Revenues Management

DEPARTMENT OF THE INTERIOR

Bureau of Reclamation

43 CFR Part 403

RIN 1006-AA30

Revenues Management

AGENCY: Bureau of Reclamation, Interior.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Bureau of Reclamation (Reclamation) is proposing to

publish rules and guidelines detailing the authorized crediting of

revenues derived from the incidental use of Reclamation water projects

and project lands under the jurisdiction of Reclamation. Due to

existing confusion in revenues crediting criteria, rules will be

utilized to clearly define front-end, tail-end, and general credit and

when each is appropriate. Rules are necessary to define statutory

language which may seem ambiguous and which may have caused confusion

in the past. The rules will also govern the treatment of the

contractors who have received unauthorized credits in the past.

DATES: Reclamation invites the public to submit written comments on the

proposed rulemaking action. Comments must be submitted on or before

February 2, 1994.

ADDRESSES: Written comments on the proposed rules and guidelines should

be addressed to J. William McDonald, Assistant Commissioner-Resources

Management, Bureau of Reclamation, Denver Office, P.O. Box 25007,

Denver, CO 80225-0007.

FOR FURTHER INFORMATION CONTACT:

Ms. Jaralyn Beek, Head, Revenues, Section, Bureau of Reclamation, D-

5612, P.O. Box 25007, Denver, CO 80225-000 of telephone (303) 236-1061,

extension 227.

o, grazing, the leasing of minerals such as oil

and gas, commercial uses, cabin sites, storage of non-project water,

sale of surplus water, etc. Generally, these revenues are credited in

one of three ways. These are:

(1) Revenues which may be distributed as a general credit to the

Reclamation fund;

(2) Revenues which may be distributed as a ``tail-end'' credit to

the construction costs; and

(3) Revenues which may be distributed as a ``front-end'' or direct

credit to the annual obligations of the water users.

The revenues which are distributed as a general credit to the

Reclamation fund are not meant to be spent on specific functions or

projects, but rather are accessible only as directed by the laws which

govern the Reclamation fund.

The second type of disbursement, a tail-end credit (also termed a

credit to the project), involves application of the funds against the

last payment due in the repayment schedule. The reimbursable portion of

a water project's construction cost is amortized and repaid by the

beneficiaries (districts). With this type of revenues crediting the net

result is accelerated repayment of the project's construction cost,

without relieving the project users of their requirement to pay some or

all of their annual obligation.

The third type of revenue crediting is termed a front-end or direct

credit. This method allows the ``direct'' crediting of specific

revenues on the annual construction repayment and operation and

maintenance obligations of the water districts. Under the general

legislative authority which provided for front-end crediting the water

user could receive benefit from the direct crediting of revenues only

from specified sources:

(1) Power plants;

(2) Leasing of project grazing and farm lands; and

irect'' crediting of specific

revenues on the annual construction repayment and operation and

maintenance obligations of the water districts. Under the general

legislative authority which provided for front-end crediting the water

user could receive benefit from the direct crediting of revenues only

from specified sources:

(1) Power plants;

(2) Leasing of project grazing and farm lands; and

(3) The sale or use of town sites.

The primary difference between the tail-end credit and a front-end

credit is that the front-end or direct credit is used to satisfy a

water user's current construction payment. Any revenues in excess of

the annual construction payment are to be applied first against the

annual operation and maintenance expenses of the district and then as

the water users direct. This crediting assists the water user or

district in meeting current obligations rather than accelerating the

repayment of the construction obligation and applies to only a limited

number of contracts written between 1924 and 1938.

Exceptions to the general revenue disposition requirements are

revenue crediting criteria directed by project specific legislation.

The specific method used to disburse the revenues is dependent upon

the particular statute which authorizes the activity and mandates the

crediting of revenues, the activity generating the revenue, and the

status of the lands involved (whether the lands are withdrawn public

domain lands or lands purchased/acquired for the project).

Inasmuch as Reclamation does not have the latitude to dispose of

revenues differently than is required by law, Reclamation has recently

completed the first stage of a review of general and project-specific

legislation, repayment contracts and amendments, and current

Reclamation practices as they pertain to collection and crediting of

revenues

nds or lands purchased/acquired for the project).

Inasmuch as Reclamation does not have the latitude to dispose of

revenues differently than is required by law, Reclamation has recently

completed the first stage of a review of general and project-specific

legislation, repayment contracts and amendments, and current

Reclamation practices as they pertain to collection and crediting of

revenues. The intent of the initial review was to ensure that revenues

crediting fully complies with statutory requirements and focused

primarily on those revenues from which the water users receive direct

benefit. Reclamation has determined that there have been instances

where revenues may have been credited (direct credits) to the benefit

of the water users (districts) rather than to reduce the total

construction repayment obligation. This improper crediting is a result

of incomplete or inaccurate guidelines within Reclamation and, in some

instances, inappropriate contract provisions.

Reclamation intends to propose rules that would clearly set forth

when direct or front-end credits, tail-end credits, and credits to the

Reclamation fund are authorized, and will define ambiguous statutory

terms that have caused confusion in the past. In addition, the rules

would propose to establish an appeal process for districts who are

notified of improper past crediting. Reclamation also will propose to

require districts to pay interest on unpaid balances once notified of

underpayment.

Dated: December 23, 1993.

Donald R. Glaser,

Deputy Commissioner.

[FR Doc. 93-32028 Filed 12-30-93; 8:45 am]

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