[Code of Federal Regulations]
[Title 43, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 43CFR426.3]

[Page 600-603]
 
                    TITLE 43--PUBLIC LANDS: INTERIOR
 
      CHAPTER I--BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR
 
PART 426--ACREAGE LIMITATION RULES AND REGULATIONS (Eff. 1-1-98)--Table of Contents
 
Sec. 426.3  Conformance to the discretionary provisions.

    (a) Districts that are subject to the discretionary provisions. 
Unless an exemption in Sec. 426.16 applies, a district is subject to the 
discretionary provisions if:
    (1) The district executes a new or renewed contract with Reclamation 
after October 12, 1982. The discretionary provisions apply as of the 
execution date of the new or renewed contract;
    (2) The district amends its contract to conform to the discretionary 
provisions:
    (i) A district may ask Reclamation to amend its contract to conform 
to the discretionary provisions;
    (ii) The district's request to Reclamation must be accompanied by a 
duly adopted resolution dated and signed by the governing board of the 
district obligating the district to take, in a timely manner, actions 
required by applicable State law to amend its contract; and

[[Page 601]]

    (iii) If the requirements of paragraphs (a)(2)(i) and (ii) of this 
section are met, then Reclamation will amend the contract, and the 
district becomes subject to the discretionary provisions from the date 
the district's request was submitted to Reclamation;
    (iv) If the district only wants to amend its contracts to become 
subject to the discretionary provisions, the amendments need only be to 
the extent required to conform to the discretionary provisions; or
    (3) The district amends its contract after October 12, 1982, to 
provide the district with additional or supplemental benefits. The 
amendment must also include the district's conformance to the 
discretionary provisions:
    (i) The discretionary provisions apply as of the date that 
Reclamation executes the contract amendment;
    (ii) For purposes of application of the acreage limitation 
provisions Reclamation considers a contract amendment as providing 
additional or supplemental benefits if that amendment:
    (A) Requires the United States to expend significant funds;
    (B) Requires the United States to commit significant additional 
water supplies; or
    (C) Substantially modifies contract payments due the United States; 
and
    (iii) For purposes of application of the acreage limitation 
provisions Reclamation does not consider the following contract actions 
as providing additional or supplemental benefits:
    (A) The construction of facilities for conveyance of irrigation 
water for which districts contracted on or before October 12, 1982;
    (B) Minor drainage and construction work contracted under a prior 
repayment or water service contract;
    (C) Operation and maintenance (O&M) amendments;
    (D) The deferral of payments provided the deferral is for a period 
of 12 months or less;
    (E) A temporary supply of irrigation water as set forth in 
Sec. 426.16(d);
    (F) The transfer of water on an annual basis from one district to 
another, provided that:
    (1) Both districts have contracts with the United States;
    (2) The rate paid by the district receiving the transferred water:
    (i) Is the higher of the applicable water rate for either district;
    (ii) Does not result in any increased operating losses to the United 
States above those that would have existed in the absence of the 
transfer; and
    (iii) Does not result in any decrease in capital repayment to the 
United States below what would have existed in the absence of the 
transfer; and
    (3) The recipients of the transferred water pay a rate for the water 
that is at least equal to the actual O&M costs or the full-cost rate in 
those cases where, for whatever reason, the recipients would have been 
subject to such costs had the water not been considered transferred 
water;
    (G) Contract actions pursuant to the Reclamation Safety of Dams Act 
of 1978, as amended (43 U.S.C. 506); or
    (H) Other contract actions that Reclamation determines do not 
provide additional or supplemental benefits.
    (b) Districts that are subject to prior law. Any district which had 
a contract in force on October 12, 1982, that required landholders to 
comply with the ownership limitations of Federal reclamation law remains 
subject to prior law unless and until the district:
    (1) Enters into a new or renewed contract requiring it to conform to 
the discretionary provisions, as provided in paragraph (a)(1) of this 
section;
    (2) Makes a contract action requiring conformance to the 
discretionary provisions, as provided in paragraphs (a)(2) or (3) of 
this section; or
    (3) Becomes exempt, as provided in Sec. 426.16.
    (c) Standard RRA contract article. (1) New or renewed contracts 
executed after October 12, 1982, or contracts that are amended to 
conform to the discretionary provisions before or on the effective date 
of these rules must include the following clause:

    The parties agree that the delivery of irrigation water or use of 
Federal facilities pursuant to this contract is subject to reclamation 
law, as amended and supplemented, including but not limited to the 
Reclamation Reform Act of 1982 (43 U.S.C. 390aa et seq..

    (2) New or renewed contracts executed after the effective date of 
these rules, or contracts that are amended to

[[Page 602]]

conform to the discretionary provisions after the effective date of 
these rules must include the following clause:

    The parties agree that the delivery of irrigation water or use of 
Federal facilities pursuant to this contract is subject to Federal 
reclamation law, including but not limited to the Reclamation Reform Act 
of 1982 (43 U.S.C. 390aa et seq.), as amended and supplemented, and the 
rules and regulations promulgated by the Secretary of the Interior under 
Federal reclamation law.

    (d) The effect of a master contractor's and subcontractor's actions 
to conform to the discretionary provisions. If a district provides 
irrigation water to other districts through subcontracts and the master 
contracting district is subject to:
    (1) The discretionary provisions, then all subcontracting districts 
who are entitled to receive irrigation water must also conform to the 
discretionary provisions; or
    (2) Prior law, then the subcontracting district can amend its 
subcontract to conform to the discretionary provisions without 
subjecting the master contractor or any other subcontractor of the 
master contractor to the discretionary provisions. If a subcontract that 
does not include the United States as a party is amended to conform to 
the discretionary provisions, or the subcontract is a new or renewed 
contract executed after October 12, 1982, then the amended, new, or 
renewed subcontract must include the United States as a party.
    (e) The effect on a landholder's status when a district becomes 
subject to the discretionary provisions. If a district conforms to the 
discretionary provisions and the landholder is:
    (1) Other than a nonresident alien or a legal entity that is not 
established under State or Federal law, and is:
    (i) A direct landholder in that district, then the landholder 
becomes subject to the discretionary provisions and the associated 
acreage limitation status will apply in any district in which the 
landholder holds land; or
    (ii) Only an indirect landholder in that and all other discretionary 
provisions districts, then the landholder's acreage limitation status is 
not affected. Such a landholder can receive irrigation water as a prior 
law recipient on indirectly held lands in districts that conform to the 
discretionary provisions.
    (2) A nonresident alien, or legal entity not established under State 
or Federal law, and the landholder is:
    (i) A direct landholder, then since such a landholder cannot become 
subject to, and has no eligibility under the discretionary provisions:
    (A) All direct landholdings in districts that conform to the 
discretionary provisions become ineligible; and
    (B) Directly held land that becomes ineligible as a result of the 
district's action to conform to the discretionary provisions may be 
placed under recordable contract as subject to the conditions specified 
in Sec. 426.12; or
    (ii) An indirect landholder, then such a landholder may receive 
irrigation water on land indirectly held in districts conforming to the 
discretionary provisions, with the entitlements for such landholder 
determined as specified in Sec. 426.8.
    (f) Landholder actions to conform to the discretionary provisions. 
(1) In the absence of a district's action to conform to the 
discretionary provisions, United States citizens, resident aliens, or 
legal entities established under State or Federal law, can elect to 
conform to the discretionary provisions by executing an irrevocable 
election. Upon execution of an irrevocable election:
    (i) The elector's entire landholding in all districts shall be 
subject to the discretionary provisions;
    (ii) The election shall be binding on the elector and his or her 
landholding, but will not be binding on subsequent landholders of that 
land;
    (iii) An irrevocable election by a legal entity is binding only upon 
that entity and not on the part owners of that entity;
    (iv) An irrevocable election by a part owner of a legal entity binds 
only the part owner making the election and not the entity or other part 
owners of the entity; and
    (v) An irrevocable election by a lessor does not affect the status 
of a lessee, and vice versa. However, the eligibility and entitlement of 
neither a lessor nor a lessee may be enhanced through leasing.

[[Page 603]]

    (2) A landholder makes an irrevocable election by completing a 
Reclamation issued irrevocable election form:
    (i) The elector's original irrevocable election form must be filed 
by the district with Reclamation and must be accompanied by a completed 
certification form, as specified in Sec. 426.18;
    (ii) The elector must file copies of the irrevocable election and 
certification forms concurrently with each district where the elector 
holds nonexempt land;
    (iii) Reclamation will prepare a letter advising the recipient of 
the approval or disapproval of the election. Reclamation will base 
approval upon whether the election form and the accompanying 
certification form(s) indicate the elector's satisfaction of the various 
requirements of Federal reclamation law and these regulations;
    (iv) If the election is approved, the letter of approval, with a 
copy of the irrevocable election form and the original certification 
form(s), will be sent by Reclamation to each district where the elector 
holds land;
    (v) The district(s) shall retain the forms; and
    (vi) If the irrevocable election is disapproved, the landholder and 
the district will be advised by letter along with the reasons for 
disapproval.
    (3) A landholder that only holds land indirectly in a district that 
has conformed to the discretionary provisions, other than a nonresident 
alien or a legal entity not established under State or Federal law, may 
make an irrevocable election also by simply submitting certification 
forms to all districts where the landholder holds land subject to the 
acreage limitation provisions. An election made in this manner is 
binding in all districts in which such elector holds land.
    (g) District reliance on irrevocable election form information. The 
district is entitled to rely on the information contained in the 
irrevocable election form. The district does not need to make an 
independent investigation of the information.
    (h) Time limits for amendments or elections to conform to the 
discretionary provisions. Reclamation will allow at anytime a landholder 
to elect or a district to amend its contract to conform to the 
discretionary provisions. An irrevocable election that was made after 
April 12, 1987, but on or before May 13, 1987, shall be considered 
effective as of April 12, 1987.