FLOOD CONTROL, DRAINAGE, LEVEE DISTRICTS TUESDAY, JANUARY 27, 1931 HOUSE OF REPRESENTATIVES, The committee met at 10.30 o'clock a. m., Hon. Bertrand Snell (chairman) presiding. The CHAIRMAN. This is a hearing on House Resolution 330, introduced by Mr. Smith of Idaho, to give a special rule for the consideration of Senate bill 4123. [H. Res. 330, Seventy-first Congress, third 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 S. 4123, a bill to provide for the aiding of farmers in any State by the making of loans to drainage districts, levee districts, levee and drainage districts, counties, boards of supervisors, and/or other political subdivisions and legal entities, and for other purposes. 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 five-minute 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 on motion to recommit. [S. 4123, Seventy-first Congress, third session] [Strike out all after the enacting clause and insert the part printed in italic] AN ACT To provide for the aiding of farmers in any State by the making of loans to drainage districts, levee districts, levee and drainage districts, counties, boards of supervisors, and/or other political subdivisions and legal entities, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, [That for the purpose of aiding the farmers in any State on the wet lands which have been drained by artificial means and/or protected from the flood waters of a stream or streams or other waters by means of levees or other improvements by duly organized drainage districts, levee districts, levee and drainage districts, counties, boards of supervisors, and/or other political subdivisions and legal entities existing under and by virtue of the laws of the State where located, where for the payment of such works there are now outstanding bonds, mortgages, or warrants, the Secretary of the Interior is authorized to loan, out of the revolving fund hereinafter created, to any such district or legal entity an amount sufficient to redeem such bonds, mortgages, warrants, and the accrued interest thereon, in the manner and under such restrictions and conditions as are hereinafter set forth. SEC. 2. Hereinafter, whenever the words "drainage district" appear in the act they shall be interpreted to include levee districts, levee and drainage districts, counties, boards of supervisors, and/or political subdivisions and legal entities; and whenever the word bonds appears in the act it shall be interpreted to include mortgages and/or warrants. SEC. 3. Loans shall be made only to the legally constituted authority which has issued the bonds, and not unto it until the Secretary of the Interior has satisfied himself by such examination of the engineering works, for which the legal obligations were issued, as he may deem necessary, of the reasonably successful operation thereof, and that the lands designed to be protected by these works are receiving protection to a reasonable degree. The Secretary of the Interior shall make or cause to be made an appraisal of the value of the taxable real property of each drainage district making application for a loan as well as of its economic value, and no loan may be made until the Secretary is satisfied it will be paid at maturity. The Secretary of the Interior is authorized to ascertain the actual value of the outstanding bonded indebtedness of any district making an application for a loan under the provisions of this act, and as a condition precedent to making said loan, to require the holders of said bonds to enter into an agreement to remit the difference between the actual value of said bonds, and their face value, and in determining the actual value of any outstanding bonds, the Secretary is directed to take into consideration the value of said bonds, as of date of March 1, 1930. Loans may be made annually or otherwise to take up the principal of and/or accrued interest on the aforesaid bonds already due and unpaid and/or as they become due: Provided, however, That when the amount of the loan applied for to take up the bonds already issued against the drainage district applying for the loan is greater than the appraisal indicates would be paid at maturity, the Secretary may loan an amount which in his judgment would be secured as to payment at maturity, when and if the authority to bond a drainage district and the holders of the bonds of said district by mutual agreement would agree to issue and to accept second lien bonds the maturity of which shall be subsequent to the refunding bonds issued under the provisions of this act for the amount of the difference between the outstanding bonds and that which the Secretary would decide to loan for the Government, or to make other arrangements satisfactory to the Secretary of the Interior: Provided further, That the Secretary of the Interior before making the loan, must be satisfied that satisfactory legal authority exists for and ample provisions have been made to annually tax the real property accepted as security for the bonds issued sufficient to pay the maintenance expenses of the drainage district for a period equaling the life of the loan, and beginning at the end of ten years the annual taxes must be sufficient to establish a sinking fund which will retire the loan at the maturity dates fixed by the Secretary of the Interior. All money collected for the sinking fund must be deposited in the Treasury of the United States to the credit of the debtor, but may be transferred into the revolving fund by the Treasurer of the United States on application by the Secretary of the Interior. SEC. 4. Loans shall be noninterest bearing and shall be made for a period not exceeding forty years, and the Secretary of the Interior shall fix the exact time in every case. Loans shall be secured by the issuance and delivery to the Secretary of the Treasury by the legally constituted authority, refunding bonds payable to the United States in the amount of the loan, and it shall be and appear on the face of each bond that it is a first lien on the taxable real property within said drainage district on which the original obligations were issued and/or the benefits assessed against said real property but shall be subject to liens of the State and county for general taxes, and the Secretary of the Interior shall fix the dates of the maturities of said bonds: "Provided, however, That no drainage district may issue additional bonds for any purpose without having first obtained the written consent of the Secretary of the Interior. SEC. 5. Whenever any drainage district shall have sold any property in said district for unpaid taxes and shall have bought in the same, and shall hold the title to such land, then the Secretary of the Interior shall require, when any loan is made to said drainage district, that the drainage district allow the owner at the time of such sale and purchase, or his heirs at law, executors, administrators, or assigns to repurchase said land for the sum for which it was sold and purchased, plus taxes which have accrued on the same since the date of said sale: Provided, however, That the owner, his heirs at law, executors, administrators, assigns, or grantees shall exercise such right within two years after the date of said said purchase by the district and the district shall, at the time of the exercising of the right to repurchase, hold title to the lands sought to be redeemed. SEC. 6. There is authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $95,000 030, or so much thereof as may be necessary, which amount shall be a revolving fund for the purpose of making loans under the provisions of this Act: Provided, however, That the amount appropriated in any one year shall not exceed $19,000,000, but shall be in such amounts as shall be recommended by the Secretary of the Interior and when appropriated shall be deposited by the Secretary of the Treasury in this fund. SEC. 7. The Secretary of the Interior shall make all reasonable and necessary regulations for carrying into effect the purposes of this act, and the actual expenses connected therewith shall be paid out of the money provided hereunder.] That for the purpose of aiding the farmers in any State on lands which have been drained and/or irrigated and/or protected from the flood waters of a stream or streams or other waters by means of levees or other improvements by duly organized drainage districts, levee districts, levee and drainage districts, irrigation and/or similar districts on other than Federal projects, counties, boards of supervisors, and or other political subdivisions and legal entities existing under and by virtue of the laws of the State where located, where for the payment of such works there are now outstanding bonds, or warrants, certificates of indebtedness, or other lawful indebtedness, and/or unpaid judgments, the Secretary of the Interior is authorized to loan, out of the revolving fund hereinafter created, to any such district or legal entity an amount sufficient to redeem such bonds, certificates of indebtedness, or lawful indebtedness, and unpaid judgments, warrants, and the accrued interest thereon, in the manner and under such restrictions and conditions as are hereinafter set forth. SEC. 2. Hereinafter, whenever the word "district" appears in the act it shall be interpreted to include drainage districts, levee districts, levee and drainage districts, irrigation and/or similar districts other than Federal projects, counties, boards of supervisors, and/or political subdivisions and legal entities; and whenever the word "bonds" appears in the act it shall be interpreted to include certificates of indebtedness, or other lawful indebtedness, and/or unpaid judgments, and/or warrants. SEC. 3. Loans shall be made only to the legally constituted authority which has issued the bonds, or its successor in interest, and not unto it until the Secretary of the Interior has satisfied himself by such examination of the engineering works, for which the legal obligations were issued, as he may deem necessary, of the reasonably successful operation thereof, and that the lands designed to be benefited by these works are receiving benefit to a reasonable degree. The Secretary of the Interior shall make or cause to be made an appraisal of the value of the taxable property of each district making application for a loan as well as of its economic value, and no loan may be made until the Secretary is satisfied it will be paid at maturity. Loans may be made annually or otherwise to take up the principal of and/or accrued interest on the aforesaid bonds already due and unpaid and/or as they become due: Provided, however, That when the amount of the loan applied for to take up the bonds already issued against the district applying for the loan is greater than the appraisal indicates would be paid at maturity, the Secretary may loan an amount which in his judgment would be secured as to payment at maturity, when and if the authority to bond a district and the holders of the outstanding bonds of said district by mutual agreement would agree to issue and to accept bonds the maturity of which shall be subsequent to the refunding bonds issued under the provisions of this Act for the amount of the difference between the outstanding bonds and that which the Secretary would decide to loan for the Government, or to make other arrangements satisfactory to the Secretary of the Interior: Provided further, That the Secretary of the Interior, before making the loan, must be satisfied that satisfactory legal authority exists for and ample provisions have been made to annually tax the taxable property accepted as security for the bonds issued sufficient to pay the maintenance expenses of the district for a period equaling the life of the loan, and beginning at the end of ten years the annual taxes must be sufficient to establish a sinking fund which will retire the loan at the maturity dates fixed by the Secretary of the Interior. All money collected for the sinking fund must be deposited in the Treasury of the United States to the credit of the debtor, but may be transferred into the revolving fund by the Treasurer of the United States on application by the Secretary of the Interior. Sec. 4. That the Secretary of the Interior is hereby authorized and empowered to negotiate with the owners and holders of the bonds and other evidences of debts of the various districts hereinbefore referred to for the purpose of compromising and reducing the amount of existing indebtedness, both of principal and interest, and the Secretary of the Interior is accordingly given full power and authority to make such adjustments before the loans herein provided are made. Sec. 5. Loans shall be made for a period not exceeding 40 years, to be determined by the Secretary of the Interior in each case, which shall bear interest at a rate of 3 per cent per annum, payable annually: Provided, however, That during the first five years of the loan the interest may in the discretion of the Secretary of the Interior accrue and be payable during the succeeding years of the loan in equal annual installments. Loans shall be secured by the issuance and delivery to the Secretary of the Treasury by the legally constituted authority, refunding bonds payable to the United States in the amount of the loan, and it shall be and appear on the face of each bond that it is a lien on all the taxable property within said district and/or the benefits assessed against said property, and the Secretary of the Interior shall fix the dates of the maturities of said bonds: Provided, however, That no district may issue additional bonds for any purpose without having first obtained the written consent of the Secretary of the Interior as long as it is in debt hereunder. Sec. 6. Whenever any district shall have sold any property in said district for unpaid taxes and shall have bought in the same, and shall hold the title to such land, then the Secretary of the Interior shall require, when any loan is made to said district, that the district allow the owner at the time of such sale and purchase, or his heirs at law, executors, administrators, or assigns, to repurchase said land for no greater sum than that for which it was sold and purchased, plus taxes which have accrued on the same since the date of said sale: Provided, however, That the owner, his heirs at law, executors, administrators, assigns, or grantees shall exercise such right within two years after the date of said purchase by the district and the district shall, at the time of the exercising of the right to purchase, hold title to the lands sought to be redeemed. Sec. 7. There is authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $95,000,000, or so much thereof as may be necessary, which amount shall be a revolving fund for the purpose of making loans under the provisions of this act: Provided, however, That the amount appropriated in any one year shall not exceed $19,000,000, but shall be in such amounts as shall be recommended by the Secretary of the Interior and when appropriated shall be deposited by the Secretary of the Treasury in this fund. Sec. 8. The Secretary of the Interior shall make all reasonable and necessary regulations for carrying into effect the purposes of this act, and the actual expenses connected therewith shall be paid out of the money provided hereunder. Amend the title so as to read: “An Act to provide for the aiding of farmers in any State by the making of loans to drainage districts, levee districts, levee and drainage districts, irrigation, and/or similar districts other than Federal projects, counties, boards of supervisors, and/or other political subdivisions and legal entities, and for other purposes." [House Report No. 2169, Seventy-first Congress, third session] The Committee on Irrigation and Reclamation, to whom was referred the bill (S. 4123) to provide for the aiding of farmers in any State by the making of loans to drainage districts. levee d str cts, levee and drainage districts, counties, boards of supervisors, and/or other political subdivisions and legal entities, and for other purposes, having carefully considered the same, recommend its passage with the following amendment: Str ke out all follow ng the enacting clause and insert in lieu thereof the following: |