[Federal Register Volume 59, Number 1 (Monday, January 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 93-32028]

[[Page Unknown]]

[Federal Register: January 3, 1994]



Bureau of Reclamation

43 CFR Part 403

RIN 1006-AA30


Revenues Management

AGENCY: Bureau of Reclamation, Interior.

ACTION: Advance notice of proposed rulemaking.


SUMMARY: The Bureau of Reclamation (Reclamation) is proposing to 
publish rules and guidelines detailing the authorized crediting of 
revenues derived from the incidental use of Reclamation water projects 
and project lands under the jurisdiction of Reclamation. Due to 
existing confusion in revenues crediting criteria, rules will be 
utilized to clearly define front-end, tail-end, and general credit and 
when each is appropriate. Rules are necessary to define statutory 
language which may seem ambiguous and which may have caused confusion 
in the past. The rules will also govern the treatment of the 
contractors who have received unauthorized credits in the past.

DATES: Reclamation invites the public to submit written comments on the 
proposed rulemaking action. Comments must be submitted on or before 
February 2, 1994.

ADDRESSES: Written comments on the proposed rules and guidelines should 
be addressed to J. William McDonald, Assistant Commissioner-Resources 
Management, Bureau of Reclamation, Denver Office, P.O. Box 25007, 
Denver, CO 80225-0007.

Ms. Jaralyn Beek, Head, Revenues, Section, Bureau of Reclamation, D-
5612, P.O. Box 25007, Denver, CO 80225-000 of telephone (303) 236-1061, 
extension 227.

SUPPLEMENTARY INFORMATION: The passage of the 1902 Reclamation Act, as 
amended and supplemented provided for the creation of a fund within the 
United States Treasury (Reclamation fund) to be used to finance water 
projects in the arid West. Subsequently, water projects were 
constructed under a variety of statutory authorities with the 
beneficiaries generally repaying those costs determined to be 
reimbursable through scheduled payments.
    Revenues are generated from the incidental use of Reclamation water 
projects and the lands under the jurisdiction of Reclamation. These 
uses are authorized by Reclamation law and the disposition of the 
revenues generated by the uses are mandated by law. These uses include, 
but are not limited to, grazing, the leasing of minerals such as oil 
and gas, commercial uses, cabin sites, storage of non-project water, 
sale of surplus water, etc. Generally, these revenues are credited in 
one of three ways. These are:
    (1) Revenues which may be distributed as a general credit to the 
Reclamation fund;
    (2) Revenues which may be distributed as a ``tail-end'' credit to 
the construction costs; and
    (3) Revenues which may be distributed as a ``front-end'' or direct 
credit to the annual obligations of the water users.
    The revenues which are distributed as a general credit to the 
Reclamation fund are not meant to be spent on specific functions or 
projects, but rather are accessible only as directed by the laws which 
govern the Reclamation fund.
    The second type of disbursement, a tail-end credit (also termed a 
credit to the project), involves application of the funds against the 
last payment due in the repayment schedule. The reimbursable portion of 
a water project's construction cost is amortized and repaid by the 
beneficiaries (districts). With this type of revenues crediting the net 
result is accelerated repayment of the project's construction cost, 
without relieving the project users of their requirement to pay some or 
all of their annual obligation.
    The third type of revenue crediting is termed a front-end or direct 
credit. This method allows the ``direct'' crediting of specific 
revenues on the annual construction repayment and operation and 
maintenance obligations of the water districts. Under the general 
legislative authority which provided for front-end crediting the water 
user could receive benefit from the direct crediting of revenues only 
from specified sources:
    (1) Power plants;
    (2) Leasing of project grazing and farm lands; and
    (3) The sale or use of town sites.
    The primary difference between the tail-end credit and a front-end 
credit is that the front-end or direct credit is used to satisfy a 
water user's current construction payment. Any revenues in excess of 
the annual construction payment are to be applied first against the 
annual operation and maintenance expenses of the district and then as 
the water users direct. This crediting assists the water user or 
district in meeting current obligations rather than accelerating the 
repayment of the construction obligation and applies to only a limited 
number of contracts written between 1924 and 1938.
    Exceptions to the general revenue disposition requirements are 
revenue crediting criteria directed by project specific legislation.
    The specific method used to disburse the revenues is dependent upon 
the particular statute which authorizes the activity and mandates the 
crediting of revenues, the activity generating the revenue, and the 
status of the lands involved (whether the lands are withdrawn public 
domain lands or lands purchased/acquired for the project).
    Inasmuch as Reclamation does not have the latitude to dispose of 
revenues differently than is required by law, Reclamation has recently 
completed the first stage of a review of general and project-specific 
legislation, repayment contracts and amendments, and current 
Reclamation practices as they pertain to collection and crediting of 
revenues. The intent of the initial review was to ensure that revenues 
crediting fully complies with statutory requirements and focused 
primarily on those revenues from which the water users receive direct 
benefit. Reclamation has determined that there have been instances 
where revenues may have been credited (direct credits) to the benefit 
of the water users (districts) rather than to reduce the total 
construction repayment obligation. This improper crediting is a result 
of incomplete or inaccurate guidelines within Reclamation and, in some 
instances, inappropriate contract provisions.
    Reclamation intends to propose rules that would clearly set forth 
when direct or front-end credits, tail-end credits, and credits to the 
Reclamation fund are authorized, and will define ambiguous statutory 
terms that have caused confusion in the past. In addition, the rules 
would propose to establish an appeal process for districts who are 
notified of improper past crediting. Reclamation also will propose to 
require districts to pay interest on unpaid balances once notified of 

    Dated: December 23, 1993.
Donald R. Glaser,
Deputy Commissioner.
[FR Doc. 93-32028 Filed 12-30-93; 8:45 am]