[Federal Register Volume 60, Number 36 (Thursday, February 23, 1995)]
[Rules and Regulations]
[Pages 10030-10036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4416]



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DEPARTMENT OF THE INTERIOR
Bureau of Reclamation

43 CFR Part 426

[RIN 1006-AA33]


Administrative Fee Provision of the Acreage Limitation Rules and 
Regulations

AGENCY: Bureau of Reclamation, Interior.

ACTION: Final rule.

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SUMMARY: The purposes of this rule are to improve compliance with the 
form submission requirements of the Reclamation Reform Act of 1982 
(RRA) and the Acreage Limitation Rules and Regulations in order to 
ensure that irrigation water is delivered only to eligible landholders 
(landowners and lessees), and to recoup administrative costs that the 
Bureau of Reclamation (Reclamation) incurs due to noncompliance with 
the RRA reporting requirements. The rule adds a section that imposes 
fees on districts when they do not meet statutory and regulatory 
requirements for submitting RRA forms.

EFFECTIVE DATE: March 27, 1995.

[[Page 10031]] FOR FURTHER INFORMATION CONTACT: Alonzo Knapp, Manager, 
Reclamation Law, Contracts, and Repayment Office, Bureau of 
Reclamation, Attention: D-5200, PO Box 25007, Denver, CO 80225, 
Telephone: (303) 236-1061, extension 224.

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 before receiving 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 form to that effect must be submitted each year.
    While the RRA and the Acreage Limitation Rules and Regulations (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 and 
thus, were ineligible to receive the water. 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. Under their contracts 
with the United States, districts are legally obligated not to deliver 
irrigation water to landholders who do not meet the eligibility 
requirements of the RRA.
    With respect to the form requirements discussed previously, 
Sec. 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 of 
conversion in 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.
    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 amend the Acreage Limitation Rules and Regulations by adding a 
provision to impose assessments to recover its administrative costs 
when landholders do not comply with the RRA form requirements. 
Reclamation notified the public of its intent in the Federal Register 
(see 58 FR 59427) Nov. 9, 1993, and published the proposed rule at 59 
FR 33251, June 28, 1994.

Summary of Amendment to the Rules

    The amendment to the Acreage Limitation Rules and Regulations 
provides that Reclamation will assess a district for administrative 
costs when RRA forms are not submitted before receipt of irrigation 
water. The assessment will be applied on a yearly basis in each 
district for each 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 60-day grace 
period. The assessment will be applied on a yearly basis for each 
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 has assessed in the past for form 
violations under its compensation policy. The administrative cost 
assessments will not be subject to the underpayment interest component 
set forth in Sec. 426.23.
    The assessment for administrative costs shall be set periodically 
on the basis of the average costs associated with 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. 
Initially the amount of the assessment will be $260. 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 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. 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. [[Page 10032]] 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.

Comments About the Proposed Rule

    During the public comment period from June 28, 1994, through August 
29, 1994, Reclamation received 48 responses on the proposed rule. The 
responses were submitted by or on behalf of 40 districts, 7 water user 
associations, 5 landholders, one Federal agency, and one U. S. 
Congressman.
    Approximately 80 percent of the respondents either approved of the 
proposed rule entirely or in part. Many of these respondents stated 
that the administrative cost assessment will provide a reasonable and 
equitable means for addressing RRA form violations and will be a vast 
improvement over Reclamation's past policy of assessing compensation 
charges for nonsubmission of RRA forms.
    Approximately 20 percent of the respondents were opposed to the 
rule, mainly because they think the administrative cost assessments are 
unnecessary or excessive. Several respondents objected to the rule 
because they do not think Reclamation has the legal authority to impose 
such assessments.

General Comments

    Following are the general comments received about the proposed rule 
and our response to each:
    Comment 1: Two respondents commented that the rule should make it 
clear that the administrative cost assessment will be the sole economic 
ramification for RRA form violations.
    Response: The respondent's comment has not been accommodated 
because we think such language would be superfluous. First, the main 
purpose of the rule is to set forth the charges that will be assessed 
in cases of RRA form violations, which it does. In addition, it was 
stated previously in this preamble that the administrative cost 
assessment will replace the compensation charges Reclamation previously 
assessed for form violations. This statement clearly sets forth 
Reclamation's intent with regard to assessments for form violations.
    Comment 2: Four respondents commented that the rule should clearly 
state that the administrative cost assessments will be applied 
prospectively only.
    Response: The rule will be applied prospectively. The rule will be 
effective March 27, 1995. This date is printed at the beginning of this 
preamble, under EFFECTIVE DATE. We do not think it is necessary to 
repeat the effective date in the rule itself.
    Comment 3: Nineteen respondents commented that the administrative 
cost assessments should be applied retrospectively to past RRA form 
violations instead of the compensation rate.
    Response: As stated in the response to the preceding comment, the 
rule will be applied prospectively. However, Reclamation is currently 
considering a plan whereby issued and pending compensation bills for 
RRA form violations would be reviewed using the dollar amount in 
Sec. 426.24(e) as the basis for possible action.
    Comment 4: One respondent commented that Reclamation needs to 
define ``$260 per form violation'' and asked how many RRA forms are 
required of a farmer in a single year.
    Response: We assume the phrase the respondent is referring to is 
from a statement in the preamble of the proposed rule. The complete 
sentence reads as follows: ``The assessment for administrative costs is 
initially set at $260 per form violation.'' The sentence in question is 
a general statement, the main purpose of which was to make the reader 
aware of the amount of the administrative cost assessment; i.e., $260. 
Sections 426.24(a) and (b) describe how the assessment will be applied 
to form nonsubmissions and form errors.
    Regarding the respondent's question, a landholder generally needs 
to submit just one RRA form annually; however, in some cases, 
additional forms may be required. Regardless of the number of forms 
required, the $260 assessment for forms nonsubmission will be based on 
a landholder's entire RRA form effort for the water year in question, 
for each district in which land is held. For example, if Landholder A 
held land in District B and received irrigation water in 1995 despite 
the fact that he/she submitted neither of two RRA forms required for 
that water year, the assessment would be $260, not $520.
    Comment 5: One respondent commented that the proposed rule did not 
adequately comply with the Regulatory Flexibility Act because it did 
not explain why the rule would not have a significant effect on a 
substantial number of small entities.
    Response: The explanatory language referred to by the respondent 
has been added to the preamble of this final rule. By doing so, 
Reclamation believes it is in full compliance with the requirements of 
the Regulatory Flexibility Act.
    Comment 6: Five respondents questioned Reclamation's authority to 
impose administrative cost assessments. Several of the respondents 
commented that the assessments are actually penalties, and since the 
RRA does not include a penalty provision, the assessments cannot be 
charged.
    Response: Reclamation is authorized to promulgate regulations and 
to collect all data necessary to carry out its mission. 43 U.S.C. 
Sec. 373; 43 U.S.C. 390 ww(c); 31 U.S.C. Sec. 9701.
    Reclamation determines eligibility to receive water, in large part, 
based on the information provided on RRA certification and reporting 
forms. Section 426.10(k) of the regulations requires that failure by 
landholders to submit the required certification or reporting form(s) 
will result in loss of eligibility to receive water.
    In issuing the administrative fee rule, Reclamation has properly 
exercised its authority to promulgate regulations for ensuring the 
delivery of irrigation water only to eligible landholders. The fee is 
intended to improve compliance with RRA certification requirements and 
ensure that irrigation water is delivered only to those landholders 
eligible under the RRA and to recoup certain administrative costs 
Reclamation incurs due to noncompliance with RRA reporting 
requirements.
    Reclamation, as a Federal agency, also may impose remedial 
measures. Courts have recognized an agency's authority to impose 
measures if they reasonably relate to the purpose of the enabling 
statute and further congressional objectives. Gold Kist, Inc. v. 
Department, 741 F.2d 344, 348 (11th Cir. 1984); West v. Bergland, 611 
F.2d 710, 725 (8th Cir. 1980); United States v. Frame, 885 F.2d 1119 
(3d Cir. 1989).
    The $260 charge provided for in this rule is an administrative fee 
designed to improve compliance with the acreage limitation requirements 
and to recover Reclamation's costs in helping landholders to meet the 
eligibility requirements of the Act. As such, the fee is remedial in 
nature rather than punitive.
    In addition, Reclamation possesses authority to ``* * * prescribe 
regulations establishing the charge for a service or thing of value 
provided by the agency.'' 31 U.S.C. Sec. 9701. As discussed above, 
under Reclamation law, any landholder who received irrigation water 
prior to submitting the requisite certification forms failed to meet 
the criteria which Congress established for eligibility. When 
Reclamation becomes [[Page 10033]] aware of the violation and 
undertakes a variety of additional activities to obtain the forms and 
the necessary information, Reclamation is helping that landholder 
establish eligibility for receiving the ``service or thing of value''--
irrigation water. Certainly, these additional Reclamation activities 
are valuable services the agency provides districts and landholders who 
would otherwise not be in compliance with applicable Federal laws, 
regulations and contracts.
    Finally, it should be noted that Reclamation's authority to 
promulgate these regulations was not diminished by the court's decision 
in Orange Cove Irrigation District v. United States, 28 Fed. Cl. 790 
(1993). That case did not involve the issue of Reclamation's authority 
to assess administrative fees or to issue rules. The plaintiff in that 
case, Orange Cove Irrigation District (OCID), brought suit against the 
United States to recover money it paid to Reclamation at the time OCID 
renewed its water service contract in 1988. Reclamation had assessed 
the district full-cost charges for water delivered in 1987 to certain 
district landholders before they submitted RRA certification forms. On 
August 12, 1993, the court rendered its decision in favor of OCID. The 
case was resolved on the narrow issue of breach of contract and should 
only be read in light of facts specific to that controversy.
    Although not necessary to its holding, the Court also determined 
that the assessment of full cost constituted an unauthorized penalty 
under the facts of this case and that the United States had not 
violated any notice and rulemaking requirements of the Administrative 
Procedure Act.
    Comment 7: Twenty-one respondents commented that the rule should 
include a provision to increase the 40-acre exemption threshold for RRA 
form requirements. Ten of the respondents suggested the threshold be 
increased to 320 acres; six of them suggested a 160-acre threshold. The 
remainder were not specific as to what the revised threshold should be. 
Many of the respondents stated that an increased threshold would help 
to decrease the cost and burden placed on districts and landholders and 
yet provide adequate means for proper enforcement of the RRA. Several 
respondents also stated that Reclamation ensured water users in the 
past that the 40-acre threshold would be increased. One respondent 
commented that the 40-acre threshold should not be reduced.
    Response: As stated in the preamble to the proposed rule, the 40-
acre threshold issue is outside the scope of this rulemaking. This 
rulemaking action was limited to administrative cost assessments in an 
effort to expedite the process. Reclamation is currently engaged in a 
rulemaking action in which we will review the Acreage Limitation Rules 
and Regulations in their entirety. The exemption threshold will be 
addressed in that rulemaking. The proposed rule for that rulemaking 
action is scheduled to be published in February 1995.
    Comment 8: One respondent asked why the Government tells 
landholders the amount of land they may farm in order to make a living.
    Response: The RRA does not limit the amount of land landholders may 
farm. It does, however, limit the amount of owned land on which any one 
landholder can receive irrigation water from Reclamation projects and 
the amount of leased land that can receive such water at a rate that is 
less than the full-cost rate. The reason for this is to ensure that the 
benefits from the Reclamation program are widely distributed rather 
than concentrated in the hands of a few landholders.

Specific Comments

    The following comments refer to specific provisions within the 
proposed rule and are followed by Reclamation's response to each.

Section 426.24(a)--Forms Submittal

    Comment 1: Eleven respondents commented that the rule needs to 
define the terms ``direct landholder'' and ``indirect landholder,'' as 
used in Secs. 426.24(a) and (b). Several of the respondents stated that 
the words ``direct'' and ``indirect'' should be deleted because the 
term ``landholder'' is sufficient by itself.
    Response: The terms ``direct landholder'' and ``indirect 
landholder'' were included in the proposed rule so readers would be 
aware that in applying the administrative cost assessment to legal 
entities, Reclamation will treat compliance by an entity independently 
from compliance by its part owners or beneficiaries. For example, if 
three shareholders in a corporation submit their RRA forms, but the 
entity and the remaining two shareholders do not, the administrative 
cost assessment would be applied to the entity and each of the two 
shareholders that were not in compliance, for a total of $780. 
Reclamation has decided to clarify Secs. 426.24(a) and (b) by deleting 
the words ``direct'' and ``indirect'' and adding a sentence to address 
application of the administrative cost assessment when legal entities 
are involved as described above.
    Comment 2: One respondent commented that if an entity completes the 
required RRA form, but one or more of the part owners does not, this 
should be treated as a form correction and not failure to file a form.
    Response: Part owners of legal entities are required to file forms 
separately from those of the entities in which they have an interest. 
The reason for this is that the acreage limitation entitlements and 
other requirements of Reclamation law apply to part owners in the same 
manner as they apply to any other landholder. Since the part owners may 
own or lease land in addition to the land that is attributable to them 
through interest in the entity, it is not sufficient for the entity's 
form to be submitted in order to determine if all acreage limitation 
entitlements have been met. Therefore, if a part owner does not submit 
the required RRA forms, this is not viewed as a correctable error on 
the part of the entity, but rather as nonsubmission of forms by the 
part owner. Thus, in the case presented by the respondent, the $260 
administrative cost assessment would be applied for each part owner 
that received irrigation water without having submitted the required 
forms. However, an additional assessment would not be applied as a 
result of the entity's actions, because it was in compliance with the 
RRA form requirements.
    Comment 3: One respondent requested that the following statement in 
the preamble to the June 28, 1994, proposed rule be clarified: ``A 
district will be assessed for administrative costs when RRA forms are 
not submitted prior to receipt of irrigation water.'' The respondent 
questioned whether this statement referred to the receipt of irrigation 
water to landowners or to the district.
    Response: The statement refers to the receipt of irrigation water 
by landholders subject to the RRA form requirements. We believe the 
language in Sec. 426.24(a) is clear on this point; therefore, the rule 
was not revised to accommodate the comment.

Section 426.24(b)--Forms Corrections

    Comment 1: Four respondents commented about the 45-day grace period 
provided for form corrections. One respondent thought landholders/
districts should be given a longer period of time in which to correct 
RRA forms before imposition of the $260 assessment. Three of the 
landholders thought the 45-day grace period was fair.
    Response: This section has been revised to increase the length of 
the grace period from 45 days to 60 days. [[Page 10034]] The grace 
period was lengthened to account for any additional time districts and 
landholders may need for mailing the forms in question. This section 
was also revised to clarify that the 60-day grace period will be based 
on calendar days rather than working days.
    Comment 2: Three respondents commented that the $260 assessment for 
administrative costs is excessive for cases where RRA forms are not 
corrected.
    Response: Reclamation believes the $260 assessment is reasonable to 
cover the additional costs it incurs to obtain corrections on RRA 
forms. In addition, any financial hardships can be avoided because the 
assessment will not be applied if the corrected forms are submitted 
within the 60-day grace period.
    Comment 3: One respondent understood the provision to mean that 
$260 would be assessed for every error Reclamation identified on an RRA 
form.
    Response: The assessment will be applied on a yearly basis for each 
landholder for which corrected forms are not submitted within the grace 
period. Therefore, if Landholder A did not submit timely corrections 
for four errors on his 1995 forms, the assessment would be $260, not 
$1,040. The application of the $260 assessment for form corrections is 
explained in Sec. 426.24(b); therefore, no revisions were made to 
accommodate this comment.
    Comment 4: Three respondents commented that mistakes occur on RRA 
forms because the forms are very complicated and are revised annually. 
Therefore, they were opposed to assessments for form errors.
    Response: The assessment for form corrections will not be applied 
immediately when Reclamation identifies errors on landholder forms. 
Landholders/districts have 60 days in which to submit corrected forms 
before the $260 assessment will be charged. To the extent possible, 
Reclamation is also willing to provide assistance if help is needed in 
completing RRA forms. Because of the preceding, we find the rule to be 
reasonable, even if the forms are perceived by some to be difficult to 
complete.
    Comment 5: Six respondents commented that the $260 assessment for 
RRA form corrections should not be charged for inadvertent errors. Four 
of the respondents thought the assessment was appropriate only in cases 
involving fraud.
    Response: Reclamation realizes that inadvertent errors will 
sometimes be made on RRA forms. On the other hand, these errors cannot 
be overlooked because complete and accurate information is needed in 
order to determine if a landholder is within applicable entitlements 
and meets other requirements of the RRA. Section 426.24(b) resolves 
both the potential for inadvertent errors and the need for accurate 
information by providing landholders a 60-day grace period in which to 
submit corrected forms before imposition of the $260 assessment. This 
assessment is not appropriate in cases involving fraud because the 
consequences for fraudulent actions are set forth in 18 U.S.C. 1001. 
These consequences, as related to the RRA forms, are discussed in 
Sec. 426.10(j).
    Comment 6: Two respondents did not think the assessment would help 
reduce the number of RRA form problems. One of the respondents thought 
the assessment would only cause antagonism. The other respondent stated 
that the fee would be too high in cases where the errors were 
inadvertent and too low in cases of fraud.
    Response: Reclamation believes the assessment will provide an 
equitable method for addressing errors on RRA forms while recovering 
the incremental costs it incurs to address such problems. We also think 
the assessment is reasonable, and in most cases, will provide an 
incentive for landholders and districts to complete their forms 
properly in future water years. The applicability of the administrative 
cost assessment to fraudulent actions is discussed in the response to 
the preceding comment.
    Comment 7: Three respondents maintained that the assessment for RRA 
form corrections should not be a flat fee, but should be based on the 
severity of the error.
    Response: All the information landholders are required to disclose 
on the forms is needed for Reclamation to have adequate information to 
determine if landholders are in compliance with the acreage limitations 
and enforce other requirements of the RRA. Therefore, all omissions and 
errors identified by Reclamation are considered to be of equal 
severity. It must also be remembered that even in those cases where 
errors are perceived to be insignificant, the $260 assessment will not 
be charged if corrections are made within the grace period.
    Comment 8: One respondent asked if the assessment for 
administrative costs will be applied to RRA form errors as well as to 
the nonsubmission of such forms.
    Response: Section 426.24(a) provides for the imposition of the $260 
administrative cost assessment in cases of form nonsubmission. Section 
426.24(b) provides for the assessment in cases of form errors. However, 
in the case of errors, the assessment will not be charged if corrected 
forms are submitted within the grace period. The assessment in 
Sec. 426.24(a) will be applied independently from the assessment in 
Sec. 426.24(b). Sections 426.24(a) and (b) were revised to clarify this 
point.
    Comment 9: One respondent commented that the assessment for form 
corrections should be applied to landholders for whom corrected forms 
are not provided within the grace period only if irrigation water has 
been received by the landholder.
    Response: Reclamation agrees with this comment and Sec. 426.24(b) 
has been revised accordingly. However, Reclamation will proceed to 
prepare the bill for the administrative cost assessment after 
expiration of the grace period. If the landholder did not in fact 
receive irrigation water during the year in question, the district will 
need to provide evidence to this effect before the assessment will be 
retracted.

Section 426.24(c)--Parties Responsible for Paying Assessments

    Comment 1: Twenty respondents disagreed with this provision. For 
legal reasons and from the standpoint of equity, they think Reclamation 
should collect the payment of administrative cost assessments from 
landholders rather than districts.
    Response: This comment has not been accommodated. Reclamation 
contracts almost exclusively with districts rather than individual 
water users. In general, districts agree in their contracts that the 
delivery of irrigation water is subject to Reclamation law as amended 
and supplemented. Based on the preceding, Reclamation will hold 
districts ultimately responsible for payment of the administrative cost 
assessments. However, Sec. 426.24(c) does not preclude districts from 
collecting the assessments from the involved landholders.

Section 426.24(e)--Assessment for Administrative Costs

    Comment 1: One respondent thought that it was unfair to impose the 
same fee on all districts in every instance of noncompliance.
    Response: The type of violations for which the assessments will be 
charged are the same in all districts. Therefore, we believe it is fair 
to establish Reclamation's average costs and impose the same assessment 
westwide. In fact, landholders and districts have frequently requested 
that such a uniform fee be established.
    Comment 2: One respondent suggested that the bill for each 
[[Page 10035]] landholder be based on an hourly rate that is consistent 
Reclamationwide.
    Response: This comment has not been accommodated. Reclamation 
analyzed the costs it incurred in the past to address RRA form 
violations and has determined it is fair and reasonable to charge an 
average assessment that is uniform in all districts.
    Comment 3: Two respondents commented that the $260 assessment does 
not accurately reflect Reclamation's costs to bring landholders into 
compliance because Reclamation only identifies the violations; the 
district performs all the other work.
    Response: Reclamation acknowledges that districts frequently take 
actions to bring landholders into compliance. However, in most cases, 
Reclamation also performs additional activities to address 
noncompliance problems. Examples of such activities were listed 
previously in this preamble. Districts may not be aware of these 
activities because they are not always conducted at the site of the 
district office.
    Comment 4: One respondent did not think it was fair that 
Reclamation can adjust the administrative cost assessment every 5 years 
without input from the districts.
    Response: The basic methodology for determining the assessment was 
set forth in the proposed rule, which was open for public comment. The 
methodology was explained again previously in this preamble. Since 
adjustments will generally only be made to reflect new cost data and a 
notice of the revised assessment will be published in the Federal 
Register, we do not think another comment period is necessary before 
the adjustments are made.
    Comment 5: One respondent questioned whether the costs will 
continually increase until they are equal to the compensation rate.
    Response: Reclamation's goal is to establish fair and reasonable 
charges to recover the costs it incurs to address RRA form violations. 
The process will be reexamined should the assessments ever reach a 
point where this goal can no longer be achieved.
    Comment 6: One respondent commented that the administrative cost 
assessment should not be based on 1991, 1992, and 1993 costs because 
Reclamation keeps changing the RRA forms, which is confusing to 
landholders.
    Response: The changes that were made to the RRA forms during 1991, 
1992, and 1993 were relatively minor. Reclamation finds no evidence to 
support a conclusion that the noncompliance level increased because of 
form revisions.
    Comment 7: One respondent commented that the rule is too vague with 
regard to the basis for the administrative cost assessment.
    Response: Reclamation agrees that the rule does not provide a 
detailed description of the basis for the administrative cost 
assessment. However, it would be inappropriate to include the complete 
cost analysis in either the rule or the preamble. In the final rule, 
the description has been deleted from Sec. 426.24(e). However, it has 
been retained in the preamble so readers will be aware of the general 
basis for the $260 assessment.
    Comment 8: One respondent wanted clarification as to whether the 
administrative cost assessment is a combination of a penalty and costs 
incurred by Reclamation.
    Response: The assessment is based strictly on Reclamation's costs 
and is remedial in nature. It does not include a penalty factor.
    Comment 9: One respondent commented that overhead costs should not 
be included in the administrative cost assessment.
    Response: Reclamation thinks it is reasonable to recover all 
additional costs incurred to address RRA form violations. Overhead 
costs are part of these costs; therefore, they have been included in 
the assessment.
    Comment 10: One respondent commented that the administrative cost 
assessment should not include the cost of Reclamation's audits, because 
that is the Government's job.
    Response: The assessment does not include costs for reviewing a 
district's compliance with the RRA or audits of individuals. It 
includes only those additional costs Reclamation incurs to address RRA 
form violations after they have been found.
    Comment 11: One respondent commented that some districts are not 
always able to terminate deliveries of irrigation water to just those 
landholders that have not submitted the required RRA forms. The reason 
for this is that several landholders, some of whom may be in 
compliance, are located on the same ditch with the same delivery point.
    Response: Despite the circumstances described by the respondent, 
districts are not permitted to deliver irrigation water to landholders 
that are not in compliance with the RRA form requirements. In the case 
described, districts may need to take extra measures to encourage all 
landholders located on the same ditch to submit the required forms. To 
the extent possible, Reclamation will work with districts to help 
resolve such situations.
    Comment 12: Two respondents stated that Reclamation is not 
permitted to terminate water deliveries in cases where landholders fail 
to submit the required forms. The respondents maintain that landholders 
must first be provided with a notice or hearing before such deliveries 
can be terminated.
    Response: These comments were not accommodated. Reclamation 
believes it is permitted to terminate water deliveries in such cases 
because: (1) Pursuant to the requirements in Secs. 206, 224(c), and 228 
of the RRA and Sec. 426.10(e) of the Acreage Limitation Rules and 
Regulations, landholders are required to submit RRA forms as a 
condition for receipt of irrigation water. (2) The consequence for 
noncompliance with this requirement has been clearly set forth in 
Sec. 426.10(k) since the Acreage Limitation Rules and Regulations were 
first promulgated in 1983. That is, failure to submit the required 
forms results in loss of eligibility to receive irrigation water by the 
landholder.
    As stated previously, Reclamation is currently engaged in a 
rulemaking action in which we will review the Acreage Limitation Rules 
and Regulations in their entirety. As part of that rulemaking action, 
we will consider the comment regarding notices or hearings prior to 
termination of water deliveries.

Executive Order 12866

    This rule does not constitute a significant regulatory action under 
Executive Order 12866, and therefore does not require review by the 
Office of Management and Budget.

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

    Reclamation identified approximately 500 landholders with RRA form 
violations during the 1990, 1991, and [[Page 10036]] 1992 water years. 
This represents 1.1 percent of the 45,000 landholders subject to the 
RRA form requirements and 0.2 percent of the 230,000 landholders in 
districts subject to the RRA. The violations were found in 60 different 
districts, which is approximately 20 percent of the districts subject 
to the ownership and full-cost pricing provisions of the RRA and about 
10 percent of the total districts that have entered contracts with the 
United States for receipt of irrigation water.
    The administrative cost assessment of $260 will in most cases be 
less than the full-cost charges that Reclamation previously assessed 
for RRA form violations pursuant to its compensation policy. Therefore, 
in comparison, the assessment will generally have a positive economic 
effect on most landholders and districts involved with form violations.
    Based on the preceding, Reclamation has certified that the rule 
will not have a significant economic effect on a substantial number of 
small entities. Small entities also are able to avoid all negative 
effects by complying with the form requirements of the RRA and Acreage 
Limitation Rules and Regulations.

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, 
Contracts, and Repayment Office, D-5200, 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, 43 CFR Part 426 is amended 
as follows:

    Dated: January 11, 1995.
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 before receiving irrigation water in 
accordance with Sec. 426.10(e). The assessment will be applied on a 
yearly basis in each district for each landholder that received 
irrigation water but failed to comply with Sec. 426.10(e). In applying 
the assessment to legal entities, compliance by an entity will be 
treated independently from compliance by its part owners or 
beneficiaries. The assessment in this paragraph will be applied 
independently of the assessment set forth in paragraph (b) of this 
section.
    (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 Reclamation within 60 calendar days of the date of 
Reclamation'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 60-day 
time period. The assessment will be applied on a yearly basis in each 
district for each landholder that received irrigation water and for 
whom corrected forms are not provided within the applicable 60-day time 
period. In applying the assessment to legal entities, compliance by an 
entity will be treated independently from compliance by its part owners 
or beneficiaries. The assessment in this paragraph will be applied 
independently of the assessment set forth in paragraph (a) of this 
section.
    (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 under paragraphs (a) and (b) of this section will be 
deposited to the general fund of the United States Treasury as 
miscellaneous receipts.
    (e) Amount of assessment. The assessment for administrative costs 
shall be set periodically on the basis of the average costs associated 
with performing activities to address certification and reporting form 
violations. Initially the amount shall be $260. This assessment for 
administrative costs will be reviewed at least once every 5 years and 
adjusted, if needed, to reflect new cost data. Notice of the revised 
assessment for administrative costs will be published in the Federal 
Register in December of the year the data is reviewed.

[FR Doc. 95-4416 Filed 2-22-95; 8:45 am]
BILLING CODE -94-P