 would authorize the Secretary of the Interior to allow for the prepayment of a contract between the U.S. and the Uintah Water Conservancy District.  The bill would allow the Uintah Water Conservancy District in Utah to prepay the present value of certain amounts the district owes to the U.S. Treasury for its share of the cost to build the Jensen Unit of the Central Utah Project.

Background

According to House Report 112-247, under current federal law, water districts which benefit from Bureau of Reclamation projects can enter into a capital repayment contract with the federal government to repay the U.S. Treasury for their respective costs associated with the federal project. Most local water districts are not allowed under federal law to prepay these contractual obligations unless specifically authorized by Congress and the President. Prepayments can bring added revenue to the U.S. Treasury in the short-term, although they can reduce overall federal revenue over the long-term since compounded interest payments would be reduced. From a local water utility perspective, these prepayment authorizations can reduce local financial obligations and, in some cases, reduce burdensome federal regulatory requirements (such as irrigation acreage limitations and reporting requirements set forth in the Reclamation Reform Act of 1982, Public Law 97-293).

The Uintah Water Conservancy District could use the authority in H.R. 818 to prepay its municipal and industrial water contract. The District entered into a repayment contract with the federal government in 1976 to repay all reimbursable costs associated with the Jensen Unit of the Central Utah Project.  According to CBO, The Uintah Water Conservancy District is currently paying the federal government about $227,000 a year on a balance of $3.9 billion in project construction costs that have been allocated to the district for repayment. However, if the district chose to prepay its debt to the government under the bill, it also would have to pay for additional construction costs—totaling $7.4 million—that have not yet been assigned to the district for repayment. Information from the district indicates that it would be unable to prepay that additional amount. Therefore, if the bill were enacted, CBO expects that the district would continue to make the annual payments it does under current law and the legislation would have no impact on the federal budget.

Cost

According to CBO, implementing H.R. 818 “would have no impact on the federal budget.”