SECRETARY'S LETTER ON KINGS RIVER (CALIF.) CONTRACT

Mr. PHILIP A. GORDON,

DEPARTMENT OF THE INTERIOR,

President, Board of Directors,

OFFICE OF THE SECRETARY, Washington, D. C., July 12, 1957.

Kings River Conservation District, Fresno, Calif.

DEAR MR. GORDON: After painstaking consideration, I have concluded the terms of the proposed contract between the United States and your district-the Kings River Conservation District of Fresno, Calif. should not be approved.

As you are well aware, your district and the Department of the Interior have been confronted with the settlement of this question since 1946.

There are some fundamental principles involved in the statutory provisions relating to excess landholdings which should be taken into account in this case and other cases of similar import. From the inception of the reclamation law, and by later amendments, the excess land limitations have been designed to accomplish two primary objectives; one, a wide distribution of landholdings by a group of beneficiaries of the Federal investment, and second, the avoidance of speculative profits arising from the Federal investment. The first objective is sought by limiting irrigation benefits to 160 acres in one ownership. The second objective is sought to be reached by requiring owners of excess lands, who seek to obtain water for such excess lands, to execute what is known as recordable contracts.

The decision by the California Supreme Court in the Ivanhoe case is still pending on appeal. At present that case presents some difficult legal issues relating to land limitations. The Federal statutes provide for repayment contracts having the approval of the Secretary, and I must comply with those statutes. I have not been convinced that this proposed contract should have that approval even if these legal issues are satisfactorily resolved.

The Kings River Conservation District covers over 1 million acres of land. A very large part, approximately one-fourth, of this land is clearly excess lands within the meaning of the Federal statute. Classified on the basis of excess lands, the record provided me by the Bureau of Reclamation shows the following:

Among the large landowners are several corporations owning between 10,000 and 20,000 acres each.

As Secretary of the Interior, it is my duty not only to conform to the technical provisions of the law but also, within whatever discretion I may have, to seek compliance with the principles on which the legislation rests. To furnish a regulated supply of water to those landholdings which are so greatly in excess of the provisions of Federal law, under a strained statutory construction, is violative of those principles, in my opinion.

I am fully aware that over the years there have been legal opinions presented and approved which have permitted individual landowners to avoid the excess land limitations of the law by a prepayment of their administratively allocated share of construction costs. However, I cannot justify an aggravation of a prior practice in an effort to remedy an absence of lawful authority.

In this case, I remain unconvinced that I either should or could approve this proposed contract-either as a matter of principle or of law.

The Department continues to recognize and support the basic concept of reclamation law that full and final payment of the obligation of a district to the Federal Government ends the applicability of the acreage limitations.

But the overriding issue here is whether this contract which provides for the release of individuals, rather than a district as a whole, should be approved. As I have pointed out, I conceive it to be the duty of the Department of the Interior, and my duty as Secretary, to exert every effort to see that applicable laws are complied with. Where discretion may be vested in the Department or the Secretary, that discretion should be exercised to obtain compliance with the principles on which the legislation is enacted. What I am concerned about is a process by which inferences are based on inferences and there is a whittling away at a principle until all that is left is a pile of shavings.

What the terms of a contract should be depends on factors in a given 'case. In the Kings River situation, the proposed options of prepayment, extended to each water user, would reduce the statutory limitations to a mere shadow. This would make the test, not one of public policy, but solely one of the financial capability of each landowner to purchase immunity from the statutory restrictions. So long as the present acreage limitations remain in the basic reclamation law, they should be complied with, until the district has fully discharged its obligations to the Federal Government.

This Department remains willing to work with your district to seek an acceptable solution to the various issues which must be resolved before a contract may be finally approved.

Whether the district will deem it appropriate to seek a solution by special congressional act is for the district to determine.

Sincerely,

FRED A. SEATON, Secretary of the Interior.

PROPOSED CONTRACT BETWEEN THE UNITED STATES AND THE KINGS RIVER CONSERVATION DISTRICT

Bureau of Reclamation: Excess lands

The Secretary of the Interior lacks statutory authority to permit individual holders of excess lands in the Kings River Conservation District to pay the reimbursable costs administratively allocable_to those holdings and thereby be relieved from the limitations on supplying water to excess lands.

Bureau of Reclamation: Repayment and water service contracts

Repayment and water service contracts entered into by the Secretary of the Interior for the utilization of flood-control dams and reservoirs operated under the direction of the Secretary of the Army for irrigation purposes must conform with the mandate found in section 46 of the Omnibus Adjustment Act of 1926.

Secretary of the Interior

The Secretary of the Interior is not authorized by Federal reclamation law to agree to provisions in the proposed contract with the Kings River Conservation District whereby individual holders of excess lands will be permitted to pay the reimbursable costs allocable to their excess holdings and thereby be relieved from the limitations on supplying water to excess lands and the consequences of the antispeculation features of the recordable contracts required by law. Statutory construction: Generally

Unrepealed provisions of earlier laws having specific application cannot be infused with new life for the purpose of implementing later law.

Statutory construction: Administrative construction

Administrative rulings cannot thwart the plain purpose of a valid law nor can prior administrative practice remedy an absence of lawful authority.

Statutory construction: Administrative construction

Administrative rulings and practices cannot enlarge the application of the opinion of the Associate Solicitor dated October 22, 1947 (M-35004), which advised that full payment of the reimbursable costs by a district relieved the excess lands in that district from the statutory restrictions on supplying water to such lands.

SOLICITOR'S OPINION ON KINGS RIVER CONTRACT

DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SOLICITOR, Washington, D. C., July 10, 1957.

Memorandum.

To: The Secretary.

From: Solicitor.

Subject: The proposed contract between the United States and the Kings River Conservation District.

You have requested my opinion concerning your statutory authority under Federal reclamation law to agree to provisions in the proposed contract with the Kings River Conservation District whereby individual holders of excess lands will be permitted to pay the reimbursable costs allocable to their excess holdings and thereby be relieved from the limitations on supplying water to excess lands and the consequences of the antispeculation features of the recordable contracts. required by law. See particularly articles 3, 6, and 8 of the proposed contract.

My opinion is that Congress has not granted to you such statutory authority. Further, fiscal desirability, no matter how impelling, does not suffice as a substitute for that statutory power.

I wish to emphasize at the outset that no criticism is hereby intended on my part of the earnest endeavors of the conservation district or those who have honestly sought or proposed, in its behalf, a rational and reasonable accommodation of interests connected with the use of the regulated and supplemental supply of water developed by the Army in constructing the Kings River and Tulare Lake Basin flood-control project. Indeed, while the excess acreage involved is comparatively large, this supplemental supply is relatively small. Nevertheless, Congress has conditioned the means whereby even such small but vital water supplies can be acquired to supplement those already developed earlier by the landowners.

The statutory authority that you as Secretary exercise in connection with flood-control projects providing irrigation benefits is derived from the Flood Control Act of 1944, particularly section 8 (43 U. S. C. 390). Dams and reservoirs operated for flood-control purposes under the direction of the Secretary of the Army after December 22, 1944, may be utilized by you for purposes of irrigation under that act only in conformity with the provisions of the Federal reclamation laws (act of June 17, 1902 (32 Stat. 388), and acts amendatory thereof or supplementary thereto). The specific provision with which you must comply under this mandate is found in section 46 of the Omnibus Adjustment Act of 1926, as amended (43 U. S. C. 423e). As codified, that section reads:

No water shall be delivered upon the completion of any new project or new division of a project initiated after May 25, 1926, until a contract or contracts in form approved by the Secretary of the Interior shall have been made with an irrigation district or irrigation districts organized under State law providing for

payment by the district or districts of the cost of constructing, operating, and maintaining the works during the time they are in control of the United States, such cost of constructing to be repaid within such terms of years as the Secretary may find to be necessary, in any event not more than forty years from the date of public notice hereinafter referred to, and the execution of said contract or contracts shall have been confirmed by a decree of a court of competent jurisdiction. Prior to or in connection with the settlement and development of each of these projects, the Secretary of the Interior is authorized in his discretion to enter into agreement with the proper authorities of the State or States wherein said projects or divisions are located whereby such State or States shall cooperate with the United States in promoting the settlement of the projects or divisions after completion and in the securing and selecting of settlers. Such contract or contracts with irrigation districts hereinbefore referred to shall further provide that all irrigable land held in private ownership by any one owner in excess of one hundred and sixty irrigable acres shall be appraised in a manner to be prescribed by the Secretary of the Interior and the sale prices thereof fixed by the Secretary on the basis of its actual bona fide value at the date of appraisal without reference to the proposed construction of the irrigation works: and that no such excess lands so held shall receive water from any project or division if the owners thereof shall refuse to execute valid recordable contracts for the sale of such lands under terms and conditions satisfactory to the Secretary of the Interior and at prices not to exceed those fixed by the Secretary of the Interior; and that until one-half the construction charges against 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 right attaching to the land involved in such fraudulent sales: Provided, however, That if excess land is acquired by foreclosure or other process of law, by conveyance in satisfaction of mortgages, by inheritance, or by devise, water therefor may be furnished temporarily for a period not exceeding five years from the effective date of such acquisition, delivery of water thereafter ceasing until the transfer thereof to a landowner duly qualified to secure water therefor: Provided further, That the operation and maintenance charges on account of lands in said projects and divisions shall be paid annually in advance not later than March 1. It shall be the duty of the Secretary of the Interior to give public notice when water is actually available, and the operation and maintenance charges payable to the United States for the first year after such public notice shall be transferred to and paid as a part of the construction payment.

Section 46 clearly requires that you shall contract with an irrigation district or irrigation districts organized under State law. By its verv nature, such a contract necessarily imposes a joint liability on all landowners of a district. Further, section 46 stipulates that excess lands shall receive no water from any project or division under your control unless the owners execute valid recordable contracts for the sale of such lands under terms and conditions satisfactory to you. The only other specific relief from the requirements relating to recordable contracts comes in connection with the antispeculation provisions when one-half of the construction charges have been repaid by a district. After that time your approval of the sale price of any of the excess lands in the district is no longer required.

Earlier provisions of Federal reclamation law authorized individual contracts in contrast to the joint liability contract specifically required by section 46. The act of August 9, 1912, as amended (37 Stat. 265; 43 U. S. C. 541 et seq.), entitled individual homestead entrymen, who complied with the requirements of applicable provisions of the homestead and reclamation laws, to receive a patent and a final waterright certificate upon payment of all sums due the United States from them as individuals. Until such full payment, the United States retained a prior lien on the individual entryman's land. I wish to emphasize the individual obligation there involved.