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vn. COSt ALLOCATION, RElKBmSEMEN'l', AND <;OST SHARING On the basis at the Identtn.ca.tlon pro... vided for in the system of BCCOWlt,s for beneficial and adverse effects an alloca... tIOD of appropt1.a.te costs sh~ be mRde when an allocation of costs is required. for lJUIl)OSeS ot establishing reimburSe... ment lev-w. pricing policies. or cost shar... ing between the Federal GQvernment and non-Federal public and private interests. All objectives and components of ob- Jectives shall be" generally treated com- parably in cost allocation a.nd are en- titled to their fair .share of the advan- tages resulting from a multlobjective plan, ' Re1mbursement and cost-sharing poll- cies &ha.ll be directed generally to the end that Identulable beneficiaries bear an equitable share of costs commensurate with beneficial eJfecl,o; received In lull cogn.1zance of the multlobJectives. Since existing cost.sharlng policiea are not en- tirely consistent with the mult10bjective approach to planning water and land resources, these policies wtll be reviewed and. needed changes will be recom- mended. A. COST ALLOCATION 1. Introduction. The existence of joint contributlons toward obJect:.ves and their components requires that an allocation of appropriate costs of a mulUobJectlve plan be made for purposes of establishing reimbursement levels, pricing pollcies, or cost sharing between the Federal Gov- ernment and non-Federal interests. Thus, when legislative or ad.mJn1straUve pol1cles regarding reimbursement. pric- ing levels. or cost sharing apply to a proposed multtobJective plan an alloca- tion of appropria.te costs shall be made. If such policIes do not apply. no alloca- tion 01 coots is necessary unless reqUired for other adm1n1strat1ve reasons. For purposes of cost allocation, only" the costs included In the national eco- nomic development a.ooount will be al- located among objectives and their components. Appropriate costs compris- ing the allocation of national economic development costs to the mult10bjectlves and their compOnents will be Identified tor purposes 01 applying specific reim- bursement and cost-sharing policies. Objectives and their components will generally be treated comparably In the cost allocation with respect to the Iden- tlflcation of alternatives, the evaluation of alternatives. and the determination of 1ncrement:.al and/or separable costs. However. the national economic develop- ment objective serves as the baseline for cost allocation since onJy national economic development costs are allo- cated~ Z. SumTTUtTy oj the cost allocation method. The cost allocation method de- sCrIbed herein Is a modlflcation and ex- tension of the separable costs-remainIng benefits method ot cost allocation which has been used to allocate costs of a multi-purpose project to purposes Berved by the project, In the multtobJective setting, cost al- location beComes a two-stage process in::- volv:1ng the allocation or costs among NOTICES objectives and then the further alloca- tion or costs among components of ob- jectives. The system of accounts showing beneficial and adverse elIects for alterna- tive plans will usu9Jly provide much of the in!onnatton needed In this process. This iB pa.rtJ.cularlY true lor incremental and separable costs which may be de- termined by comparing the appropriate alternatives including the alternative of no plan. Under the first stage, the method pro- v:ldes fur the allocation 01 natJonal eco- nomic development costs among the several objectives. For cases when fea.- tures of a plan are included to serve the environmental qualIty or !he regional development obJect1ve a.nd a.t the same time contribute incidentally to Ule na- tional economic development objective. the methed provides that the incre- mental cosm of such features: be allo- cated. among the objectl.ve served and the national economic development obJec- tive. Ca.ses 1 and 2 a.ttached are exam- ples relating to this circumstance. For cases when featureB of a plan are designated to serve the environmental quality or the regIonal development ob- Jective at the loss of net beneficial e1fecta .on the components of the national eco- nomic development objective served by the plan, and for cases when the entire plan Is -designated to serve the environ- mental quality or the regional develop- ment objective at the loss of net bene- tI.c1al effects. on national economio development, the meUlod. provides that costs equiValent to the net na.tional eco- nomic development bene.ficl.a.l effecta foregone be allocated to the obJectlve served. Ca.se<; 3 and 4 attached are ex- amples relattrig to these circumstances. Under Ute second stage the method provides for the further a.Ilocatlon of national economic development costs allocated to objectives in stage 1 among the components of the objectives. In the case - of the environmental qua.l1ty and. regional - development objectives, this would be done by allocating to each com- ponent of those objecttves a share of the national economic development cost ba.sed on the costs, oompaJ-ably evalu- ated, of the altemattve means mOISt I1kely to be Wldertaken In the absence or the plan 01 obtainlng the beneficlaJ' effects attributable to each component. In the case of the national economic de- velopment objective. coots would be 'allo- cated among the compOnents of the ob- Jective using the separable costs-remain- ing benefits method of oost alloca.tion essentially as applled In the past. 3. The cost aUocation meth.o~. Cost allocation among objectives. When fea- tures of a. plan are included to serve the environmental quality or the regional de- velopment objective or their components which are not economically JUBtJfied, each objective shall be alloca.ted- Not less than the incremental na- tlona.l economic development costs net of any incidental incremental national ec0- nomic development beneficial eff'ects 01 achieving the benellctal effects attrib- utable to each objective determined by Identifying on a. last added balils, the na- 24181 tionaJ economJc development costs and beneficlaJ elfecl,o; or Inc:remenl>i of scale 01 a pIan Intended primarily to serve each objective, Nor more than. the lesser of (1) gr05S Incremental national economic develop- ment costs of ach1eving the beneflc1aJ. effecl,o; attributable to each objective de- termined as discussed a.bove. or (2) the costs. comparably evaluated. of the alternatlve means most likely to be Wlderbaken In the absence of the plan of obtaining Ule benefio1al eJfects at- tributable to each objective, or (3) Ule value of the benetlc1al effects a.ttributa.ble to each obJectlve In the Judgment or the recommending official. Remaining joint national economic de- velopment costE (the total national eco- nomlc development costs 01 the plan less the sum of the net Incremental national economic development costs detenn1ned for each of the above objectives) 5hall be nJlooated among all objectives in propor- tion to: (1) The les..r or beneficial ef- fects or the costs, comparably evaluated, ot the alternative means most likely to be undertaken in the absence of the plan 01 obtaining Ule benellclal elfects at-' trlbutable to the national economlc de- velopment objective in the C86e of that 'obJectlve; and (2) !he ceiling estab- lished tinder the procedures set lorth above lor the envlronmentaJ quality and regional development obJectl.ves less any net incremental costs previously allo- cated to the envtronmenteJ. quality and regional development obJect1voo. When features of a plan are desig- nated to serve the environmental quality or the regional development objective or their components at the loss of net bene- ficial effects on the components ot the national economtc deVelopment objective served" by the plan. or when the entire plan Is designated to serve the environ- mental quallty or the regional develop- ment objective or their components at the loss of net beneficial effects on na- tional economlc development, costs equivalent to the net natJonaJ econom.1c development beneficial elIects foregone shall be allocated to the objective Berved. Following Is an example table Ulus- tratlng how the national economlc de- velopment cost6 alloCated to the mulU- objectives may be displayed for the major alternative plans. T,j.BLJ: I.-A DL9I"1.AT 01' NATlONA.1. ECONOYIC D.s:vJ:L- OPY!l:NT COST'll ALLOCAT.II:D to TIll: MULTlOBUcrTnll 1'0& TOE MuOB. AL'U:RN....TrVJ; PL.uls NED EQ RD Total - Plan A.: " Plan element: pJli::~~~~~::~~::~:~:~ Plan.e1ement: 1______0__..._.___.._. Plant~~:=:=:======:=:=:= Plan el8menL: 1______0.__....__...__ t ~:~=~=====::== FEDERAL REGISTER, VOL 36, NO. 245~TUESDAY, DECEMBER 21, 1971