Administrative Fee Provision of the Acreage Limitation Rules and Regulations

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]

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