Group Title: Reclamation reform act of 1979
Title: Reclamation reform act of 1979, 96th Congress, 1st session, United States Senate
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Title: Reclamation reform act of 1979, 96th Congress, 1st session, United States Senate
Physical Description: Book
Language: English
Creator: United States Senate
Publisher: United States Senate
Place of Publication: Washington, D. C.
Publication Date: 1979
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General Note: Report no. 96-235; calendar no. 246
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Volume ID: VID00001
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Calendar No. 246
96TH CONGREss SENATE REFonT
lat Session I No. 96-235





RECLAMATION REFORM ACT OF 1979



JULY 6 (legislative day, JUNE 21), 1979.-Ordered to be printed
Filed under authority of the order of the Senate of June 27 (legislative day,
June 21), 1979


Mr. CHuRCH, from the Committee on Energy and Natural Resources,
submitted the following

REPORT

together with

SUPPLEMENTAL AND ADDITIONAL VIEWS
[To accompany S. 14]

The Committee on Energy and Natural Resources, to which was
referred the bill (S. 14) a bill to amend and supplement the acreage
limitation and residency provisions of the Federal reclamation laws,
as amended and supplemented, and for other purposes, having con-
sidered the same, reports favorably thereon with amendment (s) and
recommends that the bill (as amended) do pass.
The amendments are as follows:
1. Strike out all after the enacting clause and insert the following:
That this Act shall be a supplement to the Act of June 17, 1902, and Acts
supplementary thereof and amendatory thereto (43 U.S.C. 311), hereinafter
referred to as the Federal Reclamation Law, and this Act may be cited as the
"Reclamation Reform Act of 1979".
DEFINITIONS
SEc. 2. (a) The term "Secretary" means the Secretary of the Interior.
(b) The term "individual" means any person, including his or her spouse,
and including other dependents thereof within the meaning of the Internal
Revenue Code (26 U.S.C. 152).
(c) The term "qualified recipient" means an individual who is a citizen of the
United States or a resident alien thereof or any legal entity established under
State or Federal law which benefits twenty-five such individuals or less.
(d) The term "limited recipient" means any legal entity established under
State or Federal law benefiting more than twenty-five individuals that is re-
ceiving water service from, through, or by means of a Federal reclamation
project on the date of this Act.
(1)
A(Star print)










(e) The term "landholding" means the total acreage of one or more tracts
of land owned or operated under a lease or leases by any person alone or by
participation in a legal entity which is served with a water supply pursuant
to a contract with the Secretary.
ACREAGE LIMITATION
SEO. 3. (a) The Federal Reclamation Law shall apply only to lands which are
included within a Federal reclamation project which has been authorized by
statute and which are served with a water supply from, through or by means
of works provided by such authorization pursuant to a contract with the
Secretary.
(b) Any provision of the Federal Reclamation Law which establishes a limita-
tion on acreage to be served with a water supply to the contrary notwithstanding,
a landholding of any qualified recipient which consists of one thousand two
hundred and eighty acres or less shall be considered to be within the acreage
limitation of the Federal Reclamation Law.
(c) In the determination of excess lands under the provisions of this Act or
any other provision of the Federal Reclamation Law, the applicable acreage
limitation shall be interpreted as applying to a landholding as defined in sub-
section 2 (e) of this Act.
(d) Lands included in a landholding of any qualified or limited recipient
which exceed the acreage limitation imposed by this Act or lands included in a
landholding of any other person which violate the provisions of this Act and
any other provision of the Federal Reclamation Law and which are receiving a
reclamation water supply but are not under a recordable contract on the date
of enactment of this Act shall be placed under a recordable contract within three
years of the date of enactment of this Act as a condition of continued water
service.
(e) Recordable contracts entered into pursuant to the provisions of subsection
(d) of this section shall provide for the disposal of such excess land within ten
years of the date of enactment of this Act.
(f) The Secretary may, in his discretion, by rule, impose a limitation on the
number of landholdings that may be managed by another person on behalf of
qualified recipients or other landholders.
(g) Except to the extent that they are inconsistent with the provisions of
this Act, the provisions of the Federal Reclamation Law, including those provi-
sions relating to the implementation of the acreage limitation, shall remain in full
force and effect.
(h) Nothing in this Act shall repeal or amend any existing statutory exemptions
from the acreage limitation of the Federal Reclamation Law.
EQUIVALENCY
SEc. 4. Wherever an acreage limitation is imposed by the Federal Reclamation
Law, the Secretary shall (upon request of a qualified or limited recipient or
other contracting entity representing one or more qualified or limited recipients)
designate by rule the acreage of a landholding which may receive water at one
thousand two hundred and eighty acres of class 1 land in the case of a qualified
recipient or one hundred and sixty acres in the case of a limited recipient or the
equivalent thereof in other lands of lesser productive potential. Standards and
criteria for determination of land classes pursuant to this authority shall take
into account all factors which significantly affect the economic feasibility of
irrigated agriculture, including but not limited to, soil characteristics, crop
adaptability, costs of crop production, and length of growing season.
RESIDENCY NOT REQUIRED
SEC. 5. Notwithstanding any other provision of law, a qualified or limited recipi-
ent shall not be required to be a resident on or near a landholding in order for
such landholding to be eligible to receive water pursuant to a contract with the
Secretary.
REPAYMENT OF CONSTRUCTION CHARGES
SEC. 6. (a) The acreage limitation provisions of the Federal Reclamation Law
shall cease to apply to any landholding upon completion of the repayment by
any contracting entity of the amount of any construction costs required to be







3

repaid by such contracting entity by the terms of any contracts with the Secre-
tary relating to the delivery of water supplies to such landholding for agricul-
tural use either in the repayment period provided pursuant to the contract or,
notwithstanding the payment schedule of a contract, upon lump sum payment or
after repayment by an accelerated schedule when such accelerated schedule is
applied for by said contracting entity: Provided, That where any such contract
has been or may be entered into pursuant to the authority of the Rehabilitation
and Betterment Act (Act of October 7, 1948, 63 Stat. 724, as amended), the
contracting entity shall have the additional option of adopting a form of re-
payment consistent with section 5(c) (2) of the Small Reclamation Projects Act
of 1956 (Act of August 6, 1956, 70 Stat. 1044, as amended) and if such form of
repayment is adopted, the acreage limitation provisions of the Federal Recla-
mation Law shall not apply solely as a result of the indebtedness under such
contract.
'(b) The Secretary shall provide, upon request of any owner of a landholding
for which repayment has occurred, a certificate acknowledging that the land-
holding is free of the acreage limitation of the Federal Reclamation Law. Such
certificate shall be in a form suitable for entry in the land records of the coun-
ty in which such landholding is located.

LEASING RESTRICTIONS
SEC. 7. (a) Lands which are leased by any lessee and operated for agricul-
tural production utilizing water supplied pursuant to a contract with the Secre-
tary shall be considered to be part of such lessee's landholding as well as the les-
sor's landholding for purposes of applying the acreage limitation of the Federal
Reclamation Law.
(b) Notwithstanding the acreage limitation provisions of section 3(b) of this
Act, a lessee may receive water for lands in excess of one thousand two hundred
and eighty acres if he notifies the Secretary showing that such lands in excess
of one thousand two hundred and eighty acres are leased for a period of one
year or less without a right of renewal.
(c) The right to receive water pursuant to subsection (7) (b) shall be effective
upon the filing of notice of the lease with the Secretary, containing the name
of the lessee and lessor and the length of its term, and shall continue subject to
any subsequent determination by the Secretary that the requirements of this sec-
tion have not been met.
(d) Lessees holding lands in excess of the acreage limitation of this Act or
of any other provisions of the Federal Reclamation Law under the provisions
of a valid written lease effective as of the date of this Act shall be required to
comply with the appropriate acreage limitation within ten years of the date of
this Act.
EXEMPTIONS
SEC. 8. (a) The Secretary is authorized to continue delivery of water supplies
to all project lands held by bona fide religious or charitable nonprofit organiza-
tions as of January 1, 1978, without regard to the acreage limitation of this Act
or other Federal Reclamation Law so long as tide remains unchanged and as
long as the agricultural produce and proceeds of sales are directly used for
charitable purposes.
(b) Section 3 of the Act of July 7, 1970 (43 U.S.C. 425b) is amended by strik-
ing the phrase "for a period not to exceed twenty-five years" following the term
"project water".
(c) The acreage limitation of the Federal Reclamation Law shall not apply to
lands within the Imperial Irrigation District of California.
(d) Any other provision of law notwithstanding, neither the acreage limita-
tion, nor other provisions of the Federal Reclamation Law (Act of June 17, 1902,
32 Stat. 388 and Acts amendatory thereof or supplementary thereto) shall be
applicable to landholdings receiving benefits from Federal water resource proj-
ects constructed by the United States Army Corps of Engineers unless-
(1) the project has, by Federal statute, explicitly been designated, made
a part of, or integrated with a Federal reclamation project, or
(2) the Secretary of the Interior, pursuant to his authority under the
Federal Reclamation Law has provided project works for the control or
conveyance of an agricultural water supply for the lands involved, or









(3)' the provisions of the Federal Reclamation Law are, by Federal
statute explicitly made applicable to the lands involved.
(e) The acreage limitation of the Federal Reclamation Law shall not apply
to lands temporarily provided with a water supply in unusually wet years or
from infrequent flood flows of short duration, nor shall such limitation apply to
lands leased for one year or less for the purpose of water conservation or man-
agement in years of inadequate water supply.
(f) Nothwithstanding the provisions of section 3, the Secretary may deliver
water to minor tracts of land though the delivery to such tracts may cause a
qualified recipient to become an excess landholder if the Secretary determines
that there is no economically viable alternative means of operating such minor
tracts.
(g) Land in excess of a landholding upon sale into nonexcess status after the
effective date of this Act, shall be eligible to receive water service only if title to
the land is subject to a condition that the land shall not be sold at a price greater
than the landowner's cost for the land, plus the value of any improvements, both
increased only by the rate of increase of the Consumer Price Index for the period
between the date of that landowner's purchase and the date of his sale of the
land: Provided, That if such land has continuously remained as nonexcess land
for a period of ten or more years, the sale price of the land after the tenth year
may be at the fair market value thereof without regard to the provisions of sec-
tion 423e of title 43, United States Code.
(h) Notwithstanding any other provisions of the Federal Reclamation Law
to the contrary, a landholding, including any lands in excess of the acreage
limitation applicable to such landholding, may be acquired by foreclosure or other
process of law, by conveyance in satisfaction of mortgage, by inheritance, or by
devise, and (1) if acquired by other than a qualified recipient, such landholding
shall be furnished with a water supply temporarily for a period not exceeding ten
years from the effective date of such acquisition, delivery of water thereafter
ceasing until the transfer thereof is completed to a qualified recipient, and (2)
such lands of the landholding as were not held in excess status at the time of
such acquisition may thereafter be sold at the fair market value of the property
without regard to the provisions of section 423e of title 43, United States Code,
or section 3 of this Act.
(i) A landowner which is a corporate or other trustee may collectively hold
in a fiduciary capacity land eligible to receive a water supply notwithstanding
any other provisions of the Federal Reclamation Law to the contrary: Provided,
That with respect to such holding, the beneficiary or beneficiaries thereof are in
compliance with the acreage limitation provisions of the Federal Reclamation
Law.
(j) Any provision of the Federal Reclamation Law which establishes a limita-
tion on acreage to be served with a water supply to the contrary notwithstanding,
a landholding of any limited recipient which consists of one hundred and sixty
acres or less shall be considered to be within the acreage limitation of the Federal
Reclamation Law.
RECORDABLE CONTRACTS
SEC. 9. Other provisions of this Act notwithstanding, and only with respect to
excess lands subject to recordable contracts between the United States and owners
of such lands as had been entered into prior to the effective date of this Act,
the period of time during which .such owners may dispose of the lands thereby
encumbered shall remain as specified in such contracts: Provided, however, That
the period of time during which the Secretary of the Interior has suspended, or
in fact not generally processed approvals of dispositions of excess lands, whether
by virtue of court order or otherwise, shall be added to the period provided by
such contracts.

ADMINISTRATIVE PROVISIONS
SEC. 10. (a) The Secretary is hereby authorized and directed to amend any
provision of any contract between the Secretary and another party existing upon
the date of enactment of this Act which is inconsistent with the provisions of this
Act but only at the request of said other party.
(b) Determination made by the Secretary pursuant to the authority granted in
this Act shall be in accordance with the provisions of the Administrative Proce-
dure Act, chapter 5 of title 5, United States Code.









(c) Any non-Federal party to a repayment contract with the Secretary relating
to a Reclamation project may obtain validation of any provisions of such con-
tract relating to the acreage limitation available to such party pursuant to such
contract or under the Federal Reclamation Law by making application therefore
to the Secretary in writing within three years from the date of enactment of this
Act. The Secretary shall review each such application and within ninty days from
the date on which he receives such application shall transmit it to the Congress
together with his comments and recommendations. Unless the Congress by joint
resolution disapproves the application with ninty days from the date on which
it receives the Secretary's transmittal, the application shall be approved and the
provisions shall be considered to be validated.
(d) If lands in excess of the acrege limitation of Federal Reclamation Laws
have not been disposed of at the end of the recordable contract period, power of
attorney shall vest in the Secretary who shall sell such lands by lottery or other
impartial selection only to qualified receipts according to such reasonable rules
as he may establish. In such sales the Secretary shall make every effort to pro-
vide opportunities for the acquisition of landholdings of varying financially and
economically feasible size.
CONSENT TO SUE
SEC. 11. In addition to any other remedy available in law or equity, any party
to a contract with the Secretary of the Interior providing for the deliver of agri-
cultural water supplies may bring an action in the United States district court
for the district in which the project is located for mandatory injunctive relief
to reform such contract in accordance with the terms of any written representa-
tion concerning the application or interpretation of the Federal Reclamation Law
or contracts made by the Secretary or his representative to such party or his
predecessor in interest. Exclusive jurisdiction for such suit is hereby vested in
the United States district court. If the court finds, on the basis of the evidence
submitted, that the party would not have entered into the contract but for the
written representations made by the Secretary or his representative, which were
relied on by the water users, then the court shall order the Secretary to reform
the contract to conform with the representations and the contract, as reformed,
shall be considered valid as of the date of the written representation.
REPORTING
SEc. 12. Any contracting entity subject to the acreage limitation of Reclamation
Laws shall compile and maintain such records and information relating to land
ownership, leasing, water supply and use, land use, cropping, financial transac-
tions including transfers of interest in lands which are reasonably necessary to
to implement this Act and the Federal Reclamation Law. On a date set by the
Secretary following the date of enactment of this Act, and annually thereafter,
every such contracting entity shall provide in a form suitable to the Secretary
such reports on the above matters as the Secretary may require.
2. Amend the title so as to read: "A bill to amend and supplement
the acreage limitation and residency provisions of the Federal Recla-
mation Law, as amended and supplemented, and for other purposes.".

PURPOSE OF THE MEASURE

The purpose of S. 14 is to provide a modern statement of congres-
sional policy on several aspects of Reclamation Law, to resolve ambi-
guities, and to conform the law to the current practical considerations
of farm practices and economics. As amended, S. 14 clarifies and up-
dates the provisions of Federal Reclamation Law placing a limitation
upon the acreage in a single ownership which is eligible to receive a
water supply from a reclamation project, repeals the requirement for
a water user to reside on or in the vicinity of his land holding, clarifies
and restricts the exception of leased lands from the acreage limitation,
and defines and updates several other provisions of the Reclamation
Law.








SUMMARY OF MAJOR PROVISIONS
As amended, S. 14 addresses several major issues related to the recla-
mation program and in some instances would mandate significant
departures from past or present practice. Major issues and related
provisions of the bill are briefly described as follows:

ELIGIBILITY
Section 2 establishes that a recipient of water for irrigable land (or
"qualified recipient") would be an individual along with his depend-
ents or a small corporation benefiting 25 individuals or less. A "limited
recipient" would be any legal entity benefiting more than 25
individuals.
ACREAGE LIMITATION
Section 3 raises the basic acreage limitation from 160 acres to 1,280
acres for a qualified recipient. Section 2 provides that leased as well as
owned land will be included in arriving at the total acreage subject to
the acreage limitation, and that the total acreage of a qualified or lim-
ited recipient will be so limited regardless of whether or not the lands
may be located on different projects.

LEASING
Section 7 defines the acreage limitation application to the leasing of
lands served with water by a Federal reclamation project.

RESIDENCY
Section 5 of the bill would repeal the residency requirement of
Reclamation Law.

SALES OF EXCESS LANDS
Section 10 provides for the use of a lottery or other impartial means
for sale of excess lands for which power of attorney has vested in the
Secretary at the expiration of a recordable contract.

PAYOUT
Section 6 of the bill provides that the acreage limitation would cease
to apply upon repayment of the construction costs owed to the Federal
Government by water users on a Reclamation project.

SPECIAL EXEMPTIONS
Section 8 of the bill provides that religious or charitable organiza-
tions, Corps of Engineers projects, and the Imperial Irrigation Dis-
trict in California, are exempt from the acreage limitation of Federal
Reclamation Law.
BACKGROUND AND NEED
The basic Federal Reclamation Law was enacted in 1902 (32 Stat.
38'8). It has been frequently amended and updated since, and the body








of statutory law presently referred to as "the Federal Reclamation
Law" fills three thick volumes encompassing all or parts of hundreds
of individual public laws.
The initial purpose of the Reclamation Act, which was an outgrowth
of the earlier Homestead and Desert Land Entry Acts, was to estab-
lish a program of Federal financial assistance for water resource
development projects which were necessary if settlers were to establish
irrigated farms on the arid public lands west of the hundredth merid-
ian. The Reclamation program was carried out initially by the Recla-
mation Service which is now the Bureau of Reclamation in the Depart-
ment of the Interior.
The program has evolved through the decades and is now a major
water resource development program involving major river basins
and multi-purpose projects providing hydro-electric power, municipal
and industrial water supply, fish and wildlife conservation, flood con-
trol, and public recreation in addition to the original irrigation pur-
pose. Nevertheless, irrigated agriculture continues to be a principal
and substantial aspect of the Reclamation program. In 1977, the
latest year of record, the Reclamation program supplied a full water
supply to nearly 5 million acres and a partial or "supplementary"
water supply to over 6 million additional acres. This acreage is dis-
tributed over about 176 separate Reclamation projects and about
146,000 individual farms. It represents about 3 percent of the Nation's
farmland and 25 percent of its irrigated farmland. The gross value of
crops from Reclamation farms in 1977 was about $4.4 billion.
Under modern Reclamation Law the irrigation water users sign
contracts with the Secretary of the Interior agreeing to repay the
portion of the project investment costs allocated to the irrigation
function over a fixed period (usually 40 years) without interest. In
most instances, moreover, the repayment is limited to an amount less
than the full irrigation allocation which is the computed "repayment
capacity" of the farmers, and the costs in excess of that capability are
returned to the Treasury by electric power or municipal water reve-
nues from Bureau projects.
From the outset of the Reclamation program, and up to the most
recent project authorizations, one consideration of Federal assistance
to irrigated agriculture has been the "acreage limitation" concept. The
original limitation was stated as follows in Section 5 of the Act of
1902:
No right to the use of water for land in private ownership
shall be sold for a tract exceeding 160 acres to any one land-
owner, and no such sale shall be made to any landowner unless
he be an actual bona fide resident on such land. . .
The amount of land was a direct extrapolation of the limit on a
homestead entry, and projects which were built to irrigate public
lands involved homesteading provisions for new settlers as well as
project repayment.
Over the 77 years of the Reclamation program, the acreage limita-
tion provision has been restated in statutes on numerous occasions and
several statutory modifications, amplifications and specific exemptions
have been enacted. Moreover, administrative practices in the imple-








mentation of the law, judicial decisions, and administrative interpreta-
tions have greatly amplified the original concept.
The complexity of the management of scores of diverse projects in
17 States, and the essential scarcity of statutory guidance, have led
to contradictions in the implementation of the acreage limitation over
the years. There have also been rather overt differences among the
policy attitudes of the many Interior Secretaries historically respon-
sible for enforcement. Current acreage limitation policy is a combi-
nation of statutory and judicial law, precedent, tradition, equity, and
the practical limitations upon effective enforcement.
In general, the Bureau of Reclamation and the Secretary have
interpreted Reclamation Law on a case-by-case basis and through a
series of legal opinions and Secretarial instruction. On August 9,
1976, pursuant to a case brought by the National Land for People, a
nonprofit organization, the U.S. District Court ruled that the Bureau
had not complied with the Administrative Procedures Act and en-
joined the approval of sales of excess lands in the Westlands Irriga-
tion District pending promulgation of rules and regulations.
On August 25, 1977, the Bureau of Reclamation published pro-
posed regulations covering the administration of the Reclamation
Law. The regulations were believed by many Western irrigation
interests to be severe interpretations of the law, and in several re-
spects were in contradiction with current administrative practice.
The promulgation of the regulations was subsequently injoined sub-
ject to the completion of an environmental impact statement which is
presently being prepared. The purpose of S. 14 is to provide a modern
expression of congressional policy regarding Reclamation Law to
resolve the many controversies which will otherwise result from the
implementation of regulations.
LEGISLATIVE HISTORY
During the 95th Congress, several measures including legislation
identical to S. 14 were introduced in the Senate. Hearings on the
measures were held by the Committee on Energy and Natural Re-
sources on April 12 and 13, 1978, at which time testimony was received
from Administration and public witnesses. Consideration of the legis-
lation was not completed prior to adjournment of the 95th Congress.
Other than S. 14 the following bills to amend the Federal Reclama-
tion Law or otherwise change the administration of the reclamation
program were introduced in the Senate during the 96th Congress and
were referred to the Committee on Energy and Natural Resources:
S. 386, S. 633, S. 654, S. 672, S. 718, and S. 735.
S. 14 was introduced on January 15, 1979 by Senator Church, and
Senators Hatfield, Packwood, Bentsen, Laxalt, McClure, Melcher, and
Baucus have joined as cosponsors. On March 20, the Administration
submitted a favorable report on S. 14 with suggested amendments.
On March 22, a hearing on S. 14 was held before the Subcommittee on
Energy Research and Development at which time testimony was re-
ceived from Administration and public witnesses. On June 20, the
measure was considered by the Full Committee, and it was ordered
reported with amendments on June 21, 1979.
Similar legislation is presently pending before the House Commit-
tee on Interior and Insular Affairs.








CoMMTlraR RECOMMENDATION AND TABULATION OF VOTEs
The Senate Committee on Energy and Natural Resources, in open
business session on June 21,1979, by majority vote of a quorum present
recommended that the Senate pass S. 14, if amended as described
herein.
The roll call vote on reporting .the measure was 12 yeas, 3 nays as
follows:
Yeas Nays
Jackson Metzenbaum
Church Tsongas
Johnston Bradley
Ford
Matsunaga
Melcher
Hatfield*
McClure
Domenici
Stevens*
Bellmon*
Wallop*

CoxxrrrEE AMENDMENTS
The Committee amended S. 14 to strike all after the enacting clause
and insert a substitute text, and to amend the title to reflect a minor
technical correction.
Aside from technical, clarifying and conforming amendments, the
Committee's substitute text made the following changes:
A new Section 3 (a) was inserted to clarify the scope of the appli
cation of the Federal Reclamation Law.
Section 3(d), as reported, was amended to provide 3 years rather
than 1 year for lands in excess of the acreage limitation under the
provisions of this bill to be placed under recordable contract.
A proviso was deleted from Section 4 which would have limited
the acreage equivalency concept to lands in areas having less than
a 180-day frost free growing season.
Section 6, providing for the termination of the acreage limitation
upon repayment of construction charges, was amended to authorize
the option of adopting a repayment schedule which is accelerated be-
yond the contractual schedule or the option of a lump sum payment
of the remaining unpaid construction charges as means of terminating
the acreage limitation upon the lands of the contracting entity.
Language was added to Section 6 providing that indebtedness un-
der Rehabilitation and Betterment loans would continue the applica-
tion of the acreage limitation, however the option would be provided
to either terminate such loans by early repayment or to pay interest
on the portion of such loans attributable to water service for excess
lands. In either such option the acreage limitation would not apply.
Section 7, relating to the application of the acreage limitation to
leased lands was amended to exempt lands under leases with terms

*Indicates voted by proxy.






10

of one year or less without rights of renewal from the limitation and
to provide a full ten years to bring presently leased lands within com-
pliance with the acreage limitation.
Section 8 was revised (1) to delete language restricting the Secre-
tary's-adnyiinistrative authority to deliver water to excess lands; (2)
to restrict the language exempting charitable and religious organiza-
tions from the acreage limitation to provide such exemption only so
long as the produce or proceeds of sales of produce from such lands
are directly used for charitable purposes; (3) to add language amend-
ing an existing exemption for State-owned lands leased for revenue
to remove the existing 25-year limitation on such arrangements; (4)
to add language exempting the Imperial Irrigation District of Cali-
fornia from the acreage limitation; (5) to add language clarifying
that the acreage limitation of Reclamation Law does not apply to
Corps of Engineers projects unless otherwise explicitly provided by
Federal statute; (6) to add a provision exempting lands temporarily
supplied with water in unusually wet years and exempting leases of 1
year or less for purposes of managing water in drought periods from
the acreage limitation; (7) to add a provision exempting minor tracts
of land from the acreage limitation; (8) to add a provision estab-
lishing a 10-year period during which the price of subsequent sales of
previously excess lands shall be approved by the Secretary; (9) to
add a provision requiring excess lands acquired by foreclosure or
other process of law to be furnished with a project water supply for
10 years; (10) to permit formerly excess lands which are not excess
at the time of acquisition through foreclosure or other process of law
to be sold thereafter at fair market value; (11) to add a provision ex-
empting trustees holding lands in a fiduciary capacity from the acre-
age limitation if the beneficiaries of such landholdings are in com-
pliance; and (12) to add a provision making it clear that entities
which do not meet the requirements of a "qualified recipient" under
this bill but which are currently receiving a water supply from a
Reclamation project may continue to receive such water for a land-
holding of no more than 160 acres.
A new Section 9 was inserted extending the terms of any recordable
contracts currently in effect by the equivalent period of time of the
moratorium on voluntary land sales presently imposed by court order
and Secretarial decision.
A new subsection was added to Section 10 (formerly Section 9) pro-
viding a procedure to validate the terms of any existing contract be-
tween the Secretary and a water-using entity relating to the acreage
limitation.
A new subsection was added to Section 10 (formerly Section 9) to
provide that sales of excess lands sold by the Secretary under his
powers of attorney upon expiration of recordable contract terms shall
be by lottery or other impartial selection of buyers and land holdings
of varying sizes shall be offered for sale.
A new Section 11 was added to grant permission for contracting
entities to sue the Secretary to reform contracts if the courts find that
written representations made by the Secretary or his representatives
were relied upon by contracting entities concerning the interpreta-
tion of Reclamation Law.








SECTION-BY-SECTION ANALYSIS
Section 1.-This Act is made amendatory to and supplementary of
the "Reclamation Law." This has been a traditional means of extend-
ing Reclamation Law and it thereby invokes all of the existing pro-
visions as well as administrative and judicial interpretations. It is the
intention throughout this measure to preserve all such existing stat-
utes and interpretations where they do not conflict with the provisions
of this measure.
Section 2. (a)-Self explanatory.
Section 2. (b)-The term "individual" is defined as a man and wife
along with other dependents as defined according to the Internal Rev-
enue Code in order to provide a standard for determining the number
of acreage limitation landholdings which could be held by a family
group. In general, a head of household along with his legal depend-
ents would be entitled to one landholding of 1,280 acres. The existing
joint ownership concept of allowing two units for a man and wife
would be amended. Other adults and independent children would be
entitled to separate acreage units.
Section 2. (c)-The term "qualified recipient" is a new, all inclusive
term for purposes of applying the new provisions of this bill. In addi-
tion to individuals the term "qualified recipient" would include small
corporations.
Section 2. (d)-This section defines a new category of recipient
eligible to continue receiving a water supply from a Federal Reclama-
tion project. This section, in conjunction with Section 8(j) and con-
forming language, has the effect of allowing stock corporations who are
presently receiving water to continue receiving water sufficient for 160
acres.
Section 2. (e)-The term "landholding" is intended to mean the area
of land receiving water from a Federal Reclamation project which is
farmed by any party which either owns such land or leases it from an-
other owner. This is the 'acreage which would be limited. There is no
distinction made in .the basic acreage limitation between leased or
owned lands. Furthermore, the "landholding" would be the total of all
such project-served acreage held by any party on one or more projects.
Section 3. (a) -This section clarifies the application of the Federal
Reclamation Law to lands specifically included within an authorized
Federal Reclamation project and served with a water supply pursuant
to a contract. The objective is to make clear that people who may be
incidentally benefitted by a project are not subject to the limitations of
the Federal Reclamation Law.
Section 3. (b)-This section establishes a new acreage limitation for
a "landholding" as defined above. Note that this provision overrides
the existing law only where a "qualified recipient" is concerned, and
provides that a "landholding" may be 1,280 acres. The existing acre-
age limitation law would continue to apply to any landholder who is a
limited recipient. (i.e. a large corporation).
Furthermore, the existing provisions of law would continue to gov-
ern where specific exemptions from the acreage limitation have been
previously legislated. These existing provisions would include certain
specific projects and the application of the acreage limitation to proj-








ects receiving loans under the Small Reclamation Projects Act loan
program.
Section 3. (c)-This section applies the definition of a "landhold-
ing" to existing acreage limitations as well as to the limitation in
S. 14. It insures that a landholder who is not a "qualified recipient",
is bound by the limitation on the total of all lands owned or leased
which receive water on one or more projects.
Section 3. (d) -This section recognizes that the restrictions applied
by S. 14 with regard to leased lands and multiple-project ownerships
will result in lands becoming excess which might not have been con-
sidered to be excess as the law has been administered prior to enact-
ment of this measure. Such lands are required to be placed under
recordable contract within 3 years. They will then be treated as all
other excess lands presently under such contracts.
Section 3. (e)-This section provides a 10-year disposal period for
lands placed under new recordable contracts pursuant to (d) above.
It therefore would provide 10 years for disposal of multi-project
ownerships in excess of 1,280 acres or ownerships in excess of 160
acres if held by parties who are not "qualified recipients."
Section 3. (f) -This section permits the Secretary to limit the num-
ber of landholdings which a hired manager may operate in the service
of one or more qualified recipients or landholders. It is intended to
avoid the possibility that a management contract arrangement could
be substituted for a lease and used to transfer the benefits of several
landholdings to one "manager".
Section 3. (g)--This is a savings clause to clarify the intent of
S. 14 to preserve existing Reclamation Law except as specifically
amended.
It is important to remember in interpreting S. 14 that, unless spe-
cifically changed therein, the existing Reclamation Law continues
to apply, and whatever latitude the Secretary of the Interior or the
courts may have to alter implementation remains. Passage of S. 14
will not change or otherwise affect the Administration by the Secre-
tary of the Small Reclamation Projects Act of 1956 (70 Stat. 1044
as amended), the Emergency Fund Act of 1948 (62 Stat. 1052) or
such other authorities of the Secretary not specifically addressed.
Section 3. (h) -This is a savings clause to preserve statutory exemp-
tions from the acreage limitation where they now exist.
Section 4.-This section provides for the application of the Class 1
equivalency concept on a programwide basis; the Committee intends
that the Bureau of Reclamation will follow the practices and pro-
cedures implementing this provision which have been used in estab-
lishing Class 1 equivalency on projects for which the concept has
already been authorized by previous Acts.
Section 5.-This section abolishes residency as a requirement in order
to be eligible to receive water for a landholding. It is the intention
of this section to remove any requirement for residency in regard
to any "landholdings" which are involved with the Reclamation Law
in any regard.
Section 6. (a) -This section provides that when a contracting entity
representing landholders has repaid to the Federal Government the
amount of construction costs required to be repaid by its contract, in
accordance with the repayment schedule contemplated in the contract,






I's
the acreage limitation will cease to apply to the landholdings. Con-
tract provisions which permit early, accelerated, or lump sum repay-
ment would be honored under this section if they have already been
validated by the Congress or if they are validated under the provisions
of subsection 10 (c) of this Act.
This section further provides that a lump sum repayment or an
accelerated repayment schedule will be adopted in other cases if applied
for by the contracting entity.
If a contracting entity owes construction charges under a contract
entered into pursuant to the authority of the Rehabilitation and
Betterment Act, the acreage limitation would continue to apply during
the term of repayment of such indebtedness. Lump sum or accelerated
repayment of such debts by the contracting entity would be authorized
and in addition the contracting entity could choose to repay the portion
of the Rehabilitation and Betterment debt associated with excess
lands with interest as an alternative to continuing the acreage limita-
tion where such indebtedness was the sole remaining reason for appli-
cation of the limitation.
Section 6. (b)-This section provides that upon repayment of con-
tractual construction charges, the Secretary of the Interior shall, at
the request of a landholder, document the termination of the acreage
limitation as it applied to that landholding.
Section 7. (a) -This section clarifies the intent of S. 14 that the
lands which a lessee leases from another and farms as part of his opera-
tion are charged against such lessee's landholdings, as well as the
owner-lessor's landholding, for purposes of the acreage limitation. The
net result of this provision would be that a qualified recipient who is
not actively farming could own up to 1280 acres and lease it to one or
more other persons who would farm it as part of their landholdings.
However, a limited recipient could own and lease out only 160 acres
under existing law as amended by S. 14.
Section 7. (b)-This section provides that water may be delivered
to leased lands held by a lessee in excess of 1,280 acres when the lease
is for 1 year or less and such lease does not convey to the lessee a right
of renewal. However, this section is not meant to be construed that
the lessee may not lease the same land in the following or subsequent
years.
Section 7. (c)-This section provides that delivery of water to
leased lands in excess of 1,280 acres pursuant to section 7(b) may
begin immediately upon filing of the required notice of the lease with
the Secretary of the Interior. However, such right of delivery may
be interrupted upon a determination by the Secretary that the require-
ments of this section have not been met.
Section 7. (d)-The effect of S. 14 is that lands operated under
lease will be treated as part of the landholding of the lessee and will
henceforth come within the limitations of 1,280 acres for qualified
recipients and 160 acres for limited recipients. There presently exist
leaseholdings in excess of these limitations. This section explicitly
provides that such lessees must come into compliance within 10 years.
Section 8. (a)-This section provides that the Secretary shall con-
tinue to deliver water to Reclamation project lands held by nonprofit
charitable or religious organizations as of January 1, 1978, without
regard to the acreage limitation. The conditions for such continued








service are that the title to the lands must remain unchanged and
either the agricultural produce from the lands or the proceeds of the
sales of such produce must be used directly for charitable purposes.
The intent of the second condition is that such lands could not be
operated for general revenue, but that the sale of produce from such
lands would be permissible if the proceeds of such sales are directly
used for charitable purposes.
Section 8. (b)-The Act of July 7, 1970 (43 USC 425b) exempts
certain State-owned lands from the acreage limitation. Section 3 of
that Act provides that a State may lease lands for revenue so long as
the lands of each leaseholder comply with the acreage limitation. The
existing law limits such leasing arrangements to a period of 25 years
from the 1970 date of enactment. This section would remove the
25-year limitation upon the States.
Section 8. (c) -This section provides a blanket exemption from the
acreage limitation of the Federal Reclamation Law for the lands of
the Imperial Irrigation District of California. This district was served
with water by the Boulder Canyon Reclamation project authorized in
1928. The water users received formal assurances from the Secretary
of the Interior in 1933 that the acreage limitation did not apply, and
no effort was made by the Federal Government to impose the acreage
limitation until 1964.
The Committee believes that the land patterns which have evolved
based upon investments and individual decisions which relied upon
Federal behavior of nearly 40 years duration should not now be over-
turned and that the economic impacts upon the landowners involved
of belated application of the acreage limitation would be inequitable.
The residency requirement, of course, would be removed by the gen-
eral provision of Section 5.
Section 8. (d)-This section clarifies the congressional intent that
the acreage limitation of Reclamation Law does not apply to projects
constructed by the U.S. Army Corps of Engineers unless an Act of
Congress explicitly makes the Reclamation Law applicable to a par-
ticular project.
Section 8 of the Flood Control Act of 1944 provided that dams
constructed by the Corps of Engineers thereafter "may be utilized
for irrigation purposes", and the Act authorized the Secretary of the
Interior to become involved in such projects "under the provisions of
the Federal Reclamation Laws". The wording of the section is ambig-
uous and has given rise to sweeping controversies concerning the ap-
plication of the Reclamation Law to agricultural lands which are
benefited by dams constructed by the Corps. Subsequent court deci-
sions and sporadic efforts on the parts of successive Secretaries of the
Interior to consumate contracts with various beneficiaries of Corps
projects have served to create a shadow extending to .all agricultural
lands which are involved with Corps projects.
The intent of Section 8(d) of S. 14 is to make clear that Section 8
of the Flood Control Act of 1944 did not, in and of itself, make the
Reclamation Law applicable to any specific project. The specific legis-
lation dealing with the project in question must be consulted to deter-
mine the applicability of the Reclamation Law. S. 14 sets forth three
criteria for making such a determination and declares that the Recla-
mation Law shall not apply unless: (1) by explicit statutory language








the Congress has designated the project as a Reclamation project or
has integrated it with or made it a part of a Reclamation project, or
(2) in addition to the project works constructed by the Corps, the Sec-
retary of the Interior pursuant to the Federal Reclamation Law has
also provided project works for control or conveyance of an agricul-
tural water supply to the lands in question, or (3) the Congress has
by statute explicitly made the Reclamation Law applicable to the
project or lands in question.
It is the intention of the Committee that the Corps exemption shall
apply to the projects on the Kings, Kern, Kaweah and Tule Rivers in
California authorized by the Flood Control Act of 1944 (58 Stat. 887).
Furthermore, it is the intention of the Committee that the criteria
specified in subparagraphs (1), (2) and (3) shall not be construed to
apply to the projects constructed on those rivers under the authority
of that Act.
It is the general intent of this section to eliminate the shadow of
applicability of the Reclamation Law to Corps of Engineers projects
in any case in which the intent of Congress concerning such applica-
bility is not clearly and explicitly set forth in statutory language.
Section 8. (e)-This section exempts from the acreage limitations,
lands which receive a water supply in two circumstances.
The first such circumstance applies to lands which might in un-
usually wet years be capable of being served with an irrigation water
supply involving the use of Reclamation project facilities, but which
would have no dependable water supply upon which a continuing
irrigated farming operation could be economically based, and lands
which may be capable of short term water service during flood flows
only.
The acreage limitation, the Committee believes, in such instances
should not act as a deterrent to putting available water to beneficial
use. The Committee notes as examples the experience of the Madera,
Chowochilla and La Branze Districts in the Friaut Division of the
Central Valley Project in California.
The second circumstances covered by this section is that in which
leases of 1 year or less are used as a management arrangement among
landholders to permit the consolidation of partial water supplies in
unusually dry years.
Again, the Committee believes that the acreage limitation should not
act to restrain prudent water conservation in emergency situations.
The Committee notes the example of the Arch-Hurley District in New
Mexico, which has experienced several years of low water availability.
Section 8. (f)-This section permits the delivery of water to minor
tracts of land in excess of a landholder's acreage limit if the Secretary
determines that such tracts could not otherwise be viably operated.
Section 8. (g) -This section provides that when excess lands are
sold to qualified recipients who have landholdings in conformance
with the acreage limitation, water service to such formerly excess
lands will for 10 years be conditioned upon an agreement on the part
of the landowner that any resale must be at a price reflecting no more
than the landowner's initial cost increased by the subsequent rate of
increase of the Consumer Price Index plus the market value of any
improvements made by the landowner.








The section also provides that formerly excess lands may be sold at
fair market value after a period of 10 or more years during which
such lands have been held in nonexcess status.
Section 8. (h) -This section provides that a water supply may be
delivered to lands which are acquired by foreclosure or other process
of law, by conveyance in satisfaction of a mortgage, by inheritance, or
by device. Water may be provided for not to exceed 10 years regard-
less of whether or not the entity acquiring such lands is a qualified.
recipient and without regard to the excess status of such lands, if any.
If such lands were not held in excess status by the immediate former
owner at the time of the acquisition, they may be resold at any time
subsequent to the acquisition at fair market value. If they were held in
excess status by the immediate former owner, they must be resold at
an approved dry land price in the same manner as required by Reclam-
ation Law of sales of excess lands in general.
Section 8. (i)-This section provides that a trustee may hold lands
in trust which collectively exceed the acreage limitation without regard
to the acreage limitation or the requirement to be a qualified recipient.
The section provides, however, that in order to exercise this exemption,
the trustee must be acting in a fiduciary capacity and the beneficiaries
of the several trusts must individually be in conformance with the
acreage limitation. In other words, the landholdings are not exempted
from the requirements of Federal Reclamation Law except for relief
from any legal impediments to the involvement of the trustee.
Section 8. (j)-This section provides that a "limited recipient" as
defined in this Act will continue to be entitled to receive a water supply
for a landholding limited to 160 acres as it would be under existing
law. A "limited recipient" is a legal entity benefiting more than 25
individuals.
Section 9.-This section provides for an extension of the 10-year
time period for disposal of excess lands subject to existing recordable
contracts which is commensurate with the period of time for which
there has been a moratorium on the approval of sales of such lands by
the Secretary of the Interior. The effect would be to allow additional
time for the disposition of such lands and the extension of the period
of time that the lands would be eligible to receive water service prior
to such disposal.
Section 10. (a)-This section authorizes and directs the Secretary
to amend existing contracts to conform to the provisions of this bill if
the other parties to the contracts request such amendments. It is the in-
tention of this provision that the Secretary does not have the latitude to
deny any such request nor does the amendment of any contract for this
purpose afford any opportunity for renegotiation or unilateral amend-
ment of such contract in any other regard than to conform to the pro-
visions of this measure.
Section 10. (b)-This section would require the Secretary to issue
appropriate notices and to adopt rulemaking procedures appropriate
for the implementation of the authorities granted in this Act as they
are set forth in the Administrative Procedures Act.
Section 10. (c)-This section addresses contracts entered into be-
tween non-Federal entities and the Secretary of the Interior contain-
ing provisions which provide for "relief" from, or are otherwise re-
lated to, the acreage limitation of the Federal Reclamation Law upon







repayment of the amount called for in the contract. The courts have
said that such contract provisions are generally invalid unless the con-
tract has been submitted to the Congress for review pursuant to the
Reclamation Project Act of 1939 (53 Stat. 1187; 43 U.S.C. par. 485).
The effect of this section would be to allow, at the initiation of the
water user, validation by the Congress of such contract provisions
which have not otherwise been validated following a review by the
Secretary of the Interior.
Section 10. (d)-This section provides that excess lands which are
sold by the Secretary by power of attorney after expiration of the 10-
year recordable contract period (which is a procedure of existing law)
shall be sold only to qualified recipients and by impartial selection of
buyers. The Secretary shall include in such sales of excess lands parcels
of various sizes, smaller than 1,280 acres and especially very small par-
cels where he determines that such parcels would be financially and
economically viable farm units. The purpose of this provision is to
facilitate the initiation of new family farm units at minimal invest-
ment costs. No authority is granted to apply such restrictions to sales
made by owners within the 10-year recordable contract period.
Section 11.-Repayment contracts between water users and the Sec-
retary are the usual vehicle for the application of acreage limitations
to the project lands. Some such contracts have explicit provisions
which were questioned by the courts on the grounds that they exceeded
the Secretary's authority. Section 10 (c) of this Act provides for the
congressional validation of such provisions at the request of the water
users.
In some instances, written representations were made to the water
users concerning the interpretation of the Reclamation Law or of con-
tract provisions which may have influenced the water users' decision
to consulate the contract. Section 11 provides access to the courts for
parties seeking to reform such contracts in accordance with the terms
of such representations. The conditions of this permission are clear in
the text.
This right would be applicable to the contractual agreements, in-
cluding any amendments to contracts, which were in force upon the
date of enactment of this Act.
Section 12.-This section is self-explanatory.

COST AND BUDGETARY CONSIDERATIONS
The following estimate of costs of this measure has been provided by
the Congressional Budget Office:
CONGRESSIONAL BUDGET OFFICE,
U.S. CONGRESS,
Washington, D.C., July 5,1979.
Hon. HENRY M. JACKSON,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Dirksen Senate Office Building, Washington, D.C.
DEAR MR. CHAIRMAN : Pursuant to Section 403 of the Congressional
Budget Act of 1974, the Congressional Budget Office has reviewed S.
14, the Reclamation Reform Act of 1979, as ordered reported by the
Senate Committee on Energy and Natural Resources, June 21, 1979.


S.Nept. 96-235 --- 2







Based on this review, it is estimated that no additional cost will be
incurred by the federal government as a result of enactment of this
bill.
Under existing federal reclamation law, individual holdings of land
eligible for irrigation water are limited to 160 acres, and lands in ex-
cess of the limit must be disposed of by landholders within a suitable
period of time. Although the limitation has not been aggressively en-
forced by the Bureau of Reclamation, the majority of landholders are
in compliance with the law. S. 14 would increase the acreage limitation
to 1,280 acres and would apply the limitation to leaseholders not spe-
cifically covered under current laws.
The cost of enforcing the limit specified in the bill is not expected
to exceed the cost of enforcing the proposed regulations implementing
current law, which were published on August 25, 1977 by the Depart-
ment of the Interior. These regulations reflect the Bureau of Reclama-
tion's intention to enforce strictly existing law regarding acreage lim-
itations and excess lands. If the Congress does not enact this or a simi-
lar bill, the proposed regulations are expected to go into effect by
fiscal year 1982, after the environmental impact statement on the pro-
posed change in regulations is completed. Such a statement is neces-
sary for any rule change that might be promulgated, including those
enforcing S. 14. Before new rules go into effect, during fiscal years
1980 and 1981, the Bureau will begin to collect the data necessary to
enforce an acreage limitation. It will be necessary to have the informa-
tion on ownership of land receiving water from reclamation projects
both for the administration's proposed regulations and for regula-
tions carrying out the provisions of S. 14. The President's budget
request for 1980 included $2.4 million for this purpose.
Other costs associated with the acreage limitation are mainly for
staff to evaluate data received, to decide when the law is not being
observed and to enforce compliance with the law. These functions
must be performed under either acreage limitation. While some sav-
ings in enforcement costs may result under S. 14, because there will
be fewer violators of the higher limitation, any savings are likely to
be offset by the cost of applying the law to the leaseholders not now
covered by reclamation law and by the cost of renegotiating agree-
ments with irrigators to conform with the new provisions in law. As
a result, no significant budget impact is anticipated as a result of S. 14.
Should the Committee so desire, we would be pleased to provide
further details on this estimate.
Sincerely,
ALICE M. RIVLIN,
Director.

REGULATORY IMPACT EVALUATION
In compliance with paragraph 5 of Rule XXIX of the Standing
Rules of the Senate, the Committee makes the following evaluation
of the regulatory impact which would be incurred in carrying out the
provisions of S. 14:
It is not possible to predict how many of the approximately 596,000
people and 146,000 farms on 176 operating reclamation projects would
be affected by implementation of S. 14. Section 12 of S. 14 specifically








requires the submittal by contracting entities of certain information
and Section 7 requires the submittal of information by lessees or lessors
for purposes of administering the measure. Some of the information
required by S. 14 is already available from the various contractors;
however, S. 14 would require the submission of additional material
heretofore not required in the administration of the reclamation
program.
It is not easily ascertained what the economic impact of the new
reporting requirements contained in S. 14 would be since there is in-
sufficient information available as to the present status of landholdings
and farming activities on project lands. The reporting requirements
of this bill, in addition to providing for compliance with the bill will
provide, for the first time, a relatively complete picture of the owner-
ship and leasing patterns on reclamation project lands.
Pursuant to S. 14, there is the opportunity for contracting entities
to achieve relief from the acreage limitations of Reclamation Law;
the extent that this opportunity is utilized will have a direct bearing
on the amount of reporting which is required; however, until such
time as the pattern of land ownership and leasing is known, there is
no way to estimate the economic or personal costs entailed with the
adoption of S. 14.
In any event, the various transition periods provided for compli-
ance with the new requirements of this measure will serve to mitigate
the economic impacts it may have. Furthermore, it is the principal
purpose of this measure to simplify and liberalize existing legal
restraints and the overall impact of the measure will be to relieve
many individuals from the regulatory burdens of acreage limitation
and residency requirements and the economic burdens of legal action
to defend against administrative interpretation of current ambiguous
policies.
EXECUTIVE COMMUNICATIONS
The pertinent legislative reports and communications received by
the Committee from the Department of the Interior setting forth Ex-
ecutive agency recommendations relating to S. 14 are set forth below:
U.S. DEPARTMENT OF THE INTERIOR,
OFFICE OF THE SECRETARY,
Washington, D.C. March 20, 1979.
Hon. HENRY M. JACKSON,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate,
Washington, D.C.
DEAR MR. CHAIRMAN : This responds to your request for the views
of this Department with respect to S. 14, a bill "To amend and supple-
ment the acreage limitation and residency provisions of the Federal
reclamation laws. as amended and supplemented, and for other pur-
poses."
The Department would support enactment of legislation containing
provisions of that bill with amendments recommended herein.

THE BILL
S. 14 would allow for an acreage limitation under the Federal recla-
mation laws of twelve hundred eighty acres (1280) as the maximum








landholding of any qualified recipient eligible to receive Federal recla-
mation project water. Qualified recipients would include an individual,
his or her spouse, or dependents thereof as defined by the Internal
Revenue Code (26 U.S.C. 152), or any legal entity directly benefiting
25 persons or less, and that is a citizen of the United States and owns
or leases a landholding. The Secretary would be allowed to limit the
number of holdings receiving project water and managed by any per-
son on behalf of a qualified recipient. The Secretary would be required
to designate, upon the request of a qualified recipient, an equivalency
formula for determining the acreage of a landholding which is eligible
to receive project water and which is the equivalent of 1280 acres of
class 1 land for lands of .lesser productive potential. The equivalency
policy would apply only to projects, units, or districts where the grow-
ing season is 180 days or less. New acreage limitation provisions would
apply within 1 year of enactment.
Residency would not be required of a qualified recipient. Multiple
ownerships would be allowed for entities "directly benefiting" 25
persons or less. Leasing would be allowed within the acreage limits
provided, but new purchasers would be required to farm land for 10
years prior to leasing it. Existing leases as of January 1, 1978, would
be recognized for the duration, or 10 years, whichever is shorter.
S. 14 would call for release from acreage limitation provisions for
any landholding upon "payout" (completion of repayment) of any
contract with the Secretary relating to delivery of water supplies. An
exemption from legal limitations would be provided for charitable or
religious non-profit organizations holding land as of January 1, 1978.
The Secretary would be required to amend existing contracts, upon
the request of the holder, to conform to provisions of the bill if
enacted.
DISCUSSION AND DEPARTMENTAL VIEWS
We will work with the format of S. 14 which covers the principal
issues; these primary issues are acreage, equivalency, residency, leas-
ing, payout, and timing of the application of new provisions. We pro-
pose numerous additions and amendments to S. 14, however.
STATEMENT OF PURPOSE
The Department strongly supports the original purposes of the
Reclamation Act of 1902. We consider it important in this major legis-
lative effort to clearly reaffirm those purposes at this time. Conse-
quently, we propose in Section 2 of our amendments the addition of a
statement of purpose to S. 14 setting forth the major objective which
we believe were embodied in the original Act and have continuing
validity. Those purposes are: (a) to promote owner-operated family
farms; (b) to provide opportunity for a maximum number of farmers
on the land and for individuals to get a start in farming; (c) to dis-
tribute widely the benefits of federally subsidized reclamation projects;
(d) to preclude speculative gain in the disposition of excess lands; and
(e) to provide for sound repayment practices from those receiving
federally supplied water.
ELIGIBILITY
We would also add a separate section on eligibility (Section 4 of our
amendments), setting forth as clearly and succinctly as possible those








classes of persons who would be eligible to receive reclamation project
water. Our criteria for eligible recipients of project water reflect our
view that the basic entitlement should center around the adult indi-
vidual, without regard to family size, as has heretofore been the tra-
ditional practice. Joint ownerships would be permitted between two
related or unrelated adults. Multiple ownership arrangements would
be permitted, but would be limited to owners in an immediate family
relationship with each other. This limitation represents an effort to
recognize family multiple ownerships that have legitimate purposes
but do not run counter to program purposes, and to exclude those more
wiide-open multiple ownerships that are more difficult to monitor and
control and which tend to promote non-resident, non-participating,
investor-type ownerships that are inconsistent with the purposes of
the reclamation program.
RESIDENCY
The most significant of the eligibility requirements is residency,
considered in Section 5 of our amendments. The Department considers
a strong residency requirement to be the best means of assuring the
owner-operated farms that are envisioned by the reclamation program.
In this respect, we disagree with the position taken in S. 14 which
would apparently do away with the residency requirement. We be-
lieve that the loose eligibility criteria provided in S. 14 would make
it extremely difficult to monitor and manage the reclamation pro-
gram to maintain consistency with program goals.
Section 5 of the Reclamation Act of 1902 requires that landowners
receiving federally subsidized water be "bona fide residents" on the
farm or in "neighborhood" of the farm, which has been historically
defined as a maximum distance of 50 miles from the farm. We would
reaffirm this requirement, while allowing some exceptions for such rea-
sons as retirement or health.
We recognize that the residency requirement has not been enforced
for 50 years, and hardships could be created if the requirement were
reimposed abruptly. Consequently, we believe the requirement should
be phased in gradually, and our aemndments apply the following tran-
sition rules.
New purchasers of reclamation project lands would be given a three-
year grace period to become residents. They would be required to
declare, by affidavit, their intent to become a resident within three
years, and thereafter to become a resident within that time in order
for their land to continue to receive project water. Affidavits would
be monitored to achieve compliance. Our proposed amendments would
allow, in addition to other sanctions, the cancellation of water de-
liveries for any lands involved in .a fraudulent declaration.
Adult individuals who now own land but are not residents would
continue to receive project water for the lands, and residency would be
required only of new owners at the first transfer of title, however it
occurs.
Multiple ownerships held by persons in an immediate family rela-
tionship (defined as those in a direct lineal relationship with each
other, spouses, brothers and sisters) would not be required to meet
residency requirements until the first transfer of title or shares, or the
addition of new shareholders, however accomplished.








Corporations or other multiple ownerships holding lands receiving
project water whose owners are not in an immediate family relation-
ship would be given a 5-year transition period within which to meet
requirements, to transfer ownership to eligible program participants,
or to cease receiving project water.
In addition, we recommend that the residency requirement be aug-
mented by requiring owners and lessees to be substantially involved
in the farming operation. Criteria and standards for involvement
would be developed later in regulations. Such criteria would be more
stringent than the IRS definition under which periodic vists suffice
for "involvement."
ACREAGE LIMITATIONS
The Department-proposed amendments respecting the acreage lim-
itation (Section 6 of our amendments) agree in principle with the posi-
iton in S. 14 to expand the acreage limitation for lands held by one
owner eligible to receive project water. S. 14 would allow flat 1280
acres (plus equivalency where authorized) owned or leased per quali-
fied participant. The Department would allow a resident adult to
receive project water on 320 acres of owned land with an additional
allowance for 160 acres of leased land, for a total of 480 acres (plus
equivalency where authorized). In the alternative, as much as 480
acres could be leased by one individual receiving project water; any
combination of ownership and leasing totaling 480 acres per individual
provided ownership does not exceed 320 acres, would be permitted.
Two adult individuals could receive project water on 640 acres of land
jointly owned, or 960 acres of land jointly owned and leased. So a
husband and wife, or two unrelated adult individuals could receive
water on as much as 960 acres.
However, multiple family ownerships, such as family corporations,
joint tenancies, partnerships or trusts, where owners are resident
adults in an immediate family relation, could hold up to 960 acres so
long as no more than 480 acres is owned and leased on behalf of any
one resident adult owner. No additional entitlement for any form of
ownership would be allowed for dependent children.
New acreage limitations would apply immediately to new purchases
of land, excess or non-excess. Eligible individuals having an entitle-
ment under current law that exceeds the limt applicable under the
new bill (for instance families with a large number of dependent
children) would be allowed to keep their current entitlement. New
limitations would apply on the first transfer of title or shares.
Lands currently under recordable contract would continue to receive
water for the duration of the contract.
We note a feature contained in Section 3 (d) of S. 14 which would
allow the Secretary to limit the number of landholdings that may be
managed for a qualified recipient by another person. We believe this
concept has merit but that we can achieve the same purpose through
our definition of leasing, which includes management.
We believe our approach strikes a desirable balance between the sev-
eral important objectives: maintaining the small owner-operated
farm; providing sufficient flexibility to allow for reasonable growth in
owner-operated farms; allowing for the considerable variations in the
farm economy; recognizing developments in farming technique and








economics over the years; recognizing to a reasonable degree the results
of the history of the reclamation program and the reliance built upon it.
We do not believe that, based on current average ownerships through-
out the program, the average ownership, norm, or common size of farm
under our proposal, would approach the 960-acre figure. On the other
hand, we think there are enough controls in our approach to prevent
the establishment or continuation of large ownerships by absentee
farmers, investors, and non-family corporations.

EQUIVALENCY
S. 14 would authorize the Secretary to apply an equivalency formula
to acreage limits for districts having a growing season of 180 days or
less. The purpose of equivalency is to help assure the viability of farms
on project lands where productivity is less, and to assure that owners
of less productive land within a given district would not be at a com-
petitive disadvantage compared to owners of better lands in the dis-
trict. We support the application of equivalency with the 180-day
division, which would separate those projects where equivalency would
be least needed or equitable from those where it may be necessary or
desirable.
Our approach, contained in Section 7 of our proposed amendments
would authorize the Secretary, at his discretion, to apply equivalency
on a case-by-case basis, if requested by a district after a vote of the
district. We prefer the case-by-case approach which is manageable and
is consistent with past practice in the application of equivalency to
particular projects. We do not believe a system-wide approach, advo-
cated by some, would be manageable or equitable.
On projects where equivalency has been previously authorized, the
amendments would allow the Secretary to reassess existing equivalency
determinations to conform to the new overall standards of the amend-
ments. The Secretary would retain discretion to determine whether
application of equivalency to a given project or district would be
appropriate.
A serious problem is present by the suggestion which has been
made a number of times which would require the application of
equivalency based upon the request of a single landowner. This pro-
vision could create serious inequities among landowners and would
cause administrative havoc. We strongly recommend the application
of equivalency only on the request of the district as a whole.

LEASING CONDITIONS
We support the purpose of section 7 of S. 14, which would place
limitations on leasing. Leasing can be a worthwhile device for pro-
viding access for new farmers to the reclamation program and for
providing extra income to a small farmer. We also recognize that
leasing has been a principal device for circumventing the requirements
of the law. Consequently we believe leasing should be carefully moni-
tored and controlled to avoid abuses.
S. 14 would apply acreage limits to leased lands. In Section 9 of
our amendments, we would amend Section 7 (a) of S. 14 to require that
both acreage and residency limitations should apply to leasing. Section








7(b) of S. 14 would require that new purchasers of land after Janu-
ary 1, 1978, would have to farm the land for 10 years before leasing
it (subject to hardship exceptions). We support this provision and
would adopt it. Section 7(c) would phase in application of new acre-
age limitations to leased land for a period of the expiration of an
existing base, or 10 years, whichever is shorter. We would revise the
requirement to phase in all applicable limitations to lessees of leased
land for a period of 5 years or the expiration of an existing lease,
whichever is longer. Phase in of new limitations for lessors would be
determined, of course, by rules applicable to owners, previously
discussed.

CONTRACT APPROVALS AND EXEMPTION FROM ACREAGE LIMITATIONS
S. 14, Section 6, would apply a blanket exemption from acreage
limitations to all landholdings upon completion of the repayment
required by the terms of any contracts with the Secretary relating to
project water for agricultural use.
The case of United States v. Tulare Lake Canal Co. (553 F. 2d 1093;
9th Cir., 1976), ruled that provisions in contracts between the Bureau
of Reclamation and water-user organizations containing so-called
"payout clauses," which exempt water-user organizations from the
reclamation excess land laws upon payment of their contract obliga-
tions, are invalid. Twenty-two contracts containing such provisions
had previously been ratified by the Congress, and it is the Department's
view that such ratification has removed for those contracts the objec-
tion found in Tulare Lake.
Our amendments would provide Congressional ratification of exist-
ing district contracts containing so-called "payout" clauses.
We do not support "payout" contracts as a matter of Departmental
policy. During a brief phase in the administration of the reclamation
program in the early 1950's, "payout" contracts were accepted policy
and a number of such contracts were written. Because contracts con-
taining payout clauses were signed in good faith by the districts con-
cerned and had been approved by an opinion of the Solicitor, and
because payout provisions were reduced to a binding written contract
in some cases, we believe they should be honored. We would not sign
any more such contracts.
We would clarify in the bill and retain the discretion that now exists
for the Secretary to grant acreage exemptions upon payment of a
district's obligation over the full term if the Secretary finds that a
pattern of family farms has been established. We would not honor
any representations not reduced to a contract. To do so would set a
very dangerous precedent, would cause serious administrative difficul-
ties, and would be inconsistent with the Tulare Lake decision. Nor do
we support recognition of representations to individual farmers. This
would result in the inequitable and anomalous situation where farmers
who have failed to comply are given a break while neighboring farm-
ers in the same district who have complied all along would be required
to continue to comply.
About sixty-five district contracts have not been ratified to remove
the problem posed by the recent Tulare Lake decision. The bill would
attempt to cure that defect in those outstanding contracts by supply-








ing Congressional ratification, which would apply to the updated list
of contracts attached hereto. Any exemption granted, by contract or
otherwise, would be only upon full payment over the normal term of
the contract, and the land laws would apply and be enforced in the
meantime.
The issue has been frequently raised as to whether prepayment of
the contractual obligation would warrant an exemption. We are
strongly opposed to such a policy, since it would negate the purposes
of the reclamation program, and we do not think it is authorized under
existing law.
DISPOSITION OF EXCESS LANDS
Section 12 of S. 14 does not address the issue of disposition of excess
lands. Our amendments attempt to reduce speculation and provide for
equitable distribution of excess lands. It would limit the classes of
eligible purchasers from whom the seller could choose to three groups,
immediate family members, tenants and employees of more than 10
years standing, or adjoining neighbors. This classification is an attempt
to recognize, on the one hand, several basic groups which experience
has shown may have a reasonable basis for a preference at purchasing
available excess lands, and who, if otherwise eligible as landowners,
should be encouraged by the law to participate. On the other hand, it
is an attempt to keep the opportunity for purchase of excess lands
open to as many people as possible. We feel that the classifications are
manageable and supportable based on our experience at administering
the program.
If a seller has not sold his excess lands to an eligible purchaser
within the above groups by the end of the recordable contract period,
power of attorney would vest immediately in the Secretary to sell the
lands by lottery to an eligible purchaser. The Secretary would estab-
lish procedures and criteria for sale in regulations. The Secretary
would retain discretion as to whether, or how long, to continue water
deliveries to excess lands beyond the recordable contract period and
during the period of sale by the Secretary.
The Administration would also seek to contract speculation in ex-
cess lands by amending Section 46 of the Omnibus Adjustment Act
of 1926 (43 U.S.C. 423(e)) to extend price control by the Secretary
over the sale and resale of excess lands for a period of 15 years beyond
the initial sale, and by requiring clear documentation of the legal
conditions of sale in the sales transactions. Although Section 46 could,
and we think should, be read to provide authority for price control
over resales of excess lands, it has not been so interpreted until re-
cently. For this reason, we believe that provisions for strengthening
and clarifying Section 46, found at Section 12 (c) of our amendments,
are worthwhile.
REPAYMENT OF PROJECT COSTS
Section 10 (a) of the amendments would require that any water
service contracts including amendments or temporary contracts, en-
tered into after enactment, would require reassessments of rates and
repayment every 5 years. This would recognize several factors. Fre-
quently irrigation projects are built on terms which are extremely
favorable to the irrigators, whose initial payment capacity may be








small; however, as a project progresses and farms become established,
repayment capacity is likely to increase substantially. If so, it is only
fair that irrigators being favored with a substantial Federal subsidy
should assume a larger measure of responsibility. Additionally, over
the course of a given project contract of 40 or 50 years, economic con-
ditions and technology will change and inflation could substantially
dilute the dollar; the reassessment provision would permit recogni-
tion of these factors. The reassessment provision would not guarantee
a rate increase every 5 years; nor would it be one-sided. In a period of
a serious economic down-turn, a rate reassessment could reflect adverse
conditions. We consider the reassessment provisions to be desirable.
The renegotiation provision would not apply to repayment contracts
negotiated under section 9(d) of the Reclamation Project Act of 1939.
We note, however, that section 9(d) does permit variable payment
rates negotiated at the inception of the contract.
Section 10 (b) of our amendments requires that repayment for any
portion of a delivery system constructed as part of a reclamation pro-
ject should comence within 1 year after that portion of a delivery
system begins to regularly deliver water. This recognizes that project
beneficiaries should begin repayment when the benefits of a project
begin to accure. In a number of cases serious abuses have occurred
when project facilities have been in operation for a number of years
delivering benefits before repayment has commenced. The provision
recognizes outstanding commitments for "development period"
privileges allowed by sections 7 and 9 of the Reclamation Project Act
of 1939, and allows future application of those provisions in potential
hardship situations. We recognize it may take time to initiate cash-
producing crops, although 10 years may be too long. While it is not
our intention to negate those provisions of the 1939 Act, it should be
understood in current and future applications of the development
period provisions of that law that they were written in a time of
extreme economic hardship, particularly for farmers, and such ex-
treme conditions do not pertain today. Moreover, other government
programs have been developed to forestall economic hardship among
farmers.
PUBLIC PARTICIPATION IN CONTRACTING
S. 14 does not address this issue. We support the concept of public
participation in the contracting process, and this position is consist-
ent with the findings and recommendations contained in the report of
the Special Task Force on the San Luis Unit, published January
1, 1978, pursuant to Public Law 95-46.
We recognize that decisions of great importance, which significant-
ly affect both project beneficiaries and those outside the project, are
made in the contract negotiation process. All affected parties should
have the opportunity for knowledge of pending proceedings and for
input into the process. It is also true that in the actual negotiations
there may be times when direct public participation may be im-
practicable. We believe that our recommendation for public participa-
tion, which is found at Sec. 11 of our amendments, is fair to those
interested in any given project or contract proceeding. The provi-
sions are similar to H.R. 6335 and H.R. 10243 in the 95th Congress and








are consistent with the recommendations of the San Luis Task Force.
They would require public notice of proposed draft contracts, and op-
portunity for public comment, with public hearings at the Secretary's
discretion; review of comments by the Secretary would also be re-
quired. Contract negotiations would be open to the public as ob-
servers; notice of these sessions would not be required.

CIVIL PENALTY PROVISION
We have proposed in Section 16 the addition of authority for the
Secretary to assess a civil penalty against those who violate provisions
of the Federal reclamation laws and regulations. The penalties would
vary wtih the circumstances but could range, at the Secretary's dis-
cretion to $5,000, or to twice the value of project water delivered to
a violator. Traditionally, the only sanction available to the Secretary
to enforce reclamation laws has been to cut off project water supplies
for infractions. This is a Draconian measure which the Department
has been reluctant to invoke. Without abandoning the option of shut-
ting off water, we believe that the civil penalty provision will offer
an additional and more flexible and realistic tool for achieving com-
pliance with the reclamation laws.

OTHER PROVISIONS
We would adopt a provision in Sec. 8(b) of S. 14 calling for an
exemption for charitable and religious organizations, holding project
lands as of January 1, 1978, from legal limitations of the reclamation
program. Although we do not want to expand the participation of
charitable organizations in the program since that is not the purpose
of the program, we do not wish to eliminate those charitable orga-
nizations now participating in the program.
Our position adopts the provision of Section 9(a) of S. 14 which
would authorize the Secretary upon the request of the holder to amend
existing contracts to conform to the provisions of the bill.
An additional provision requires water districts to obtain and
maintain such data and submit such reports as the Secretary may con-
sider necessary to enforce the law.
Other reclamation laws, not inconsistent with the new bill, would
remain in full force and effect.

DEPARTMENTAL REGULATIONS
It is appropriate to mention here the regulations, which would be
required by Section 14 of our amendments, and which are being de-
veloped in coordination with work now underway on an environ-
mental impact statement (EIS). The draft regulations which were
proposed previously have been substantially revised, based upon
hearings which were conducted in the West by top policy level of-
ficials of the Department, on 10,000 written comments which were
received, and on further ongoing study by the Department. Addi-
tional revisions to the regulations will be forthcoming. Pursuant to
a decision of the Federal District Court in Fresno, further promulga-
tion of rules is stayed pending completion of the EIS. The EIS will
be done with references to the rules as revised to date, not the rules








as initially proposed. Our present timetable calls for completion of
the EIS and regulations process during 1980. This matter will be
more fully covered in Departmental testimony at hearings on S. 14
before your Committee.
It is clear that the EIS will increase our knowledge of potential im-
pacts of the regulations, and of legislative amendments as well. There
is substantial interest in the Congress and elsewhere to amend the law.
We concur in that purpose. On behalf of the Administration, we are
offering this report and the attached amendments in response to your
requests for our views on the Congressionally-sponsored legislation
now before you. We will continue to work on the EIS with the expec-
tation that it may well offer important additional knowledge concern-
ing alternatives for this program. When the EIS is complete, we will
then assess its importance for pending or future regulations and leg-
islation.
We note that other bills, in addition to S. 14, on the subject of reform
of the Federal reclamation laws, have been recently introduced in the
Senate, including S. 633 and S. 386. While we have not been requested
to address these bills for the purposes of this hearing, we believe they
may present potentially serious problems for the reclamation program
(especially S. 633) and we would like to have the opportunity to sub-
mit additional views in time for further Committee consideration of
reclamation reform legislation.
This concludes the presentation of the Department's views. As stated
initially, we would support enactment of legislation reflecting the
views and amendments provided herewith.
The Office of Management and Budget, has advised that the presen-
tation of this report is in accord with the Administration's program.
Sincerely,
GruY R. MARTIN,
Assistant Secretary.
Attachment.

PROPOSED AMENDMENTS AND ADDITIONS To S. 14
Insert new See. 2 of S. 14, page 2, line 1:

STATEMENT OF PURPOSE
"Sec. 2. It is the purpose of this Act to reaffirm as law and policy that
the purposes of the Reclamation Act of 1902 and the Congressional in-
tention in Federal reclamation law, are and have been:
(a) to promote owner-operated family farms;
(b) to provide opportunity for a maximum number of farmers
on the land and for individuals to get a start in farming;
(c) to distribute widely the benefits of federally subsidized
reclamation projects;
(d) to preclude speculative gain in the disposition of excess and
formerly excess lands; and
(e) to provide for sound repayment practices from those receiv-
ing federally supplied water.








DEFINITIONS
Change Sec. 2 of S. 14 to Sec. 3 and revise as follows:
"Sec. 3. As used in this Act-
(a) The term "Secretary" means the Secretary of the Interior.
(b) An "immediate family relationship," for the purposes of
this Act and reclamation laws generally as modified by this Act,
shall mean persons in a direct lineal relationship with each other,
spouses, brothers and sisters.
(c) "Adult individual" for the purposes of this Act shall mean
any individual person 18 years of age, or older.
(d) "Resident" shall mean an adult individual having a bene-
ficial ownership interest in or who leases land receiving water
from a Federal project governed by Reclamation law, and who
is an actual bona fide resident on or in the neighborhood of, but
in no event greater than 50 miles from, the land receiving project
water.
(e) "Project water" is water that is furnished under reclama-
tion law by or through federally financed facilities to a district.
(f) "Leasing" shall mean a legal arrangement where the person
owning the land (the lessor) relinquishes to another (the lessee)
effective control or operation or management of the land, in ex-
change for cash or other value.
(g) "Purchaser" shall mean an individual who acquires an
ownership interest in project lands by whatever means.
(h) "District" shall mean any entity or individual which has
a contract, lease, license or permit with the United States for a
water supply for agricultural purposes.
(i) Project lands are lands receiving project water.
Insert new Sec. 4 as follows:
ELGIBIImTY
"Sec. 4. Eligible recipients of Federal reclamation project water for
irrigation of project lands shall be limited to:
(.a) Adult individuals who own and/or lease lands within a
Federal reclamation project for agricultural purposes and who
are residents and comply with the acreage and other requirements
of this Act;
(b) Two adult individuals, related or unrelated, who own and/
or lease jointly project lands for agricultural purposes and who
are residents and comply with the acreage and other requirements
of this Act; and
(c) Other legal entities representing the ownership interest of
two or more adult individuals, such as corporations, partnerships,
trusts, and joint tenancies meeting these requirements:
(1) The entity is legally registered or established in one or
more States;
(2) All beneficial owners (except one, as per (b) above) must
be in an immediate family relationship with each other;
(3) All beneficial owners must be residents; and








(4) No more than 480 acres may be owned and/or leased
(of which no more than 320 acres must be owned) for each
participating resident adult individual, ]provided that in no
instance shall a legal entity own and/or lease more than 960
acres of land receiving project water, of which no more than
640 acres may be owned.
(d) A minor individual may beneficially own land served by
project water so long as the acreage involved is counted against
the ownership entitlement of an eligible adult.
(e) Each of the above classes of eligible participants shall, in
addition to meeting residency requirements as set forth in section
5, infra, be required to be substantially involved in the farming
operation. Criteria and standards for involvement shall be devel-
oped in regulations to be issued pursuant to section 14, infra."
Change Sec. 5 to be titled "Residency" and substitute the following:
RESIDENCY
"Sec. 5. (a) The requirement in section 5 of the Reclamation Act of
1902 (43 U.S.C. 392) pertaining to residency is hereby reaffirmed. The
term resident shall be defined as provided in Sec. 2(d) above.
(b) Notwithstanding subsection (a), in recognition of the fact that
the residency requirement has not been enforced for many years, and
in order to avoid the undue hardships that may arise if the require-
ment is enforced too abruptly, residency will be enforced henceforth as
follows:
(1) Residency shall be required of all new purchasers of Rec-
lamation project lands after January 1, 1978; however, new pur-
chasers may qualify to continue to receive project water on newly
purchased lands by making affidavits indicating an intent 'to be-
come a resident within 3 years, and by becoming a resident within
that time.
(A) The Secretary shall carefully monitor such affidavits
to achieve compliance.
(B) The Secretary may impose by rule such reasonable
procedures and sanctions as may be necessary to protect
against fraudulent or other unfulfilled affidavits. Such sanc-
tions may include termination of water deliveries to the land
in question, or penalties as provided by section 16 of this Act.
(2) With respect to individuals who own land purchased prior
to January 1, 1978, who are not now residents, but who are other-
wise qualified, residency will not be required so long as ownership
is retained; upon transfer of any beneficial interest in the land,
however accomplished, the transferee shall be a resident.
(3) Where land has been owned prior to January 1, 1978, by a
family corporation or other form of multiple ownership com-
prised of individuals in an immediate family relationship, resi-
dency will not be required of individuals having an interest in the
family multiple ownership as of that time; upon the addition of
any new family shareholders in the multiple ownership, or upon
any transfer of title or shares however accomplished, new owners
or shareholders shall be residents.








(4) Lands now owned by corporations or other entities which
would not be eligible to receive project water according to prq-
visions of Section 4 above, shall lose their eligibility to receive
project water if, within five years from the date of enactment of
this Act such owners have not become qualified or transferred
their ownership to qualifying adult resident individuals or family
entities.
(5) With respect to lessees of lands receiving project water,
residency shall be required upon the termination of a valid writ-
ten lease (existing as of January 1, 1978) or 5 years from the
date of enactment of this Act, whichever is greater. Owners/
lessors shall be subject to provisions above relating to ownership."

ACREAGE LIMITATIONS
Change Sec. 3 to Sec. 6 and substitute the following:
"Sec. 6. (a) Notwithstanding any other provisions of law, for the
purposes of administering Federal Reclamation laws, no project water
shall be delivered to any lands in excess of 320 acres owned by any
one resident adult individual.
(b) Each resident adult owner may receive project water for an ad-
ditional amount of leased land, which when added to the land owned
does not exceed 480 acres. However, in no event may an individual
adult owner own more than 320 acres of land receiving project water.
All 480 acres of a single entitlement receiving project water may be
leased land if none is owned.
(c) A resident adult individual may receive project water for
land owned and/or leased jointly with one other resident adult indi-
vidual, related or unrelated, provided that the total land owned
does not exceed 640 acres and the total farm size of owned and leased
land does not exceed 960 acres.
(d) The Secretary may allow other multiple ownership arrange-
ments including trusts, partnerships, joint tenancies, and corporations
to involve larger operating units provided eligibility requirements
of Section 4(c) are met, and provided further that the total farm size
of owned and leased land does not exceed 960 acres.
(e) Nothing in this Act shall repeal or amend existing statutory
exemptions from acreage limitations of the reclamation laws.
(f) The acreage limits in the Act shall be determined without
regard to project or district lines.
(g) Implementation of Acreage Limitations
(1) Acreage limitations contained in this Act will apply im-
mediately to any purchases or leases of lands, excess or non-excess,
occurring after January 1, 1978.
(2) Lands currently under recordable contract as of enactment
of this Act will retain their eligibility to receive project water
during the term of the recordable contract.
(3) In circumstances where lands are subject to an existing,
valid recordable contract entered into prior to enactment of this
Act, and where lands formerly considered excess may fall within
acreage limitations imposed by this Act, the Secretary is author-
ized to renegotiate such recordable contracts to reflect new limita-
tions, if requested by the holders of those contracts and provided








that the landowners making the request currently meet eligibility
requirements provided in this Act. Any such renegotiated con-
tracts shall not extend the term for sale of lands deemed excess
beyond the time originally agreed.
(4) Multiple ownerships which did not meet eligibility criteria
of sec. 4 of this Act as of January 1, 1978 shall have 5 years from
the date of enactment of this Act within which to conform to the
requirements of this Act, to transfer their lands to eligible owners,
or to cease receiving project water.
(5) Family corporations or ,any other multiple ownerships, in
which all participants 'having a beneficial interest were in an
immediate family relationship on January 1, 1978, need not com-
ply with the acreage limits contained in this section which are
more restrictive than 'any in effect on January 1, 1978 in order to
retain their eligibility to receive project water. Lands owned by
these family ownership arrangements will become subject to the
acreage limits of this Act upon the first transfer of title or shares,
however it occurs, or the addition of any new beneficial owners.
(6) Notwithstanding the above subsections, lands held by any
owners and/oir lessees in more than one irrigation district which
are currently receiving water and which in total exceed acreage
limits applied 'by this Act, shall be considered excess immedi-
ately, and owners must place these lands under recordable con-
tract within one year of the enactment of this Act, in order to
continue to receive project water. The lands placed under record-
able contract must be disposed of within 5 years. If a lessee leases
from more than one owner and the lessee, only, is in excess status,
then the lessee shall comply as provided in subsection (7) below.
(7) Those lessees holding lands under a valid written lease,
existing as of January 1, 1978, and receiving project water, shall
be required to comply with acreage limitations imposed herein
within 5 years or upon termination of such valid written lease,
whichever is longer.
(8) The acreage limitations applied by this section shall be
subject to the provisions of section 7."

EQUIVALENCY
Change Sec. 4 to Sec. 7 and modify to read as follows:
"Sec. 7. (a) Whenever an acreage limitation would be imposed by
Federal reclamation law, as modified by this Act, the Secretary may
establish the acreage of land owned and/or leased in one unit by one
resident adult individual, which may be eligible to receive project
water from, through, or by means of project works as nonexcess land,
at four hundred eight acres of class 1 land or the equivalent thereof
in other lands of lesser productive potential, as determined by the
Secretary. Equivalency may be applied on a distriot-by-district basis
and may be applied to a given district only if requested by the district
following a vote by the district membership favoring the application
of equivalency, and if the Secretary determines it is appropriate. The
Department shall use existing standards, criteria, and procedures of
the Bureau of Reclamation in classifying lands., determining the
equivalency factor, ,and in applying the equivalency policy: Provided,








That this section shall not apply to any project, unit oir division of a
project, or repayment contracting entity if the average frost-free
growing season, as determined from published Department of Com-
merce records, exceeds one hundred and eighty days.
(b) On projects where the application of equivalency has been pre-
viously authorized by an act of Congress, that authorization shall
remain in effect; however, upon the request of a district holding an
existing contract with the Secretary on any such project, the Secretary
may reassess existing equivalency determinations and amend existing
contracts to reflect changes in reclamation law effected by this Act.
(c) The Secretary may determine, in his discretion with respect to
any district requesting the application of equivalency after examina-
tion of all relevant factors pertaining to equivalency, and despite the
fact that the requesting district may lie wholly or partly within the
180-day limitation applied by this Act, that the application of an
equivalency formula to such district is inappropriate.
(d) By March 31 of the year following calendar year of the date of
enactment of this Act, and on each March 31 thereafter, the Secretary
shall report to the Congress on actions taken to carry out the purposes
of this section. The report shall present on a case-by-case basis, the
name of the project division, unit, and repayment entities involved and
summary information on equivalency determinations and other actions
taken by the Secretary under this section during the calendar year pre-
ceding the date of the report."
Change Sec. 6 to Sec. 8 and revise to read:
CONTRACT APPROVALS
"Sec. 8 (a). The reclamation contracts with water user organizations
negotiated pursuant to the Federal reclamation laws by the Secretary
of the Interior, and listed hereinafter, are hereby approved by the
Congress of the United States. (Contracts are listed in Appendix A to
this bill, incorporated as part of the bill.)
(b) Provisions in the aforementioned contracts allowing for exemp-
tion from the acreage limitation provisions of reclamation law upon
full payment of the districts' allocated shares of construction costs
shall not be construed as authorizing or allowing lump sum or other
accelerated payment in order to achieve such an exemption. Only pay-
ment over the normal term in regularly scheduled installments shall be
sufficient.
(c) Upon full payment of a district's allocated share of construc-
tion charges in regularly scheduled installments over a normal, full
term, for any district in any project heretofore or hereafter authorized,
and of any other charges and loans incurred under authority of any
other Federal Reclamation Law, the Secretary, upon application by a
district or other contracting entity, may in his discretion grant an
exemption from the acreage limitations and residency requirement
imposed by the Federal Reclamation Laws only if he is satisfied that a
general pattern of family-sized farm ownerships owned and operated
in accordance with Reclamation law has been established within the
boundaries of the district or other contracting entity seeking the
exemption. The repayment of loans under the Rehabilitation and
Betterment Act, 43 U.S.C. 504, et seq., shall be required prior to Sec-








retarial consideration on an exemption only for those loans made after
the effective date of this Act.
(d) The Secretary shall provide, upon request of any owner of land
in a district for which repayment has been made and an exemption
has been allowed, a certificate acknowledging that the land is free
of the acreage limitation provisions of Federal reclamation laws.
Such certificate shall be in a form suitable for entry in the land rec-
ords of the county in which such landholding is located."
Change Sec. 7 to Sec. 9 and revise to read as follows:

LEASING CONDITIONS
"Sec. 9. (a) The residency and acreage limitation requirements of
this Act shall apply to both lessors and lessees of project land receiv-
ing project water, as provided in section 5 and 6 above.
(b) No eligible recipient acquiring a landholding after January 1,
1978, may lease such landholding unless he or she has derived income
as a qualified recipient from such landholding for agricultural pro-
duction rather than a fixed rental for a period of not less than ten
years: Provided, however, That the Secretary may permit such leasing
after a shorter period of time upon application of a lessor if the Sec-
retary determines that hardship or other mitigating circumstances,
including purchase of land which is subject to a valid written lease,
warrant such permission.
(c) The Secretary shall require that each district shall maintain an
accurate and up-to-date file on each lease of lands served by Federal
water. Each lease shall be filed with the district. Each district shall
maintain files open for public inspection and shall report annually to
the Department on the outstanding leases within the district that are
served by Federal water."
Add new section 10 through 17 as follows:

REPAYMENT OF PROJECT COSTS
"Sec. 10. (a) With respect to water service contracts, including tem-
porary and interim contracts, or any amendments to such contracts,
entered into after the date of enactment of this Act, the Secretary
shall require in any such contracts or amendments that rates and as-
sessments to be paid by the contracting entity shall be renegotiated
every five years. The studies on which such rates and assessments may
be based shall also be conducted every five years. Any other adminis-
trative review ordinarily conducted by the Secretary of reclamation
projects shall be coordinated to the extent possible with rate reviews to
avoid duplication of work and unnecessary administrative burdens.
(b) Notwithstanding any other provision of law, the Secretary shall
require in any repayment or water service contract, including interim
and temporary contracts, or amendments to such contracts, entered
into after the date of enactment of this Act, that payment for portion
or section of any distribution or delivery system constructed pursuant
to Federal reclamation laws, shall commence when such portion or
section begins regularly and permanently to deliver water. No section
of any system shall be used to deliver water for more than one year
unless repayment for that section has commenced, provided that the
Secretary shall honor existing contracts or written notices pertaining








to "development periods" allowable under Sections 7 and 9 of the
Reclamation Project Act of 1939, and may, in situations of potential
hardship, apply such provisions for development periods in future
contacts."
PUBLIC PARTICIPATION
"Sec. 11. Section 9 of the Reclamation Project Act of 1939 (43 U.S.C.
485h) is amended by adding the following new subsections at the end
thereof:
(f) No long-term or short-term contract for water supply for
irrigation (including any contract for the supply of surplus or
interim water) or for repayment of reclamation project facilities
may be entered into, amended, or modified by the Secretary or his
designate unless, before taking such action, the Secretary has-
(1) published notice of the proposed draft contract in
newspapers of general circulation in each region which may
be affected by such contract amendment, or modification;
(2) provided an opportunity for comment by interested
persons with written data, views, and arguments;
(3) considered substantive comments received.
(g) (1) Contract negotiations involving any of the aforemen-
tioned contracts under the Federal reclamation laws shall be con-
ducted in open sessions at which the public may appear
as observers and public notice may be, but is not required to be
given.
(2) The Secretary may provide an opportunity for a public
hearing to receive comments on any proposed contract and shall
determine if, when, and where any such hearings shall be held."
DISPOSITION OF EXCESS LANDS
"Sec. 12 (a) Owners of excess lands shall be permitted to dispose of
their lands, prior to the end of the term of a recordable contract
covering such lands, and subject to price approval by the Secretary,
to an eligible purchaser of their choice from among the following:
1) Immediate family members
2) Long-term (defined as 10 years) tenants and employees, or
3) Adjoining neighbors.
(b) If land has not been sold to an eligible purchaser as described
in section (a) at the end of the recordable contract period, power of
attorney shall vest in the Secretary who shall sell the land by lottery
or other impartial means to an eligible purchaser according to such
reasonable rules as he may establish. When the power of attorney
vests in the Secretary, he shall have discretion to continue or to cease
delivery of project water to such lands."
(c) section 46 of the Act entitled "An Act to adjust water right
charges, to grant certain relief on the Federal irrigation projects, and
for other purposes", approved May 25, 1926 (43 U.S.C. 423e), is
amended as follows:
(1) Insert "(a)" before the expression "No water shall be de-
livered"; and
(2) Strike out "and that until one-half the construction
charges said lands shall have been fully paid no sale of any such
lands shall carry the right to receive water unless and until the








purchase price involved in such sale is approved by the Secretary
of the Interior and that upon proof of fraudulent representation
as to the true consideration involved in such sales the Secretary of
the Interior is authorized to cancel the water rights attaching to
the land involved in such fraudulent sales".
(3) Add a new subsection (b) to read as follows:
"(b) (1) No sale of any excess land on or after the effective
date of this subsection nor any resale of such land (notwith-
standing any change from excess to non-excess status result-
ing from previous sale or resales) within fifteen years after
such initial sale of any excess land shall carry rights to re-
ceive water from any project or division thereof subject to
the Federal reclamation laws unless the following require-
ments are met:
(A) The purchase price involved in the initial sale of
excess land or subsequent resale thereof is approved by
the Secretary of the Interior;
(B) The requirements of this section are set forth in
the sales documents for the initial sale of excess lands or
subsequent resale thereof;
(C) Other conditions of initial sale of excess lands or
subsequent resale thereof meet the requirements of the
Federal Reclamation laws and regulations the Secretary
adopts to implement those laws; and
(D) The sale documents for initial sale of excess lands
or subsequent resale thereof are recorded in the records of
the county in which the lands are located.
(2) Upon proof of fraudulent representation as to the true
consideration involved in any sale the Secretary of the In-
terior is authorized to cancel the water right attaching to the
land involved in such fraudulent sale, or to impose other sanc-
tions as provided by section 16 of this Act."

CHARITABLE AND RELIGIOUS EXEMPTION
"Sec. 13. The Secretary is authorized to continue delivery of water
supplies to all project lands held by bona fide religious or charitable
non-profit organizations as of January 1, 1978, without regard to
acreage and residency requirements of this Act, so long as title remains
unchanged. Criteria for non-profit status may be developed in such
regulations as the Secretary may promulgate."

REGULATIONS
"Sec. 14 The Secretary is hereby authorized and directed to pro-
mulgate rules and regulations subject to the provisions of subchapters
I and II of chapter 5 of title 5, United States Code, to carry out the
purposes of this Act and the Federal reclamation laws."

ADMINISTRATIVE PROVISIONS
"Sec. 15 (a) The Secretary is authorized upon request of the holder
of an existing contract under Federal reclamation laws to amend the








contract to conform to the provisions of this Act, and to otherwise per-
form any and all acts appropriate to carrying out the purposes of this
Act.
(b) Except to the extent they are inconsistent with this Act, the
Federal reclamation laws in effect at the time of enactment of this
Act shall remain in full force and effect.
(c) The Districts and recipients of project water shall compile and
maintain such records and information relating to land ownership,
residency, leasing, water supply and use, land use, cropping, financial
transactions including transfers of interest in lands, and other matters
as the Secretary determines are reasonably necessary to implement
this Act and reclamation law. On a date set by the Secretary following
the date of enactment of this Act, and annually thereafter, every dis-
trict, owner or operator of lands annually receiving project water
shall, as a condition precedent to delivery of project water, provide in
a form suitable to the Secretary such reports on the above matters as
the Secretary may require."

PENALTIES AND ENFORCEMENT-CIVIL PENALTIES
"Sec. 16 (a) Any person, district or other contracting entity, who
knowingly commits an act in the process of apply for or receiving
water from a project governed by the Federal Reclamation Laws
which violates any provision of this Act or any of the other acts com-
monly called the Federal Reclamation Laws, or any regulations pro-
mulgated pursuant to any of those acts, may be assessed a civil penalty
by the Secretary of not more than $5,000 for each such violation:
Provided, however, that if the person, district or other contracting
entity, is in violation of a provision of law or regulation dealing with
acreage limitations or residency, the penalty shall be set at a minimum
of double the fair market value of the water so delivered, considering
the cost of private irrigation, groundwater pumping costs, and any
other relevant factors.
(b) Any person, district or other contracting entity which fails to
compile, maintain, or make available any records required to be kept
under this Act or any other acts commonly called the Federal Recla-
mation Laws, or any regulations promulgated pursuant to any of those
acts, may be assessed a civil penalty by the Secretary of not more than
$200 for each day that it fails to produce such records following the
date provided for production in a written request for the records by
the Secretary.
(c) The Secretary shall assess the penalties authorized under section
(a) and (b) only after a hearing before an administrative law judge
or other appropriate Department official. The Secretary may in his
discretion reduce or remit such civil penalty.
(d) Upon failure to pay a penalty assessed under this Act, the Sec-
retary may request the Attorney General to institute a civil action in
any district court of the United States in which the person, district, or
other contracting entity is found, resides, or transacts business to col-
lect the penalty. Such court shall have jurisdiction to hear and decide
any such action.








(e) In any hearing held to consider the assessment of the civil
penalty authorized by this Act the Secretary may issue subpoenas for
the attendance and testimony of witnesses and the production of rele-
vant papers, books, and documents, and administer oaths. In case of
refusal to obey a subpoena served upon any person pursuant to this
section, the district court of the United States for any district in which
such person is found or resides or transacts business, upon application
by the United States and after notice to such person, shall have juris-
diction to issue an order requiring such person to appear and give
testimony before the Secretary or other appropriate Departmental
official, or to appear and produce documents, or both, and any failure
to obey such order of the court may be punished by such court as a con-
tempt thereof.
(f) The civil penalty authorized herein may be assessed, in the Sec-
retary's discretion, in addition to, or instead of, any other remedy pro-
vided by law, regulation, or contract for violation of this Act or any
of the other acts commonly called the Federal Reclamation Laws, or
any regulations promulgated pursuant to any of those acts."
AUTHORIZATION OF APPROPRIATIONS
"Sec. 17. There are hereby authorized to be appropriated, from time
to time, out of any money in the Treasury not otherwise appropriated,
such sums as are necessary to meet costs and expenses incurred by the
United States for the implementation and administration of the pro-
visions of this act to whatever extent such actions may relate to func-
tions of the office of the Commissioner of Reclamation and properly
constituted subordinate offices thereof; provided, that such costs and
expenses shall be, to the extent they are assignable to a particular proj-
ect or district, reimbursable as construction, operation and mainte-
nance, or other costs under the Federal Reclamation laws (Act of
June 17, 1902, 32 Stat. 388 (43 U.S.C. 371),) and acts amendatory
thereof or supplementary thereto."











CONTRACTS WITH PAYOUT OF CONSTRUCTION CHARGES APPROVED BY CONGRESS

Date of Date of Excess
Project: Contractor: Type of action Acreage contract payout lands Contract No.


Yakima, Wash.:
Kittitas Reclamation District: Con-
tract------------------
Prosser Irrigation District: Contract.
Roza Irrigation District: Contract...--
Vale, Ore.: Vale Oregon Irrigation
District: Contract.....---------
Frenchtown, Mont.: Frenchtown Irriga-
tion District: Contract...............
Owyhee, Idaho/Ore on:
Owyhee Irrigation District: Contract.
Gem Irrigation District: Contract....-
Ridgeview Irrigation District: Con-
tract...........------------
Advancement Irrigation District:
Contract. .... ..--------
Payette-Oregon Slope Irrigation Dis-
trict: Contract-------------
Crystal Irrigation District: Contract..
Bench Irrigation District: Contract..
Slide Irrigation District: Contract-....
Ontario-Nyssa Irrigation District:
Contract...--------------
North Platte, Nebr./Wyo.:
Gering-Fort Laramie Irrigation Dis-
trict: Contract......-------
Goshen Irrigation District: Contract..
Pathfinding Irrigation District: Con-
tract...................------------
Umatilla, Ore.:
Herminston Irrigation District: Con-
tract....-------------------
West Extension Irrigation District:
Contract -----------------------
Deschutes, Oreg.: North Unit Irrigation
District: Contract.-------------
Minidoka, Idaho: American Falls Reserv.
District No. 2: Contract....----
Boise, Idaho: Black Canyon Irrigation
District:
Contract No. 1----....----------
Contract No. 2..---..............------------
Klamath, Calif./Oreg.: Tulelake Irrigation
District: Contract --------------


59, 582 Nov. 25,1949
2,155 --. do ----
72,511 July 22,1953
34,993 Apr. 11,1949
4, 574 Sept. 6,1951
49, 706 Aug. 29,1951
33,578 .....do......
6, 174 .....-do-....--
537 .....-do-.......
4,680 .....-do-....--
1,280 --.do-...-..
2,319 ..-..do.---
1,144 .....-do.....
5, 831 Aug. 20,1951

54,845 Sept.22,1952
52,484 .....-do.....--
100, 949 .....-do.......

10, 829 July 6,1954
6, 519 ------...........
50,000 Feb. 13,1954
20, 000 Oct. 14,1954

6, 881 Sept. 2,1954
53, 200
42, 909 Sept. 10, 1956


712.0 ..-----
0 .-----
344.8 -----
0
0 ----------
1, 692.6 -----------
0
0 ----------
500.0 -...........
3.0 -----...........
Unknown --------
Unknown ----------
Unknown -----------
Unknown -----------
Unknown ...........------
Unknown -----------


1994 1,787.0 -----------
1996 3, 891.0-----------
1995 4,521.0 .............-----


0 --------------
1,676.0 ---...--------
302.0 ...........
0 --------------


1961 9.0 ----------..

1997 2,466.0 .-----------








40

WHICH CONTAIN PROVISIONS FOR RELIEF FROM ACREAGE LIMITATION UPON FULL PAYOUT OF
CONSTRUCTION CHARGES-NOT APPROVED BY CONGRESS

Date of Date of Excess Contract
Project: Contractor: Type of service Acreage contract payout lands No.


Avondale (Idaho): Avondale Irrigation
District: Full contract....-----------
Boise (Idaho): Emmet Irrigation District:
Supplemental ....................-------------------
Cresent Lake Dam (Oregon): Tumalo
Irrigation District: Full---------
Dalton Gardens (Idaho): Dalton Gardens
Irrigation District: Full .........
Little Wood River (Idaho): Little Wood
River Irrigation District: Supplemental.
Michaud Flats (Idaho): Falls Irrigation
District: Full .....-------
Minidoka-Palisades (Idaho):
Aberdeen-Springfield Canal Co.:
Supplemental-----------------................
American Falls Reservoir District:
Full.........-- ...--------
Blackfoot Irrigation District: Sup-
plemental ..------------------
Burgess Canal & Irrigation Co.:
Supplemental ..-------------.....
Burley Irrigation District: Full -......---
Butler Island Canal Co., Ltd.: Sup-
plemental...-----------------
Butte and Market Lake Canal Co.: Sup-
Butte and Market Lake Canal Co.:
Supplemental...... ----- -
Clark & Edwards Canal or Irrigating
Co.: Supplemental....-----
Corbett Slough Ditch: Supplemental-
Craig Mattson Canal Co.: Supple-
mental.........----------
Danskin Ditch Co.: Supplemental-...
Dilts Irrigation District, Ltd.: Sup-
plemental.------.- ----------
Enterprise Canal Co., Ltd.: Supple-
mental.......... ..
Enterprise Irrigation District: Sup-
plemental..---------------
Farmers Friend Irrigation Co., Ltd.:
Supplemental... -----------
Food, Machinery, & Chemical Corp.:
Supplemental.--..---..---------
Harrison Canal & Irrigation Co.:
Supplemental.-------....------
Idaho Irrigation Co.: Supplemental_
Island Irrigation Co.: Supplemental-
J. R. Simplot Co.: Supplemental ...
LaBele Irrigation Co.: Supplemental
Lenroot Canal Co.: Supplemental----
Liberty Park Irrigation Co : Supple-
mental.
Long Island Irrigation Co.: Supple-
mental.
Lowder Slough Canal Co., Ltd.:
Supplemental.
Martin Canal Co.: Supplemental --....
Minidoka Irrigation District: Full-..
New Lava Side Ditch Co.: Supple-
mental --------------------
New Sweden Irrigation District:
Supplemental ------
North Rigby Irrigation & Canal Co.:
Supplemental---- ------
North Side Canal Co., Ltd.: Supple-
mental.----- --------
Palisades Water Users, Inc.: Supple-
mental------------------


860
25,000
8, 000
979
9,549
11,275


July 14,1954
Oct. 4,1955
Sept. 20,1954
Apr. 26,1954
June 18,1958
Dec. 9,1955


June 30,2002
June 30,2006
June 30,1998
Dec. 31,1997
June 30,2011
June 30,2019


47,200 Oct. 22,1952 Dec. 31,2000
211,900 May 13,1954 May 13,1954
10, 800 Dec. 12, 1952 Dec. 31, 2000
21,100 Dec. 18, 1952 --....do.......
48,000 ...do-------....-.......do.......
600 Dec. 12,1952 .....do .....--

19,400 --....do-----...........do......
1,800 --do---------do---
4,700 --- do---------- do ----
900 June 22,1960 -...do-.......
5,200 Dec. 12,1952 ..-- do ---
525 --.....do -----------do--
5,400 --.do-----.........---do...--
6,000 June 2,1960 June 2,1960
10,200 Dec. 12,1952 Dec. 31,2000
160 Mar. 2,1960 --.. do..---..
9,500 Dec. 2,1952 --..do.......
33, 600 .....do........ do-...-...
2,900 .....-do --------do --
160 Feb. 12,1960 ..--do--
1,600 Dec. 12, 1952 .---do ---
3,100 -- do ---- do...--.
5,000 .....-do...........--------do...---
3,100 Jan. 19,1960 --..do ..---
740 Dec. 12,1952 .....-do --..
1,600 -----do ----- do ---
72,000 Feb. 2,1960 -- do ---
4,700 Dec. 12,1952 -- do ---
25,100 -....do ---- .do..---
1,200 Dec. 18,1952 .-- do..---
155,500 Dec. 12, 1952 -..- do ---
31,080 ..--.. do ---.-----.. do...-


0 ..... . .
21 -------
0 ...-----------
0 ------
0 ---...-----
1,613 ------

Unknown ----..--.----
0 ----------


0 -----------
23 ------
Unknown --------------

Unknown -------..
Unknown --------
Unnw -----------
0 -----------
0 -----------

0 -----------
0


0 ---------
0 ...----------
0 -----------

Unknown ----------
Unknown ------
1,012 -----------
Unknown --------
Unknown --
0 -----------
0 -----------
0 ----------
1,437 -------
0 -------
0 -------
1,818.9 -------
0 -----------
1,021 -------
0 ------------
Unknown
Unknown --------------











WHICH CONTAIN PROVISIONS FOR RELIEF FROM ACREAGE LIMITATION UPON FULL PAYOUT OF
CONSTRUCTION CHARGES-NOT APPROVED BY CONGRESS

Date of Date of Excess Contract
Project: Contractor: Type of service Acreage contract payout lands No.


Parks & Lewisville Irrigation Co.:
Supplemental.
Parsons Ditch Co., Ltd.: Supple-
mental.
Peoples Canal & Irrigation Co.:
Supplemental.
Pocatello, city of: Supplemental.....
Popular Irrigation District: Supple-
mental...... ------. --------.
Progressive Irrigation District: Sup-
plemental------------ ---.... -
Reid Canal Co.: Supplemental...-
Rigby Canal & Irrigation Co.: Sup-
plementali....-- ............
Riverside Ditch Co.: Supplemental -.
Rudy Irrigation Canal Co.: Supple-
mental---....-----...........
Snake River Valley Irrigation Dis-
trict: Supplemental..........---------
Sunnydell Irrigation District: Sup-
mental.........................
Texas Slough Irrigation Co.: Sup-
plemental ---.------------------
Trego Ditch Co.: Supplemental.----
Twin Falls Canal Co.: Supplemental-
Watson Slough Ditch Co. & Watson
Slough Irrigation Canal: Supple-
mental ----------------
Wearyrick Ditch Co.: Supplemental.
West LaBelle Irrigation Co.: Supple-
mental------
West Side Mutual Canal Co :Supple-
mental... -------
Woodville Canal Co.: Supplemental.
Rogue River Basin (Oregon): Talent Irri-
gation District: Supplemental.--------
Wapinitia (Oregon): Juniper Flat District
Improvement Co.: Supplemental --
Yakima (Washington): Kennewick Irri-
gation District: Full ...-- ..........
Klamath, Calif./Oreg.:
Poe Valley Improvement District-...
Plevna District Improvement Co ..---.
Horsefly Irrigation District ------
Klamath Irrigation District -------..
Yuma, Ariz.: Yuma County Water Users
Association: Supplemental ----
San Angelo, Tex.: Tom Green County
Water Control and Improvement Dis-
trict No. 1: Full ---------


8, 600 .....do...........-----do..
440 Feb. 17,1960 .....-do..
16,300 Dec. 18,1952 .....-do..
160 Jan. 8, 1960 --..... do..
1,200 Dec. 18,1952 .....do..
30,400-----. do---------- do..
4,600 Dec. 12, 1952 Dec. 31,
3,090 .....-do-....... Dec. 31,
3, 400 ....-- do............do..
4,700 -----..do--------........... do..
19,800 .....do........------- do..
3, 800 .....do--------..........do..
3,300 .-. do -----..-.do..
1,200 ---- do-------- do..
205,000 May 13,1954 --. do_.


2, 900 Dec. 18,1952
1,400 ..-- .do---
1, 000 May 31, 1961
1,000 July 6,1954
2,600 Dec. 18,1952


-....do-
._do_-
Dec. 31,
Dec. 31,
--.....do..


15, 054 Aug. 27,1956 Dec. 31,
2,108 Apr. 11,1957 Dec. 31,
19,171 July 22,1953 June 30,
2,636 July 20,1953
523 Feb. 7,1955 i
9, 848 Sept. 16, 1957 1
38,875 Nov. 20,1954 Imm
53,415 June 15, 1951

10,000 June 18,1959


0 -----------
0 -----------
4..... 0...

.....- 40 .-----
..... Unknown ...........-----------
--0 -----------
-- 1,187-----------
1974 0 18------...........
2000 0 .-----
0 --------------
..... 0 ...........

..... ------
...... 150 -----.-
0..... O.


--0 ---- ---



2004 0 ----...
2000 Unknown .-----.--
..0 ------200 -
----- Unknown ----------
2004 0 -----------

---- 200 ----------
2032 0
2000 0 -------
2024 0 -----
'1993 1, 236 -------
1967 0
1981 Unknown ------ -
inent Unknown -----------
1963 2,796-------

2022 316 14-06-50036


U.S. DEPARTMENT OF THE INTERIOR,
OFFICE OF THE SECRETARY,
Washington, D.C., June 19,1979.
Hon. HENRY AM. JACKSON,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Washington, D.C.
DEAR IR. CHAIRMAN : This will respond to your May 30, 1979, letter
requesting information on the application to the Elephant Butte Irri-
gation District of the provisions of S. 14 that would grant relief from
acreage limitations and residency requirement of Federal reclamation








laws upon completion of the repayment required under a contract with
the United States. The specific question asked is: ". . would the Ele-
phant Butte Irrigation District be considered to have completed 're-
payment required by the terms of any contracts with the Secretary
relating to the delivery of water supplies to such landholding for agri-
cultural use'?"
The provision in question in S. 14, as currently drafted, provides
that:
The acreage limitation provision and residency requirement of
the Federal Reclamation Law shall cease to apply to any land-
holding upon completion of the repayment required by the terms of
any contracts with the Secretary relating to the delivery of water
supplies to such landholding for agricultural use.
The repayment obligation of the Elephant Butte Irrigation District
under its repayment contract with the United States dated November
9, 1937, was $5,698,012. Repayment of this obligation to the United
States by the district was completed in September 1971. This contract
obligation represented the remaining balance of the repayment obliga-
tion of the district at the date of the contract for the delivery of water
supplies for agricultural use; therefore, in our opinion, the Elephant
Butte District has completely paid its repayment obligation to the
United States.
We note an important difference between the provision cited above
and similar provisions contained in other bills on the same subject.
The exemption provision in S. 14 allows an exemption simply upon
payout of charges according to contract terms, but is not dependent
upon the repayment contract having a so-called "payout" provision
which specifically provides for cessation of regulation upon full pay-
ment of construction charges. Most of the other proposed exemption
provisions we have dealt with so far called only for the validation
of these payout articles.
The problem with Elephant Butte is that payout clauses are con-
tained in some individual recordable contracts, but not in the District
contract. An exemption based on the individual recordable contracts
containing payout provisions would not cover all of the land in the
district, and would create a "checkerboard" effect of exempt and non-
exempt lands in the district.
The S. 14 provision would seem to solve the "checkerboard" prob-
lem in Elephant Butte and would exempt all of the district's lands.
Parenthetically. you should be aware that the S. 14 provision does
not appear to exempt Elephant Butte's sister district, El Paso Water
Irrigation District. While El Paso has the same form of individual
recordable contracts which could be validated, it has not completed
"repayment required by the terms of any contracts with the Secretary
relating to the delivery of water supplies to such landholding for
agricultural use," (emphasis added) because the district (as well as
all of its landholders by joint obligation) has not paid out a $7 mil-
lion rehabilitation and betterment loan which is scheduled by con-
tract for repayment. A fair interpretation of S. 14, one we prefer, is
to require repayment of that rehabilitation and betterment loan prior
to an exemption:being granted.
You should also note that, even after construction or other capital
charges have been paid out, many districts must still pay an annual








operation and maintenance charge. We don't think Congress intends
to continue regulation if the only costs remaining are annual operation
and maintenance costs. If so, S. 14 should be revised to make it clear
that regulation ceases if the district's only remaining contractual
obligation is to pay annual operation and maintenance costs. We also
believe, however, as noted in the preceding paragraph, that it may be
the intent of Congress to cease regulation only if all construction and
capital type costs, regardless of whether they be construction charges
under the main repayment contract or loan repayments under other
contracts such as rehabilitation and betterment contracts, distribution
and drainage contracts or the like, have been repaid. If so, the legis-
lation should be clear on that point as well.
As you know, this Department has opposed previous legislative pro-
posals which would automatically exempt districts from acreage
limitations and residency upon repayment. We are concerned par-
ticularly about payment over the full term of contracts and about
provisions which would allow early "buyout" from acreage limitations,
since these would avoid achieving program purposes, such as initial
breakup of excess lands and providing new opportunities for small
farmers; also such provisions would inure only to the benefit of the
few wealthy districts, who could afford "buyout", and would dis-
criminate against the less wealthy majority of districts who could not
afford it. We also question the inclusion of the residency requirement
in the exemption. We believe it is very important, if some sort of pay-
out exemption is provided, to tailer the provision so inequitable
district exemptions, and an inequitable bias in favor of wealthy dis-
tricts, do not result.
Finally, as your Committee approaches markup of S. 14, we urge
your attention to adopting reasonable limitations on acreage, on leas-
ing, on corporate, non-resident, and investor-type ownerships, and
such other reasonable controls so that the program can achieve its
purposes and does not present the opportunity to develop into a
special Federal subsidy for a privileged and wealthy few among the
nation's farmers. We would be pleased to talk to you, your colleagues,
and your staff at any time about these issues.
Sincerely,
CECIL D. ANDRUS,
Secretary.












SUPPLEMENTAL VIEWS OF SENATOR CHURCH
I sponsored S. 14 and its predecessor bill in the previous Congress
for two reasons. First, efforts to rigorously enforce the existing Rec-
lamation Law, especially where recent interpretations are at variance
with long-established practice, threaten to work grave hardships upon
many westerners who are exactly the kind of independent family
farmers that the Reclamation program has always intended to en-
courage and assist. Second, the Reclamation program has been subject
to widespread criticism because the implementation of the acreage
limitation under the ambiguous existing statutory guidance has ap-
peared to many to be inconsistent with the spirit of the program.
In S. 14 1 have tried to address both problems. This measure will give
relief to real family farmers in several important ways. It will abolish
the troublesome residency requirement which has not been enforced
for decades. I contend that requiring residency on or in the vicinity
of the landholding serves no useful purpose. The establishment of a
legal residency on an agricultural landholding does not guarantee that
one is a practical farmer nor does a residence more than 50 miles from
landholding in the modern-day West indicate that one is not operat-
ing the farm on a day-to-day basis.
Further, S. 14 would increase the maximum landholding for which
a farmer might receive Reclamation water service to 1,280 irrigated
acres. That is a generous farm size, but it is consistent with the eco-
nomics of modern farming. There are, in fact, some types of specialized
farm equipment so expensive that they could only barely be supported
by an operation of this size.
Of course, few Reclamation farms will actually reach this maximum
size, but relief from the long outdated "160-acre" limitation, and the
many administrative loopholes which have evolved to permit farmers
to survive under it, is long overdue.
Beyond these two major provisions, S. 14 contains several other
adjustments, clarifications and amendments of existing law which will
resolve inequities and problems that have arisen in special circum-
stances over nearly 80 years of experience with the Reclamation Law
and its interpretation. These provisions are urgently needed by many
hundreds of farmers throughout the 17 Reclamation States, many
who farm very small acreages but for one or another reason have come
into conflict with narrow interpretations of existing law.
On the other hand, S. 14 includes provisions which will make the en-
forcement of the Reclamation Law more certain and practical. It
clearly includes leased as well as owned lands within each landholding
which is limited to 1,280 acres. Long term leasing arrangements have
long been cited as the most notable of the evasions of the existing law,
and it is probably impossible for the Secretary to investigate the real
nature of such leases. Under the provisions of S. 14, the acreage limita-
tion applies to the lands for which a landowner receives water regard-
less of the nature of his tenure.








Also, under S. 14 large corporations will not be permitted to be
qualified recipients of Reclamation water supplies. Existing holdings
of large corporations will be limited to 160 acres of land, owned or
leased and no new corporate entries will be created.
I am confident that S. 14 will entirely resolve the legal problems of
all but a very few of the farmers currently operating within the
Reclamation program. But it will also preserve the fundamental pur-
pose of Reclamation land law which is to provide the greatest number
of opportunities for economically viable family farm operations.
I am aware that in some areas of the Reclamation West there are a
few very large private and corporate land holdings, some encompass-
ing tens of thousands of acres which would not be permitted to con-
tinue to exist under this measure. I do not contend that it is necessarily
in the public interest to disrupt the economic values produced by such
ventures, but I recognize that it was never an objective of the Reclama-
tion program to assign millions or even tens of millions of dollars of
public investment to the exclusive economic advantage of a single
private or corporate agricultural business.
I have therefore opposed amendments which would permit such
landholding to be created or perpetuated by long-term leasing arrange-
ments without acreage restriction.
FRANK CHURCH.













ADDITIONAL VIEWS OF SENATOR HATFIELD

In response to recent court cases and proposed regulations on Fed-
eral Reclamation Law, Congress has considered several measures to
amend and supplement this body of law. The law has not been sig-
nificantly modified since the original 1902 Reclamation Act and the
1926 Omnibus Adjustment Act.
The proposals before Congress run the entire gamut of interests,
from strict imposition of existing law to an entire repeal of some
reclamation statutes. S. 14, introduced by Senator Church, is the
Committee's vehicle for reclamation reform. It is a noble attempt to
address the differing opinions and to mediate between their under-
lying philosophies. I have strongly supported Senator Church's com-
prehensive approach and the original intent of S. 14. However, I
believe certain provisions accepted by the Committee have skewed
the basic objectives of reclamation reform.
I must object, in particular, to provisions allowing lease holdings
beyond the 1,280-acre limit, and expanding the payout concept
exempting water users from acreage limitations. I have recommended,
in addition, that provisions be adopted to provide a fair and equitable
mechanism for the disposal of excess land.
I fail to be convinced there is a need to lift acreage limitations for
short-term leases. The acreage limitation was expanded to an absolute
1,280-acres specifically to accommodate farming conditions and leas-
ing agreements which are necessary to any farm operation. Lifting
acreage limitations for short-term leases can only be viewed as a loop-
hole for large landholders to maintain their excessive claim to rec-
lamation water.
Like the short-term lease exemption, the accelerated and lump-sum
payout provisions will allow wealthy farmers to exempt themselves
from the acreage limitation and continue to take undue advantage
of the continued Federal subsidy. It should be pointed out that the
fulfillment of a farmer's obligation actually recovers to the U.S.
Treasury only an average of 25 percent of the actual costs of serving
that farmer with a Reclamation water supply.
Without an administrative mechanism for the disposal of excess
land, Congress will have avoided one of the basic purposes of Recla-
mation Law-that is, to assure the Federal subsidy is distributed
broadly and equitably. It should be recalled that one of the prinicpal
tenets of the rationale for spending large sums of Federal money to
develop water in the West was-and if we are to extend the program,
still must be-the creation of opportunities for the family farm.
As a cosponsor of S. 14, I1 have su ported the bill's intent to (1) update
Reclamation Law to conform with the needs of today's farmers and
(2) preserve the public's interest in seeing that the Federal subsidy
encourages the establishment of viable family owned farms. I believe








the Committe action on S. 14 goes a long way toward meeting the
first objective, but falls far short of the second. If we are to fulfill both,
objectives of Reclamation reform I believe the aforementioned changes
should be made to S. 14.
MARK 0. HATFIELD.

CHANGES IN EXISTING LAW
In compliance with subsection 4 of Rule XXIX of the Standing
Rules of the Senate, changes in existing law made by the bill S. 14,
as ordered reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new matter is printed in italic,
existing law in which no change is proposed is shown in roman) :

AN ACT To PROVIDE FOR THE DIFFERENTIATION BETWEEN PRIVATE AND
PUBLIC OWNERSHIP OF LANDS IN THE ADMINISTRATION OF THE
ACREAGE LIMITATION PROVISIONS OF FEDERAL RECLAMATION LAW,
AND FOR OTHER PURPOSES

Sec. 3 Lessees of irrigable lands owned by States, political subdivi-
sions and agencies thereof which are held to be subject to the acreage
limitation provisions of Federal reclamation law and for which re-
cordable contracts to sell have not been made may receive project water
[for a period not to exceed twenty-five years] from the date of
approval of this Act subject to the same acreage limitation provisions
of Federal reclamation law as private landowners.




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