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Interior Department Acts to Expedite Some Federal Facility Title Transfers

June 27, 2019
By Duggan Flanakin

In an effort to boost water development and the maintenance of water projects on federal lands, the U.S. Interior Department has taken steps to make it easier to transfer water projects on federal land to users of the water.

Interior Secretary David Bernhardt took two actions to make it easier to transfer ownership of some federal facilities and water projects to those who use them.

The Department of Interior’s (DOI) move responds to directives of President Donald Trump and Congress to update its standards for determining which activities qualify for Categorical Exclusions and to streamline the Bureau of Reclamation’s (BuRec) title transfer process to allow more actions to go forward without specific authorizing legislation from Congress.

Incentivizing Water Development

BuRec has issued title transfer authorizations for 33 facilities and water development projects since the mid-1990s as a result of specific laws authorizing the transfers.

Trump directed the DOI to streamline title transfer activities in his fiscal year 2020 budget request, and Congress took up the challenge in March 2019 by passing S. 47, the John D. Dingell, Jr. Conservation, Management, and Recreation Act (Dingell Act) to encourage water project development by streamlining title transfers and issuing more categorical exclusions.

Taxpayer Benefits Cited

Categorical exclusions allow actions a federal agency, in consultation with the President’s Council on Environmental Quality, has determined do not individually or cumulatively have a significant effect on human health or the environment and, as a result, do not require an environmental assessment or formal environmental impact statement to be undertaken. Title transfers normally require environmental impact assessments, an often lengthy and expensive process that Congress expressed concern was discouraging the development of valuable water projects on federal lands.

“This limited conveyance of federal Reclamation projects or facilities, such as diversion dams, canals, laterals, and other water-related facilities, benefit [sic] local water beneficiaries who will have greater autonomy and flexibility in managing these facilities,” DOI’s May 22 press release states. “Local ownership can also provide financial collateral for capital improvements that could be made at these transferred facilities. Ultimately, the American taxpayer benefits from the eligible transfers covered under these actions since divestiture decreases federal liability.”

“This new title transfer process embodies the President’s goals of streamlining bureaucratic processes and making our government more efficient and accountable,” Bernhardt said in DOI’s press release. “Title transfers are a win for local communities and a win for the American taxpayer.

“The Department looks forward to continuing our work with local water users to reduce title transfer costs [and] stimulate infrastructure investment through local ownership with the bottom line goal of making this new streamlined approach a major success,” Bernhardt said.

‘Make the Desert Bloom’

The DOI’s expansion of projects qualifying for categorical exclusions comes in response to Title VIII of the Dingell Act, which allows BuRec to transfer title of entire classes of facilities that no longer require case-by-case authorizing legislation at the end of the process.

DOI’s actions will help the agency meet its original purpose, says economist P. J. Hill, Ph.D., a senior fellow at the Property and Environment Research Center.

“Congress created the Bureau of Reclamation in 1902 as a national effort to make the desert bloom, and irrigation from reclamation projects remains an important part of agriculture in the western United States,” Hill said. “Today, Reclamation manages 492 dams and 338 reservoirs in 17 western states that together irrigate more than 11 million acres.

“The original intent was, once the capital costs of an irrigation project were repaid to the federal government, ownership was to revert to the water users,” said Hill. “Each transfer, however, requires an act of Congress, and the process of securing such approvals has proven long and cumbersome.”

Allowing Better Resource Use

Hill says making the title transfer process more efficient should improve the outcomes for the government and water users alike.

“Canals, dams, and irrigation and pumping facilities require ongoing upkeep the government hasn’t kept up with, so BuRec has a large maintenance backlog,” Hill said. “By conveying title to, for instance, local irrigation groups, they could sell bonds to finance improvements, but currently lack of ownership prevents them from using irrigation facilities as collateral.”

DOI’s reforms could also encourage valuable water transfers, says Hill.

“Finally, all parties might benefit from locally controlled water reallocation,” Hill said. “For example, most federal irrigation water generates $50 to $500 an acre-foot of value in agricultural benefits, but the same water would be worth $5,000 to $10,000 an acre-foot for municipal uses.

“If farmers had a clear ownership claim, they could sell water to another party who values it more, a transaction that would benefit both buyer and seller,” Hill said.

Duggan Flanakin (dflanakin@gmail.com) writes from Austin, Texas.