(a) Assessments collected in excess of expenses incurred shall be accounted for in accordance with one of the following:

1. (1) Excess funds not retained in a reserve, as provided in paragraph (a)(2) of this section shall be refunded proportionately to the persons from whom they were collected; or

2. (2) The Council, with the approval of the Secretary, may carry over excess funds into subsequent fiscal periods as reserves: Provided, That funds already in reserves do not equal approximately three fiscal years' expenses. Such reserve funds may be used:

   1. (i) To defray expenses during any fiscal period prior to the time assessment income is sufficient to cover such expenses;
   2. (ii) To cover deficits incurred during any fiscal period when assessment income is less than expenses;
   3. (iii) To defray expenses incurred during any period when any or all provisions of this part are suspended or are inoperative; and
   4. (iv) To cover necessary expenses of liquidation in the event of termination of this part.