[Federal Register Volume 70, Number 200 (Tuesday, October 18, 2005)]
[Notices]
[Pages 60496-60497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-20789]


=======================================================================
-----------------------------------------------------------------------

DELAWARE RIVER BASIN COMMISSION


Notice of Proposed Rulemaking; Proposed Amendment to the Basin 
Regulations--Water Supply Charges and Comprehensive Plan Relating to 
Certificates of Entitlement

AGENCY: Delaware River Basin Commission.

SUMMARY: The Delaware River Basin Commission (``Commission'' or 
``DRBC'') will hold a public hearing to receive comments on proposed 
amendments to the Commission's Basin Regulations--Water Supply Charges 
and Comprehensive Plan concerning certificates of entitlement. No 
changes in the substance or administration of the rule are proposed. 
The purpose of the proposed amendments is to clarify the language of 
the rule to conform to the Commission's past decisions and current 
practices in order to provide better notice to users as to how the 
Commission is implementing its entitlements program and to avoid future 
controversy.
    Background. The Delaware River Basin Compact (``Compact''), the 
1961 statute that created the DRBC and defined its powers, authorizes 
the Commission to charge for the use of facilities that it may own or 
operate and for products and services rendered thereby. Compact, Sec.  
3.7. Congress limited this authority by providing that the Commission 
cannot charge for water withdrawals or diversions that could lawfully 
have been made without charge as of the effective date of the Compact. 
Id., Sec.  15.1(b).
    By Resolution No. 64-16A in 1964 the Commission authorized a water 
charging program. It provided for the revenues generated by the program 
to be used for repayment of the nonfederal share of the investment cost 
of water supply storage facilities associated with federal projects 
within the Basin. In anticipation of Commission investment in storage 
at the Beltzville Lake and Blue Marsh Reservoir projects in 
Pennsylvania, the Commission by Resolution No. 1971-4 defined, among 
other things, the means by which it would establish water charging 
rates. Consistent with Section 15.1(b) of the Compact, Resolution No. 
1971-4 provided that charges would be applicable only to the amount of 
water withdrawn in excess of the amount taken or legally entitled to be 
taken by an entity during the preceding year. By Resolution No. 74-6, 
the Commission instituted a system of water supply charges for surface 
water withdrawals within the Basin. That resolution provided for the 
issuance of certificates of entitlement to then-current water users, 
establishing the amount of water each could lawfully take from the 
surface waters of the Basin without charge, consistent with Section 
15.1(b) of the Compact. The resolution provided that a certificate of 
entitlement was not transferable, except under limited circumstances 
set forth in enumerated exceptions.
    Because entitlements treat users that commenced water withdrawals 
before the enactment of the Compact more favorably than users who 
commenced water withdrawals later, even though all users benefit 
equally from the facilities financed by water supply charges, courts 
and the Commission have emphasized the need to eliminate entitlements 
over time. Both the Commission and the courts have construed narrowly 
the exceptions to the rule that entitlements are not transferable, and 
the Commission has in its decisions consistently held that changes in 
ownership or control would extinguish a certificate. However, the 
language of the regulations has never explicitly defined ``changes in 
ownership or control.'' As a consequence, in the decisions that the 
Commission has been asked to make in its adjudicatory capacity and that 
the courts have subsequently been asked to decide, the matter of what 
constitutes a change of ownership or control has been controversial.
    In 1994, in response to a ruling by the Third Circuit in Texaco 
Refining and Marketing, Inc. v. DRBC, 824 F. Supp. 500 (D.Del. 1993), 
aff'd., No. 93-7475 (3d Cir. June 24, 1994) (per curiam), the 
Commission adopted Resolution No. 94-20. That resolution incorporated 
an explicit ``ownership and/or control'' test and eliminated the merger 
exception included in the Commission's regulations at the time. In 
addition, the exception for corporate reorganizations embodied in 
Section 5.2.1.F.2 of the Water Charging Regulations was amended to 
apply only when the reorganization ``does not affect ownership and/or 
control.''
    In spite of the 1994 amendment, some members of the Basin community 
have continued to interpret the language of the rule in a manner 
contrary to the Commission's consistent interpretation. To avoid 
further controversy, the Commission proposes a more thorough revision 
of the language, intended to remove any ambiguity.
    Key Provisions. In addition to defining ``change in ownership and/
or control'' with much greater specificity, the proposed revisions also 
make clear that a merger at any tier in a corporate organization will 
extinguish a certificate held by a subsidiary in the same way as if the 
merger had occurred at the subsidiary level. Although the Commission 
has interpreted its rule this way in the past, the rules have never 
been explicit on this point.
    The proposed amendments preserve and clarify the corporate 
reorganization exception contained in the current regulation. The 
Commission traditionally has not extinguished an entitlement in the 
case of an internal reorganization, and it does not propose a change in 
this practice.
    The proposed amendments also preserve the existing exception for 
agricultural uses. Historically, agriculture has been treated 
differently than other uses. For purposes other than agriculture, an 
entitlement is issued to a user and would not be transferable to a 
different user, even if the use remained the same. In the case of 
agriculture, however, an entitlement effectively runs with the land, as 
long as the land remains in agriculture. The proposed amendments 
provide that an entitlement can be reissued to the successor of a 
holder of a certificate issued for agricultural water use, provided 
that the successor demonstrates that the water will continue to be used 
for agricultural irrigation purposes.

DATES: The public hearing will be held on Wednesday, December 7, 2005 
at approximately 2:30 p.m. as part of the Commission's regularly 
scheduled business meeting. The time is approximate because the 
Commission will conduct hearings on several dockets (project approvals) 
beforehand, beginning at approximately 1:30 p.m. The hearing will 
continue until all those who wish to testify are afforded an 
opportunity to do so. In the event that all those who wish to testify 
cannot be heard on December 7, the hearing will be continued at a date, 
time and location to be announced by the Commission Chair that day. 
Persons wishing to testify at the hearing are asked to register in 
advance with the Commission Secretary by phoning 609-883-9500, 
extension 224. Written comments will be accepted through Tuesday, 
January 10, 2006.

[[Page 60497]]


ADDRESSES: The text of the proposed amendment and the text of the 
current regulation are posted on the Commission's Web site, http://www.drbc.net. The public hearing will be held in the Goddard Room at 
the Commission's office building, located at 25 State Police Drive in 
West Trenton, New Jersey. Directions to the Commission's office 
building are also posted on the Commission's Web site. Written comments 
should be addressed to the Commission Secretary as follows: by e-mail 
to [email protected]; by fax to the Commission Secretary--
609-883-9522; by U.S. Mail to the Commission Secretary, DRBC, P.O. Box 
7360, West Trenton, NJ 08628-0360; or by overnight mail to the 
Commission Secretary, DRBC, 25 State Police Drive, West Trenton, NJ 
08628-0360.

FOR FURTHER INFORMATION CONTACT: Please contact Commission Secretary 
Pamela Bush, 609-883-9500 x203, with questions about the proposed rule 
or the rulemaking process.

    Dated: October 12, 2005.
Pamela M. Bush,
Commission Secretary and Assistant General Counsel.
[FR Doc. 05-20789 Filed 10-17-05; 8:45 am]
BILLING CODE 6360-01-P