B-149629, SEP. 6, 1962

B-149629, SEP. 6, 1962

TO THE SECRETARY OF THE INTERIOR:

THIS REFERS TO A LETTER DATED AUGUST 2, 1962, FROM THE ASSISTANT SECRETARY OF THE INTERIOR RELATIVE TO CONTRACT NO. 14-06-600-3747, DATED OCTOBER 17, 1958 AND CONTRACT NO. 14-06-600-3746, DATED OCTOBER 9, 1958, BETWEEN THE UNITED STATES AND THE MALTA IRRIGATION DISTRICT, AND THE UNITED STATES AND THE GLASGOW IRRIGATION DISTRICT, RESPECTIVELY.

THE ESSENTIAL FACTS ARE REPORTED AS FOLLOWS:

THE MILK RIVER RECLAMATION PROJECT OF MONTANA PROVIDES IRRIGATION WATER TO SEVEN IRRIGATION DISTRICTS, INCLUDING THE MALTA AND THE GLASGOW IRRIGATION DISTRICTS. EACH OF THE SEVEN DISTRICTS HAS A CONTRACT WITH THE UNITED STATES TO REPAY ITS PROPORTIONATE SHARE OF THE ORIGINAL CONSTRUCTION COST OF THE MILK RIVER PROJECT, INCLUDING THE SHERBURNE LAKES DAM, AND TO PAY IN ADVANCE THE GOVERNMENT'S COST OF MAINTAINING CERTAIN PROJECT WORKS, INCLUDING THE SHERBURNE LAKES DAM.

AFTER WORLD WAR II, INSPECTIONS OF THE SHERBURNE LAKES DAM REVEALED TO THE BUREAU OF RECLAMATION THAT THE DAM COULD NOT BE EFFECTIVELY AND SAFELY OPERATED UNLESS THE OUTLET WORKS AND THE SPILLWAY WERE REBUILT. THE ESTIMATED COST OF THE PROPOSED WORK WAS $330,000, WHICH WAS CONSIDERED BY BUREAU OFFICIALS AS MAINTENANCE COSTS, AND THEREFORE, PAYABLE IN ADVANCE UNDER THE SEVERAL CONTRACTS WITH THE IRRIGATION DISTRICTS.

THE REHABILITATION AND BETTERMENT ACT OF OCTOBER 7, 1949 (43 U.S.C. 504), PERMITS MAINTENANCE COSTS TO BE PAID IN INSTALLMENTS OVER A NUMBER OF YEARS WHEN DETERMINED TO BE NECESSARY BY THE SECRETARY OF THE INTERIOR AND WHEN THE IRRIGATION DISTRICTS CONCERNED HAVE CONTRACTED TO REPAY ON SUCH BASIS.

EACH OF THE SEVEN DISTRICTS WAS OFFERED AN AGREEMENT TO REPAY THEIR SHARE OF THE MAINTENANCE COSTS OF THE SHERBURNE LAKES DAM WORK UNDER THE PROVISIONS OF THE ACT OF 1949. HOWEVER, ONLY THE COMMISSIONERS OF THE MALTA AND GLASGOW IRRIGATION DISTRICTS ACCEPTED THE OFFER. THE CONSENT OF THE WATER USERS TO SUCH CONTRACTS WAS NOT SECURED.

THE UNITED STATES PROCEEDED WITH THE WORK ON THE DAM AS AN ORDINARY MAINTENANCE COST. EACH OF THE FIVE IRRIGATION DISTRICTS WHICH HAD REFUSED TO ENTER INTO REHABILITATION AND BETTERMENT CONTRACTS WAS CHARGED BY THE BUREAU OF RECLAMATION FOR ITS SHARE OF THE ESTIMATED $330,000 COST UNDER THE PROVISION OF ITS CONTRACT OBLIGATING IT TO PAY FOR THE MAINTENANCE OF SHERBURNE DAM.

THE FIVE DISTRICTS REFUSED TO PAY SUCH AMOUNTS, AND THE UNITED STATES BROUGHT SUIT UNDER THE CONTRACTS. THE DISTRICTS DEFENDED ON THE GROUND THAT THE WORK INVOLVED WAS NOT MAINTENANCE BUT WAS ACTUALLY NEW CONSTRUCTION WORK FOR WHICH THE DISTRICTS COULD NOT BE CHARGED WITHOUT THE CONSENT OF THEIR WATER USERS. THE COURT FOUND THAT OF A TOTAL ACTUAL COST OF $287,686.01, $200,630.08 OF THE TOTAL, WHICH CONSTITUTED THE COST OF REBUILDING OF THE OUTLET WORKS, WAS MAINTENANCE, AND $87,055.93 FOR THE REBUILDING OF THE SPILLWAY, WAS CONSTRUCTION CHARGES. THE COURT CONCLUDED THAT THE CONSTRUCTION WORK COULD NOT BE CHARGED TO THE IRRIGATION DISTRICTS AS MAINTENANCE, AND THAT UNDER THE RECLAMATION EXTENSION ACT AN IRRIGATION DISTRICT CANNOT BE OBLIGATED TO PAY FOR ADDITIONAL CONSTRUCTION COSTS WITHOUT THE CONSENT OF ITS WATER USERS. UNITED STATES V. FORT BELKNAP IRRIGATION DISTRICT, ET AL., 197 F.SUPP. 812. THE DEFENDANTS' APPEAL AND THE PLAINTIFF'S CROSS-APPEAL FROM THIS DECISION WERE DISMISSED ON STIPULATION OF THE PARTIES ON JUNE 13, 1962.

IT IS REPORTED THAT PURSUANT TO THE COURT'S DECISION, THE UNITED STATES WILL RECOVER FROM EACH OF THE FIVE IRRIGATION DISTRICTS INVOLVED IN THE LITIGATION ITS PROPORTIONATE SHARE OF THE ACTUAL COST OF THE MAINTENANCE WORK. THE CONSTRUCTION WORK FOR THE REBUILDING OF THE SPILLWAY WILL NOT BE RECOVERED UNDER THE CONTRACTS WITH THESE DISTRICTS.

THE ASSISTANT SECRETARY STATES THAT IN THIS SITUATION THE QUESTION IS PRESENTED AS TO WHAT ACTION THE GOVERNMENT SHOULD TAKE WITH RESPECT TO PAYMENT BY THE MALTA AND GLASGOW IRRIGATION DISTRICTS OF THEIR RESPECTIVE SHARES OF THE COST OF REBUILDING THE SHERBURNE LAKES DAM SPILLWAY. THESE COSTS ARE RESPECTIVELY $38,022.12 AND $16,095.36.

THE REHABILITATION AND BETTERMENT CONTRACTS WITH THE MALTA AND GLASGOW IRRIGATION DISTRICTS PROVIDE IN PART AS FOLLOWS:

"WORK PERFORMANCE

"1. THE UNITED STATES SHALL PERFORM EMERGENCY MAINTENANCE WORK ON THE SHERBURNE LAKE OUTLET WORKS, SUBJECT TO THE PROVISIONS OF ARTICLES 4 AND 5 BELOW. THE ESTIMATED COST OF SUCH WORK IS $330,000. THE CONTRACT-OFFICER SHALL NOTIFY THE DISTRICT'S BOARD OF COMMISSIONERS OF THE ACTUAL COST OF SUCH WORK WHEN THE SAME IS COMPLETED.

"REPAYMENT OF COSTS

"2. (A) THE DISTRICT SHALL REPAY TO THE UNITED STATES ITS PROPORTIONATE SHARE OF THE REIMBURSABLE COST OF SUCH REHABILITATION AND BETTERMENT WORK. THE DISTRICT'S PROPORTIONATE SHARE OF THE TOTAL ESTIMATED COST IS * * *. IF THE REIMBURSABLE COST OF SUCH WORK IS GREATER OR LESS THAN THE ESTIMATED $330,000 THE DISTRICT'S PROPORTIONATE SHARE OF SUCH REIMBURSABLE COST SHALL BE RESPECTIVELY INCREASED OR DECREASED; BUT THE DISTRICT SHALL HAVE THE OPTION OF PAYING THE AMOUNT OF ANY INCREASE IN COSTS AS PART OF ITS SHARE OF THE ANNUAL OPERATION AND MAINTENANCE COST FOR THE RESERVED WORKS, UNDER ARTICLE 18 OF THE REPAYMENT CONTRACT, OR OF PAYING SUCH INCREASE IN COST HEREUNDER. * * *"

THE REHABILITATION AND BETTERMENT ACT PROVIDES THAT: "THE TERMS "REHABILITATION AND TERMENT," AS USED IN THIS SECTION, SHALL MEAN MAINTENANCE, INCLUDING REPLACEMENTS, WHICH CANNOT BE FINANCED CURRENTLY * * * BUT SHALL NOT INCLUDE CONSTRUCTION * * *.' (43 U.S.C. 504). CONSEQUENTLY, THE REHABILITATION AND BETTERMENT CONTRACTS ENTERED INTO BETWEEN THE UNITED STATES AND THE MALTA AND GLASGOW IRRIGATION DISTRICTS COVER PAYMENT FOR "MAINTENANCE" COSTS. THE COMMISSIONERS OF THE IRRIGATION DISTRICTS MAY NOT AGREE TO PAY CONSTRUCTION COSTS WITHOUT THE CONSENT OF THE WATER USERS. SEE 43 U.S.C. 469, 470; FOX V. ICKES, 137 F. 2D 30, 34. SUCH CONSENT HAS NOT BEEN OBTAINED HERE.

UNDER THE HOLDING OF THE UNITED STATES DISTRICT COURT IN MONTANA, SUPRA, THE COST OF REBUILDING OF THE SPILLWAY ON THE SHERBURNE LAKE OUTLET WORKS ($87,055.93) CONSTITUTED CONSTRUCTION CHARGES FOR WHICH THE DEFENDANT IRRIGATION DISTRICTS WERE NOT LIABLE. WHILE THE MALTA AND GLASGOW IRRIGATION DISTRICTS WERE NOT PARTIES TO THIS LITIGATION THERE APPEARS NO REASON TO CONCLUDE THAT A COURT LITIGATION INVOLVING THESE DISTRICTS WOULD COME TO A DIFFERENT RESULT ON THE QUESTION OF WHAT CONSTITUTED MAINTENANCE AND CONSTRUCTION COSTS ON THE SHERBURNE LAKES DAM WORKS. ACCORDINGLY, WE WOULD NOT OBJECT IF YOUR DEPARTMENT EXCLUDED THE SUMS OF $38,022.12 AND $16,095.36, RESPECTIVELY, REPORTED TO BE THE PROPER SHARES OF COST ATTRIBUTABLE TO THE REBUILDING OF THE SPILLWAY, WHEN GIVING NOTICE TO THE MALTA AND GLASGOW IRRIGATION DISTRICTS, PURSUANT TO ARTICLE 1 OF THEIR CONTRACTS, OF THE COST OF "EMERGENCY MAINTENANCE WORK" ON THE SHERBURNE LAKE OUTLET WORKS.