TEMPORARY RELIEF FOR WATER USERS ON IRRIGATION PROJECTS CONDUCTED AND OPERATED UNDER THE RECLAMATION LAW

TUESDAY, FEBRUARY 23, 1932

HOUSE OF REPRESENTATIVES,
COMMITTEE ON RULES,
Washington, D. C.

The committee met at 10.30 o'clock a. m., Hon. Edward W. Pou (chairman) presiding.

The CHAIRMAN. This hearing is on House Resolution 152 for the consideration of the bill, H. R. 9489.

(The resolution and bill referred to are as follows:)

[House Resolution 152, Seventy-second Congress, first session]

Resolved, That upon the adoption of this resolution it shall be in order to move that the House resolve itself into the Committee of the Whole House on the state of the Union for the consideration of H. R. 9489, a bill to provide for the temporary relief of water users on irrigation projects constructed and operated under the reclamation law. That after general debate, which shall be confined to the bill and shall continue not to exceed two hours, to be equally divided and controlled by the chairman and ranking minority member of the Committee on Irrigation and Reclamation, the bill shall be read for amendment under the fiveminute rule. At the conclusion of the reading of the bill for amendment the committee shall rise and report the bill to the House with such amendments as may have been adopted, and the previous question shall be considered as ordered on the bill and the amendments thereto to final passage without intervening motion except one motion to recommit.

[H. R. 9489, Seventy-second Congress, first session]

A BILL For the temporary relief of water users on irrigation projects constructed and operated under the reclamation law

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That any irrigation district, water-users' association, or other water-users' organization under contract with the United States for payment of construction charges under the act of June 17, 1902 (32 Stat. 388), or acts amendatory thereof or supplementary thereto, including the act of February 21, 1911 (36 Stat. 923) (upon acceptance of this act by resolution of its board of directors or corresponding body), shall be required to make no payment on the regular construction charge for the calendar year, 1931, and in lieu of the regular installment of construction charge provided for under existing contracts, may pay for the calendar year 1932 on the basis of 50 per centum of the amount which, but for this act, would be payable under said contracts, such amount to be computed and determined for that year in the manner provided in said contracts and the law applicable thereto. Interest and penalty as now provided by law and contracts for nonpayments when due shall apply on all charges for 1932 adjusted as herein authorized. No interest or penalty shall be payable on that portion of the charges herein authorized to be deferred: Provided, That in determining the rate for the sale of power during the irrigation season of 1931 to irrigation districts from any power plant operated by the Bureau of Reclamation, interest on the cost of the power system shall not be included as

an element, but interest at the rate of 21⁄2 per centum per annum shall be included as an element of such rate for the sale of power to such districts during the irrigation season of 1932.

SEC. 2. On projects or divisions of projects where no irrigation district, water users' association, or other water-users' organization has assumed joint obligation for payment of construction charges, individual water-right applicants or entrymen, upon acceptance of this act in a manner satisfactory to the Secretary of the Interior, shall be required to make no payment on the regular construction charge for the calendar year 1931, and in lieu of the installments payable under existing contracts, may pay their regular installments of construction charges for the calendar year 1932 on the same basis as that authorized in section 1 hereof for districts, associations, and other water-users' organizations.

SEC. 3. The act of Congress approved January 31, 1931, entitled "An act for the relief of the Uncompahgre reclamation project, Colorado" (Private, Numbered 300, Seventy-first Congress), is hereby amended to extend for one year from and after January 1, 1932, the time for beginning construction of drainage system upon the Uncompahgre project, and any and all construction charges accruing upon or for said project for or during the year 1932 shall be deferred and included in and made payable as a part of the project supplemental construction charge provided for in said act of January 31, 1931; and in order to afford opportunity to complete the construction authorized by the act of Congress approved February 21, 1931 (Public, Numbered 708), relating to the Grand Valley reclamation project, Colorado, any and all construction charges accruing upon or for said project for or during the year 1932 shall be deferred without interest and penalties and shall be included in and made payable as project supplemental construction charges.

SEC. 4. At the expiration of the period for which deferment of charges is made under this act, all districts, water-users' associations, or other waterusers' organizations and all individuals accepting the provisions hereof shall resume payment of charges on the basis of and in accordance with existing contracts and shall continue payments thereafter until the entire indebtedness of said districts, water-users' association, or other water-users' organizations and individuals to the United States shall have been fully paid. In the case of a district, water-users' association, or other water-users' organization, or individual having contracts executed pursuant to the act of February 21, 1911 (36 Stat. 925), the act of August 13, 1914 (38 Stat. 686), or the act of May 25, 1926 (444 Stat. 636), or any special act the deferred construction installment or installments for the calendar year 1931, and that portion of the 1932 installment or installments deferred, together with the installment or installments of deferred construction and/or operation and maintenance for 1931 and 50 per centum of the installment and/or installments of such deferred charges for 1932, shall be paid as an additional installment to be due and payable one year after the date the last installment under existing contracts shall become due, except in those cases in which the Secretary of the Interior, whose decision shall be final, shall find necessary additional installments, which he is hereby authorized to fix. In the case of any district, water-users' association, or other water-users' organization, or individual under contract for payment of construction charge pursuant to subsection F, section 4, act of December 5, 1924 (43 Stat. 702), construction pay ments shall be continued on the basis of existing contracts until the entire indebtedness to the United States, including all charges deferred pursuant to this act, shall have been fully paid. Installments so carried over shall be subjected to the reductions provided for in section 7 hereof.

SEC. 5. The Secretary of the Interior, in his discretion, and upon acceptance of the provisions of this section by the water users affected, in the manner provided in sections 1 and 2 hereof, may permit adjustment of construction and/or operation and maintenance charges heretofore deferred by contracts made pursuant to existing law to be made for the years 1931 and 1932 on the basis authorized in sections 1 and 2 hereof or on such other basis as the Secretary may find to be required in each case.

SEC. 6. The Secretary of the Interior, in his discretion, is further authorized to defer the payment to the United States from any water-users' organization, as defined in section 1 hereof and from any individual water-right applicant or entryman of construction charges and installments of deferred construction and/or deferred operation and maintenance charges for the calendar year 1930 and prior thereto. Such deferred charges, together with penalty or interest to December 31, 1931, under existing laws and contracts shall be paid in such annual installments as the secretary of the Interior may fix.

SEC. 7. Any irrigation district, water-users' association, or other water-users' organization which has contracted to pay construction charges and which is not in arrears for more than one calendar year in the payment of any construction, operation, and maintenance, or other charge due by it to the United States may, at its option, deliver or authorize the delivery of water during the years 1932 and 1933 to water users who may be more than one year in arrears in the payment of charges or assessments due from such landowner or water user to the district or association.

SEC. 8. In the case of any irrigation district, water-users' organization, or individual receiving credits on account of power profits or other revenues under the provisions of subsections I and/or J, section 4, act of December 5, 1924 (43 Stat. 703), or any other act of Congress, when any extension is granted as provided in sections 1, 2, or 4, the amount of such credits shall be deducted from the amount of any payments so extended: Provided, That the provisions of this section shall not apply to power profits or other revenues derived from works not constructed at the expense of the United States. The credits, if any, in excess of the payments so extended shall be applied as now provided by law and contract. Acceptance of the provisions of this act shall operate as a waiver of any law and/or contract providing for application of credits different from that in this section prescribed.

SEC. 9. Collections of construction charges for the calendar year 1931 (which charges are subject to adjustment and are adjusted under sections 1, 2, and 4 of this act) and penalties and interest, if any, from water-users' organizations and individual water-right applicants or landowners, heretofore made under existing contracts, plus interest on all amounts so collected at the rate of 6 per centum per annum, shall be credited upon the succeeding payments as they become due, including operation and maintenance charges.

SEC. 10. That the act of June 25, 1910, entitled "An Act to authorize advances to the reclamation fund, and for the issue and disposal of certificates of indebtedness in reimbursement therefor, and for other purposes," as amended, and the act of March 3, 1931 (46 Stat. 1507), are hereby amended so as to provide that payments in reimbursement of moneys so advanced under these acts and not heretofore repaid shall be made by transfer annually from the reclamation fund to the general funds of the Treasury beginning July 1, 1935.

[House Report No. 597, Seventy-second Congress, first session,

The Committee on Irrigation and Reclamation, to whom was referred the bill (H. R. 9489) for the temporary relief of water users on irrigation projects constructed and operated under the reclamation law, having considered the same report thereon with a recommendation that it do pass.

The committee conducted extensive hearings on the urgent necessity of enacting the pending legislation, and was addressed by the Commissioner of Reclamation, Dr. Elwood Mead, and by representatives, from the various reclamation projects in the West, and has unanimously reached the conclusion that this legislation is imperative in order to relieve the settlers on many of the projects who are unable to meet their annual construction charges. Because of water shortage, due to unusual drought conditions extending throughout the arid States, and the low price of farm products, such as $7 per ton for hay, 50 cents per 100 pounds for potatoes, 20 cents per pound for butterfat, 15 cents per dozen for eggs, 15 cents per pound for wool, 5 cents per pound for lambs, 5 cents per pound for hogs, and 4 cents per pound for beef, a large proportion of the water users are in arrears and without money.

Certain fixed charges, such as operation and maintenance, must be paid by the settlers each year, in addition to annual charges on construction costs, as well as county and State taxes, amounting to more than the gross value of the crop production last year in many instances.

Under the law the Secretary of the Interior is prohibited from furnishing water for irrigation purposes, to the occupants of the land who are more than one year in arrears. Consequently, if this legislation is not enacted, many of the settlers on a number of projects will not be able to raise any crops during the current

year.

Farming activities on a reclamation project are much more expensive than in the humid regions and while they may produce larger crops, the low price prevailing during the last two or three years for farm products, has made farming on these projects most unprofitable and involved the settlers in an actual loss, and

in many instances made it necessary for them to obtain loans on their machinery and livestock to meet the construction payments which must be promptly made in order to secure water for irrigation.

By reason of the fact that the Government already has a first lien on the land for the unpaid construction charges, it is impossible for the farmers to secure loans from the Federal farm loan bank, and frequently from any other source under existing conditions. In addition, many of the banks in the irrigated sections have been closed, and the small deposit of the farmers have been tied up. No money is available for financing the farmers to meet their urgent obligations.

This relief legislation is in line with laws heretofore enacted to aid the farmers on other than reclamation and drainage projects, and will permit the water users in the arid regions to carry on their activities with the hope that prices next year will be sufficiently high to enable them to retrieve their losses. By reason of the fact that there is an excessive snowfall in the mountains of the West, there is every reason to believe that all of the projects will have an ample water supply for producing next year's crops.

In this connection, it is well to refer briefly to what has been accomplished under the reclamation law. Accordingly to the Commissioner of Reclamation, Doctor Mead, in his testimony before the subcommittee of the House Committee on Appropriations, December 15, 1931, there are 40,354 irrigated farms on the 26 Federal reclamation projects, with a population of 165,956. There are located on these projects 213 cities and towns with a population of 472,723. There are 688 schools, 724 churches, and 120 banks with deposits of $134,261,170, and 226,014 depositors.

Except for the cooperation of the Federal Government toward the construction of Federal reclamation projects, the eastern States would have been deprived of the purchasing power of this vast number of people. Many people are of the opinion that the reclamation of the arid lands is purely a local matter, when as a matter of fact the building up of markets on these projects is beneficial to every State in the Union.

The bill under consideration provides for the temporary relief of water users on reclamation projects which are constructed or are being constructed under the reclamation law.

Section 1 provides that the construction charges for 1931 which were due the 1st of last December shall be deferred until the end of the contract period and that 50 per cent of the construction charges for the current year shall be similarly deferred. The last paragraph of the section provides that the payment of interest at 5 per cent due on the cost of the power plant shall be suspended for1931, and one-half of the interest rate shall be suspended for 1932. This provision is applicable only to the Gem irrigation district, which is a portion of the Owyhee project in Oregon and Idaho, which, under the contract with the Secretary of the Interior, is to be paid out in 12 annual installments, nearly 50 per cent of which has already been paid.

Section 2 provides that this deferment shall apply to individual water users who are not on projects where districts or water users' associations have assumed the joint obligation for payment.

Section 3 extends for one year from and after January 1, 1932, the time within which the Uncompahgre reclamation project in Colorado shall commence the construction of a drainage system in lieu of annual construction payments, as provided in the act of January 31, 1931 (46 Stat. 1974), and that all construction charges accruing upon said project for the year 1932 shall be deferred and made a part of the project supplemental construction charge provided for in said act. Section 3 also provides that the payment of all construction charges on the Grand Valley reclamation project, in Colorado, for the year 1932, shall be deferred, in order to afford that project an opportunity to complete the contruction authorized by the act of February 21, 1931.

Section 4 provides that the water users' organization and the individual water users shall resume payment of charges in accordance with existing contracts at the end of the period for which deferment has been granted.

Section 5 authorizes the Secretary of the Interior, in his discretion, to permit the adjustment of construction and operation and maintenance charges heretofore deferred on the basis authorized in sections 1 and 2 of this bill.

Section 6 authorizes the Secretary of the Interior to supply water for irrigation purposes to districts or individuals who are delinquent in their payment for the calendar year 1930 or years prior thereto.

Section 7 provides that any irrigation district or water users' association which has contracted to pay construction charges and is not in arrears for more than

one calendar year may authorize the delivery of water to any individual water user who may be delinquent in his payments to the district or association.

Section 8 provides that any profits accruing to the water users or district from the sale of power shall be deducted from the amount of any payment extended under the provisions of this bill, and that any such credits in excess of the construction charge shall be applied as now provided by law and contract. The proviso in this section excepts from the operation of this law those power projects which were not constructed at the expense of the reclamation fund.

Section 9 provides that any payments of construction charges for the year 1931 which have been made heretofore shall be credited upon succeeding payments as they become due, including maintenance and operation charges, and interest at the rate of 6 per cent per annum shall be added to the amounts so collected and be credited on the succeeding payments.

Section 10 provides for the deferment of the repayment of the moneys advanced to the reclamation fund under the act of June 25, 1910, and the act of March 3, 1931, until July 1, 1935.

Under the provisions of rule 13, 2-A, the following is submitted:

Act of June 25, 1910 (36 Stat. 835)

SEC. 3. That beginning five years after the date of the first advance to the reclamation fund under this act, fifty per centum of the annual receipts of the reclamation fund shall be paid into the general fund of the Treasury of the United States until payment so made shall equal the aggregate amount of advances made by the Treasury to said reclamation fund, together with interest paid on the certificates of indebtedness, issued under this act, and any expense incident to preparing, advertising, and issuing the same.

Act of June 12, 1917 (40 Stat. 149)

The act of June twenty-fifth, nineteen hundred and ten (36 Stat. 835), is amended to provide that reimbursement of the moneys advanced under the provisions of that act shall be made by transferring annually the sum of $1,000,000 from the reclamation fund to the general funds in the Treasury, beginning July 1, nineteen hundred and twenty, and continuing until full reimbursement has been made.

Act of February 6, 1931 (46 Stat. 1069)

The annual payments required to be made from the reclamation fund to the general funds in the Treasury, as reimbursement for advances made in accordance with the provisions of the act entitled "An act to authorize advances to the 'Reclamation fund,' and for the issue and disposal of certificates of indebtedness in reimbursement therefor, and for other purposes," approved June 25, 1910, as amended, are hereby suspended for a period of two years, beginning with the fiscal year ending June 30, 1931.

Proposed amendment

That the act of June 25, 1910, entitled "An act to authorize advances to the reclamation fund, and for the issue and disposal of certificates of indebtedness in reimbursement therefor, and for other purposes,' as amended, is hereby amended so as to provide that payments in reimbursement of moneys so advanced under this act and not heretofore repaid shall be made by transfer annually from the reclamation fund to the general funds of the Treasury beginning July 1, 1935.