United States Department of the Interior

BUREAU OF RECLAMATION

Mid-Pacific Regional Office

2800 Cottage Way

Sacramento. California 95825-1898

HP-440

t.TrR-4.OO MAY 2~ 1?~

To: All Interested Persons, Organizations, and Agencies

From: Roger K. Patterson

Regional Director

Subject: Bureau of Reclamation’s Final Interim Guidelines for Implementa~:ion

of Interim Renewal Contracts Pursuant to Section 3404(c) Under

Title XXXIV of Public Law 102-575 - Central Valley PrOject’

Enclosed for your information is a copy of the final Interim Guidelines for

the Implementation of the Interim Renewal Contract Provisions, Central Valley

Project Improvement Act (Title XXXIV of Public Law 102-575) (Interim

Guidelines). Comments from meetings held during the last week in March and

written comments received through April 22, 1994, provided Reclamation with

useful information regarding these Interim Guidelines. We appreciate the time

and effort by the public in both of these activities.

The substance of thes~ Interim Guidelines and/or the execution of the interim

renewal contracts may be affected by judicial action or other future events.

The federal district court in Westlands Water District, et al. v. Bureau of

Reclamation. et al., Civ. No. 93-5327 OWW (E.D. Ca.). has recently issued a

decision indicating its intent to issue an injunction, •anticipated shortly,

prohibiting implementation of certain sections of the CVPIA pending compliance

with the National Environmental Policy Act. The court’s decIsion and the

injunction it issues may, directly or indirectly, affect implementation of

other sections of CVPIA, including., those providing for •the interim renewal of

existing long-term contracts.

If you haye any questions regarding the Interim Guidelines, please contact

John Davis at (916) 978-5030 or Frank Dimick (916) 978-5139 (TTD 978-4417).

(~~~zz

IN REPIS’

REFERTO:
12/17/92

Revised 01/08/93

F ~ Revised 01/15/93

Revised 01/21/93

~,11* Revised 01/29/93

______________________________ Revised 06/07/93

_____________ Revised 06/22/93

__ _ w

___ Revised 06/29/93

Revised 07/14/93

Revised 02/26/94

Revised 03/08/94

Revised 03/10/94

Revised 05/05/94

Revised 05/11/94

Revised 05/17/94

Revised 05/18/94

GUIDELINES FOR IMPLEMENTATION

OF THE INTERIM RENEWAL CONTRACTS

CENTRAL VALLEY ~PR0JECTI~(PR0VEMENT ACT

(TITLE XXXIV OF PUBLIC LAW 102-575)

I. OBJECTIVE

The objective of these guidelines is.to implement the provisions of Section 3404(c) of

iblic Law 102-575 (P.L. 102-575) an.d provide for the interim renewal of existing long-term

ontracts for Central Valley Project (GyP) water consistent with Federal Laws and associated

regulations.

The objective of the interim renewal contracts is to provide existing CVP contractors

water deliveries during the period from expiration of .the original contract until the

environmental documentation is complete in’ accordance with Section 3404(c) of P.L. 102-575

(interim period). The interim renewal contracts are also intended to provide a means of

carrying out the goals and requirements of Title XXXIV of P.L. 102-575 and other provisions

of the Federal and state law, and will therefore be modified accordingly.

II. AUThORITY

The authority for the interim renewal contracts includes the Acts of August 4, 1939,

July 2, 1956, June 21, 1963, and Title 34 of P.L. 102-575.

III. APPLICABILITY

These guidelines apply to the interim renewal of all long-term CVP contracts during the

interim period.

IV. IMPLEMENTATION

These interim guidelines are effective immediately and will remain in effect until

vised or superseded.
Section 3404(c) (1) provides that no long-term repayment or water service contract wfll’

be renewed until appropriate environmental review, including the programmatic environmental

impact statement (PEIS) on the CVP required under Section 3409 has been completed. The

Section further provides that the United States and the contractors may enter into interi’

renewal contracts during the period between expiration of their long-term contracts ax

completion of the PEIS and other required environmental documentation. To implement the

provisions, Reclamation intends to execute an initial interim renewal contract with ea

contractor for a term of up to 3-years, and subsequent interim renewal contracts for terms

of up to 2-years, until the appropriate envixonmental review is completed pursuant to Section

3404(c) (1). Subsequent interim renewal contracts will be’ contingent upon the contractor

complying with all terms and conditions of i~s existing interim renewal contract.

Reclamation ‘will implement the provisionsjn a consistent manner for all water users,

including municipal and industrial (M&I) water users.

V. INTERIM RENEWAL CONTRACTS - Terms and Conditions. Noncompliance with any terms and

conditions of its existing interim renewal contract will be considered by the United

States to be a breach of contract.

A. Contract Term. The initial interim renewal contract will be for a term of up to

3 years. Subsequent renewal contracts will be for terms of up to 2 years each

until the PEIS and other required environmental documentation is completed.

B. Water Supply. The quantity of water under contract will not be increased during

the interim period. The quantity of water under contract will be reviewed for

reasonable beneficial use based on information submitted by the contractor with

adequate supporting documentation for evaluation by the United States including.

btit not limited to, the following information:

1’. Agricultural Use. Historical reasonable beneficial use (This includE

both water used by the contractor within its service area and watr

transferr’ed by the contractor for use outside its service area)

projected future reasonable beneficial use including projected cropping.

patterns.

2. M&I Use. Present and future reasonable beneficial use for current and

projected populations, commercial, and industrial growth. The

contractor’s imalysis should be consistent with the State of California’s

population projections,. County’s and City’s general plans, general

industrial water use data, and/or other adequate supporting documentation.

3. All Uses. All uses are to comply with the cOntractor’s water conservation

plans, and such plans are to comply with Reclamation’s current water

conservation~ criteria.

C. Payment. Payment will be required in the contract for the applicable water

service rate and payments and surcharges including but not limited to those

required by P.L. 102-575.

1. Water Service Rate. Interim renewal contracts will require the payment of

the appropriate cost of service and full cost water rates established by

Federal law and the current CVP ratesetting policy. The water rates will

be adjusted annually in accordance with Reclamation Reform Act of 1982

(RRA).

2. Operation and Maintenance (0&M) Non-interest Bearing Deficit

Accelerated payment of 0&M non-interest bearing deficits will b~ requirei

Section 106 of Public Law’ 99-546 requires the Secretary of the Interior to
include in each new or amendatory coiitract for delivery of water from’the

CV? provisions ensuring that any annual deficit incurred by a CV? water

contractor in the payment of the operation and maintenance costs of the

CV? is repaid by such contractor under the terms of such new or amended

contract. The contractors will be required to pay the United States their

outstanding CV? O&M non-interest bearing deficit over the term of the

interim renewal contract. A contractor may request a longer repayment

period than the term of the interim renewal contract and the Contracting

Officer may approve a payment period extension. However, approvals for

payment period extensions will include contractual provisions that require

th~ deficit to accrue interest at the rate described in section 106 of ~he

Act of October 27, 1986 (P.L. 99-546) (100 Stat.. 3050). Exceptions to

this requirement for any extensions to bear interest may be granted on an

- individual basis because of undue hardship [such as natural disasters,

accidents within the District (e.g., physical breakdown of facilities or

other emergencies threatening, or causing interruption of service),

financial insolvency, etc.,] or other conditions that result in a

substantial reduction (i.e., more than 50 percent) in available water

supply. Granting of any exceptions will be at the sole discretion of

Reclamation and must be fully documented. and justified in writing.

3. Payments and Surcharges Required by P.L. 102-575. The following charges

will be paid into the Restoration ~‘und:

a. Restoration Payments. These charges will be included pursuant. to

Section 3407(d)(2) of P.L. 102-575. Charges will be cdmputed in

accordance with separate interim guidelines developed for Section

34~7 of P.L. 102-575.

b. Friant Surcharge. This surcharge will be included in •interim

renewal contracts for CVP water supplies from the Friant Division

pursuant to Section 3406(c) of P:L. 102-575. Charges ranging from

$4.00 to $7.00 as specified in Section 3406(c) will be assessed.

4. Monthly Payments. Interim renewal contracts will provide that the water

service rate as defined in section C(l) above will be made on a monthly

basis two months in advance of delivery. Payments and surcharges as

defined.in section C(3) above will be for water delivered in accordance

with the interim guidelines being developed for Section 3407 of P.L. 102-

575.

D. Water Transfer. Separate interim guidelines for water transfers have been

developed pursuant to Section 3405(a) of P.L.’ 102-575 and will be utilized in

implementation of water transfers. All interim renewal contracts will comply

with these guidelines, as revised and updated.

E. Water Quality. The provisions contained in Section 3405(c) of P.L. 102-575

will be added to the standard water quality provision. The contractor shall be

responsible for compliance with all State and Federal water quality standards

applicable to surface and subsurface agricultural drainage discharges generated

through the use of Federal or contractor facilities or CVP water provided by the

contractor within its boundaries.

F. Water Measurement. Pursuant to the intent of Section 3405(b) of P.L. 102-575,

beginning with the first year of the .first interim renewal contract, the

contractor shall ensure all ‘surface water delivery systems within its service
area are equipped with water measuring devices or water measuring ~iethods

consistent with the Department of the Interior, Bureau of Reclamation Water

Measurement Manual within five years of the date of the initial contract renewal.

The contractor shall ensure that water delivered for irrigation purposes

measured at each agricultural turnout and that water delivered for M&I purpo~

is measured at each M&I service connection. The contractor shall be responsi

for installing, operating, maintaining and repairing these measurement devi

at no cost to the United States. All measurement methods employed by the

contractor shall also be implemented at no cost to the United States.

Measurement devices or water measuring methods of comparable effectiveness

installed or implemented pursuant to this Article must be acceptable to the

Contracting Officer. The contractor shall use. the information obtained from such

water measuring devices or water measuring methbds for billing purposes. The

contractor shall include a summary of the information obtained from such water

measuring devices or water measuring methods in the annual report required under

the water conservation article.

The contractor shall inform, in writing, Reclamation and the State of California

annually as to the monthly volume of surface water delivered within its

boundaries.

U. Water Conservation. The interim renewal contracts will require the contractor

to prepare and be implementing a water conservation plan. Reclamation has

developed “Criteria for Evaluating Water Conservation Plans” dated April 30, 1993

(Criteria). All water conservation plans, including those required under Secti.on

210 of •the RRA, will be evaluated to determine if they meet these Criteria.

These Criteria were developed pursuant to Section 3405(e) of P.L. 102-575. The

contractor must have a water conservation plan that meets Reclamation’s water

conservation criteria prior to execution of the interim renewal contract unle-~

there are, in the opinion of Reclamation, extenuating circumstances beyond

control of the contra~ctor for developing and implementing a water conservat

plan that meets Reclamation’s water conservation criteria. In addition,

contracts for M&I water will require such contractors to implement Best

Management Practices identified by and time frames issued by the California qrban

Water Conservation Council unless any such practice is found by Reclamation to

be inappropriate for such contractor.

The contractor will be required to submit to the Contracting Officer annual

reports on the status of implementation of the water conservation program.

At subsequent 3-year intervals, the contractor will be required to submit to the

Contracting Officer for review an updated water conservation plan that meets with

Reclamation’s then current water conservation criteria.

Step 5 B(3) in Reclamation’s water conservation criteria of Best Management

Practices tasks a district/entity to: “Implement an increasing tiered block water

pricing structure, or other water pricing structure, that promotes the most

effective management of water.” Reclamation will require any district/entity

that does not implement an increasing tiered block pricing structure within 18

months of the execution of its interim renewal contract to have a tiered pricing

contractual provision inany subsequent interim renewal contract. Reclamation

intends to review the contractor’s progress in implementing this provision at

least annually to ensure that the district/entity is complying with all the terms

and conditions of its water conservation plan and contract.

H. Water Shortage. The water shortage article will provide that a shortage

occur during any year in the quantity of water made available to the contrac

by the United States through and by means of the CV?. The cause of the water
shortage may be drought or other causes including but not limited to, compliance

with federal and state laws and regulations. The interim renewal contracts will

contain language that gives the United States the authority on how Project water

is allocated within the CVP.

I. Discretionary Provisions of R.RA. The interim renewal contract will subject the

contractor to all discretionary provisions of the R.RA.

J. Standard Articles. The current standard articles will be included in the interim

renewal contracts such as the Water and Air Pollution Control, Equal Oppbrtunity,

Compliance with Civil Rights Laws and Regulations and Officials Not to Benefit.

Guide84