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money has been spent wisely for the benefit of that valley. The law, as at present interpreted by the Solicitor for the Interior Department and by the Attorney General of the United States, makes it necessary in order to do that, to pass this law—that is, it is a change of existing law, and there isn't any reason, either in law, equity or justice, or anything else that I can see, for that provision. The Secretary has already announced the charges upon that land; the money has been spent; nobody questions but that it has been spent wisely and has been absolutely essential to the safety of the valley to build protection works there; and now, because there is an opportunity to collect that money by the use of some works for which the Government has spent its money and which it now owns, the provision is inserted here to prevent the collection of the money from the Imperial Valley for the defrayment of that expense; or, in other words, to pay that money over to the Yuma water users. The charge per acre on the Yuma project as announced on the part of the project to which this applies is $75 per acre. The people on that project are now in a lawsuit with the Government, undertaking to upset that—but they are not going to succeed, in my judgment, because I don't think they have either law or equity on their side; but, of course, that is to be determined by the decision of the court. The trial was held last spring, but the decision has not yet been rendered. The CHAIRMAN. That is the amount of the water charge? Mr. DAVIs. Yes, sir. Mr. WELLING. They are trying to reduce the charge? Mr. DAVIS. They are trying to have it cut down. Mr. HAYDEN. The basis of the suit in the Federal court is that the original reclamation act stated that settlers should pay the estimated cost of the construction of a project. It is the contention of a part of the water users under the Yuma project that the Secretary of the Interior did make an estimate of cost, upon which they acted in good faith in subscribing as shareholders in the association. The Secretary insists that certain statements and reports to which these water users refer was not an official estimate within the intent of the law. That is a question for the courts to decide. My judgment is the court will hold that the people on the project must pay the total construction charge as fixed by the Secretary of the InteIrlor. On July 16, 1918, the Secretary of the Interior fixed the total construction charge for the Yuma project and announced it in a public notice as $75 an acre. In arriving at the charge of $75 an acre, certain items of cost were included. Among the items was the construction of the Laguna Dam, which was set forth at about $1,750,000. When it was proposed that the Imperial irrigation district be permitted to obtain the use of the Laguna Dam at a compensation of $1,600,000, the water users of the Yuma project, through their representatives, said that they were willing to agree to the arrangement, provided their part of the construction charge be reduced by a like amount. The Secretary of the Interior, after listening to the arguments pro and con—at that time Mr. Davis opposed the idea—concluded that the contention of the representatives of the Yuma project was just, and said that he would allow the Yuma water users this

credit, if permitted to do so under the law. The matter was referred to the Attorney General, who rendered an opinion that the Yuma water users could not be given credit for the $1,600,000 under existing law since legislation is necessary, I therefore submitted the matter to the Secretary of the Interior and received this letter from him:

Such a controversy arose in the department as to our right to credit the Yuma reclamation project with any moneys received from the Imperial project with any moneys received from the Imperial irrigation district for the privileges of connecting with and using the Laguna Dam, that I referred the matter to the Attorney General of the United States for opinion. I am now in receipt of his opinion dated September 16, 1919, copy inclosed, wherein he holds that under the law this credit can not be allowed. I am of the opinion that Congress should authorize the receipts from the Imperial irrigation district or other districts for the use of the Laguna Dam to be applied as a reduction of the charges assessed against the Yuma projects. I recommend that such legislation be enacted.

It was in pursuance of that recommendation made by the Secretary of the Interior that I have asked to have included in section 19 of this bill the provision to which Mr. Davis objects.

The CHAIRMAN. Now, just permit me I suppose this was quite similar to the conditions with other projects. In the case of the North Platte project of Nebraska and Wyoming, the estimates on that project, in the first place, were for $35, I believe it was, and they were increased twice, first to $45 and finally to $55 per acre. Of course there was some dissatisfaction about that, but they are all paying the $55 an acre, and they are getting rich by doing it.

Mr. TAYLOR. I think Mr. Davis will recall, too, that the Uncompahgre project in Colorado was probably the most insistent one in the United States, as it was the first one. They had a direct statement from the department that the maximum cost would be $25 an acre; now it is up to about $75 an acre, and, of course, there are a lot of kickers that have always been contending that the Government ought to be held to that original proposition.

Mr. Davis. I will say, Mr. Chairman, that while what has been said regarding original estimates is true, when those estimates were announced in Yuma-I was present—as in many other places, they were accompanied by a statement that the law required this fund to be a revolving fund, that whatever the cost it would have to be repaid, and when the contract was finally drawn in each case it so provided. The contract being so drawn, it enabled us to do a great many things that were not included in the original estimate, and we did. As Mr. Hayden will remember, on his own project we started out with the idea of building only the Roosevelt Storage Dam. We afterwards built a great many things in addition. We bought canal systems, etc., and where they expected that the cost would be about $4,000,000-$3,850,000 was the amount, I believe, for which they incorporated-it came to about $11,000,000. But that has all been thrashed out fully. We bought big canal systems, enlarged them; we built a power plant, as Mr. Taylor remembers, on the Uncompahgre project. The figure that has now been announced there as the book cost includes a large number of things; for example, the purchase of all those canal systems that were not included in that first estimate at all. They have been purchased, they have been rebuilt and enlarged, very similarly to what we have done upon the Salt River.

Mr. TAYLOR. And they did waive those original agreements anyhow, and virtually threw the thing wide open for the Government to go ahead and complete the project, so that they are estopped any. how.

Mr. HAYDEN. I do not doubt but that the Federal court will decide that the Yuma water users must pay the announced charge, as fixed by the Secretary of the Interior.

Mr. BARBOUR. Upon what do they base their claim to relief?
Mr. Davis. Just what Mr. Hayden says.

Mr. TAYLOR. They built and paid for a very large and expensive dam, and now you people in California want to come in and use it, and they believe you ought to pay for it.

Mr. Davis. The price announced_$75 an acre—when announced by the Secretary of the Interior, did not include the entire cost, because it was expected that a portion of the cost of the Laguna Dam would be paid by the mesa, which we are now trying to get on, and if we don't carry out that mesa project that part of the cost will be lost. We took that chance in announcing this cost. We charged some of it to the mesa, and likewise we expected to collect from the Imperial Valley money for the connection with the Laguna Dam. We have been in correspondence for the last 11 years with the officials of the Imperial irrigation district, applying for this connection, and on the basis, for the entire 11 years, of an acreage charge that would be distributed pro rata upon the acreage adjoining the connection.

Mr. WELLING. Now, Mr. Davis, you have made a very strong statement here. I don't know that I sensed it properly. Will you please restate just your objections to refunding a portion of this money to the Yuma project for connecting with the Laguna Dam?

Mr. Davis. Because that has already been taken into consideration in fixing the price that they are now obligated to pay. That will be giving them credit twice.

Mr. WELLING. Where do you want that money to go?

Mr. Davis. Into the reclamation fund, where it came from when the dam and the levees were built.

Mr. WELLING. In other words, if the Imperial Valley or the east mesa in the Imperial Valley, or the Coachella Valley, or anybody else, gets water from the Laguna Dam, such funds as are collected for that connection should go to the reclamation fund rather than to the Yuma project?

Mr. Davis. Up to the amount that the Yuma project has already been credited. Of course I can conceive there might be sums that would be received in addition to this for that connection which justly might be credited, and the contract that we now have with the Imperial irrigation district looks to that. This sum that is mentioned here, and that I referred to, is the sum that the Imperial irrigation district agreed to pay for connection of Laguna Dam, $1,600,000. That much was deducted from the actual cost of the Yuma project in fixing the acreage charge upon the lands now announced. Now, if the Coachella Valley, and some other areas, pay for a connection with the Laguna Dam, the present contract with the Imperial irrigation district provides that that money shall be expended in storage construction.

Mr. WELLING. Let me see if I understand you now. Your contention is that the Yuma project has already had the benefit of $1,600,000?

Mr. Davis. Exactly.

Mr. WELLING. On account of the contemplated connection with the Imperial irrigation district ?

Mr. Davis. Yes, sir; that is exactly the truth. Mr. TAYLOR. And you want that money for storage up above, which will necessarily inure to the benefit of more or less of all of them.

Mr. Davis. It should be so expended under the provisions of the reclamation act. It, however, belongs to the reclamation fund, because that is where it came from and the bill provides that the fund shall be a revolving one. Now, then, from the standpoint of justice and equity—this charge of $75 an acre is only about twothirds of the annual gross product in that valley to-day. I know of one individual who owns 320 acres in that valley, who has leased his land for a period of three years at $30 per acre per annum, and will in that three years receive $90 in lease money, while his total charge is $75 for the only thing that makes that land valuable, and that charge is spread over 20 years. Those facts came out in the trial, and the principal witness for the plaintiff in that case was the man I refer to, and he acknowledged the truth of what I say. Other leases have been made at $50 and $60 per acre per annum, I am told.

Mr. SMITH of Idaho. Yet they didn't want to pay the $75? Mr. Davis. No. There have been numerous other cases of rentals, I am told, though I am not so sure, but I am told that as high as $60 an acre has been paid there—and mind you the renter in that case has to pay the annual operation and maintenance charge that the Government charges for delivery of water.

Mr. HAYDEN. You made the statement a moment ago that it was contemplated in fixing the construction charge of $75 an acre on the Yuma project that connection with the Laguna Dam was to be made by the Imperial Valley. I would like to know just how you can prove that statement by the records.

Mr. Davis. The records on the subject are quite voluminous, and I have brought a condensation of them here. We have been in correspondence on that subject for 11 years, as I say. The experience of the California Development Co. with its treacherous canal heading in the Colorado River near Pilot Knob has kept prominently in the foreground the necessity of a more permanent heading for the Imperial Canal, and it has been from the first the belief of most engineers acquainted with the conditions that this would eventually be connected with Laguna Dam.

The landowners of Imperial Valley were accustomed to dispute this for some years, but repeated water shortages and difficulties with their heading created a sentiment in the valley in favor of such connection, and correspondence looking to this end was initiated in 1909 by Mr. H. J. Messenger, president of Imperial Water Co. No, 11. This correspondence was followed by communications from the officers of Imperial Water Co. No. 1 and other residents of Imperial Valley.

On February 26, 1910, a letter addressed to the Secretary of the Interior and signed by Webster, Blair, Strieby, Reisser, and Hazzard, a committee representing the various mutual water companies, requested a definite proposition, as follows:

These companies have appointed the undersigned a committee to ascertain from the proper Federal authorities upon what plan or basis it would be possible to have our water diverted from the Colorado River through the Laguna Dam system.

If such arrangements could be made, we wish to know what proportion of the cost of Laguna Dam we would be expected to assume or what charge per second-foot or acre-foot would be required to pay for service through the Laguna Dam system.

A similar request was made by letter of March 2, 1910, by F. S. Webster, president of the Associated Water Cos. On February 16 Imperial Water Co. No. 5, through its secretary, addressed a similar request to the Secretary of the Interior.

Just about 10 years ago the policy was announced. Secretary Ballinger signed a letter which read as follows under date of March 1:

Section 4 of the reclamation act requires that the building charges “ shall be proportioned equitably.” It appears that a reasonable interpretation of the intent of the law would be that each acre sharing in the benefit of the Laguna Dam should pay the same for such benefit as is paid by every other acre.

If an acreage approximating 300,000 acres in Imperial Valley should desire the benefit of this dam, the equitable share would be in the neighborhood of $5 per acre.

And this has been the policy of the Government ever since.

There has been a contract providing for such connection under negotiation more or less constantly for about five years. At any rate the matter had taken definite form, figures had been made, and a price named several years before the issue of public notice on the Yuma propect.

Mr. HAYDEN. The question at issue here is: Did the Secretary of the Interior, in fixing the construction charge at $75 per acre on the Yuma project, take into consideration the fact that money was to be received from the Imperial irrigation district or from some other source to help pay for the cost of Laguna Dam? My understanding is that the Secretary fixed the construction charge on the Yuma project on the recommendation of a board which he appointed to visit all of the various reclamation projects, ascertain what expenditures had been made that should not be charged to the water users, and determine what the construction charge should be. That was done for every project in the United States. Is there anything in the records of that board, which fixed the charge for the Yuma project, or is there anything in the record made when the Secretary of the Interior fixed the Yuma project construction charge to show that consideration was given to the fact that money might be received from some such outside source ?

Mr. Davis. I am not sure about that. The local board that met ot Yuma to study this project was dissolved and the matter was considered finally by a board consisting of Gen. Marshall, Elwood Mead, and Mr. O'Donnell. Two members of the board joined in a recommendation that $60 an acre was all the land would stand, and Gen. Marshall announced that $75 an acre could be paid by them. That, however, was not a recommendation for any public notice or anything else in conformity with the law, but simply an expression of opinion. Later he was shown to be very much mistaken on that, because of subsequent developments in the valley.

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