RECLAMATION EXTENSION ACT-SEC. 5 States v. Chas. L. Donohoe Co., 33 F. 2d 362 (N.D. Cal. 1929). Where a contract between the United States and a water users' association provided that the latter should promptly collect such charges as should be apportioned to its shareholders, the fact that the cost was greater than expected cannot be urged as a ground for equitable relief. Yuma County Water Users' Assn. v. Schlecht, 275 Fed. 885 (9th Cir. 1921), affirmed 262 U.S. 138 (1923). 3. Change of payment date 191 The Act of August 13, 1914, provided for the payment of irrigation construction charges upon a specified date, the only authority for change of which is contained in the Act of May 15, 1922, and where the latter act is invoked to change the date of payment under a prior contract, the procedure prescribed therein must be followed in order to give validity to the amended contract. Solicitor Edwards Opinion, 50 L.D. 142 (1923). Sec. 5. [Operation and maintenance charges-Basis therefor-Minimum charge-Secretary may transfer care and operation of project-Reduction or increase of charges.]—In addition to the construction charge, every waterright applicant, entryman, or landowner under or upon a reclamation project shall also pay, whenever water service is available for the irrigation of his land, an operation and maintenance charge based upon the total cost of operation and maintenance of the project, or each separate unit thereof, and such charge shall be made for each acre-foot of water delivered; but each acre of irrigable land, whether irrigated or not, shall be charged with a minimum operation and maintenance charge based upon the charge for delivery of not less than one acrefoot of water: Provided, That, whenever any legally organized water users' association or irrigation district shall so request, the Secretary of the Interior is hereby authorized, in his discretion, to transfer to such water users' association or irrigation district the care, operation, and maintenance of all or any part of the project works, subject to such rules and regulations as he may prescribe. If the total amount of operation and maintenance charges and penalties collected for any one irrigation season on any project shall exceed the cost of operation and maintenance of the project during that irrigation season, the balance shall be applied to a reduction of the charge on the project for the next irrigation season, and any deficit incurred may likewise be added to the charge for the next irrigation season. (38 Stat. 687; 43 U.S.C. §§ 492, 499) EXPLANATORY NOTES Codification. The proviso in the first sentence is codified in section 499, title 43, U.S. Code. The remainder of the section is codified in section 492. 1922 Modification. The Act of May 15, 1922, 42 Stat. 541, authorizes the Secretary of the Interior to enter into contract with any legally organized irrigation district whereby the irrigation district shall agree to pay the moneys required to be paid to the United States, and in such event waterright applications on the part of landowners and entrymen, in the discretion of the Secre NOTES OF Operation and maintenance charges 1 tary, may be dispensed with. In the event of such contract being made, the Secretary in his discretion, may contract for repayment as will best conform to the district and taxation laws of the respective States under which the district is formed and he may contract for penalties and interest charges in case of delinquency in payments as he may deem proper and consistent with such State laws, notwithstanding sections 1, 2, 3, 4, 5 and 6 of this Act. The 1922 Act appears herein in chronological order. OPINIONS 1. Operation and maintenance charges Expenditures are properly chargeable to "construction" when they (1) are incurred 192 RECLAMATION EXTENSION ACT-SEC. 5 to construct an irrigation system and put it in condition to furnish and properly distribute water, (2) are made necessary by faulty original construction in violation of contract and statutory requirements, or (3) are for the purpose of increasing the capacity of the original system. On the other hand, expenditures are properly chargeable to "operation and maintenance" when they are required to remedy conditions brought about by the use of a completed system or to maintain and operate it effectively for the end to which it is designed. U.S. v. Fort Belknap Irr. Dist., 197 F. Supp. 812, 819 (D Mont. 1961). In making repairs and replacements chargeable to "operation and maintenance" the government is not limited to preserving the status quo, but may, in the exercise of sound discretion, utilize materials or equipment of an improved type or design. U.S. v. Fort Belknap Irr. Dist., 197 F. Supp. 812 (D. Mont. 1961). After the passage of Section 5 of the Reclamation Extension Act, the Secretary did not have the right to contract to deliver water for a fixed charge not to exceed a certain amount per acre. Carruthers v. Sunnyside Valley Irrigation Dist., 29 Wash. 2d 530, 188 P. 2d 136 (1947). Reclamation law before passage of the Reclamation Extension Act did not require that the charge for operation and maintenance be based upon beneficial use as a measure of the value of the service rendered, consequently prior contracts made by the Secretary to deliver water at a fixed charge were valid. Id. Where water service is not available for lands as the trial court found to be the case with respect to the right-of-way of the Oregon Short Line Railroad Company through lands of the Minidoka Irrigation District, Minidoka project-an assessment against such lands is invalid. Oregon Short Line R.R. Co. v. Minidoka Irr. Dist., 283 Pac. 614 (Idaho 1929). Where lands of an Idaho irrigation district were included in a Federal reclamation project under a contract obliging the Government to furnish water and construct drainage works within the district, which was done and the cost assessed as a construction charge against all the project water users, the district agreeing that the project lands in the district should pay the same operation and maintenance charge per acre as announced by the Secretary of the Interior for similar lands of the project, held that the project lands within the district were liable with the other project lands to bear, as an operation and maintenance charge, the cost of providing drainage for project lands outside the district which were being ruined by seepage water from the operation of the irrigation system. Nampa & Meridian Irr. Dist. v. Bond, 268 U.S. 50 (1925), affirming 288 Fed. 541, 283 Fed. 569. The operation and maintenance deficit arising on the Belle Fourche project, South Dakota, prior to the enactment of the Extension Act of August 13, 1914, was not extinguished by that Act and is collectible. Solicitors Opinion, December 16, 1920, reprinted in Reclamation Record of February, 1921, p. 75. Against lands subject to section 1 of this Act, operation and maintenance charges cannot become due until after water-right application has been made; against lands subject to section 2 of this Act these charges may accrue before making of water-right application, and accumulate against the land. Instructions, 47 L.D. 285 (1919). Operation and maintenance charges follow the same rule as construction charges and do not accumulate against lands for which water-right application has not been made. C.L. No. 622, December 16, 1916. The word "year" used in connection with the operation and maintenance costs is the 12 months ending with December 31. C.L. No. 555, April 17, 1916. 2. Transfer of care and maintenance The Secretary is authorized to transfer without charge to the Coachella Valley County Water District the care and maintenance of 25 permanent-type houses erected by the United States on land donated by the District. The houses were used by construction workers in connection with the construction of irrigation works and are no longer needed for that purpose. In view of the fact that the land was donated and the permanent-type housing was constructed with the understanding that the houses would subsequently be used by District personnel when the District assumed the responsibility for operation and maintenance of the project, the houses may properly be considered part of "project works" within the meaning of Section 5 of the Reclamation Extension Act of 1914. Disposition under section 203 of the Federal Property and Administrative Services Act of 1949 is not required. 35 Comp. Gen. 287 (1955), reversing 34 Comp. Gen. 374 (1955). The relationship of creditor and debtor between the United States and individual water users continues to exist after the care, operation and maintenance of a project has been transferred to a water users association or an irrigation district under the authority of section 5 of the Reclamation Extension Act of 1914, but is terminated where RECLAMATION EXTENSION ACT-SEC. 6 contracts or amended contracts have been entered into with an irrigation district pursuant to the Act of May 15, 1922. Solicitor Edwards Opinions, M-11120 and M-12181 (April 17, 1924). 3. Water users associations A contract made under the reclamation act between the United States and an irrigation company on behalf of its stockholders for the furnishing of additional water to the lands of such stockholders from the Government reservoir, construed, and held valid, and to authorize the charges made against the company for maintenance and operation. New York Canal Co. v. Bond, 265 Fed. 228 (9th Cir. 1920). Where irrigation districts subscribed for stock in an association of water users on a reclamation project entitling them to water, the board of directors and the Secretary of the Interior held authorized to release the 193 irrigation districts from their subscriptions and obligations to take water. Payette-Boise Water Users' Association v. Cole, 263 Fed. 734 (D. Idaho 1919). Where an irrigation district subscribing to stock in an association of water users on a reclamation project was released from its obligations by the association's board of directors, and though the other subscribers learned thereof within a reasonable time, no action to set aside the release was brought for several years during which the district landowners ceased to exercise any rights as stockholders and were not recognized as such, and the district issued bonds by means of which it procured other water, and lands in the district were bought and sold and transfers thereof made, the members of the association were chargeable with laches preventing them from attacking the release in equity. Ibid. Sec. 6. [Date when charges become due fixed by the Secretary-Discount for prompt payment-Penalty for nonpayment-Cancellation for continued arrears-Actions for recovery.]-All operation and maintenance charges shall become due and payable on the date fixed for each project by the Secretary of the Interior, and if such charge is paid on or before the date when due there shall be a discount of five per centum of such charge; but if such charge is unpaid on the first day of the third calendar month thereafter, a penalty of one per centum of the amount unpaid shall be added thereto, and thereafter an additional penalty of one per centum of the amount unpaid shall be added on the first day of each calendar month if such charge and penalties shall remain unpaid, and no water shall be delivered to the lands of any water-right applicant or entryman who shall be in arrears for more than one calendar year for the payment of any charge for operation and maintenance or any annual construction charge and penalties. If any water-right applicant or entryman shall be one year in arrears in the payment of any charge for operation and maintenance and penalties, or any part thereof, his water-right application, and if he be a homestead entryman his entry also, shall be subject to cancellation, and all payments made by him forfeited to the reclamation fund, but no homestead entry shall be subject to contest because of such arrears. In the discretion of the Secretary of the Interior suit or action may be brought for the amounts in default and penalties in like manner as provided in section three of this act. (38 Stat. 688; 43 U.S.C. §§ 479, 493-97) EXPLANATORY NOTES no Codification. The provision that water shall be delivered where an applicant or entryman is in arrears more than one calendar year in payment of annual construction charge and penalties is codified in section 479, title 43, U.S. Code. The remainder of the section is codified in sections 493-97. 1924 Modification. Subsection H, sec tion 4 of the Act of December 5, 1924, 43 Stat. 703, reduces the penalty provided for herein from 1 per cent per month to onehalf of 1 per cent per month, as to all installments which may thereafter become due. The Act appears herein in chronological order. 1922 Modification. The Act of May 15, 1922, 42 Stat. 541, authorizes the Secretary 194 RECLAMATION EXTENSION ACT-SEC. 6 of the Interior to enter into contract with any legally organized irrigation district whereby the irrigation district shall agree to pay the moneys required to be paid to the United States, and in such event waterright applications on the part of landowners and entrymen, in the discretion of the Secretary, may be dispensed with. In the event of such contract being made, the Secretary in his discretion, may contract for repayment as will best conform to the district and taxation laws of the respective States under which the district is formed and he may contract for penalties and interest charges in case of delinquency in payments as he may deem proper and con Calendar year 1 Suit for water charges 5 1. Calendar year sistent with such State laws, notwithstanding sections 1, 2, 3, 4, 5 and 6 of this Act. The 1922 Act appears herein in chronological order. Cross References, Relief to Water Users. Temporary provisions authorizing the furnishing of water to landowners or entrymen in arrears more than one calendar -year, notwithstanding the provisions of this section, were contained in Public Resolution No. 3 of May 17, 1921, 42 Stat. 4, and in section 2 of the Act of March 31, 1922, 42 Stat. 490, as amended by section 4 of the Act of February 28, 1923, 42 Stat. 1325. Each of these Acts appears herein in chronological order. NOTES OF OPINIONS The term "calendar year” as used in this section refers to a period from January 1 to December 31, inclusive. Secretary's decision, May 24, 1916; C.L. 564, June 6, 1916. 2. When charges due A suit was brought by landowners to restrain the Board of Directors of the Elephant Butte Irrigation District from including in its budget for the 1927 tax rolls the estimated cost of operation and maintenance for the ensuing year on the ground that the district would not disburse such amounts to the United States, under its contracts and annual notices, until the year following that in which the charges were incurred, or the second ensuing year from the one in which the budget in question was made. The court sustained the action of the Board and denied a motion for rehearing upon the District's contention that it was deemed sound business practice at the time to anticipate the estimated operation and maintenance cost for the ensuing year even though, under the practice then prevailing, such amount would not necessarily be disbursed by the district during that year. Sperry v. Elephant Butte Irr. Dist., 270 Pac. 889, 33 N. Mex. 482 (1928). 3. Military service Under section 501, Act of March 8, 1918 (40 Stat. 440), penalties arising under this section upon prior defaulted construction or operation and maintenance charges will not run during the period of the military service. Departmental decision, 47 L.D. 167 (1919). 4. Withholding water delivery Even if the Federal Government and its agents must conform to the State laws in the matter of initiating and perfecting appropriations from the nonnavigable stream in Idaho, for an irrigation system constructed and maintained under the reclamation act, the manager of such Government project may, as authorized by section 6, act of August 13, 1914, withhold water from land within the project where owner is in arrears for year for maintenance charge, though under the general State rule, held applicable to Carey Act companies and other quasipublic corporations appropriating water for sale, water may be refused only in respect to charges for current expenses, after demanding payment in advance. Mower v. Bond, 8 F.2d 518 (D. Idaho 1925). A lien on the crops of a landowner who is delinquent in payment of charges is required as a condition to right to continue to use water from the project. Ibid. Where water is rented under a regulation that the unpaid rentals upon the same land for previous years must be paid, before water is furnished, the regulation will be enforced even after a change of ownership, the new owner being required to pay up the water rental charges incurred by the previous owner before water will be delivered. Decision of First Assistant Secretary, June 18, 1935. 5. Suit for water charges The provisions of sections 3 and 6 of the Extension Act, in reference to one year of grace for the payment of overdue water charges, refer only to the drastic remedies of cancellation and forfeiture and not to the right to bring suit in a court for collection of a water charge past due and unpaid. Reclamation decision, December 4, 1917. U.S. v. Edison E. Kilgore. 6. Relief act RECLAMATION EXTENSION ACT-SEC. 9 The provisions of the Act of March 31, 1922, 42 Stat. 489, which affords relief to settlers on reclamation projects with reference to operation and maintenance charges, simply relax the requirements of section 6 of the Act of August 13, 1914, by permitting the Secretary of the Interior, in 195 his discretion, to furnish irrigation water, during the time specified therein, to landowners or entrymen who are in arrears for more than one calendar year, and nothing contained therein authorizes the extension of time for the payment of such charges. Lower Yellowstone Irrigation Districts Nos. 1 and 2, 49 L. D. 301 (1922). Sec. 7. [Local association may be appointed fiscal agent for the United States to collect charges-Official receipt.]—The Secretary of the Interior is hereby authorized, in his discretion, to designate and appoint, under such rules and regulations as he may prescribe, the legally organized water users' association or irrigation district, under any reclamation project, as the fiscal agent of the United States to collect the annual payments on the construction charge of the project and the annual charges for operation and maintenance and all penalties: Provided, That no water-right applicant or entryman shall be entitled to credit for any payment thus made until the same shall have been paid over to an officer designated by the Secretary of the Interior to receive the same. (38 Stat. 688; 43 U.S.C. § 477) 1. Contract NOTES OF OPINIONS The Secretary of the Interior is authorized by the Reclamation Act of 1902 alone, and certainly by the Warren Act of 1911, and section 7 of the Reclamation Extension Act of 1914, to enter into a contract with an irrigation district to furnish water and to join in the construction of a drainage system. Nampa & Meridian Irr. Dist. v. Petrie, 28 Idaho 227, 153 Pac. 425, 428 (1915). Where a contract between the United States and a water users' association provided that the latter should promptly collect such charges as should be apportioned to its shareholders, the fact that the cost was greater than expected cannot be urged as a ground for equitable relief. Yuma County Water Users' Assn. v. Schlecht, 275 Fed. 885 (9th Cir. 1921), affirmed 262 U.S. 138 (1923). Sec. 8. [Authority to make regulations governing use of water, reclamation, and cultivation-Penalty for noncompliance with regulations.]—The Secretary of the Interior is hereby authorized to make general rules and regulations governing the use of water in the irrigation of the lands within any project, and may require the reclamation for agricultural purposes and the cultivation of one-fourth the irrigable area under each water-right application or entry within three full irrigation seasons after the filing of water-right application or entry, and the reclamation for agricultural purposes and the cultivation of onehalf the irrigable area within five full irrigation seasons after the filing of the water-right application or entry, and shall provide for continued compliance with such requirements. Failure on the part of any water-right applicant or entryman to comply with such requirements shall render his application or entry subject to cancellation. (38 Stat. 688; 43 U.S.C. § 440) Sec. 9. [Additional construction charges for certain lands.]-In all cases where application for water right for lands in private ownership or lands held under entries not subject to the reclamation law shall not be made within one year after the passage of this act, or within one year after notice issued in pursuance of section four of the reclamation act, in cases where such notice has not |