80TH CONGRESS HOUSE OF REPRESENTATIVES 2d Session

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REPORT No. 1691

PROVIDING FOR ADJUSTMENT OF IRRIGATION CHARGES ON THE FLATHEAD INDIAN IRRIGATION PROJECT, MONTANA

APRIL 7, 1948.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. WELCH, from the Committee on Public Lands, submitted the

following

REPORT

[To accompany H. R. 5669]

The Committee on Public Lands, to whom was referred the bill (H. R. 5669) to provide for adjustment of irrigation charges on the Flathead Indian irrigation project, Montana, and for other purposes, having considered the same, report favorably thereon with amendments and recommend that the bill as amended do pass.

The amendments are as follows:

On page 11, line 1, after the word "all", insert the word "of". On page 11, line 25, after the word "made", insert the word "in". On page 12, line 19, after the word "contracts", insert the following: "to make such determinations, to effect such adjustments in project accounts,".

The Flathead irrigation project lies in what is known as the lower Flathead Valley within the boundaries of the Flathead Indian Reservation in the Lake, Sanders, and Missoula Counties in northwestern Montana. The area served by the project generally is bounded on the north by the Flathead Lake, on the east by the Mission Range, on the west by the Cabinet Range of mountains, and on the south by the Nine-Mile Divide.

The project consists of two main features: The irrigation system which is designed to provide water for some 138,000 acres, in which about $10,000,000 has been invested, and a power distribution system and small generating plant in which approximately $1,000,000 has been invested. The irrigation system consists of some six main canals totaling 60 miles, 910 miles of laterals, and three pumping plants with lifts of 335 feet, 43 feet, and 79 feet. The power system consists of 410 miles of distribution lines, a 320-watt generating system, and

several substations. The system serves some 3,700 customers and there is now on file between five and six hundred applications for connection by small users.

The purpose of this bill is to revise the legislation under which the Flathead irrigation project operates. The present authorization law is contained in an amendment to the Appropriation Act of May 10, 1926. We are asked for new legislation that will extend the time for repayment, authorize new supplemental repayment contracts, and permit the construction of additions and improvements to the irrigation system and the power system so that new customers may be connected and present ones better served. The new legislation provides for the reimbursement of the Federal Government of funds that have been advanced for both the power and irrigation system and for the write-off of certain delinquent accounts that have been found to be uncollectible.

Twice Congress has extended moratoriums for repayments to the Federal Government because the legislation needed for the system to operate has not been provided. The construction of the Hungry Horse Dam above this project has brought a large influx of new people into this area resulting in an increase of population that has made necessary not only additional electrical facilities but additional water for new homes and farms.

Four days of hearings were held on this legislation in addition to hearings held a year ago at which time it was found that the subcommittee did not have necessary information to act. Therefore, the Congress granted a moratorium on payments and requested that facts needed in order to enact the legislation be provided this session of Congress.

The hearings have been held; testimony was given by the Bureau of Indian Affairs, representatives of the tribes, and representatives of the irrigation districts. All were given complete opportunity to present their thoughts and have worked hard and long in order to reach a compromise that would be satisfactory to the Government, to the water users, and to the Indians concerned. We believe the resulting bill has attained those ends. On the opening day of the hearing, Mr. Oscar L. Chapman, Under Secretary of the Interior, submitted a letter to the committee accompanied by a new draft of the bill. This letter stated in part:

I suggest that the bill be amended by striking out all after the enacting clause and that the language of the attached draft of the bill be submitted therefor. If so amended, I recommend that the bill be enacted.

This new draft was the one studied by the committee. At the end of the hearings it was found that it did not meet the needs of this irrigation project nor conform to all the desires of the Department of the Interior. Those interested, that is, the Bureau of Indian Affairs, the representatives of the irrigation districts, and the representatives of the tribes thereon, met and have drafted a new version of this bill which is the one that is presently submitted and recommended for passage.

DESCRIPTION OF THE BILL

Section 1: This is a directive to apply the provisions of this bill. Section 2: (a) Allocates the costs between the divisions of the project.

(b) Provides that revenues hereafter accruing will be used to operate and maintain the system and establish necessary revenues under section 3 of Public Law 647.

(c) The deferred costs on the Camas division are here interpreted to mean the difference between the per acre costs of the Mission Valley division and the Camas division multiplied by the total acreage of the Camas division. The excess costs of the Camas division are estimated to be $566,178 as of June 30, 1948. Assuming that available revenues of that date are $981,600, the excess Camas costs could be liquidated and leave a balance of $415,422 to be applied to

(d) The Mission Valley division, the Camas division, and the Jocko division costs of construction, approximately $9,317,800. The balance to be liquidated out of future revenues and construction assessments is $8,902,400 with some $7,848,684 being irrigation costs, which will be—

(e) Spread over a period of 50 years for an annual assessment of some $157,000. Future irrigation costs will be liquidated by increasing the amount or number of these annual installments.

The remaining unliquidated power costs as of June 30, 1948, of approximately $1,054,000 are also to be scheduled over a period of 50 years, or approximately $21,000 a year. The remaining unliquidated power costs above, and those in the future, are both to be liquidated out of revenues of the power system and will not be assessed against the landowners.

(g) Provides the basis upon which rates for electric energy sold through the power project system shall be fixed. The first part of this subsection provides that the power rates shall produce net revenues sufficient to repay all construction costs incurred on account of the power system of the project.

The language in this subsection

for the purpose of reducing the irrigation system construction costs chargeable against the lands embraced within the project and of insuring the carrying out of the intent and purpose of legislation and repayment contracts applicable to the project

is designed to make plain the intention of the committee that the net profit provided for in the succeeding portions of this subsection is intended to be used for the purpose of repaying a substantial portion of the reimbursable irrigation construction costs of the project.

Rates for power sold by the project shall be the lowest which will produce net revenues to

1. Meet the $21,000 plus power system construction annual installments and for the purpose of reducing the $157,000 plus irrigation system construction cost.

2. Yield a reasonable return on the unliquidated power system costs. This should be about 3 to 31⁄2 percent and means from $30,000 to $35,000 now, and probably will grow to $60,000 to $70,000 within the next 5 years.

3. Yield a reasonable return on the value of the project's interest or equity in the power development at Kerr Dam. This is estimated

to be $62,500 for 1948, but will vary with changing load factors and use of the project pumps.

(h) Priority of application of future net revenues are provided as follows:

(1) To liquidate all matured installments for construction costs of the power system.

(2) To liquidate all matured installments for construction costs of the irrigation system.

(3) To liquidate unmatured installments of the power system. (4) To liquidate unmatured installments of the irrigation system.

(5) To liquidate construction costs charged against Indianowned lands the collection of which is deferred under the act of July 1, 1932.

(6) To liquidate the annual operation and maintenance cost of the irrigation system.

(i) Application of proportionate share of net revenues accruing to Indian lands and lands on which part of construction costs have been made shall reduce the annual irrigation operation and maintenance

assessment.

(j) The water users will pay the balance of the annual construction assessment not liquidated from power revenues. The time required to fix, levy, and collect shall be considered in applying annual revenues

to assessments.

Section 3: Repayment adjustments provided for in sections 1 and 2 shall not become effective until supplemental contracts contained in the terms and conditions described are concluded.

Section 4 has to do with uncollectible accounts consisting of two items: First, $40,549.89 of operation and maintenance charges, and, second, $2,195.16 electric energy charges. Forty thousand five hundred and forty-nine dollars and eighty-nine cents of unpaid assessments which are unrecoverable were incurred up to May 10, 1926, and ought to be canceled. They are not a charge against the system but are personal obligations. This charge is owed by people who in most cases have long since left the project. The cost of collecting over the years would probably fully equal any money collected. Good business judgment indicates this old failure of the Government to make collections should not be a continued harassment of the districts and should be written off. The $2,195.16 is an energy charge against customers who are dead, or who have left and this item is not collectible and should therefore be written off.

Sec. 5 authorizes appropriation of the following amounts:

(a) Two items of $64,161.18 and $409.38 with interest for unreimbursed balances spent for construction costs out of tribal trust funds. These amounts will be added to construction and the principal amount will be reimbursable to the United States.

(b) $400,000 to be deposited into the United States Treasury to the credit of the Confederated Salish and Kootenai Tribes of which $200,000 is for settlements of all claims for the use of tribal lands for the physical works and facilities to date, and the second $200,000 is for a permanent easement for the future use of said land.

(c) $1,000,000 for future construction of irrigation and power system.