The Central Utah Project's Jensen Unit turned out to be a multimillion-dollar mistake, according to new legislation being pushed by Utah congressmen.
The Utahns are asking Congress to write off the lion's share of the local costs Uintah Basin residents face for that CUP unit near Vernal.The unit's water, coming mostly from the relatively new Red Fleet Dam, was designed to help develop oil shale and provide water for a burgeoning population. But when the energy boom there went bust, so did the demand for the shale and Red Fleet's water, congressmen say.
That left Uintah Basin residents holding the tab for $1-million-plus payments each year to the federal government for the CUP unit and no way to raise the money through water sales.
Utah's congressmen are trying to come to residents' rescue with legislation to let them out of buying eight-ninths of the water for which they originally contracted and to cut the annual payments they faced from $1,092,096 a year for 50 years to $226,585 a year.
That's a good deal for residents, but it forces the federal government to eat a loss of tens of millions of dollars. Still, the U.S. Bureau of Reclamation (the unit's builder) supports the plan and negotiated the proposed contract allowing it, which Congress is now being asked to endorse.
"This way, the federal government would recoup some of its loss. Without it, it would just be sitting there with a project and no way to pay for any of it," said David Rasmussen, general manager of the Uintah Water Conservancy District, the other party in the contract with the Reclamation Bureau.
Rep. Howard Nielson, R-Utah, introduced the House version of the rescue bill on Wednesday. Sen. Jake Garn, R-Utah, introduced an identical Senate version quietly on Feb. 9, with no press release or mention of it to the media.
An aide admitted that Garn's office had hoped not to draw much attention to the matter and introduced the legislation only after Interior Department lawyers ruled it was necessary because the contract is "disadvantageous" to the United States. Several political reasons may be behind Garn's acting quietly.
For example, the Bureau of Reclamation had $225,000 in its budget this fiscal year and is proposing $122,000 for the next fiscal year for "minor construction work" on the Jensen Unit's Red Fleet Dam and Tyzack Aqueduct.
Also, more CUP bills are expected in coming weeks to authorize hundreds of millions of dollars more for CUP's Bonneville Unit, which delivers water to the Wasatch Front, and the CUP's Upalco Unit to serve the Ute Indian Tribe.
While the Jensen Unit legislation could complicate those other CUP matters, officials say it would provide help that is justified and needed.
For example, Garn said in a statement submitted with his bill that the federal government pushed Uintah Basin water officials into contracting for the Jensen Unit during the height of public "hysteria" over Arab oil pricing.
"So the water storage and delivery systems of the Jensen Unit . . . were constructed in response to . . . the congressional enactment of the Energy Security Act of 1980 in anticipation of a synthetic fuels production boom.
"After the facilities were constructed, the boom became a bust. Local residents left the area in droves. It became impossible for the local Uintah Water Conservancy District to repay the federal government," Garn said. Rasmussen gave an idea of just how impossible those payments were.
He said his district had contracted for 18,000 acre-feet of water, enough to supply the annual needs of 90,000 people. After the boom went bust, his district figured the most it could market was a mere 1,500 acre-feet.
The contract now calls for it to pay for 2,000 acre-fee, an amount Rasmussen said his district at present does not need.
"We didn't use any water from Red Fleet in 1987. Last year we pumped a little, but we could have done without it, and it was a drought year," Rasmussen said.
He said besides the lack of water market, his agency also had a property tax ceiling that would not allow it to collect anywhere near the amount needed for the contract. So it was in jeopardy of defaulting on the entire contract.
His district and the Reclamation Bureau negotiated for almost two years on a change to the contract, which was agreed on between them last September. It also calls for the Uintah district to pay for operation and maintenance of Red Fleet Dam, even though it will own only one-ninth of its water.
Rasmussen said his district will also have first option to buy more of the water later if the energy boom returns, if the proposed contract is approved. "So we haven't sold out our future," he said.
He admitted much of the water in the dam now has little use besides for recreation. "It goes downstream to California. By the time it gets to San Diego, I'm sure they find a use for it."
Garn also said in his statement with his bill that other areas have received similar consideration from Congress.
For example, last year Congress forgave Minot, N.D., a $1 million debt on a water-delivery system after Congress had canceled the project that was to have provided water for it.
"I would hope the Congress will act quickly to approve this legislation recognizing that without it, the federal government will receive no return on its investment and the taxpayers would lose their investment as well," Garn concluded.