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July 6, 1949.-Committed to the Committee of the Whole House on the State

of the Union and ordered to be printed

Mr. MURDOCK, from the Committee on Publie Lands, submitted the



(To accompany H. R. 51841

The Committee on Public Lands, to whom was referred the bill (H. R. 5184) to approve contracts negotiated with the Belle Fourche irrigation district, the Deaver irrigation district, the Westland irrigation district, the Stanfield irrigation district, the Vale, Oreg., irrigation district, and the Prosser irrigation district, to authorize their execution, and for other purposes, having considered the same, report favorably thereon without amendment and recommend that the bill do pass.


The purpose of this bill is to approve repayment contracts negotiated by the Secretary of the Interior with the Belle Fourche irrigation district, the Deaver irrigation district, the Westland irrigation district, the Stanfield irrigation district, the Vale. Oreg.. irrigation district, and the Prosser irrigation district.

Section 7 of the Reclamation Project Act of 1939 authorizes and directs the Secretary of the Interior to investigate the repayment problems of any existing contract unit, where. in his judgment, a repayment contract as provided in section 3 or 4 of the act would not be practicable or provide an economic sound adjustment Having made such finding the Secretary of the Interior is authorized and directed under provisions of section 7 to negotiate a repayment contract which, in his judgment, would provide fair and equitable treatment of the repayment problems involved and would be in keeping with the general purpose of the Reclamation Project Act of 1939.

The Secretary of the Interior, having made the required finding, has negotiated with the water users' organizations concerned certain amendatory repayment contracts which will reschedule the payments due by those organizations in such a way that they can be met promptly as they become due. Each amendatory contract which this bill would authorize the Secretary to execute has been voted upon favorably by the water users in the irrigation districts concerned.

The Department of the Interior has recommended the enactment of this legislation. The Department's favorable report on a companion bill, S. 2089, addressed to the chairman of the Senate Committee on Interior and Insular Affairs, is in part as follows:

We recommend enactment of the proposed legislation. The proposed contracts, each of which has been approved by the water users of the respective irrigation districts, were negotiated under authority of section 7 of the Reclamation Project Act of 1939 (53 Stat. 1187). The reclassification of land of the Deaver irrigation district and of the Belle Fourche irrigation district was made under authority of section 8 of that act. There are enclosed for the convenience of your committee copies of the contracts themselves, together with summaries of the land reclassification made in connection with the amendatory repayment contracts negotiated with the Deaver and Belle Fourche irrigation districts.

The Belle Fourche project, located in western South Dakota was authorized in 1903. Construction of the project commenced in 1904 and was virtually complete by 1911 with the exception of the drainage system which was constructed during the years 1928 through 1931. About one-half of the project lands initially were withdrawn public lands which were opened for reclamation entry by public notices issued between 1907 and 1917. Project settlement was complete by 1920. practically all public lands having been entered or water right applications having been filed for privately owned lands within the project area.

In 1905, the Belle Fourche Valley Water Users' Association entered into contract with the United States guaranteeing the payment of the construction charges fixed by public notice. The Belle Fourche irrigation district succeeded the Water Users' Association and entered into a new contract in 1923 which was amended in 1927 to obtain the benefits of the Omnibus Adjustment Act of 1926 and to provide for supplemental construction principally of a drainage system. The 1923 and 1927 contracts were further amended by the contract of September 1, 1931, which called for annual construction payments increasing by 5-year periods from $50,000 in 1931 to $75.000 in 1951 The 1923 and 1927 contracte provided for the funding of sizable amounts of delinquent operation and maintenance charges and interest and penalties Additionally, annual construction installments for several years were deferred for later payment.

With regard to the 1931 contract the district availed itself of the congressional moratoria on construction installments coming due, during the years 1931 through 1935, and has been granted numerous deferments since 1935 with the result that the district had paid only about one-half of the tota amounts coming due from 1931 to date While the district has more nearly met the installments coming due in the recent years of high prices, anticipated lower agricultural prices in the future and the scheduled increase in installments under the present contractual arrangements starting in 1951 probably would cause the district again to default in its construction payments if the 1931 contract is not amended.

The Belle Fourche irrigation district taces basic repayment problems which several previous adjustments in repayment arrangements failed to resolve With a view to resolving these basic problems, the Bureau of Reclamation has made an objective economic and repayment survey of the project. reclassified the lands of the project, and with the cooperation of the water users has developed an amenda tory repayment plan which is thought to be reasonable and fair to the water users. and assures, to the maximum extent possible, the protection of the investment of the United States and the continued operation of the project on a sound economic basis.

The soils iound on the Belle Fourche project are one of the major factors affecting the development of the project Practically all of the area north of the Belle Fourche River, constituting about two-thirds of the project area, is made up on Orman clay and Pierre clay soils. These soils although rich in most mineral plant food elements, are heavy and difficult to manage and thus seriously limit crop vields and the kind of crops which can be grown. Intensive farming has not developed on these gumbo soils and crop returns per acre have remained at relatively low levels. The most productive soils, knowry as the Vale series, are found on the flood plain of the Belle Fourche River and its tributaries. These alluvial soils which characterize about one-third of the project lands are sandy loams and silt loams well adapted to intensive cropping,

The lands of the project have been reclassified in order to establish their current productive capacity, to correct inequities in the district's assessments, and to provide a firm base for the analysis of payment capacity and the development of a sound amendatory repayment plan. This classification, referred to as the 1947 classification, reduces the pay class area under the existing 1926 classification from 62,008.9 to 55,708.5 acres and reduces the temporarily unproductive area from 10,725,0 to 3,420.7 acres. Additionally, the 6,825 acres in the uncompleted Willow Creek division which were placed in a suspended status by the 1926 act are reclassified as premanently unproductive. Construction of the irrigation system for the Willow Creek division was suspended more than 20 years ago after very little work had been done, and construction of the division subsequently was abandoned principally because experience on adjacent project lands of a similar nature indicated that the Willow Creek lands were not well adapted to irrigation.

The detailed economic and repayment survey of the project included a thorough analysis of land use, farm production, farm costs, and the established farm pattern for the various productive classes of land. An allowance was made for all items of farm income and expenses including the amount and seasonal distribution of labor, the costs and returns attributable to capital investment, and farm family living costs prevailing in the area. From these basic data an analysis was made of the water users' long-range payment capacity under price and cost relationships prevailing during the period 1939-44. This period was selected as the period in recent years most likely to reflect long-range agricultural prices and costs of production. It was found on this basis that the water users, with reasonable management practices could maintain their established level of living and pay all farm expenses, including water charges at rates which would enable the district to meet an annual construction installment approximating $40,000.

Based on the 1947 reclassification, the repayment 'obligation of the irrigation district is adjusted in the proposed amendatory contract to reflect the write-off of (a) the $273,667.90 construction cost assigned to Willow Creek lands by the Board of Survey and Adjustments in 1926 as reported in House Document 201, Sixty-ninth Congress, first session, (b) $597,246.33 representing the proportionate share of primary construction costs, attributable to 13,604.7 acres of permanently inproductive land at the per acre rate of $43.90 determined by the Board of Survey and Adjustments, and (c) $138,359.80 which is the proportionate share of drainage system construction costs attributed to the 13,604.7 acres being eliminated from the project. In addition 3,420.7 acres are classed as temporarily unproductive. These lands will be subject to a 5-year development program with the expectation that they can be made permanently productive. The contract authorizes reclassification by the Secretary either into pay status or to nonpay class 6 at the end of the 5-year period.

The proposed repayment obligation also includes $400,000 to cover the estimated cost of much-needed works involving the replacing of the present outlet structures of the Belle Fourche Dam. the extending of the fill and riprap on the upstream face of the dam. and other renabilitation and betterment work on the struction installment of $38,700, and subsequently the district may, at its option approximate one-half of the charge on class 1 lands, and intermediate charges will be assessed class 2 and class 3 lands.

The district under the proposed repayment contract will pay an annual conwill adjust the annual construction installment of $38,700 in accordance with annual fluctuations in net farm income as measured by changes in the prices of and without regard to the operation of the variable formula, the pay-out under the production. Assuming expenditure of $400,000 for rehabilitation and betterment proposed contract would be approximately 80 years. Call of excessive amounts of delinquent water charges and the movement of large acreages of low-producing gumbo lands into county ownership via the tax

The economic survey of the project reveals that in the past one of the major title route was the failure of the assessment system to recognize the widely differing order to correct this situation, the proposed contract requires that district assessshilies of the lands in various areas of the project to pay water charges. In ments be varied by class of land so that total water charges on class 4 lands will

irrigation system.

Among other features of the contract are provisions for (a) the continuance of district operation and maintenance of the project, and (b) the establishment of a reserve fund for meeting extraordinary operation and maintenance contingencies.

S. 2089, if enacted, will provide the authorization needed for my execution of the proposed contract and also will approve the 1947 reclassification of project lands. The bill also will authorize the further adjustment of the district construction charge obligation in keeping with the further reclassification of project lands placed in class 5 of the 1947 reclassification.

The Deaver irrigation district comprises the lands of the Frannie division of the Shoshone Federal reclamation project. The Frannie division is one of the five divisions of the Shoshone project located in Park and Big Horn Counties in northwest Wyoming. The other divisions are the Garland division, which was constructed and settled prior to World War I; the Willwood division, which was constructed and settled after World War I; the Heart Mountain division, which is now being constructed and settled; and the Oregon Basin division, which has not yet been constructed. These other divisions, where settled, are on sound operating bases. The farmers are paying their water charges and their farm units have a relatively high sales and security value. The Frannie division, which was constructed and settled during World War I, is in a less fortunate position.

Substantial areas of the Frannie division are of low productivity or are seeped. The division irrigation system was designed for 38,000 acres, but the good lands under the system were limited, and by 1921, only 27,500 acres were entered. Under the 1926 land classification, authorized by the Fact Finders' Act of December 5. 1924 (43 Stat. 672), the Board of Survey and Adjustments found only 20,000 acres to be irrigable, of which about 4,300 acres were classed as temporarily unproductive. The largest acreage irrigated at any time was 15,000. This acreage has declined to an average of about 12,000 during recent years. Unfortunately, the better lands in the divi: ion are checkerboarded with the poorer lands or are at the end of the system, so that their irrigation requires the operation and maintenance of most of the facilities designed to serve the entire 38,000-acre system. The high per acre operation and maintenance cost which has resulted from this circumstance, when combined with the low productivity of much of the Frannie division land, has made difficult the payment of adequate water charges, whether such charges are for operation and maintenance or on account of the construction charge obligation of the Deaver irrigation district, contained in its 1926 repayment contract with the United States. The condition of the Frannie division's irrigation system has become progressively less efficient; first, because during the low farm income years of the 1930's there was insufficient income for adequate operation and maintenance; and second, because during the good farm income years of World War II, personnel and equipment could not be secured.

Under the Deaver irrigation district's 1926 repayment contract, as amended, the district assumed operation and maintenance of the Frannie division on December 31, 1929. Construction payments on the 5 percent crop plan authorized by the act of December 5, 1924, were to begin February 1, 1932. On January 3, 1933, the 1926 contract was amended to enable the district to effect a land-drainage program. In lieu of the congressional moratoria on construction charges allowed other reclamation projects by the act of April 1, 1932 (47 Stat. 75), and succeeding acts, construction charges due from the Deaver irrigation district in the years 1933–42 were deferred with the provision that the district was to make a special levy of not less than $8,000 annually for drainage work. The average collection for drainage purposes during this period amounted to only $3,875 per year due to widespread delinquency caused by the deflated prices of farm products throughout the country. Beginning February 1, 1943, payments of construction charges were to continue in accordance with the 1926 contract, modified so that payments due in 1943 were to be one-half of 5 percent of the gross crop value; in 1944, payments were to be three-fourths of the full amount; with the full payment falling due in 1945 and thereafter. The district was unable to meet this schedule, so it was necessary to defer for later payments about threefourths of the 1946 construction charge and about one-half of the charges for 1947, 1948, and 1949.

In order that the Frannie division may be placed on the same sound basis as its sister divisions, it is necessary, first, to carry out a program which will insure the rehabilitation and the future good maintenance of its irrigation works and lands and, second, to place its construction charge obligation on a basis which is consonant with the payment capacity of the division landowners.

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