SUPPLEMENTARY INFORMATION:

A Notice of Proposed Rate Adjustment was published in the Federal Register on April 21, 2017 (82 FR 18770) to propose adjustments to the irrigation assessment ( printed page 37605) rates at several BIA irrigation projects. The public and interested parties were provided an opportunity to submit written comments during the 60-day period that ended June 20, 2017.

Did BIA defer or change any proposed rate increases?

Yes. For the Flathead Indian Irrigation Project, the full rate increase to $33.50 as published in the proposed notice for the 2018 rate will not be implemented. The final 2018 rate will be changed from $33.50 to $29.00, with the remainder of the full rate increase to be implemented in 2019. For the Wind River Irrigation Project, the Crowheart and A Canal Units increase to $15.75 as published in the proposed notice for the 2017 rate will not be implemented. The final 2017 rate is $15.50. All other rates are to be implemented at the respective irrigation projects as published.

Did BIA receive any comments on the proposed irrigation assessment rate adjustments?

Yes. Written comments were received related to the proposed irrigation rate adjustment for the Flathead (FIIP) and Colorado River (CRIIP) Indian Irrigation Projects.

What issues were of concern to the commenters?

Commenters raised concerns on the proposed rates about the following issues:

The Following Comments Are Specific to the Flathead Indian Irrigation Project

Written comments relating to the proposed rate adjustment were received by letter. BIA's summary of the issues and BIA's responses are provided below.

Comment: Several commenters expressed a position that, under the irrigation districts' repayment contracts, only irrigation districts have the power to assess themselves.

Response: As noted in the April 21, 2017 Federal Register notice, BIA is required to establish irrigation assessment rates that recover the costs to administer, operate, maintain, and rehabilitate our projects. As owner of the FIIP, it is BIA's responsibility to ensure adequate resources are made available to meet the requirements noted above. BIA's authority to assess rates dates back to the Act of May 29, 1908, is codified at 25 U.S.C. 381 et seq., and is addressed in the BIA's regulations at 25 CFR part 171. Additionally, the repayment contracts between the irrigation districts and Interior explicitly state that operation and maintenance expenses “shall be paid . . . as provided . . . by rules made or to be made . . . by the Secretary of the Interior.” The repayment contracts between the irrigation districts and Interior capture the irrigators' obligation to pay annual assessments as well as the irrigation districts' authority to collect such assessments for payment to the United States. The authority to assess rates, however, rests solely with Interior and has not been delegated to the irrigation districts.

Comment: Several commenters requested that the rate increase be deferred until current litigation is resolved regarding the transfer of the operation and maintenance of the FIIP.

Response: As current project operator, BIA must plan for the 2018 season and set O&M rates at a level sufficient to cover the costs of administering, operating, maintaining and rehabilitating the FIIP. It is imperative that the project operator be able to operate and maintain the project, ensure adequate staffing levels, purchase supplies and materials, repair and/or replace existing key infrastructure, implement an invasive weed control program, maintain operating equipment, maintain an adequate equipment sinking fund for replacing vital heavy equipment, and maintain an adequate Emergency Reserve Fund. Additionally, the project operator will also need to address deferred maintenance projects on the FIIP.

Comment: One commenter stated that a 29% increase is unwarranted at this time.

Response: The costs associated with operating and maintaining the FIIP have historically and consistently exceeded the amount paid through assessments. Even during the timeframe during which the Cooperative Management Entity operated the FIIP, the O&M assessment rate was increased twice, in 2010 and 2011. Since reassumption, the BIA has made clear the need to increase FIIP assessments rates to address its operation and maintenance needs and has publicly noticed the need to raise rates in both 2015 and 2016 (see 80 FR 33279, June 11, 2015, and 81 FR 51927, August 5, 2016, respectively). The only reason rate increases were not implemented during these years was because of the timeframe necessary to communicate an increase to the counties that collect the O&M funds. Rate increases have been needed for many years, and FIIP's ability to address its operation and maintenance needs have been compromised by not increasing rates since 2011.

Moreover, the methodology used by BIA to determine the 2017 O&M rate was reasonable. Based on a review of historical income receipts and expenditures, a budget of projected income receipts and expenditures is developed approximately two years before the O&M assessments are collected and expenses are incurred. BIA relies on financial reports generated by the Financial and Business Management System for reviewing past expenditures and projecting a future budget and expenditures. Procurement files and records maintained by the FIIP were also reviewed and considered.

Comment: One commenter stated that no rate increase should be made at this time because of local agricultural economics.

Response: BIA's projects are important economic contributors to the local communities they serve, and they contribute millions of dollars in crop value annually. Unfortunately, the costs associated with operating and maintaining an irrigation project may increase independently of prices and costs that are realized by the irrigators. Historically, BIA tempered irrigation rate increases to demonstrate sensitivity to the economic impact on water users, but that past practice resulted in a rate deficiency at some irrigation projects and BIA does not have discretionary funds to subsidize irrigation projects. Therefore, funding to operate and maintain these projects needs to come from revenues from the water users served by those projects.

BIA's irrigation program has been the subject of several Office of Inspector General (OIG) and U.S. Government Accountability Office (GAO) audits. In the most recent OIG audit, No. 96-I-641, March 1996, the OIG concluded:

Operation and maintenance revenues were insufficient to maintain the projects, and some projects had deteriorated to the extent that their continued capability to deliver water was in doubt. This occurred because operation and maintenance rates were not based on the full cost of delivering irrigation water, including the costs of systematically rehabilitating and replacing project facilities and equipment, and because project personnel did not seek regular rate increases to cover the full cost of project operation.

A previous OIG audit performed on one of the BIA's largest irrigation projects, the Wapato Indian Irrigation Project, No. 95-I-1402, September 1995, reached the same conclusion.

To address the issues noted in these audits, BIA must systematically review and evaluate irrigation assessment rates and adjust them, when necessary, to reflect the full costs to operate and perform all appropriate maintenance on the irrigation project or facility infrastructure to ensure safe and reliable ( printed page 37606) operation. If this review and adjustment is not accomplished, a rate deficiency can accumulate over time. Rate deficiencies force BIA to raise irrigation assessment rates in larger increments over shorter periods than would have been otherwise necessary.

Comment: One commenter stated that the proposed rate increase was not discussed with the Joint Board of Control (JBC) nor the Confederated Salish and Kootenai Tribes (CSKT).

Response: The status of the FIIP budget and the need to increase rates were communicated to the JBC as early as 2014 and have been discussed with both the JBC and CSKT numerous times since then. BIA publicly noticed its intent to increase assessment rates in both 2015 and 2016 (see 80 FR 33279, June 11, 2015, and 81 FR 51927, August 5, 2016). Regarding the 2018 proposed increase, the Project Manager provided and discussed the proposed budget information that supports the rate increase to the JBC in January 2017. This information was also provided at an April 11, 2017 water user meeting. The CSKT was also notified of the rate increase.

Comment: One commenter recommended a gradual rate increase over the next 5 to 7 years.

Response: BIA has projected this proposed rate increase for several years, and anticipated increasing the assessment rates in both 2015 and 2016. The FIIP O&M budget was prepared in accordance with BIA financial guidelines. BIA considers the following items when determining an irrigation's project's budget: Project personnel costs; materials and supplies; vehicle and equipment repairs; equipment; capitalization expenses; acquisition expenses; rehabilitation costs; maintenance of a reserve fund for contingencies or emergencies; and other expenses that are determined to be necessary to operate and maintain an irrigation project.

Based on increased costs associated with administering, operating, maintaining and rehabilitating the FIIP, the need for the proposed rate increase is clear and the $7.50 increase is justified. However, given the timing of the Federal Register notice, BIA has decided to impose only a $3.00 increase in 2018 and postpone the remainder of the increase until 2019.

The Following Comment Is Specific to the Colorado River Indian Irrigation Project

Comment: One commenter suggested that the rate for the Colorado River Indian Tribes should be increased by 11%. Included were several reports related to previous and recent information collected regarding the Colorado River Indian Irrigation Project (CRIIP).

Response: The recent information collected concerning the CRIIP is being evaluated to determine how this might impact the future operation and maintenance activities of the project. However, in order to implement an increase it would be necessary to propose the change and again solicit comments. For the purpose of this notice, the proposed rate as published in the Federal Register at 82 FR 18770 (April 21, 2017) will remain unchanged.

Does this notice affect me?

This notice affects you if you own or lease land within the assessable acreage of one of our irrigation projects or if you have a carriage agreement with one of our irrigation projects.

Where can I get information on the regulatory and legal citations in this notice?

You can contact the appropriate office(s) stated in the tables for the irrigation project that serves you, or you can use the Internet site for the Government Printing Office at www.gpo.gov.

What authorizes you to issue this notice?

Our authority to issue this notice is vested in the Secretary of the Interior (Secretary) by 5 U.S.C. 301 and the Act of August 14, 1914 (38 Stat. 583; 25 U.S.C. 385). The Secretary has in turn delegated this authority to the Assistant Secretary—Indian Affairs under Part 209, Chapter 8.1A, of the Department of the Interior's Departmental Manual.

Whom can I contact for further information?

The following tables are the regional and project/agency contacts for our irrigation facilities.

What irrigation assessments or charges are adjusted by this notice?

The rate table below contains the current rates for all irrigation projects where we recover costs of administering, operating, maintaining, and rehabilitating them. The table also contains the final rates for the 2017 calendar year and subsequent years where applicable. An asterisk immediately following the rate category notes the irrigation projects where 2017 rates are different from the 2016 rates.

( printed page 37609)

Consultation and Coordination With Tribal Governments (Executive Order 13175)

The Department of the Interior strives to strengthen its government-to-government relationship with Indian Tribes through a commitment to consultation with Indian Tribes and recognition of their right to self-governance and Tribal sovereignty. We have evaluated this notice under the Department's consultation policy and under the criteria of Executive Order 13175 and have determined there to be substantial direct effects on federally recognized Tribes because the irrigation projects are located on or associated with Indian reservations. To fulfill its consultation responsibility to Tribes and Tribal organizations, BIA communicates, coordinates, and consults on a continuing basis with these entities on issues of water delivery, water availability, and costs of administration, operation, maintenance, and rehabilitation of projects that concern them. This is accomplished at the individual irrigation project by project, agency, and regional representatives, as appropriate, in accordance with local protocol and procedures. This notice is one component of our overall coordination and consultation process to provide notice to, and request comments from, these entities when we adjust irrigation assessment rates.

Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (Executive Order 13211)

The rate adjustments are not a significant energy action under the definition in Executive Order 13211. A Statement of Energy Effects is not required.

Regulatory Planning and Review (Executive Order 12866)

These rate adjustments are not a significant regulatory action and do not need to be reviewed by the Office of Management and Budget under Executive Order 12866.

Regulatory Flexibility Act

These rate adjustments are not a rule for the purposes of the Regulatory Flexibility Act because they establish “a rule of particular applicability relating to rates.” 5 U.S.C. 601(2).

Unfunded Mandates Reform Act of 1995

These rate adjustments do not impose an unfunded mandate on state, local, or tribal governments in the aggregate, or on the private sector, of more than $130 million per year. They do not have a significant or unique effect on state, local, or tribal governments or the private sector. Therefore, the Department is not required to prepare a statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.).

Takings (Executive Order 12630)

These rate adjustments do not effect a taking of private property or otherwise have “takings” implications under Executive Order 12630. The rate adjustments do not deprive the public, state, or local governments of rights or property.

Federalism (Executive Order 13132)

Under the criteria in section 1 of Executive Order 13132, these rate adjustments do not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement because they will not affect the States, the relationship between the national government and the States, or the distribution of power and responsibilities among various levels of government. A federalism summary impact statement is not required.

Civil Justice Reform (Executive Order 12988)

This notice complies with the requirements of Executive Order 12988. Specifically, in issuing this notice, the Department has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct as required by section 3 of Executive Order 12988.

Paperwork Reduction Act of 1995

These rate adjustments do not affect the collections of information which have been approved by the Office of Information and Regulatory Affairs, Office of Management and Budget, under the Paperwork Reduction Act of 1995. The OMB Control Number is 1076-0141 and expires June 30, 2019.

National Environmental Policy Act

The Department has determined that these rate adjustments do not constitute a major Federal action significantly affecting the quality of the human environment and that no detailed statement is required under the National Environmental Policy Act of 1969, 42 U.S.C. 4321-4370(d), pursuant to 43 CFR 46.210(i). In addition, the rate adjustments do not present any of the 12 extraordinary circumstances listed at 43 CFR 46.215.

Data Quality Act

In developing this notice, we did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106-554).