43 U.S.C. 12 §485h

§ 485h

TITLE 43—PUBLIC LANDS

section, the organization or representatives of
the water users shall furnish a list of those lands
which are considered to be of comparatively low
productivity or to be nonproductive, and of
those lands which are considered to be of greater
or lesser productivity than indicated by existing
classifications, if any, made pursuant to the
Federal reclamation laws, and shall furnish also
such data relating thereto as the Secretary by
regulation may require.
(d) Primary determination
Upon receipt of any such request the Secretary shall make a preliminary determination
whether the requested land classification or reclassification probably is justified by reason of
the conditions of the lands involved and other
pertinent conditions of the project, including its
contractual relations with the United States.
(e) Probable justification
If the Secretary finds probable justification
and if the advance to the United States hereinafter required is made, he shall undertake as
soon as practicable the classification or reclassification of the lands listed in the request, and of
any other lands which have been, are, or may be
included within the project involved and which
in his judgment should be classified or reclassified.
(f) Expenses
One-half of the expense involved in any classification work undertaken pursuant to this section shall be charged to operation and maintenance administration nonreimbursable; and onehalf shall be paid in advance by the organization
involved. On determining probable justification
for the requested classification or reclassification as provided in this section, the Secretary
shall estimate the cost of the work involved and
shall submit a statement of the estimated cost
to said organization. Said organization, before
commencement of the work, shall advance to
the United States one-half of the amount set
forth in said statement and also shall advance
one-half of the amount of supplementary estimates of costs which the Secretary may find it
necessary to make from time to time during the
progress of the work; and said amounts shall be
and remain available for expenditure by the Secretary for the purposes for which they are advanced, until the work is completed or abandoned. After completion or abandonment of the
work, the Secretary, shall determine the actual
costs thereof; and said organization shall pay
any additional amount required to make its
total payments hereunder equal to one-half of
the actual cost or shall be credited with any
amount by which advances made by it exceed
one-half of said actual cost, as the case may be.
(g) Classification as prerequisite to contract
If in the judgment of the Secretary a classification or reclassification pursuant to the provisions of this section is a necessary preliminary
to entering into a contract under section 485b or
485c 1 of this title, he may require the same as a
1 See

References in Text note below.

Page 148

condition precedent to entering into such a contract.
(h) Modification of existing obligations
No modification of any existing obligation to
pay construction charges on any project shall be
made by reason of any classification or reclassification undertaken pursuant to this section
without express authority therefor granted by
Congress upon recommendations of the Secretary made in a report under subsection (f) of
this section.
(Aug. 4, 1939, ch. 418, § 8, 53 Stat. 1192; Pub. L.
93–608, § 1(18), Jan. 2, 1975, 88 Stat. 1970.)
REFERENCES IN TEXT
The Federal reclamation laws, referred to in subsec.
(c), are defined in section 485a of this title.
Section 485c of this title, referred to in subsec. (g),
was repealed by Pub. L. 85–611, § 3, Aug. 8, 1958, 72 Stat.
543.
AMENDMENTS
1975—Subsecs. (f) to (i). Pub. L. 93–608 redesignated
subsecs. (g) to (i) as (f) to (h), respectively. Former subsec. (f), which required a report to Congress by the Secretary on classifications and reclassifications or
project lands, was struck out.

§ 485h. New projects; sale of water and electric
power; lease of power privileges
(a) Findings of Secretary
No expenditures for the construction of any
new project, new division of a project, or new
supplemental works on a project shall be made,
nor shall estimates be submitted therefor, by
the Secretary until after he has made an investigation thereof and has submitted to the President and to the Congress his report and findings
on—
(1) the engineering feasibility of the proposed construction;
(2) the estimated cost of the proposed construction;
(3) the part of the estimated cost which can
properly be allocated to irrigation and probably be repaid by the water users;
(4) the part of the estimated cost which can
properly be allocated to power and probably be
returned to the United States in net power
revenues;
(5) the part of the estimated cost which can
properly be allocated to municipal water supply or other miscellaneous purposes and probably be returned to the United States.
If the proposed construction is found by the Secretary to have engineering feasibility and if the
repayable and returnable allocations to irrigation, power, and municipal water supply or
other miscellaneous purposes found by the Secretary to be proper, together with any allocation to flood control or navigation made under
subsection (b) of this section, equal the total estimated cost of construction as determined by
the Secretary, then the new project, new division of a project, or supplemental works on a
project, covered by his findings, shall be deemed
authorized and may be undertaken by the Secretary. If all such allocations do not equal said
total estimated cost, then said new project, new
division, or new supplemental works may be

Page 149

TITLE 43—PUBLIC LANDS

undertaken by the Secretary only after provision therefor has been made by Act of Congress
enacted after the Secretary has submitted to
the President and the Congress the report and
findings involved.
(b) Allocation of part of cost to flood control or
navigation
In connection with any new project, new division of a project, or supplemental works on a
project there may be allocated to flood control
or navigation the part of said total estimated
cost which the Secretary may find to be proper.
Items for any such allocations made in connection with projects which may be undertaken
pursuant to subsection (a) of this section shall
be included in the estimates of appropriations
submitted by the Secretary for said projects,
and funds for such portions of the projects shall
not become available except as directly appropriated or allotted to the Department of the Interior. In connection with the making of such an
allocation, the Secretary shall consult with the
Chief of Engineers and the Secretary of the
Army, and may perform any of the necessary investigations or studies under a cooperative
agreement with the Secretary of the Army. In
the event of such an allocation the Secretary of
the Interior shall operate the project for purposes of flood control or navigation, to the extent justified by said allocation therefor.
(c) Furnishing water to municipalities; sale of
electric power; lease of power privileges
The Secretary is authorized to enter into contracts to furnish water for municipal water supply or miscellaneous purposes: Provided, That
any such contract either (1) shall require repayment to the United States, over a period of not
to exceed forty years from the year in which
water is first delivered for the use of the contracting party, with interest not exceeding the
rate of 31⁄2 per centum per annum if the Secretary determines an interest charge to be proper, of an appropriate share as determined by the
Secretary of that part of the construction costs
allocated by him to municipal water supply or
other miscellaneous purposes; or (2) shall be for
such periods, not to exceed forty years, and at
such rates as in the Secretary’s judgment will
produce revenues at least sufficient to cover an
appropriate share of the annual operation and
maintenance cost and an appropriate share of
such fixed charges as the Secretary deems proper, and shall require the payment of said rates
each year in advance of delivery of water for
said year. Any sale of electric power or lease of
power privileges, made by the Secretary in connection with the operation of any project or division of a project, shall be for such periods, not
to exceed forty years, and at such rates as in his
judgment will produce power revenues at least
sufficient to cover an appropriate share of the
annual operation and maintenance cost, interest
on an appropriate share of the construction investment at not less than 3 per centum per
annum, and such other fixed charges as the Secretary deems proper: Provided further, That in
said sales or leases preference shall be given to
municipalities and other public corporations or
agencies; and also to cooperatives and other
nonprofit organizations financed in whole or in

§ 485h

part by loans made pursuant to the Rural Electrification Act of 1936 [7 U.S.C. 901 et seq.].
Nothing in this subsection shall be applicable to
provisions in existing contracts, made pursuant
to law, for the use of power and miscellaneous
revenues of a project for the benefit of users of
water from such project. The provisions of this
subsection respecting the terms of sales of electric power and leases of power privileges shall be
in addition and alternative to any authority in
existing laws relating to particular projects. No
contract relating to municipal water supply or
miscellaneous purposes or to electric power or
power privileges shall be made unless, in the
judgment of the Secretary, it will not impair
the efficiency of the project for irrigation purposes.
(d) Delivery of water for irrigation; repayment
contract prerequisites
No water may be delivered for irrigation of
lands in connection with any new project, new
division of a project, or supplemental works on
a project until an organization, satisfactory in
form and powers to the Secretary, has entered
into a repayment contract with the United
States, in a form satisfactory to the Secretary,
providing among other things—
(1) That the Secretary may fix a development period for each irrigation block, if any,
of not to exceed ten years from and including
the first calendar year in which water is delivered for the lands in said block; and that during the development period water shall be delivered to the lands in the irrigation block involved at a charge per annum per acre-foot, or
other charge, to be fixed by the Secretary each
year and to be paid in advance of delivery of
water: Provided, That where the lands included
in an irrigation block are for the most part
lands owned by the United States, the Secretary, prior to execution of a repayment contract, may fix a development period, but in
such case execution of such a contract shall be
a condition precedent to delivery of water
after the close of the development period: Provided further, That when the Secretary, by contract or by notice given thereunder, shall have
fixed a development period of less than ten
years, and at any time thereafter but before
commencement of the repayment period conditions arise which in the judgment of the Secretary would have justified the fixing of a
longer period, he may amend such contract or
notice to extend such development period to a
date not to exceed ten years from its commencement, and in a case where no development period was provided, he may amend such
contract within the same limits: Provided further, That when the Secretary shall have deferred the payment of all or any part of any
installments of construction charges under
any repayment contract pursuant to the authority of the Act of September 21, 1959 (73
Stat. 584), he may, at any time prior to the
due date prescribed for the first installment
not reduced by such deferment, and by agreement with the contracting organization, terminate the supplemental contract by which
such deferment was effected, credit the construction payments made, and exercise the au-

§ 485h

TITLE 43—PUBLIC LANDS

thority granted in this section. After the close
of the development period, any such charges
collected and which the Secretary determines
to be in excess of the cost of the operation and
maintenance during the development period
shall be credited to the construction cost of
the project in the manner determined by the
Secretary.
(2) That the part of the construction costs
allocated by the Secretary to irrigation shall
be included in a general repayment obligation
of the organization; and that the organization
may vary its distribution of construction
charges in a manner that takes into account
the productivity of the various classes of lands
and the benefits accruing to the lands by reason of the construction: Provided, That no distribution of construction charges over the
lands included in the organization shall in any
manner be deemed to relieve the organization
or any party or any land therein of the organization’s general obligation to the United
States.
(3) That the general repayment obligation of
the organization shall be spread in annual installments, of the number and amounts fixed
by the Secretary, over a period of not more
than 40 years, exclusive of any development
period fixed under paragraph (1) of this subsection, for any project contract unit or, if the
project contract unit be divided into two or
more irrigation blocks, for any such block, or
as near to said period of not more than forty
years as is consistent with the adoption and
operation of a variable payment formula
which, being based on full repayment within
such period under average conditions, permits
variance in the required annual payments in
the light of economic factors pertinent to the
ability of the organization to pay.
(4) That the first annual installment for any
project contract unit, or for any irrigation
block, as the case may be, shall accrue, on the
date fixed by the Secretary, in the year after
the last year of the development period or, if
there be not development period, in the calendar year after the Secretary announces that
the construction contemplated in the repayment contract is substantially completed or is
advanced to a point where delivery of water
can be made to substantially all of the lands
in said unit or block to be irrigated; and if
there be no development period fixed, that
prior to and including the year in which the
Secretary makes said announcement water
shall be delivered only on the toll charge basis
hereinbefore provided for development periods.
(e) Contracts to furnish water
In lieu of entering into a repayment contract
pursuant to the provisions of subsection (d) of
this section to cover that part of the cost of the
construction of works connected with water supply and allocated to irrigation, the Secretary, in
his discretion, may enter into either short- or
long-term contracts to furnish water for irrigation purposes. Each such contract shall be for
such period, not to exceed forty years, and at
such rates as in the Secretary’s judgment will
produce revenues at least sufficient to cover an
appropriate share of the annual operation and

Page 150

maintenance cost and an appropriate share of
such fixed charges as the Secretary deems proper, due consideration being given to that part of
the cost of construction of works connected with
water supply and allocated to irrigation; and
shall require payment of said rates each year in
advance of delivery of water for said year. In the
event such contracts are made for furnishing
water for irrigation purposes, the costs of any
irrigation water distribution works constructed
by the United States in connection with the new
project, new division of a project, or supplemental works on a project, shall be covered by
a repayment contract entered into pursuant to
subsection (d) of this section.
(f) Public participation
No less than sixty days before entering into or
amending any repayment contract or any contract for the delivery of irrigation water (except
any contract for the delivery of surplus or interim irrigation water whose duration is for one
year or less) the Secretary shall—
(1) publish notice of the proposed contract or
amendment in newspapers of general circulation in the affected area and shall make reasonable efforts to otherwise notify interested
parties which may be affected by such contract or amendment, together with information indicating to whom comments or inquiries concerning the proposed actions can be addressed; and
(2) provide an opportunity for submission of
written data, views and arguments, and shall
consider all substantive comments so received.
(Aug. 4, 1939, ch. 418, § 9, 53 Stat. 1193; July 26,
1947, ch. 343, title II, § 205(a), 61 Stat. 501; Pub. L.
85–611, §§ 1, 3, Aug. 8, 1958, 72 Stat. 542, 543; Pub.
L. 87–613, § 2, Aug. 28, 1962, 76 Stat. 407; Pub. L.
97–293, title II, § 226, Oct. 12, 1982, 96 Stat. 1273.)
REFERENCES IN TEXT
The Rural Electrification Act of 1936, referred to in
subsec. (c), is act May 20, 1936, ch. 432, 49 Stat. 1363, as
amended, which is classified generally to chapter 31
(§ 901 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 901 of
Title 7 and Tables.
Act of September 21, 1959, referred to in subsec. (d)(1),
is Pub. L. 86–308, Sept. 21, 1959, 73 Stat. 584, which
amended section 485b–1 of this title, enacted provisions
set out as a note under section 485b–1 of this title, and
amended provisions set out as a note under section 485b
of this title. For complete classification of this Act to
the Code, see Tables.
AMENDMENTS
1982—Subsec. (f). Pub. L. 97–293 added subsec. (f).
1962—Subsec. (d)(1). Pub. L. 87–613 authorized the Secretary, when a development period of less than ten
years was fixed by contract and, before repayment period conditions arose which would justify a longer period, to amend such contract to extend such period to
not exceed ten years from its start, and where no period was provided, to grant a period not to exceed ten
years, and where he deferred payment of any construction charges pursuant to act of September 21, 1959, authorized him, prior to the due date of the first installment not reduced by such deferment, by agreement
with the contracting organization, to terminate the
supplemental contract by which such deferment was effected, credit the construction payments made, and exercise the authority granted in this section.
1958—Subsec. (d)(3). Pub. L. 85–611, § 1, permitted the
general repayment obligation to be spread in annual in-

Page 151

TITLE 43—PUBLIC LANDS

stallments as near to the period of not more than 40
years as is consistent with the adoption and operation
of a variable payment formula which permits variance
in the required annual payments.
Subsec. (d)(5). Pub. L. 85–611, § 3, struck out provisions
which required repayment contracts to provide that
each year the installment of the organization’s repayment obligation scheduled for such year shall be the
construction charges due and payable for such year, or
that each year the installment for such year of the organization’s repayment obligation shall be increased or
decreased on the basis of the normal and percentages
plan provided in former section 485c of this title for
modification of existing obligations to pay construction charges, and the amount of the annual installment, as thus increased or decreased, shall be the construction charges due and payable for such year.
CHANGE OF NAME
Department of War designated Department of the
Army and title of Secretary of War changed to Secretary of the Army by section 205(a) of act July 26, 1947,
ch. 343, title II, 61 Stat. 501. Section 205(a) of act July
26, 1947, was repealed by section 53 of act Aug. 10, 1956,
ch. 1041, 70A Stat. 641. Section 1 of act Aug. 10, 1956, enacted ‘‘Title 10, Armed Forces’’ which in sections 3010
to 3013 continued Department of the Army under administrative supervision of Secretary of the Army.
CONSTRUCTION WITH SECTION 101–1 OF TITLE 33
Section as amended and modified by act Dec. 22, 1944,
ch. 665, § 1(c), 58 Stat. 665, see section 701–1(c) of Title 33,
Navigation and Navigable Waters.
MUNICIPAL, DOMESTIC, AND INDUSTRIAL WATER SUPPLY
CONTRACTS; RENEWALS; CONFORMING AMENDMENTS TO
EXISTING CONTRACTS; ‘‘LONG-TERM CONTRACT’’ DEFINED

Pub. L. 88–44, June 21, 1963, 77 Stat. 68, provided:
‘‘That the Secretary of the Interior shall, upon request
of the other party to any long-term contract for municipal, domestic, or industrial water supply hereafter entered into under clause (2) in the proviso to the first
sentence of section 9, subsection (c), of the Reclamation Project Act of 1939 (53 Stat. 1195, 43 U.S.C. 485h),
include provision for renewal thereof subject to renegotiation of (1) the charges set forth in the contract in
the light of circumstances prevailing at the time of renewal and (2) any other matters with respect to which
the right to renegotiate is reserved in the contract.
Any right of renewal shall be exercised within such reasonable time prior to the expiration of the contract as
the parties shall have agreed upon and set forth therein.
‘‘SEC. 2. The Secretary shall also, upon like request,
provide in any such long-term contract or in any contract entered into under clause (1) of the proviso aforesaid that the other party to the contract shall, during
the term of the contract and of any renewal thereof and
subject to fulfillment of all obligations thereunder,
have a first right for the purposes stated in the contract (to which right the holders of any other type of
contract for municipal, domestic, or industrial water
supply shall be subordinate) to a stated share or quantity of the project’s water supply available for municipal, domestic, or industrial use.
‘‘SEC. 3. The Secretary is hereby authorized, upon request by the other party, to negotiate amendments to
existing contracts entered into pursuant to the first
sentence of section 9, subsection (c), of the Reclamation Project Act of 1939 [subsec. (c) of this section] to
conform said contracts to the provisions of this Act.
‘‘SEC. 4. As used in this Act, the term ‘long-term contract’ means any contract the term of which is more
than ten years.’’
EXTENSION OF VARIABLE PAYMENT PLAN TO OTHER
ORGANIZATIONS
Section 2 of Pub. L. 85–611 provided that: ‘‘The benefits of a variable payment plan as provided in the

§ 485h–1

amendment to paragraph (3) of section 9, subsection (d),
of the Reclamation Project Act of 1939 [subsec. (d)(3) of
this section] contained in section 1 of this Act may be
extended by the Secretary to any organization with
which he contracts or has contracted for the repayment
of construction costs allocated to irrigation on any
project undertaken by the United States, including
contracts under the Act of August 11, 1939 (53 Stat.
1418), as amended [section 590y et seq. of Title 16, Conservation], and contracts for the storage of water or for
the use of stored water under section 8 of the Act of December 22, 1944 (58 Stat. 887, 891) [section 390 of this
title]. In the case of any project for which a maximum
repayment period longer than that prescribed in said
paragraph (3) has been or is allowed by Act of Congress,
the period so allowed may be used by the Secretary in
lieu of the forty-year period provided in said amendment to paragraph (3).’’

§ 485h–1. Administration of repayment contracts
and long-term contracts to furnish water; renewal and conversion; credit for payments;
right to available water supply; rates; construction component
In administering subsections (d) and (e) of section 485h of this title, the Secretary of the Interior shall—
(1) include in any long-term contract hereafter entered into under subsection (e) of section 485h of this title provision, if the other
contracting party so requests, for renewal
thereof under stated terms and conditions mutually agreeable to the parties. Such terms
and conditions shall provide for an increase or
decrease in the charges set forth in the contract to reflect, among other things, increases
or decreases in construction, operation, and
maintenance costs and improvement or deterioration in the party’s repayment capacity.
Any right of renewal shall be exercised within
such reasonable time prior to the expiration of
the contract as the parties shall have agreed
upon and set forth therein;
(2) include in any long-term contract hereafter entered into under subsection (e) of section 485h of this title with a contracting organization provision, if the organization so requests, for conversion of said contract, under
stated terms and conditions mutually agreeable to the parties, to a contract under subsection (d) of section 485h of this title at such
time as, account being taken of the amount
credited to return by the organization as hereinafter provided, the remaining amount of
construction cost which is properly assignable
for ultimate return by it can probably be repaid to the United States within the term of a
contract under subsection (d) of section 485h of
this title;
(3) credit each year to every party which has
entered into or which shall enter into a longterm contract pursuant to subsection (e) of
section 485h of this title so much of the
amount paid by said party on or before the due
date as is in excess of the share of the operation and maintenance costs of the project
which the Secretary finds is properly chargeable to that party. Credit for payments heretofore made under any such contract shall be
established by the Secretary as soon after
July 2, 1956 as it is feasible for him to do so.
After the sum of such credits is equal to the
amount which would have been for repayment