81 FR 35608 - Clarifying Language in the Basin Regulations-Water Supply Charges Relating to Certificates of Entitlement

DELAWARE RIVER BASIN COMMISSION

Federal Register Volume 81, Issue 107 (June 3, 2016)

The Delaware River Basin Commission is codifying revisions to its Basin Regulations--Water Supply Charges. The revisions involve no changes in the substance or administration of the rule. They were made in order to clarify the language of the rule to conform to the Commission's decisions and practices so as to provide better notice to users regarding how the Commission implements its entitlements program and to avoid future controversy.

[Federal Register Volume 81, Number 107 (Friday, June 3, 2016)]
[Rules and Regulations]
[Pages 35608-35609]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-13011]


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DELAWARE RIVER BASIN COMMISSION

18 CFR Part 420


Clarifying Language in the Basin Regulations--Water Supply 
Charges Relating to Certificates of Entitlement

AGENCY: Delaware River Basin Commission.

ACTION: Final rule.

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SUMMARY: The Delaware River Basin Commission is codifying revisions to 
its Basin Regulations--Water Supply Charges. The revisions involve no 
changes in the substance or administration of the rule. They were made 
in order to clarify the language of the rule to conform to the 
Commission's decisions and practices so as to provide better notice to 
users regarding how the Commission implements its entitlements program 
and to avoid future controversy.

DATES: This final rule is effective July 5, 2016.

FOR FURTHER INFORMATION CONTACT: Pamela Bush, 609-477-7203.

SUPPLEMENTARY INFORMATION: 

Background

    The Delaware River Basin Commission (``DRBC'' or ``Commission'') is 
a federal-interstate compact agency charged with managing the water 
resources of the Delaware River Basin on a regional basis without 
regard to political boundaries. Its members are the governors of the 
four basin states--Delaware, New Jersey, New York and Pennsylvania--and 
the North Atlantic Division Commander of the U.S. Army Corps of 
Engineers, representing the federal government.
    By Resolution No. 2006-2 on March 1, 2006, the Commission approved 
revisions to its Basin Regulations--Water Supply Charges, 18 CFR part 
420, to clarify the language of the rule to conform to the Commission's 
decisions and practices, in order to provide better notice to users 
regarding how the Commission implements its entitlements program and to 
avoid future controversy. The revisions involved no changes in the 
substance or administration of the rule. Although the adopted revisions 
were incorporated into the Commission's Administrative Manual Part 
III--Basin Regulations--Water Supply Charges, which uses a unique 
numbering system, the corresponding sections of the Code of Federal 
Regulations were never updated to include them. This final rule adds 
the approved changes to the federal code.
    Notice of the proposed revisions was published in the Federal 
Register at 70 FR 60496, October 18, 2005. Notice also appeared in the 
Delaware Register of Regulations, 9 DE Reg. 674, November 1, 2005; New 
Jersey Register, 37 N.J.R. 4206, November 7, 2005; New York State 
Register, November 2, 2005 (page 4); and Pennsylvania Bulletin, 35 
Pa.B. 6094, Nov. 5, 2005. The Commission held a public hearing on the 
proposed revisions on December 7, 2005 and accepted written comments on 
them through January 10, 2006. The changes were adopted by unanimous 
vote approving Resolution No. 2006-2 at the Commission's public 
business meeting on March 1, 2006.

Additional Materials

    Additional materials can be found on the Commission's Web site, 
www.drbc.net. These include: the notice of the proposed amendments 
published in the Federal Register, at http://nj.gov/drbc/library/documents/water-charges-codify/1_FR_PropRule_CertsEntitle101805.pdf; 
and in the state registers at http://www.nj.gov/drbc/about/regulations/other-rulemakings.html; the text of the draft revisions as proposed, at 
http://nj.gov/drbc/library/documents/water-charges-codify/6_ProposedText_WaterSupplyChargingRegs_Art5.2.pdf; Resolution No. 2006-
2, adopting the revisions as final, at http://nj.gov/drbc/library/documents/water-charges-codify/7_Res2006-02_CertEntitle_adopted030106.pdf; and the Minutes of the Commission's 
business meeting of March 1, 2006, explaining the differences between 
the proposed and adopted rule text, at http://nj.gov/drbc/library/documents/water-charges-codify/8_Min_030106_note-pgs18-21.pdf.
    With adoption of this final rule, the Commission will reference the 
CFR version of the Basin Regulations--Water Supply Charges for most 
purposes. For the foreseeable future, however, both versions will 
remain posted on the Commission's Web site, at http://www.nj.gov/drbc/about/regulations/.

List of Subjects in 18 CFR Part 420

    Water supply.

    For the reasons set forth in the preamble, the Delaware River Basin 
Commission amends part 420 of title 18 of the Code of Federal 
Regulations as follows:

PART 420--BASIN REGULATIONS--WATER SUPPLY CHARGES

0
1. The authority citation for part 420 continues to read as follows:

    Authority: Delaware River Basin Compact, 75 Stat. 688.

0
2. Revise Sec.  420.31(d) through (f) to read as follows:


Sec.  420.31  Certificate of entitlement.

* * * * *
    (d) Limitations. (1) A certificate of entitlement is granted to a 
specific user for water withdrawals or diversions at a specific 
facility in the amount of the Legal Entitlement as defined in Sec.  
420.23(b).
    (2) A certificate of entitlement shall not be applied, transferred 
or modified to apply to a facility other than the facility initially 
specified in the certificate.
    (3) A certificate of entitlement may not be transferred from the 
certificate holder to another user, except as provided in the 
exceptions set forth in paragraph (f) of this section.
    (4) A certificate of entitlement does not exempt the certificate 
holder from paying water supply charges for any portion of water 
withdrawals or diversions used outside the facility specified in the 
certificate and any additional service area to which the facility 
supplied water as of October 27, 1961 or at the facility specified in 
the certificate by a user other than the certificate holder. For 
purposes of this paragraph (d)(4), a certificate holder claiming an 
exemption from charges for water supplied within a service area shall 
submit proof satisfactory to the Commission identifying the facility's 
service area as of October 27, 1961. In the absence of proof of the 
service area as of October 27, 1961, the service area defined in the 
Commission docket, if any, for the facility in effect at the time the 
certificate was issued shall be deemed to be the facility's service 
area. In the absence of proof of a service area, the certificate shall 
only exempt the certificate holder from paying water supply charges for 
water used at the facility.
    (e) Termination of certificate. (1) A certificate of entitlement 
terminates pursuant to this section and without the need for Commission 
action if at least one of the following occurs:
    (i) The certificate holder dissolves or otherwise ceases to exist;
    (ii) The certificate holder ceases the withdrawals or diversions at 
the facility to which the certificate of entitlement

[[Page 35609]]

applies, or abandons the intake, provided that a shutdown of the 
facility for maintenance or improvement, or a replacement of the 
intake, that is performed at the earliest practicable commercially 
reasonable time following commencement of the shutdown or replacement, 
shall not be deemed to be a cessation of withdrawal or diversion;
    (iii) The certificate holder through contract, lease or other 
agreement ceases to be the user or public water system supplier of the 
water withdrawn or diverted at the facility; or
    (iv) There is a change in the ownership or control of the facility. 
Once terminated, a certificate of entitlement may not be reinstated or 
reissued.
    (2) A change in ownership or control of the facility includes, but 
is not limited to, any transaction, acquisition, merger or event 
(collectively ``transaction'') resulting in at least one of the 
following:
    (i) A transfer of title to the facility;
    (ii) A person or entity or the shareholders or other owners of an 
entity becoming the beneficial owner, directly or indirectly, or 
acquiring alone or in concert the power or right to vote at least 20 
percent of any class of ownership interest in a certificate holder or 
any of its parent entities, regardless of the tier in the corporate or 
entity structure at which the transaction occurs;
    (iii) A change in ownership or control for purposes of any of the 
certificate holder's or any of its parent corporations' employee 
agreements; or
    (iv) A change of the de facto controlling interest in a certificate 
holder or any of its parent entities, regardless of the tier in the 
corporate or entity structure at which the change occurs.
    (3) A change of the de facto controlling interest in an entity 
includes, but is not limited to, a change of the persons or entities 
with the ability or authority, expressed or reserved, to direct the 
management or policies of an entity and/or to take at least one of the 
following actions:
    (i) Amend or change the entity's identity (e.g. joint venture 
agreement, unincorporated business status);
    (ii) Appoint or remove at least 50% of the members of the Board of 
Directors or Trustees of a corporation, general partner of a 
partnership, or a similar member of the governing body of an entity;
    (iii) Amend or change the by-laws, constitution, or other operating 
or management direction of the entity;
    (iv) Control the sale of, use of or access to any or all of the 
entity's assets;
    (v) Encumber the entity's assets by way of mortgage or other 
indebtedness;
    (vi) Control any or all of the assets or other property of the 
entity upon the sale or dissolution of the entity;
    (vii) Dissolve the entity;
    (viii) Arrange for the sale or transfer of the entity to a new 
ownership or control;
    (ix) Select or change the management of the entity or determine 
management compensation; or
    (x) Set operating policies, financial policies or budgets.
    (4) For purposes of applying paragraph (e)(3) of this section, 
consideration may be given to circumstances particular to the person or 
entity and certificate holder involved, including without limitation 
the ability of that person or entity to take actions in light of the 
number of shares in the certificate holder or its parent entities that 
are actively voted, the practice of any majority shareholder in 
exercising or refraining from exercising majority rights, and any 
agreements giving the person or entity the right to control votes of 
others.
    (5) A series of transactions undertaken pursuant to a plan or that 
are otherwise related shall be considered a single transaction for 
purposes of this section. For purposes of calculating the twenty 
percent threshold in paragraph (e)(2)(ii) of this section, the 
securities, shares or other interests held immediately prior to the 
transaction shall be added to the securities, shares or other interests 
acquired in the transaction.
    (f) Exceptions-(1) Agricultural exception. (i) Whenever ownership 
or possession of land in agricultural use is transferred, any 
certificate of entitlement with respect to such land shall be deemed to 
run with the land, if but only if within sixty days following the land 
transfer the new user demonstrates to the Executive Director that it 
will continue to use the water withdrawn or diverted for agricultural 
irrigation. Following any such timely demonstration, the Executive 
Director shall transfer the certificate of entitlement to the new user. 
The Executive Director may extend the sixty day period for good cause 
shown.
    (ii) A certificate of entitlement that has been transferred 
pursuant to paragraph (f)(1)(i) of this section relieves the user of 
the obligation to pay water supply charges only with respect to the 
quantity of water in fact used by the new certificate holder for 
agricultural irrigation up to the Legal Entitlement specified in the 
certificate, and not with respect to the quantity of water used for any 
other purposes. The provisions of Sec.  420.43 shall apply to water 
uses outside the scope of the certificate of entitlement.
    (iii) A certificate of entitlement that has been transferred 
pursuant to paragraph (f)(1)(i) of this section terminates pursuant to 
this paragraph (f)(1) and without the need for Commission action if and 
when the certificate holder ceases using the water for agricultural 
irrigation, provided that if the cessation occurs in conjunction with a 
transfer of ownership or possession of the land in agricultural use, 
the certificate of entitlement may be transferred to a new user 
pursuant to paragraph (f)(1)(i). Once terminated, a certificate of 
entitlement may not be reinstated or reissued.
    (2) Corporate reorganization exceptions. The following provisions 
apply where a corporate parent directly or indirectly owning 100% of 
each class of shares of all of its subsidiary corporations decides to 
reorganize those subsidiary corporations without affecting the 
corporate parent's 100% ownership interest.
    (i) Whenever a corporate reorganization consists solely of a change 
of the name, identity, internal corporate structure, or place of 
organization of a corporate certificate holder or any of its parent 
corporations, the Executive Director may reissue a certificate of 
entitlement in the name of the new owner of the facility, provided that 
the reorganization does not affect ownership and/or control by the 
certificate holder's corporate family of companies within the meaning 
of paragraphs (e)(2) through (5) of this section and does not alter the 
ultimate corporate parent's 100% ownership interest.
    (ii) A merger or other plan, transaction or series of transactions 
that effectuates a change of ownership or control within the meaning of 
paragraphs (e)(2) through (5) does not fall within the exemption of 
paragraph (f)(2)(i) of this section on the basis that a corporate 
reorganization constitutes part of the merger, plan, transaction or 
series of transactions.

    Dated: May 26, 2016.
Pamela M. Bush,
Commission Secretary and Assistant General Counsel.
[FR Doc. 2016-13011 Filed 6-2-16; 8:45 am]
 BILLING CODE 6301-01-P