Comments on Review of Federal Water Marketing Practices

B-198376,B-198377,B-198378: Published: Sep 25, 1981. Publicly Released: Sep 25, 1981.

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The Office of the General Counsel provided legal opinions on the water marketing practices of the Federal Government. The Secretary of the Interior may charge interest on capital costs originally allocated to irrigation where the water or storage space is actually used by industrial consumers. He may include interest as part of the fixed charges covered by the water service contracts. The rate of interest is in the Secretary's discretion unless the rate is specified in the project's authorizing legislation. The Bureau of Reclamation practice of temporarily reallocating water originally intended for a reimbursable purpose to a nonreimbursable purpose, where water is not used for the nonreimbursable purpose, is questionable. Legislation provides for development periods during which irrigators may receive project water on a toll charge basis without repaying construction costs whether the lands involved are public or private. Under the Water Supply Act, the practice of allowing 40 years for repayment of municipal and industrial costs commencing separately with the initiation of each use is in accord with congressional intent. Where no one has bought project water or storage space the Government must bear the costs involved. Long term water service contracts between Interior and irrigators may be converted to fixed repayment contracts at the request of the contracting organization. The Department of Energy Organization Act reaffirms the need for specific congressional approval for cost reallocations. A regulation which provides some measure of compensation to local taxing units for land acquired by the United States for flood control, navigation, and allied purposes is not applicable to the Interior Department. Revenues received under the Water Supply Act must be deposited in the Treasury as miscellaneous Federal receipts, unless otherwise provided by statute. The inclusion by the Bureau of Reclamation of incidental administrative costs as part of operation and maintenance charges paid by water users appears to be a reasonable exercise of administrative authority.

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