Acreage Limitation Rules and Regulations

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