[Federal Register Volume 62, Number 250 (Wednesday, December 31, 1997)]
[Proposed Rules]
[Pages 68492-68500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33990]
[[Page 68491]]
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Part IX
Department of Interior
_______________________________________________________________________
Bureau of Reclamation
_______________________________________________________________________
43 CFR Part 414
Offstream Storage of Colorado River Water and Interstate Redemption of
Storage Credits in the Lower Division States; Proposed Rule
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 /
Proposed Rules
[[Page 68492]]
DEPARTMENT OF THE INTERIOR
Bureau of Reclamation
43 CFR Part 414
RIN 1006-AA40
Offstream Storage of Colorado River Water and Interstate
Redemption of Storage Credits in the Lower Division States
AGENCY: Bureau of Reclamation, Interior.
ACTION: Notice of proposed rulemaking.
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SUMMARY: Under this proposed rule Colorado River water may be stored
offstream in the Lower Basin to permit future interstate use of
Colorado River water in the Lower Division States (Arizona, California,
or Nevada). This proposed rule would establish the procedural framework
under which authorized entities (for example, a State-authorized water
bank) in any Lower Division State could store offstream Colorado River
water to develop storage credits associated with that water, and redeem
those water storage credits within the Lower Division. This rule would
increase the efficiency, flexibility, and certainty in Colorado River
management.
DATES: Comments:
Any comments must be received by Reclamation at the address below
on or before March 2, 1998.
Request for Public Hearings
Upon request, Reclamation will hold public hearings on the proposed
rule in Las Vegas, Nevada, Phoenix, Arizona and Ontario, California.
Reclamation will accept requests for public hearings until 4:00 p.m.
Pacific time on January 30, 1998.
ADDRESSES:
Comments
If you wish to comment, you may submit your comments by any one of
several methods. You may mail comments to Bureau of Reclamation,
Administrative Record, Lower Colorado Regional Office, P.O. Box 61470,
Boulder City, NV 89006-1470. You may also comment via the Internet at
bjohnson@lc.usbr.gov (see Electronic Access and Filing Addresses under
SUPPLEMENTARY INFORMATION).
In addition, you may hand-deliver comments to Bureau of
Reclamation, Administrative Record, Lower Colorado Regional Office, 400
Railroad Avenue, Boulder City, Nevada.
Comments, including names and street addresses of respondents, will
be available for public review at this address during regular business
hours (7:45 a.m. to 4:15 p.m.), Monday through Friday, Pacific time,
except holidays. If you wish to request that Reclamation consider
withholding your name or street address from public review or from
disclosure under the Freedom of Information Act, you must state this
prominently at the beginning of your comment. All submissions from
organizations or businesses, and from individuals identifying
themselves as representatives or officials of organizations or
businesses, will be made available for public inspection in their
entirety.
Public Hearings
If Reclamation receives a request to schedule public hearings in
Las Vegas, Nevada; Phoenix, Arizona; or Ontario, California,
Reclamation will hold such hearings at the following locations:
McCarran International Airport, 5757 Wayne Newton Boulevard,
Commissioner's Meeting Room, 5th Floor, Terminal 1, Las Vegas, Nevada;
Bureau of Indian Affairs conference room, 2 Arizona Center, 400 North
5th Street, 12th Floor, Phoenix, Arizona; Red Lion Hotel, 222 North
Vineyard, Ontario, California. Upon request, Reclamation will consider
holding public hearings in other locations, at times and on dates that
Reclamation will announce prior to the hearings.
Request for public hearings and request to participate in public
hearings
Submit requests for public hearings and requests to participate in
public hearings orally or in writing to Mr. Dale E. Ensminger, Boulder
Canyon Operations Office, Bureau of Reclamation, P.O. Box 61470,
Boulder City, Nevada 89006-1470, telephone (702) 293-8659.
FOR FURTHER INFORMATION CONTACT: Mr. Dale Ensminger, telephone (702)
293-8659.
SUPPLEMENTARY INFORMATION: This section provides the following
information:
I. Public Comment Procedures
Written Comments
Electronic Access and Filing Addresses
Public Hearings
II. Background
III. Purpose of this Rule
IV. Prior Rulemaking Proceedings
V. Section-by-Section Analysis of Proposed Rule
VI. Procedural Matters
Environmental Compliance
Paperwork Reduction Act
Regulatory Flexibility Act
Unfunded Mandates Reform Act of 1995
Executive Order 12612, Federalism Assessment
Executive Order 12630, Taking Implications Analysis
Executive Order 12866, Regulatory Planning and Review
Author
List of Subjects in 43 CFR Part 414
I. Public Comment Procedures
Written Comments
Written comments on the proposed rule should be specific, should be
confined to issues pertinent to the proposed rule, and should explain
the reason for any recommended change. Where possible, comments should
reference the specific section or paragraph of the proposed rule that
the commenter is addressing. Reclamation will not necessarily consider
or include in the Administrative Record for the final rule comments
which Reclamation receives after the close of the comment period (see
DATES) or comments delivered to an address other than those listed
above (see ADDRESSES).
Electronic Access and Filing Addresses
If you comment via the Internet at bjohnson@lc.usbr.gov (see
ADDRESSES), please submit comments as an ASCII file avoiding the use of
special characters and any form of encryption. Please also include
``attn: AC1006-AA40'' and your name and return address in your Internet
message. If you do not receive a confirmation from the system that we
have received your Internet message, contact us directly at (702) 293-
8411.
Public Hearings
Individuals who wish to attend but not testify at any hearing
should contact the person identified under FOR FURTHER INFORMATION
CONTACT beforehand to verify that Reclamation will hold the hearing.
Reclamation will hold public hearings on the proposed rule as specified
above if a member of the public requests a public hearing. Any person
who desires to participate at a hearing at a particular location should
inform Mr. Dale E. Ensminger under FOR FURTHER INFORMATION CONTACT
either orally or in writing of the desired hearing location by 4:00
p.m. Pacific time January 30, 1998. If no one has contacted Mr. Dale E.
Ensminger to express an interest in participating in a hearing at a
given location by that date, Reclamation will not hold that hearing. If
only one person expresses an interest, Reclamation may hold a public
meeting rather than a hearing, and Reclamation will include the results
in the Administrative Record.
If Reclamation holds a hearing, Reclamation will continue the
hearing until all persons wishing to testify have
[[Page 68493]]
had an opportunity to do so. In order to assist the transcriber and to
ensure an accurate record, Reclamation requests that each person who
testifies at a hearing give the transcriber a copy of that testimony.
In order to assist Reclamation in hearing preparation, Reclamation also
requests that each person who plans to testify submit to Reclamation at
the address previously specified (see ADDRESSES) an advance copy of
that testimony.
II. Background
The Colorado River serves as a source of water for irrigation,
domestic, and other uses in the States of Arizona, California,
Colorado, Nevada, New Mexico, Utah, and Wyoming, and in the Republic of
Mexico. The initial apportionment of water from the Colorado River was
made by an interstate compact, the Colorado River Compact, dated
November 24, 1922 (Compact). The Compact became effective in 1929
following ratification by six states and approval by the Congress of
the United States. The State of Arizona became the final State to
ratify the Compact in 1944. The Compact defined the Colorado River
Basin and divided the seven States into two basins, an Upper Basin and
a Lower Basin. The Compact apportioned to each basin, in perpetuity,
the exclusive beneficial consumptive use of 7.5 million acre-feet (maf)
of water. Under the Compact, ``consumptive use'' means diversions of
water from the mainstream of the Colorado River, including water drawn
from the mainstream by underground pumping, less return flow to the
river.
The Lower Basin includes those parts of the States of Arizona,
California, Nevada, New Mexico, and Utah within and from which waters
naturally drain into the Colorado River system below Lee Ferry
(Arizona), a point in the mainstream of the Colorado River 1 mile below
the mouth of the Paria River. The Compact also grouped the seven States
into two divisions, the Upper Division and the Lower Division. The
Lower Division consists of the States of Arizona, California, and
Nevada. All mainstream Colorado River water apportioned by the Compact
to the Lower Basin is divided among the three Lower Division States.
All mainstream Colorado River waters apportioned to the Lower Basin,
except for a few thousand acre-feet apportioned to the State of
Arizona, have been allocated to specific entities and, except for
certain Federal establishments, placed under permanent water delivery
contracts with the Secretary for irrigation or domestic use. These
entities include irrigation districts, water districts, municipalities,
Federal establishments including Indian reservations, public
institutions, private water companies, and individuals.
The Supreme Court of the United States, in its Opinion of June 3,
1963, (373 U.S. 546) and Decree entered March 9, 1964 (376 U.S. 340)
(Decree), in the case of Arizona v. California, et al., confirmed that
the Secretary was vested with sufficient authority and charged with the
responsibility to direct, manage, and coordinate the operation of dams
and related works on the Colorado River in the Lower Basin. The Supreme
Court concluded, among other things, that the Secretary derives
significant authority from the contract authority under section 5 of
the Boulder Canyon Project Act of 1928 (45 Stat. 1057, 43 U.S.C.
617)(BCPA) that requires water users in the Lower Basin to have a
contract with the Secretary. The Supreme Court further concluded that
Congress intended the Secretary, principally through the Secretary's
section 5 contract power, to carry out the allocation of the waters of
the mainstream of the Colorado River among the Lower Basin States and
to decide which water users within each State would get water and on
what terms. Accordingly, the Secretary acts as water master of the
Colorado River in the Lower Basin.
The Decree excludes Federal establishments from the BCPA
requirement for a contract with the Secretary, but the water allocated
to a Federal establishment is included within the apportionment of the
Lower Division State in which the Federal establishment is located.
Waters available to a Lower Division State within its apportionment but
with a priority date later than June 25, 1929, have been allocated by
the Secretary to water users within that State after consultation with
the State.
Many Colorado River water rights originated as ``perfected rights''
that are specified in the Decree as rights acquired in accordance with
State law and exercised by the actual diversion of a specific quantity
of water for beneficial use on a defined area of land or to definite
municipal or industrial works, and in addition will include water
rights created by the reservation of mainstream water for the use of
Federal establishments under Federal law whether or not the water has
been applied to beneficial use. The highest priority Colorado River
water rights are present perfected rights (PPR's) that the Decree
defines as those perfected rights existing on June 25, 1929 (the
effective date of the BCPA). The Decree also recognizes Federal Indian
reserved rights for the quantity of water necessary to irrigate all the
practically irrigable acreage on five Indian reservations along the
Colorado River. The Decree defines the rights of Indian and other
Federal reservations to be Federal establishment PPR's. PPR's are
important because in any year in which there is less than 7.5 maf of
Colorado River water available for consumptive use in the Lower Basin
States, PPR's will be satisfied first in the order of their priority
without regard to State lines.
In 1996, Arizona enacted a State-authorized program establishing an
Arizona State Water bank that would allow offstream storage of Colorado
River water and subsequent interstate delivery of such stored water
through redemption of credits pursuant to Interstate Storage
Agreements. In the future, other Lower Division States may enact
comparable measures.
III. Purpose of this Rule
Arrangements that facilitate more efficient use of the limited
Colorado River water resource are beneficial to all water users. This
proposed rule addresses offstream storage of Colorado River water and
development of storage credits by authorized entities within the Lower
Division States. Authorized entities include a State water banking
authority, or other entity of a Lower Division State holding
entitlements to Colorado River water, expressly authorized pursuant to
applicable laws of Lower Division States to: (1) Enter into Interstate
Storage Agreements; (2) develop intentionally created unused
apportionment; (3) acquire the right to use intentionally created
unused apportionment; or (4) develop or redeem storage credits for the
benefit of an authorized entity in another Lower Division State.
The rule will establish a framework for the Secretary to follow in
approving and administering interstate agreements to allow offstream
storage and contractual distribution of Colorado River water, and
thereby encourage voluntary interstate water transactions among the
Lower Division States. Such voluntary water transactions, including
interstate contractual distribution of Colorado River water consistent
with the BCPA and the requirements of the Supreme Court of the United
States in its Decree entered March 9, 1964 (3376 U.S. 340) (Decree) in
Arizona v. California, et al., can help to satisfy regional water
demands. The proposed rule does not deal with intrastate storage and
distribution of water.
The proposed rule will foster prudent water management in the Lower
Division States by allowing authorized
[[Page 68494]]
entities of Consuming States, pursuant to an interstate agreement, to
store Colorado River water offstream, to receive storage credits for
the stored water, and to recover this water for future use. The
offstream storage will be accomplished through an authorized entity of
the Storing State. The water to be stored will be basic apportionment
from the Storing State or unused basic apportionment or unused surplus
apportionment of the Consuming State. The proposed rule is based on the
understanding that this type of offstream storage is a beneficial
consumptive use of Colorado River water. The rule is permissive in
nature and is intended to encourage and facilitate these voluntary
water transactions.
The proposed rule is designed to improve the Secretary's ability to
fulfill his responsibilities to manage the Lower Basin of the Colorado
River on a more efficient basis. This proposed rule is expected to be a
first step toward improving the efficiency associated with management
of the Colorado River in the Lower Basin.
While taking action in the form of this proposed rule to assist the
States of the Lower Division of the Colorado River to meet their water
needs, the Department also acknowledges its responsibilities to the
Indian Tribes in the Lower Division. The Department is interested in
finding ways that the Tribes may more fully benefit from the water
rights they hold in the Lower Basin, and in protecting the availability
of water supplies to which these rights attach.
The focus in the proposed rule is on the use of State-authorized
entities, including water banks, as a vehicle for authorizing
interstate storage and redemption of storage credits associated with
Colorado River water. The Department believes that the interstate water
storage and deliveries permitted by these rules can be implemented
without compromising its responsibilities toward, and in fact may lead
to benefits to, the Indian Tribes. The Department's proposed reliance
on State-authorized entities is predicated, in part, on its expectation
that these entities will be operated in a fashion that provides an
opportunity for Indian Tribes to participate in storage and similar
activities. In this regard the Department notes that the State of
Arizona is examining ``mechanisms that will enable Indian communities
that hold entitlements to Colorado River water to participate in water
banking with the Arizona Water Banking Authority.'' Arizona Laws 1996,
ch. 308, Sec. 27. The Department encourages Arizona and the other Lower
Division States to implement programs within the existing Law of the
River that will allow the Tribes to more fully benefit from their water
rights.
In addition, the Department will be mindful of the need to protect
local tribal water resources when fulfilling its role as set forth in
these interstate water banking rules. Tribes as well as other water
rights holders may, for example, have concerns regarding the potential
impacts of future groundwater withdrawals from a water bank on their
water rights. The Department wants to work with Lower Division States
and authorized entities banking Colorado River water to ensure that
water stored and recovered for interstate delivery does not adversely
impact those local tribal water resources. Under the proposed rule the
Secretary will, when determining whether to approve a proposed
interstate transaction, take into account, among other things, the
potential impacts of a proposed transaction on water rights holders,
including Indian Tribes. See Sec. 414.3(b).
Finally, this proposal does not address, and is not intended to
govern the exercise of, whatever authority the Secretary of the
Interior has to consider and implement, in appropriate situations,
tribal storage and water transfer activities.
Except as described below, the Secretary, in reviewing an
Interstate Storage Agreement, will not focus on the price associated
with utilization of storage credits or other financial details agreed
to by the authorized entities as willing sellers and willing buyers.
The transaction must leave the United States in no worse a financial
position than if the transaction had not occurred. When it is
operationally feasible to do so, United States facilities may be
available for use in storing, delivering, and distributing Colorado
River water offstream under the proposed rule to the extent that the
United States is fully reimbursed for relevant capital, interest, and
operation and maintenance costs. Approval to deliver Colorado River
water cannot obligate the Federal Government to incur extra non-
reimbursable expenses to store water or deliver it to a new location.
Further, existing Reclamation law requires adjustment in repayment
terms when use of the water shifts from a non-interest bearing category
to an interest-bearing category, such as from agriculture use to
municipal and industrial use. Additionally, if pumping power is needed
to affect a given transaction, the parties to the transaction must
provide or pay for such power, and may have to secure it from non-
Federal sources.
The actions and transactions contemplated in the proposed rule are
within the current authority of the Secretary, the BCPA, and the
Decree. Under BCPA, with the exception of Federal Establishments PPR's,
no authorized entity may receive Colorado River water except in
accordance with a contract with the Secretary. Where appropriate to
implement the Interstate Storage Agreement, the Secretary will contract
for water deliveries under Section 5 of the Boulder Canyon Project Act.
In accordance with specific approvals, offstream storage and
development of storage credits for interstate purposes have already
taken place on a limited basis. The proposed rule will provide a
standard set of procedures to be used in place of the ad hoc processes
that have been used for previous interstate water transactions. These
procedures will provide greater flexibility, certainty, and assurance
to all parties potentially interested in entering into interstate
transactions for storage of Colorado River water and use or redemption
of storage credits. This increased certainty is expected to promote
more efficient management of the Colorado River and facilitate
additional voluntary water transactions of this type among Lower Basin
water users.
The Secretary will consider the implications of the proposed
Interstate Storage Agreement for the financial interests of the United
States and the United States will require the parties who benefit from
the transactions to fund the United States' reasonable costs to
evaluate, process, and/or approve transactions entered into under this
rule. In considering a request for approval of an Interstate Storage
Agreement for offstream storage of Colorado River water and use or
redemption of storage credits, the Secretary will consider, among other
relevant factors: applicable law; applicable contracts; potential
effects on trust resources; potential effects on contractors or Federal
entitlement holders, including Indian and non-Indian PPR holders and
other Indian tribes; potential effects on other third parties;
environmental impacts and effects on threatened and endangered species;
comments from interested parties, particularly parties who may be
affected by the proposed action; and other relevant factors, including
the implications of the proposed Interstate Storage Agreement for the
financial interests of the United States.
IV. Prior Rulemaking Proceedings
In 1991, 1992, and 1994, Reclamation developed draft rules for
administering
[[Page 68495]]
Colorado River water entitlements and distributed drafts to known
interested parties. Among other things, those drafts included
provisions that would have allowed instream storage of water saved,
interstate transfer of conserved water, reductions in entitlements due
to nonuse, and proposed water conservation criteria. Because of the
controversy associated with these proposals, Reclamation suspended
further work on the rule in late 1994 to allow the Lower Division
States time to develop a consensus on storage and interstate transfer
issues. While a consensus on all of these issues has not been achieved,
it appears that there is strong support and demand for a new, more
narrowly focused rule that will facilitate offstream water storage and
interstate water delivery programs in the Lower Basin.
V. Section by section analysis of the Proposed Rule
Section 414.1. Purpose
Under this proposed rule Colorado River water may be stored
offstream to permit future interstate use of Colorado River water. This
proposed rule would establish the procedural framework under which
authorized entities of any of the Lower Division States (Arizona,
California, or Nevada) could store offstream through another authorized
entity (for example, State-authorized water banks) in any Lower
Division State, Colorado River water allocated but not taken by water
entitlement holders within the State where the storage occurs, or
unused basic apportionment, or surplus apportionment of the Consuming
State. The authorized entity of the Storing State would develop, on
behalf of the authorized entity in the consuming state, storage credits
associated with that water. When unused apportionment is intentionally
created to satisfy a request for delivery of water from storage
credits, the authorized entity must ensure that its State's consumptive
use is decreased by a quantity sufficient to offset the quantity of
storage credits that are to be made available as unused apportionment
by the Secretary and delivered for use in another Lower Division State
in accordance with Article II(B)(6) of the Decree. This rule would
increase efficiency, flexibility, and certainty in Colorado River
management.
The proposed rule establishes procedures for interstate contractual
distribution derived from credits for Colorado River water stored
offstream. These procedures will apply to all holders of entitlements
to use Colorado River water in the Lower Division States. The proposed
rule allows authorized entities of any Lower Division State to enter
into agreements with authorized entities of another Lower Division
State to store Colorado River water offstream, develop storage credits,
and redeem storage credits associated with that water, subject to the
approval of the Secretary.
Section 414.2. Definitions
This section of the rule defines terms that are used in the rule.
The following terms are defined by or derived from the Decree: basic
apportionment, Colorado River water, consumptive use, mainstream,
surplus apportionment, and unused apportionment. Most of the other
terms were defined for the purposes of this rule to establish a common
understanding of terms relating to storage of water.
All Interstate Storage Agreements for offstream storage of Colorado
River water and the interstate redemption of storage credits under this
proposed rule would be executed by a State water banking authority, or
other entities holding entitlements to Colorado River water, expressly
authorized pursuant to applicable laws of Lower Division States to: (1)
enter into Interstate Storage Agreements; (2) develop intentionally
created unused apportionment; (3) acquire the right to use
intentionally created unused apportionment; or (4) develop or redeem
storage credits for the benefit of an authorized entity in another
Lower Division State. States are encouraged to define the term
``authorized entity'' broadly so as not to exclude appropriate entities
potentially interested in entering into arrangements to develop or
acquire water storage credits on an interstate basis. Constraints
placed on ``authorized entities'' will have the likely effect of
reducing the net benefits associated with the proposed rule.
The proposed rule includes a definition of intentionally created
unused apportionment of Colorado River water. As proposed, it does not
specify what measures or actions may be used to create such
apportionment. In Section 414.3, the Secretary specifies the
information that he will consider in approving any proposed Interstate
Storage Agreement. Subparagraph (a)(7) of Section 414.3 directs that
any request for approval of a proposed Interstate Storage Agreement,
``specify which action the authorized entity will take to create
intentionally created unused apportionment.'' The Department seeks
comment on the issue of whether the final definition of intentionally
created unused apportionment should specify what types of measures or
actions the Secretary would approve as intentionally created unused
apportionment. Comments should identify actions that would be adequate
to demonstrate the development of intentionally created unused
apportionment.
Section 414.3. Interstate Storage Agreements and Redemption of Storage
Credits
The proposed rule would authorize offstream storage of Colorado
River water in the Lower Division States by State-authorized entities
on the basis of approved Interstate Storage Agreements. Under this
section of the proposed rule, a Lower Division State authorized entity
could establish a water bank and store Colorado River water on behalf
of authorized entities in the other two Lower Division States. Such
water banks could store water consisting of water allocated but not
taken by water entitlement holders within the Storing State, or unused
basic apportionment, or surplus apportionment of the Consuming State.
The proposed rule assumes that there are two ways to ``store''
water in offstream storage: direct storage or indirect storage. Direct
storage can be accomplished by putting water into an underground
aquifer at an underground water storage facility or in a surface
reservoir located off the mainstream of the Colorado River. Indirect
storage can be accomplished through groundwater savings that result
from replacing established groundwater use with Colorado River water.
A central feature of the procedures in the proposed rule is the
Interstate Storage Agreement. Under this section of the proposed rule,
the authorized entities of two or more Lower Division States may enter
into an agreement to store Colorado River water offstream. To become
effective, these agreements require approval by the Secretary. To
obtain the approval of the Secretary, each Interstate Storage Agreement
must contain a description of the following: quantity of water to be
stored; location of storage; type and source of water; accounting,
reporting and use of storage credits associated with water to be
stored; end use of water to be stored; and the extent to which Federal
facilities or resources will be used to deliver or store Colorado River
water stored offstream.
Under the proposed rule, the Secretary has 120 days to approve or
disapprove such agreements unless the Secretary determines that
additional time is necessary to review the agreement because the
proposal
[[Page 68496]]
involves significant environmental compliance activities or other
issues. In reviewing any proposed Interstate Storage Agreement, the
Secretary will consider the following: applicable law; applicable
contracts; potential effects on trust resources; potential effects on
contractors or Federal entitlement holders, including Indian and non-
Indian present perfected rights (PPR) holders and other Indian tribes;
potential effects on third parties; environmental impacts and effects
on threatened and endangered species; comments from interested parties,
particularly parties who may be affected by the proposed action; and
other relevant factors, including the implications of the proposed
Interstate Storage Agreement for the financial interests of the United
States.
Under this section of the proposed rule, storage credits are
developed for the benefit of the authorized entity for which Colorado
River water is placed in offstream storage. The storage credits entitle
the entity to recover water at a later date. The authorized entities
involved in the transaction will account for the water diverted and
stored offstream under an Interstate Storage Agreement, and prior to
any redemption of storage credits certify to the Secretary that water
associated with storage credits has been stored. The Secretary must be
satisfied that necessary actions have been taken to develop
intentionally created unused apportionment. Once this determination has
been made, the Secretary will make available this intentionally created
unused apportionment for use by the authorized entity of the Consuming
State consistent with the BCPA, Article II(B)(6) of the Decree, and all
other applicable laws. Also, under this section, Interstate Storage
Agreements may be assigned in whole or in part to authorized entities
upon the agreement of the parties to the Interstate Storage Agreement
and approval of the Secretary.
Section 414.4. Reporting Requirements and Accounting for Storage
Credits
Under this section of the proposed rule, each authorized entity
that has stored Colorado River water offstream for interstate purposes
must submit a report to the Secretary by January 31 of each year. The
report will specify the quantity of Colorado River water that was
stored during the previous year and is recoverable in future years and
the number of storage credits associated with that water. Under this
proposed rule, the Department has assumed that storage credits would be
equal to the quantity of water stored less deductions and losses from
storage that includes losses attributable to evaporation or percolation
or water required by State law to remain in an aquifer. Such reports
will also specify the balance of Colorado River storage credits
redeemed during the previous year and the balance of such credits that
remain recoverable as of December 31 of the previous year. This
reporting requirement will not impose a burden on the authorized entity
of a Storing State because the authorized entity will need to maintain
these records for its own purposes.
Under the proposed rule, the United States will continue to fulfill
the requirements of the Decree that requires the Secretary to prepare
and maintain, at least annually, complete, detailed, and accurate
records of diversions of water from the mainstream, return flow of such
water to the mainstream, and consumptive use of such water. Under the
proposed rule, the water diverted and stored offstream will be
accounted for as consumptively used in that same year in the Storing
State, in accordance with Article V of the Decree. The accounting
records would also reflect an equivalent quantity of storage credits in
the Storing State. When unused apportionment is intentionally created
to satisfy a request for delivery of water from storage credits, the
authorized entity must take action to ensure that its State's
consumptive use is decreased by a quantity sufficient to offset the
quantity of water made available as unused apportionment by the
Secretary and delivered for use in another Lower Division State. After
the authorized entity confirms in writing to the Secretary the quantity
of water to be delivered for use in the Consuming State and includes
documentation of actions taken to intentionally create a like quantity
of unused apportionment, the Secretary will declare unused
apportionment available within the Storing State and allocate that
unused apportionment to the Consuming State to allow recovery of the
storage credits. The intentionally created unused apportionment so made
available to the Consuming State by the Secretary will be accounted for
as consumptively used when Colorado River water in the amount of the
intentionally created unused apportionment is released for use in the
Consuming State, in accordance with Article V of the Decree.
Under the proposed rule and in accordance with Article II(B)(6) of
the Decree, the Secretary may release in any one year any Colorado
River water that is apportioned for consumptive use in a Lower Division
State but which will be unused in that State for consumptive use in
another Lower Division States in that same year. The water so released
for consumptive use in the other Lower Division States is unused
apportionment.
For example, under the proposed rule, when storage credits are
redeemed, Colorado River water that would otherwise be supplied to a
water user in a Storing State could be supplied from offstream storage
in that State. The Storing State will reduce its Colorado River water
use in accordance with the approved Interstate Storage Agreement. Then
the Secretary, in accordance with the terms of Article II (B)(6) of the
Decree, will make the Colorado River water available to the Consuming
State. No other Lower Division State or other user in the Storing State
will be able to claim the water since the Secretary is authorized under
Article II (B)(6) of the Decree to make such water available, and the
Secretary will have agreed to implement the terms of the Interstate
Storage Agreement. No other Lower Division State will be eligible to
receive water made available to the Consuming State under that
Interstate Storage Agreement.
Section 414.5. Water Quality
This section of the rule is a disclaimer which states that except
for specific water quality responsibilities that are established for
the Secretary by Federal law, the Secretary does not guarantee the
quality of water released or delivered through Federal facilities.
Water quality will be monitored by the Environmental Protection Agency
and the Army Corps of Engineers and will be subject to State or Tribal
jurisdiction, as appropriate, in accordance with the Clean Water Act.
Section 414.6 Environmental Compliance
Under the proposed rule, the Secretary is responsible for ensuring
the actions taken under the rule comply with the National Environmental
Policy Act of 1969, as amended (NEPA), the Endangered Species Act of
1973, as amended (ESA), and will integrate the requirements of other
statutes, laws, and executive orders as required for Federal actions
taken under this proposed rule.
Federal actions requiring environmental compliance may include, but
are not limited to, approval of transactions that entail changes in the
place or quantity of water diversions necessary to store a Lower
Division State's water. In evaluating a proposed Federal action taken
under this part for compliance with the National Environmental Policy
Act, the Secretary will consider effects on natural and
[[Page 68497]]
other resources as identified in the Bureau of Reclamation's National
Environmental Policy Act (NEPA) Handbook and other relevant
environmental laws and regulations. The parties to a proposed
transaction would be responsible for completing environmental
compliance documentation in accordance with the standards set forth in
the Bureau of Reclamation's NEPA Handbook and subject to Reclamation
approval prior to the Secretary's approval of the proposed action.
The Department, through Reclamation, will collect in advance the
estimated costs incurred by the United States in evaluating,
processing, or approving the action from the persons or entities who
would benefit from a proposed action under this rule.
VI. Procedural Matters
Environmental Compliance
Reclamation has prepared a draft environmental assessment (DEA).
Reclamation has placed the DEA on file in the Reclamation
Administrative Record at the address specified previously. The public
is invited to review the DEA by contacting Reclamation at the addresses
listed above (see ADDRESSES) and suggests that anyone wishing to submit
comments in response to the DEA do so in accordance with the Written
Comments section above.
Compliance with NEPA, the ESA, and other relevant statutes, laws,
and executive orders will be completed for future Federal actions taken
under this rule to ensure that any action authorized or carried out by
the Secretary does not jeopardize the continued existence of any
threatened or endangered species, does not adversely modify or destroy
a critical habitat, and is analyzed by an appropriate environmental
document. Consultation and coordination between Reclamation, the Fish
and Wildlife Service, other agencies, and interested parties will be
completed on a case-by-case basis.
Paperwork Reduction Act
The Department believes that this rule does not contain information
collection requirements that the Office of Management and Budget (OMB)
must approve under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501
et seq. This proposed rule is geographically limited to the States of
Arizona, California and Nevada. The proposed rule covers authorized
entities that would store Colorado River water off the mainstream of
the Colorado River. The information to be reported will be compiled by
the authorized entities in the course of their normal business and the
annual reports to the Secretary will not impose any significant time or
cost burden. It is estimated that each respondent would need one hour
at an estimated cost of $20 to complete the annual reporting
requirement. Moreover, the Department assumes that there will never be
an industry-wide collection of information and assumes that there will
always be fewer than 10 entities required to report information.
Notwithstanding these circumstances, the Department intends to seek
information collection approval from the OMB, pursuant to the Paperwork
Reduction Act of 1995, 44 U.S.C. 3501 et seq.
Regulatory Flexibility Act
Congress enacted The Regulatory Flexibility Act of 1980 (RFA), 5
U.S.C. 601 et seq., to ensure that Government regulations do not
unnecessarily or disproportionately burden small entities. The RFA
requires a regulatory flexibility analysis if a rule would have a
significant economic impact, either detrimental or beneficial, on a
substantial number of small entities. An initial RFA analysis has been
completed. This rule will not impose any direct cost on small entities.
A benefit-cost analysis was completed and concludes that the proposed
rule does not impose significant or unique impact upon small
governments (including Indian communities), small entities such as
water purveyors, water districts, or associations, or individual
entitlement holders.
Unfunded Mandates Reform Act of 1995
The adoption of 43 CFR part 414 will not result in any unfunded
mandate to State, local, or tribal governments in the aggregate, or to
the private sector, of $100 million or more in any one year.
Executive Order 12612, Federalism Assessment
The proposed rule does not alter the relationship between the
Federal Government and the States under the Decree nor does it alter
the distribution of power and responsibilities among the various levels
of government. Therefore, in accordance with Executive Order 12612, the
Secretary has determined that this proposed rule does not have
sufficient federalism implications to warrant preparation of a
Federalism Assessment.
Executive Order 12630, Takings Implications Analysis
The proposed rule does not represent a government action capable of
interfering with constitutionally protected property rights. This rule
does not impose additional fiscal burdens on the public. This rule
would not result in physical invasion or occupancy of private property
or substantially affect its value or use. The rule would not result in
any Federal action that would place a restriction on a use of private
property. The rule does not affect a Colorado River water entitlement
holder's right to use its full water entitlement. Under the proposed
rule, an authorized entity may store unused Colorado River water
available from an entitlement holder's water rights only if the water
right holder does not use or store that water on its own behalf. Under
the proposed rule, the only water that can be used to satisfy storage
credits is unused apportionment created by the forbearance of a use
which otherwise would have occurred. Therefore, the Department of the
Interior has determined that the rule would not cause a taking of
private property or require further discussion of takings implications
under this Executive Order.
Executive Order 12866, Regulatory Planning and Review
This proposed rule is a significant regulatory action under section
3(f)(4) of Executive Order 12866 because it raises novel legal or
policy issues. Executive Order 12866 requires an assessment of
potential costs and benefits under section 6(a)(3) of that Executive
Order. Reclamation's benefit-cost analysis determines that the proposed
rule does not impose significant or unique impacts upon small
governments (including Indian communities), small entities such as
water purveyors or associations, or even individual water entitlement
holders.
The proposed rule authorizes the distribution of Colorado River
water storage credits created by off stream storage on an interstate
basis.
California and Nevada are looking for alternative water supplies to
satisfy the increasing demands of economic development and population
growth. The proposed rule may provide an opportunity for Colorado River
water users in Nevada to experience a marginal costs savings in
securing alternative supplies. Off stream storage of Colorado River
water and interstate distribution of Colorado River water storage
credits are voluntary actions. Should the costs of the procedures
proposed in the rule to facilitate these transactions be greater than
the costs of other alternative water supplies, California and Nevada
would probably select the lower cost alternatives.
[[Page 68498]]
The benefit-cost analysis estimated net economic benefits of the
proposed rule on a State and regional level using different water
supply models and discount rates. The different water supply models
represent potential water supply conditions on the Colorado River that
affect interstate demand for water from an Arizona water bank and the
magnitude of economic benefits obtained from that water. The discount
rates used in the analysis were 5.75% (the average rate on municipal
bonds in 1996, which is a rate faced by major water purveyors in
California and Nevada) and 8.27% (the prime rate in 1996, which more
accurately represents the cost of money).
Under a conservative water supply scenario characterized by 19
years of normal conditions on the Colorado River and one surplus year,
discounted net economic benefits at the regional level ranged from
$12.8 to $61.2 million at 5.75% and $9.5 to $47.7 million at 8.27%.
Under a water supply scenario characterized by 10 years of surplus
conditions on the Colorado River, the net economic benefits range from
$550,255 to $4.8 million at 5.75% and $350,789 to $3.1 million at
8.27%. Under the scenario characterized by 10 surplus years, demand for
banked water is relatively low because the Lower Division States can
meet most of their water needs with diversions from the mainstream.
Reclamation has placed the full analysis on file in the Reclamation
Administrative Record at the address specified previously (see
ADDRESSES).
Author
The principal author of this rule is Mr. Dale E. Ensminger, Boulder
Canyon Operations Office, Bureau of Reclamation, P.O. Box 61470,
Boulder City, Nevada 89006-1470, telephone (702) 293-8659.
List of Subjects in 43 CFR Part 414
Administrative practice and procedure, Environmental protection,
Public lands, Reporting and recordkeeping requirements, Water bank
program, Water resources, Water storage, Water supply, Water quality.
Dated: December 22, 1997.
Patricia J. Beneke,
Assistant Secretary--Water and Science.
For the reasons stated in the preamble, the Bureau of Reclamation
proposes to add a new part 414 to title 43 of the Code of Federal
Regulations as follows:
PART 414--OFFSTREAM STORAGE OF COLORADO RIVER WATER AND INTERSTATE
REDEMPTION STORAGE CREDITS IN THE LOWER DIVISION STATES
Sec.
414.1 Purpose.
414.2 Definitions.
414.3 Interstate storage agreements and redemption of storage
credits.
414.4 Reporting requirements and accounting for storage credits.
414.5 Water quality.
414.6 Environmental compliance.
Authority: 43 U.S.C. 617; 43 U.S.C. 391; 43 U.S.C. 485; 43
U.S.C. 1501; 5 U.S.C. 553; 373 U.S. 546; 376 U.S. 340.
Sec. 414.1 Purpose.
This part sets forth the procedural framework for approval by the
Secretary of the Interior of interstate agreements for the offstream
storage of Colorado River water in the Lower Division States by State-
authorized entities consistent with State law. In accordance with the
Secretary's authority under Article II (B) (6) of the Decree entered
March 9, 1964 (376 U.S. 340), in the case of Arizona v. California, et
al. as supplemented and amended, this part also includes the procedural
framework to develop and redeem storage credits associated with
Colorado River water stored offstream by authorized entities consistent
with State law. This part does not address intrastate storage or
distribution of water not subject to an Interstate Storage Agreement.
Sec. 414.2 Definitions.
The following definitions, listed alphabetically, apply to this
part:
Authorized entity means a State water banking authority, or other
entity of a Lower Division State holding entitlements to Colorado River
water, expressly authorized pursuant to applicable laws of Lower
Division States to:
(1) Enter into Interstate Storage Agreements;
(2) Develop intentionally created unused apportionment;
(3) Acquire the right to use intentionally created unused
apportionment; or
(4) Develop or redeem storage credits for the benefit of an
authorized entity in another Lower Division State.
Basic apportionment means the Colorado River water apportioned to
each Lower Division State when sufficient water is available for
release, as determined by the Secretary of the Interior, to satisfy 7.5
million acre-feet (maf) of annual consumptive use in the Lower Division
States. The annual basic apportionment for the Lower Division States is
2.8 maf of consumptive use for the State of Arizona, 4.4 maf of
consumptive use for the State of California, and 0.3 maf of consumptive
use for the State of Nevada.
Colorado River water means water in or withdrawn from the
mainstream.
Consuming State means a Lower Division State where water made
available by redeeming storage credits is or will be used.
Consumptive use means diversions from the Colorado River less such
return flow to the river as is available for consumptive use in the
United States or in satisfaction of the Mexican treaty obligation.
Consumptive use from the mainstream within the Lower Division States
includes all consumptive use of water from the mainstream, including
water drawn from the mainstream by underground pumping. The Mexican
treaty obligation is set forth in the February 3, 1944, Water Treaty
between Mexico and the United States, including supplements and
associated Minutes of the International Boundary and Water Commission.
Contractor means any person or entity in the States of Arizona,
California, or Nevada who has a valid contract or agreement with the
United States for the delivery of Colorado River water.
Decree means the decree entered March 9, 1964, by the Supreme Court
in Arizona v. California, et al., 373 U.S. 546 (1963), as supplemented
or amended.
Entitlement means an authorization to beneficially use Colorado
River water pursuant to:
(1) A decreed right,
(2) A contract with the United States through the Secretary, or
(3) A reservation of water from the Secretary.
Federal entitlement holder means a Federal agency or Indian tribe
identified in Article II(D) of the Decree as having an entitlement for
the beneficial use of Colorado River water.
Intentionally created unused apportionment means unused
apportionment that is created solely as a result of an agreement within
a Storing State for the purposes of making Colorado River water
available for use in a Consuming State in fulfillment of a request for
redemption of storage credits pursuant to an Interstate Storage
Agreement.
Interstate storage agreement means an agreement, consistent with
this part, that provides for offstream storage of Colorado River water
in a Storing State for authorized entities in Consuming States and for
the recovery of the stored water. An Interstate Storage Agreement will
be among authorized entities of two
[[Page 68499]]
or more Lower Division States and may include other entities that are
determined to be appropriate to the performance and enforcement of the
agreement under Federal law and the respective laws of the Storing
State and the Consuming State.
Lower Division States means the States of Arizona, California, and
Nevada.
Mainstream means the main channel of the Colorado River downstream
from Lee Ferry within the United States, including the reservoirs
behind dams on the main channel, and Senator Wash Reservoir off the
main channel.
Offstream storage means storage in a surface reservoir off of the
mainstream or in a groundwater aquifer. Offstream storage also includes
indirect recharge when mainstream water is exchanged for groundwater
that otherwise would be pumped and consumed.
Present perfected right or PPR means perfected rights defined by
the Decree, existing as of June 25, 1929, the effective date of the
Boulder Canyon Project Act (45 Stat. 1057, 43 U.S.C. 617) (BCPA). All
present perfected rights are listed in the supplemental decrees entered
January 9, 1979, and April 16, 1984, by the United States Supreme Court
in Arizona v. California, et al., as amended or supplemented.
Secretary means the Secretary of the Interior or an authorized
representative.
Storage Credit refers to an accounting device to reflect a quantity
of Colorado River water that is stored offstream.
Storing State means a Lower Division State in which water is stored
off the mainstream.
Surplus apportionment means the Colorado River water apportioned to
each Lower Division State when sufficient water is available for
release, as determined by the Secretary, to satisfy in excess of 7.5
maf of annual consumptive use in the Lower Division States.
Unused apportionment means Colorado River water within a Lower
Division State's basic or surplus apportionment, or both, which is not
put to beneficial consumptive use during that year within that State.
Unused entitlement means any Colorado River water that is made
available to but not scheduled and used by an entitlement holder during
the year for which it is made available.
Sec. 414.3 Interstate storage agreements and redemption of storage
credits.
(a) Interstate storage agreements. In accordance with Article
II(B)(6) of the Decree, authorized entities of two or more Lower
Division States may enter into Interstate Storage Agreements subject to
the approval of the Secretary in accordance with paragraph (b) of this
section. An Interstate Storage Agreement will allow an authorized
entity in a Storing State to store unused entitlement and/or unused
apportionment for the credit of an authorized entity located in a
Consuming State and will provide for the subsequent redemption of the
credit. Such an agreement must:
(1) Specify the quantity of Colorado River water to be stored, by
which authorized entity it will be stored, the Lower Division State in
which it is to be stored, and the storage facility(ies) in which it
will be stored.
(2) Specify whether the water to be stored will be basic
apportionment from the Storing State or unused basic apportionment or
unused surplus apportionment of the Consuming State. If it is to be
unused apportionment, it may only be made available from the Consuming
State and the agreement must so specify.
(3) Specify the quantity of storage credits associated with water
stored offstream that will be available to the authorized entity in the
Consuming State at the time water is actually stored under the
agreement.
(4) Specify that accumulated storage credits may not be redeemed
within the same calendar year in which the water that generated those
credits was stored offstream.
(5) Specify that the authorized entity in the Consuming State will
provide notice to the Lower Division States and to the Secretary no
later than November 30 of its intention to request delivery of a
specific quantity of Colorado River water by redeeming accumulated
storage credits in the following calendar year.
(6) Specify that the authorized entity of a Storing State, after
receiving a notice of intention to redeem offstream storage credits,
will take actions to ensure that the Storing State's consumptive use of
Colorado River water will be decreased by a quantity sufficient to
develop intentionally created unused apportionment to offset the
delivery of Colorado River water for use in the Consuming State in
fulfillment of the storage credits.
(7) Specify which actions the authorized entity will take to
develop intentionally created unused apportionment.
(8) Specify that the authorized entity of the Storing State must
certify to the Secretary that intentionally created unused
apportionment has been developed that would not otherwise exist and
that the authorized entity will request the Secretary to make available
that quantity of Colorado River water for use in the Consuming State
pursuant to Article II(B)(6) of the Decree to redeem storage credits.
(9) Indemnify the United States, its employees, agents,
subcontractors, successors, or assigns from loss or claim for damages
and from liability to persons or property, direct or indirect, and of
any nature whatsoever arising by reason of the actions taken by the
United States in accordance with this part.
(10) Identify the extent to which facilities constructed or
financed by the United States will be used to store, convey, or
distribute water associated with an Interstate Storage Agreement.
(b) Approval by the Secretary. A request for approval of an
Interstate Storage Agreement should be made in writing to the
Secretary. The request will be acknowledged in writing by the Secretary
within 10 business days of receipt. The request should include copies
of the proposed interstate agreement and any additional supporting data
that clearly set forth the details of the proposed transaction. In
reviewing the proposed interstate agreement, the Secretary will
consider, among other relevant factors: applicable law; applicable
contracts; potential effects on trust resources; potential effects on
water rights holders, including contractors, Federal entitlement
holders, Indian and non-Indian PPR holders, and other Indian tribes;
potential effects on third parties; environmental impacts and effects
on threatened and endangered species; comments from interested parties,
particularly parties who may be affected by the proposed action; and
other relevant factors, including the direct or indirect consequences
of the proposed Interstate Storage Agreement on the financial interests
of the United States. The Secretary will respond to the request within
120 days. However, if the proposal involves significant environmental
compliance activities or other issues such that 120 days is an
insufficient period in which to respond, the Secretary will communicate
this to all parties to the proposed request and set out a schedule by
which such work will be completed or such issues resolved. In that
case, the Secretary will render a decision within 90 days of completion
of the environmental compliance activities and resolution of other
issues (if applicable). Where appropriate to implement the Interstate
Storage Agreement, the Secretary will contract for water deliveries
under Section 5 of the Boulder Canyon Project Act.
[[Page 68500]]
(c) Stored water. The authorized entity of the Storing State will
account for the water diverted and stored offstream under an Interstate
Storage Agreement, and prior to any redemption of storage credits will
certify to the Secretary that water associated with storage credits has
been stored.
(d) Redemption of storage credits. The Secretary must be satisfied
that necessary actions have been taken to develop intentionally created
unused apportionment for redemption of storage credits. Once this
determination has been made, the Secretary will make available a
quantity of Colorado River water to redeem those credits consistent
with the BCPA, Article II(B)(6) of the Decree, and all other applicable
laws. Intentionally created unused apportionment that is developed by
the authorized entity of the Storing State will be made available to
the authorized entity of the Consuming State and will not be made
available to other contractors or Federal entitlement holders.
(e) Assignment. Interstate Storage Agreements may be assigned in
whole or in part to authorized entities upon the agreement of the
parties to the Interstate Storage Agreement and upon the approval by
the Secretary consistent with the requirements of paragraph (b) of this
section.
Sec. 414.4 Reporting requirements and accounting for storage credits.
Each authorized entity will annually report to the Secretary, by
January 31, the quantity of water it diverted and stored on behalf of
authorized users in other Lower Division States and the balance of
storage credits remaining in interstate storage for each entity as of
December 31 of the prior calendar year. This water will be accounted
for, in the records maintained by the Secretary under Article V of the
Decree, as a consumptive use in the Storing State for the year in which
it is stored. The Secretary will maintain individual balances of
storage credits established by the offstream storage of water under
Interstate Storage Agreements. The balances will be reduced when
intentionally created unused apportionment is developed by the
authorized entity in a Storing State and made available for use in a
Consuming State. In the records maintained by the Secretary under
Article V of the Decree, the taking of unused apportionment for use in
a Consuming State by an authorized entity in redemption of its storage
credits will be accounted for as consumptive use by the Consuming State
of unused apportionment in the year the water is used, the same as with
any other unused apportionment taken by that State.
Sec. 414.5 Water quality.
(a) No guarantee of water quality. The Secretary does not warrant
the quality of water released or delivered under interstate agreements,
and the United States will not be liable for damages of any kind
resulting from water quality problems. The United States will not be
under any obligation to construct or furnish water treatment facilities
to maintain or improve water quality standards.
(b) Water quality standards. All contractors or Federal entitlement
holders, in diverting, using, and returning Colorado River water, must
comply with all relevant water pollution laws and regulations of the
United States, the Storing State, and the Consuming State, and must
obtain all applicable permits or licenses from the appropriate Federal,
State, or local authorities regarding water quality and water pollution
matters.
Sec. 414.6 Environmental compliance.
(a) Ensuring environmental compliance. The Secretary will ensure
that environmental compliance is completed. The Secretary will be
responsible for ensuring compliance with the National Environmental
Policy Act of 1969, as amended, and the Endangered Species Act of 1973,
as amended, and will integrate the requirements of other statutes,
laws, and executive orders as required for Federal actions taken under
this part.
(b) Responsibility for environmental compliance work. Authorized
entities requesting Secretarial approval of an interstate transaction
pursuant to this part may prepare the appropriate documentation and
compliance document for a proposed Federal action such as approving a
proposed interstate transaction. Such compliance documents must meet
the standards set forth in Reclamation's National Environmental Policy
Act Handbook before they can be adopted. All costs incurred by the
United States in evaluating, processing, and/or approving transactions
entered into under this part must be funded by the parties that propose
the transaction.
[FR Doc. 97-33990 Filed 12-30-97; 8:45 am]
BILLING CODE 4310-94-P
