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000678 3/13/00 USBR Staff Draft MetI pmposes even though Congressional approval may be necessary. NonnaJly, the conversion would probably have to constitute more than onc>-ha.lf of the project Water supply. 1'hUe lie a number of issues which need to be considered in malring this evaluation, including whether it would serve ~lamation and Federal objectives, and whether the new M&I purpose is an authorized project purpose. The process for doing a reallocation is compHcated and governed by legislation.. Therefore, this should not be under1aken unless it is warranted and it will fi1cilitate the transfer and the pricing process. The McGovern amenchDent (Section 302, 42 U.S.C. 17152) 10 the authOrizing legislation for the Department of the Energy states: "Neither the 1I'8DsfeI' of functions effected by Paragraph (1)(E) of this subsection nor any changes in cost allocation or project evaluation standards shall be deemed to authorize reallocation of joint costs of multipurpose facilities theretofore allocated unless and ~ the extent that such cIumge is hereafter. approyed by Congress.- The Solicitor's Office has held that this provision applies, wbether 01' DOt power is a project purpose. Should a cost reallocation be deemed .apploptiate, it may be possible to obtain Congressional approval through the budget and appropriations process.- That is, the .:.. proposed reallocation can be discussed in the Reclamation budget document, as long as it is prominently displayed. such 1hat Congress is fully aware ol1he proposal . .. . . . S.. Trqnsfers .ofproject water after completion o/project payolll-1be November 1997 memorandum states that the Secretary has the authority to contract and set priCjeS for M&I project water. It further states that the fact 1hat an irrigation project cont:i'ador pays:out i1s share . .of the costs' attnDutable to the irrigation function does not affect this authority. Thus, the Secretary can set'a charge fOr M&I project water and collect revenues after an irrigation obligation has been repaid. In the event that a conversion &om irrigation to M&J uses occurs before the irrigation Payout is Complete, but deliveries for M&I ,uses wiD continue after the obligation is satisfied, then a portion of the revenues will be necessary to satisfy the inigation . obligation and the balance should be credited to the Reclamation Fund, unless specifically addressed by the project authorizing legislation. 6. ldentification and computation of proper interest charges - The Sec.~ provided policy guidance to Reclamation in 1949 with respect to charging interest on the M&l project water supply. . By memorandum dated July 8, 1996, the Secretary provided revised and v.pdated guidance on this subject. This memorandmn states: "The rate of interest sbaIJ be detennined by using the interest rate formula included in the Water Supply Act of 1958 unless then: is an authorized project rate for M&I service. This applies to water service con1lacts negotiated under the provisions of section9(cX2) oftbe Reclamation Project Act of 1939, including the determination ofM&! rates for water service which converted from irrigation to M&l purposes._ 7. Clarification o/when and by what method "aid-to-irrigalionn will be adjusted _ In some instances, the additional revenues derived from water marketing or conversions of proj~ water from irrigation to M&I service can be used to reduce the "aid-to-irrigation" to be paid fioJn power reven~ These M&I revenues will be used to deCrease the "aid-to-irrigation" values provide4. to the Power Marketing Agencies (PMA's) for incorporation into the Power Repayment 3