United States Department ofthe Interior

BUREAU OF RECLAMATION

Washington, D.C. 20240

INREPLY REFERTO:

—. D-5200

MEMORANDUM

Director, Operations

Attention: W-6000, W-6100

Director, Policy and External Affairs

Attention: W-1500

Director, Program Analysis

Attention: D-5000, W-5000, D-5200

Regional Director, PN, MP, LC, UC, GP

Attention: PN-100/3300, MP-1001440, LC-l00,

BCOO-4400, UC-100/284, GP-100/2100

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BUREAU OF RECLAMATION

OFFICIAL FILE COPY

NO~~ 1998

NOV 1 8 1998

CODE ACTION su~1:Ar~z

4 DATE

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As you are aware, the Bureau ofReclamation is currently embarking on some major contracting

activities that will continue to be highly visible for years to come. As Commissioner, I am

dedicated to ensuring that Reclamation continues to fulfill its contracting responsibilities as well

as consider the need for water supplies to meet growing demands for municipal, tribal, and

environmental uses. Toward this end, overthe past several years, we have implemented some

major policies and initiatives to facilitate and to provide direction for these multiple areas ofuse.

The purpose ofthis memorandum is to summarize in one place these policies and initiatives and

to expresstheir importance in our contracting activities. This memorandum is not intended to

modify, and should not be construed as modifying, the guidance set forth in the policy

memoranda, statements, and redelegation referred to herein.

1. Policy for Term of Contract. In May 1993, Reclamation instituted the policy that the

maximum term for new orrenewed long-term contracts executed pursuant to Reclamation law

would be 25 years. The purpose ofthis policy is to better protect the interests ofthe United

States, while still adequately meeting the needs ofwater users, and to provide more operational

flexibility and improved project efficiency. The 1993 policy allowed for exceptions to be

granted by the Commissioner; however, no criteria for an exception were provided. For this

reason, I directed staffto perform an analysis ofthe policy and, if appropriate, to develop such

guidance. In the end, criteria were developed which are provided in the September 11, 1997,

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To:

From:

Subject: Contracts and Repayment Policy
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“Policy for Terms ofContract,” memorandum. Reclamation policy remains that contracts shall

not be for a term longer than 25 years. However,•the opportunity now exists for 40-year term of

— contracts if specific criteria are met.

2. Delegation ofAuthority. The January 4, 1994, memorandum, “Basis ofNegotiation for

New and/or Amendatory Water Service, Repayment and Related Contracts,” provided that

approval ofa Basis ofNegotiation would be required for each contracthaving a termofmore

than 1 year. After assessing contract activities over the following 4 years, we determined that in

order to be more efficient and expedient with contracts forsmall quantities ofwater and short

terms of contracts, authority should be redelegated to the regional directorsto approve and

execute certain contracts. This redelegation has also served to free-up staff time to focus

attention on the longer-term and more controversial contracts. This redelegation was issued

March 3, 1998.

3. Policy for Collecting Operating and Maintenance (O&M) Costs Associated with the

Administration ofWater-Related Activities. When I first came on board, the concern was

raised to me by numerous water users and from members ofCongress thatReclamation was

not following consistent practices for O&M costs assessed for services relevant to contracting

activities. The September 26, 1997, memorandum set forth policy for implementation ofan

equitable fee.

4. Municipal and Industrial (M&I) Conversion Policy Memorandum. In August 1992, the

Department’s Office ofthe Inspector General (OIG) issued a report concluding that Reclamation

did not fully recover costs ofconstruction offacilities that were originally built forirrigation, but

are now used for M&I service. Reclamation did not concur with the OIG recommendation,

whereupon the resolution was remanded to the Office ofProgram, Management and Budget

(PMB). Reclamation staffworked with PMB staffto resolve the issue, and this was culminated

with my signing the policy memorandum dated November 13, 1997. The policy issued under

this memorandum facilitates the contracting processin those instances where water changes use

from irrigation to some other use.

5. Guidelines for the 1956 Act. At my request, Reclamation and Solicitor’s office staff

performed an examination ofthe Act ofJuly 2, 1956, “Administration ofContracts Under

Section 9, Reclamation Project Act of 1939.” Pursuant to the examination, policy dated

September 3, 1998, has been issued which provides guidance when renewing waterservice

contracts pursuant to the Act of 1956. This policy provides guidance on general conditions for

either renewing a Section 9(e) water service contract or converting awater service contract to a

Section 9(d) repayment contract.

6. Water Transfers. Under my direction, a teamhas been established to review water transfer

principles and policies for both project and nonproj ect water. This team is reviewing the

Department’s Principles as well as Reclamation’s policies and guidelines for water transfers.

Legislative constraints to water transfers are another important area under review by the team.
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The team will provide recommendations forrevisions and remedies to facilitate suchtransfers.

Thereafter, it is my intent that this team’s recommendations will receive appropriate public

review.

7. Tribal Uses. On February 25, 1998, I issued a policy statement entitled “Indian Policy of

the Bureau ofReclamation” that consolidated the policies enunciated by previous

Commissioners and those which I have promulgated during my tenure as Commissioner. A

cornerstone ofthis policy is that Reclamation should actively seek partnerships with Indian tribes

to ensure that tribes have the opportunity to participate fully in the Reclamation program as they

develop and manage their water and related resources in order to implement their water rights

settlements and meet their growing demands forwater. The technical assistance activities ofthe

Native American Affairs Program are designed to bridge the efforts ofIndian tribes to obtain the

benefit ofthe Reclamation program. Reclamation will continue to evolve contract and

repaymentpolicies to reconcile Reclamation policies with Indian needs.

8. Environmental Uses. Reclamation has been successful in meeting water needs for

environmental requirementsthrough such measures as water purchases, exchanges, and transfers.

We will commit to continue to explore these avenues as well as research to identify new,

additional measures to meet environmental concerns.

In closing, I would like to address a question that often arises regarding contracting and National

Environmental Policy Act (NEPA) and Endangered Species Act (ESA) compliance, and what is

Reclamation’s position regarding such compliance. It is Reclamation’s position that all contract

activities will continue to require NEPA and ESA compliance. The level ofcompliance will

depend on the complexity ofthe Federal action.

Ifyou have any questions regarding the above-listed policies or initiatives, please contact

Ms. Sandie Simons at (303) 445-2902.

cc: Manager, Portland OR, Attention: LCA-l000

Manager, Yakima WA, Attention: UCA-l000

Manager, Boise ID, Attention: SRA-1000

Manager, Grand Coulee WA, Attention: GCP-1000

Manager, Folsom CA, Attention: CC-100

Manager, Fresno CA, Attention: SCC-100

Manager, Shasta Lake CA, Attention: NC-100

Manager, Kiamath Falls OR, Attention: KO-l00
4

Manager, Carson City NV, Attention: LO-100

Manager, Sacramento CA, Attention: CVO-100

Manager, Phoenix AZ, Attention: PxAO-1000

Manager, Yuma AZ, Attention: YAO-1000

Manager, Boulder City NV, Attention: LCD-bOO

Manager, Boulder City NV, Attention: BCOO-1000

Manager, Temecula CA, Attention:- SCAO-1000

Manager, Albuquerque NM, Attention: ALB-100

Manager, Grand Junction CO, Attention: WCN-CDeAngelis

Manager, Provo UT, Attention: PRO-bOO

Manager, Farmington NM, Attention: FCO-l0O

Manager, Salt Lake City UT, Attention: UC-600

Manager, Billings MT, Attention: MT-bOO

Manager, Grand Island NE, Attention: NK-AM

Manager, Loveland CO, Attention: EC-bO0

Manager, Mills WY, Attention: WY-bOO

Manager, Austin TX, Attention: TX-bOO

Manager, Bismarck ND, Attention: DK-b00

Assistant Solicitor, Water& Power, Attention: Mauro