[Federal Register Volume 59, Number 123 (Tuesday, June 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15509]


[Federal Register: June 28, 1994]


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DEPARTMENT OF THE INTERIOR

Bureau of Reclamation

43 CFR Part 426

[RIN Number 1006-AA33]


Acreage Limitation Rules and Regulations

AGENCY: Bureau of Reclamation, Interior.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Reclamation Reform Act of 1982 (RRA), as amended, requires 
landholders (landowners and lessees) to meet certain requirements in 
order to be eligible to receive irrigation water from Bureau of 
Reclamation (Reclamation) projects. The purposes of the proposed rule 
are to improve compliance with the form submittal requirements of the 
RRA and the Acreage Limitation Rules and Regulations (43 CFR Part 426), 
help ensure that irrigation water is delivered only to eligible 
landholders, and recoup administrative costs Reclamation incurs in 
conjunction with noncompliance with these requirements. The proposed 
rule revises the existing rules by adding a section that will impose 
fees on districts when statutory and regulatory requirements concerning 
the submittal of forms are not met.

DATES: Comments must be submitted on or before August 29, 1994.

ADDRESSES: Written comments must be submitted to J. William McDonald, 
Assistant Commissioner--Resources Management, Bureau of Reclamation, 
Attention: D-5640, P.O. Box 25007, Denver, CO 80225.

FOR FURTHER INFORMATION CONTACT: Gary Anderson, Chief, Reclamation Law 
Administration Branch, Bureau of Reclamation, Attention: D-5640, P.O. 
Box 25007, Denver, CO 80225, Telephone: (303) 236-1061, extension 221.

SUPPLEMENTARY INFORMATION: The RRA limits the amount of owned land on 
which a landholder can receive irrigation water and places a limit on 
the amount of leased land that can receive such water at a subsidized 
water rate. In order to ensure compliance with the ownership 
limitations and the limitations on subsidies, certain statutory and 
regulatory requirements must be met.
    One of these requirements applies to all landholders whose 
landholdings in districts subject to the acreage limitation provisions 
total more than 40 acres. These landholders must complete RRA 
certification or reporting forms prior to receipt of irrigation water. 
The forms must be completed annually and submitted to each district in 
which the landholder receives irrigation water. Landholders must 
disclose on the forms all the land they own and lease directly or 
indirectly in Reclamation projects that are subject to the acreage 
limitation provisions. The forms must be resubmitted whenever a 
landholding change occurs. If a landholding does not change, a 
verification statement to that effect must be submitted each year.
    While the RRA and 43 CFR Part 426 set limits on the receipt of 
irrigation water and establish requirements that must be met in order 
to receive such water, the current rules do not address situations in 
which water has been delivered to landholders who failed to meet all 
the requirements. These situations were not addressed because the RRA 
does not contemplate such deliveries.
    Districts, rather than Reclamation, generally control the 
deliveries of irrigation water to landholders. Pursuant to their 
contracts with the United States, the districts are legally obligated 
not to deliver irrigation water to landholders who do not meet the 
eligibility requirements in the RRA.
    With respect to the form requirements discussed previously, 43 CFR 
426.10(k) specifically states that failure by landholders to submit the 
required certification or reporting form(s) will result in loss of 
eligibility to receive irrigation water. However, during its water 
district reviews, Reclamation has found that in some instances, 
districts have delivered irrigation water to landholders who had failed 
to meet the form requirements and other requirements of the law and 
rules.
    In 1988, Reclamation adopted a compensation policy whereby full-
cost charges were assessed for irrigation water that had been delivered 
to ineligible landholders. This policy is based on the legal theory 
that when irrigation water is delivered to ineligible recipients, it is 
an unlawful conversion of the Government's property interest in the 
water, and the Government is therefore entitled to be compensated for 
the conversion. Since Reclamation cannot recover the water that was 
delivered to the ineligible recipients, it has been Reclamation's 
position that it is entitled to recover the value of its property 
interest in that water and that the full-cost water rate prescribed in 
the RRA is an appropriate measure of the water's value.
    When the new administration came into office in 1993, Reclamation 
decided to review certain agency policies, one of which was the full-
cost compensation policy for RRA form violations. The Commissioner of 
Reclamation asked the Department of the Interior's Office of the 
Solicitor whether Reclamation is permitted to impose charges other than 
full-cost compensation charges for such violations. In a July 23, 1993, 
memorandum, the Associate Solicitor, Division of Energy and Resources, 
advised the Commissioner that several laws ``* * * authorize 
Reclamation to promulgate regulations necessary to carry out its 
mission, including those which would assess fees. This means that 
Reclamation may, by regulation, impose administrative fees or other 
charges designed to recover the costs it incurs for processing 
improperly submitted forms or for collecting forms from those who have 
not submitted them.'' The Associate Solicitor further concluded that 
``* * * Reclamation has considerable discretion in determining how to 
calculate those costs, so long as the charges imposed bear a 
demonstrable relationship to the costs incurred by the agency and have 
the intended effect of improving compliance with the Act and achieving 
congressional objectives.''
    Based on the Associate Solicitor's conclusions, Reclamation decided 
to consider the imposition of assessments to recover its administrative 
costs. Under this approach, an assessment would be established based on 
the costs incurred by Reclamation for additional actions the agency 
must take to correct instances of noncompliance. An average cost per 
violation would be determined and applied uniformly throughout 
Reclamation projects. The assessments would provide an equitable method 
for addressing RRA violations and result in charges that are 
reasonable, while recovering the incremental costs Reclamation incurs. 
In addition, even though such assessments would be applied after a 
violation had taken place, they would provide an incentive for 
landholders and districts to comply in upcoming water years. Thereby, 
the assessments would help to ensure that ineligible landholders do not 
receive irrigation water.
    After reviewing the concept of assessments for administrative 
costs, Reclamation decided to revise the current rules to provide for 
such assessments. However, before initiating the rulemaking, 
Reclamation notified the public of its intent and asked for their 
comments. (See 58 FR 59427, Nov. 9, 1993.)

Summary of Comments

    During the comment period, 32 responses were received. Most 
responses were submitted by district personnel or attorneys 
representing districts or other water user organizations; some 
individual landholders also submitted comments. Approximately 50 
percent of the respondents approved of Reclamation's intent to 
establish the proposed assessments. The remaining 50 percent were 
either opposed to the concept or did not express a strong position on 
the matter.
    The most frequently expressed comment was that the assessments 
should not be based on the full-cost water rate as that term is defined 
in the RRA. Many respondents gave suggestions for establishing the 
proposed assessments; they are summarized in the following list.
    The respondents thought the assessments should be:

1. fair;
2. reasonable;
3. uniform throughout Reclamation projects;
4. related to
    (a) the severity of the violation,
    (b) the number of acres involved in the violation,
    (c) the costs incurred by the Government to enforce the RRA,
    (d) the purposes of the RRA,
    (e) the number of previous offenses by landholders and districts,
    (f) costs other than Reclamation's audit costs;
5. minimal because
    (a) the RRA is complex,
    (b) sometimes Reclamation is at least partially responsible for the 
offense;
6. limited to cases where
    (a) water is delivered to landholders that failed to submit RRA 
forms,
    (b) water is delivered to excess land, (c) water users are pumping 
more water than Reclamation law or the district contract allows;
7. applied
    (a) prospectively only,
    (b) only after landholders and districts have been given a grace 
period in which to correct the problem,
    (c) only if an error was intentional,
    (d) within a reasonable amount of time after the offense occurred;
8. subject to an appeals and/or hearing process;
9. assessed to the districts;
10. assessed to the involved landholders;
11. collected by Reclamation;
12. credited to districts' contract obligations.

    In addition to the above comments, some respondents questioned 
Reclamation's authority to impose assessments for administrative costs. 
A few respondents also questioned whether the assessments will have the 
intended effect of improving compliance with the requirements of the 
RRA. One respondent commented that Reclamation should not use the 
assessments to replace the current requirement that landholders must 
submit an RRA form as a condition for receipt of irrigation water. 
Another stated that RRA compliance levels would improve if Reclamation 
conducted water district reviews and district training sessions more 
frequently. Two respondents requested Reclamation to increase the 40-
acre threshold for exemption from the RRA form requirements, while 
another requested that the current class 1 equivalency provisions be 
revised.
    Reclamation received several suggestions for establishing the 
amount of the assessments. Two respondents thought the assessment 
should be $100 for instances where RRA forms contain minor errors. One 
suggested that in cases where form errors are more significant; for 
example, failure to disclose land held in excess of a non-full-cost 
entitlement, the full-cost rate plus a $2,000 fee should be charged. 
Another suggestion was that Reclamation should ask Congress to pass 
legislation authorizing the agency to charge twice the full-cost rate 
if irrigation water is delivered to excess land.
    All comments were considered during preparation of the proposed 
rule except for those relating to the forms exemption threshold, 
equivalency provisions, deliveries to excess land, water district 
reviews, and RRA training. These topics are outside the scope of the 
subject rulemaking.

Summary of Proposed Rule

    The proposed rule provides for the imposition of assessments for 
administrative costs incurred by Reclamation in conjunction with 
noncompliance with the form requirements. A district will be assessed 
for administrative costs when RRA forms are not submitted prior to 
receipt of irrigation water. The assessment will be applied on a yearly 
basis in each district for each direct and indirect landholder that 
failed to comply with the form requirements. A district will also be 
assessed for administrative costs when corrections to RRA forms are not 
provided within a 45-day grace period. The assessment will be applied 
on a yearly basis in each district for each direct and indirect 
landholder for which corrected forms are not provided within the grace 
period. These assessments for administrative costs will replace the 
full-cost charges that Reclamation currently assesses for form 
violations pursuant to its compensation policy. The administrative cost 
assessments will not be subject to the underpayment interest component 
as set forth in Sec. 426.23.
    The assessment for administrative costs is initially set at $260 
per form violation. The amount is based on a review of the costs 
Reclamation incurred in 1991, 1992, and 1993 performing activities to 
address RRA form violations. The assessment reflects the average direct 
and indirect costs incurred Reclamation-wide for: (1) communicating 
with district representatives or landholders to obtain missing or 
corrected forms, (2) assisting landholders in completing certification 
or reporting forms for the period of time they were not in compliance 
with the form requirements, (3) performing onsite visits to determine 
if irrigation water deliveries have been terminated to landholders that 
failed to submit the required forms, and (4) performing other 
activities necessary to address form violations. The assessment will be 
reviewed at least once every 5 years and, if needed, will be adjusted 
to reflect new cost data.
    As with other assessments, districts will be held responsible for 
payment of the assessments because of their contractual obligation with 
the United States. As required by 31 U.S.C. 3302, charges collected 
through the imposition of assessments for administrative costs will be 
credited to the general fund of the Treasury as miscellaneous receipts.
    Payment of the assessments set forth in the proposed rule does not 
exempt districts and landholders from the form requirements of the RRA 
or Acreage Limitation Rules and Regulations. Districts are not 
permitted to continue water deliveries to ineligible recipients simply 
because they are willing to pay the assessments. Reclamation will take 
all necessary actions to prevent the delivery of irrigation water to 
ineligible land.
    The Department of the Interior has determined that the proposed 
rule does not constitute a significant regulatory action under 
Executive Order 12866 because it will not: (1) have an annual effect on 
the economy of $100 million or more or adversely affect in a material 
way the economy, a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local or 
tribal governments or communities; (2) create a serious inconsistency 
or otherwise interfere with an action taken or planned by another 
agency; (3) materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raise novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in the executive order.

National Environmental Policy Act

    Neither an environmental assessment nor an environmental impact 
statement is required for this rulemaking because, pursuant to 40 CFR 
1508.4 and Departmental Manual part 516 DM 6, Appendix 9, Sec. 9.4.A.1, 
this action is categorically excluded from the provisions of the 
National Environmental Policy Act.

Paperwork Reduction Act

    The information collection requirements contained in this rule have 
been approved by the Office of Management and Budget as is required by 
44 U.S.C. 3501 et seq. and assigned clearance numbers 1006-0005 and 
1006-0006.

Small Entity Flexibility Analysis

    The proposed rule will not have a significant economic effect on a 
substantial number of small entities.

Civil Justice Reform

    The Department of the Interior has certified to the Office of 
Management and Budget that this proposed rule meets the applicable 
standards provided in sections 2(a) and 2(b)(2) of Executive Order 
12778.

Authorship

    This proposed rule was prepared by staff in the Reclamation Law 
Administration Branch, D-5640, Bureau of Reclamation, Denver, Colorado.

List of Subjects in 43 CFR Part 426

    Administrative practice and procedure, Irrigation, Reclamation, 
Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, it is proposed to amend 43 
CFR Part 426 as follows:

    Dated: May 16, 1994.
Elizabeth Ann Rieke,
Assistant Secretary--Water and Science.

PART 426--RULES AND REGULATIONS FOR PROJECTS GOVERNED BY FEDERAL 
RECLAMATION LAW

    1. The authority citation for Part 426 is revised to read as 
follows:

    Authority: 43 U.S.C. 371-383; 43 U.S.C. 390aa-390zz-1; 31 U.S.C. 
9701.

    2. Section 426.24 is redesignated as Sec. 426.25, and new section 
426.24 is added to read as follows:


Sec. 426.24  Assessments of administrative costs.

    (a) Forms submittal. A district will be assessed for the 
administrative costs described in paragraph (e) of this section when 
irrigation water has been delivered to landholders that did not submit 
certification or reporting forms prior to the receipt of irrigation 
water in accordance with Sec. 426.10(e). The assessment will be applied 
on a yearly basis in each district for each direct and indirect 
landholder that received irrigation water but failed to comply with 
Sec. 426.10(e).
    (b) Forms corrections. Where corrections are needed on 
certification or reporting forms, the requirements of Sec. 426.10(a) 
will be deemed to have been met so long as the district provides 
corrected forms to the Bureau of Reclamation within 45 days of the date 
of the Bureau's written request for corrections. A district will be 
assessed for the administrative costs described in paragraph (e) of 
this section when corrected forms are not provided within this 45-day 
time period. The assessment will be applied on a yearly basis in each 
district for each direct and indirect landholder for whom corrected 
forms are not provided within the applicable 45-day time period.
    (c) Parties responsible for paying assessments. Districts shall be 
responsible for payment of the assessments described in paragraphs (a) 
and (b) of this section.
    (d) Disposition of assessments. The administrative costs assessed 
and collected pursuant to paragraphs (a) and (b) of this section will 
be deposited to the general fund of the United States Treasury as 
miscellaneous receipts.
    (e) Assessment for administrative costs. The assessment for 
administrative costs shall initially be set at $260. This is based on 
an average of the direct and indirect costs the Bureau of Reclamation 
incurs performing activities to obtain certification or reporting forms 
from landholders that failed to submit such forms prior to receipt of 
irrigation water and form corrections that are not submitted by the 
designated due date. This initial $260 assessment for administrative 
costs will be reviewed at least once every 5 years and adjusted, if 
needed, to reflect new cost data based upon the Bureau's costs for 
communicating with district representatives and landholders to obtain 
missing or corrected forms; assisting landholders in completing 
certification or reporting forms for the period of time they were not 
in compliance with the form requirements; performing onsite visits to 
determine if irrigation water deliveries have been terminated to 
landholders that failed to submit the required forms; and performing 
other activities necessary to address form violations. Notice of the 
revised assessment for administrative costs will be published in the 
Federal Register in December of the year the data are reviewed.

[FR Doc. 94-15509 Filed 6-27-94; 8:45 am]
BILLING CODE 4310-94-P