Before that we will insert this letter in the record which is addressed to the chairman of the committee under date of March 28 from the Department of the Army. It is signed by Major General Holle. (The letter referred to is as follows:) Hon. CLARENCE CANNON, DEPARTMENT OF THE ARMY, Chairman, Committee on Appropriations, House of Representatives. DEAR MR. CHAIRMAN: This report is submitted pursuant to the provisions of Public Law 163, 84th Congress, approved July 15, 1955, with particular reference to the provisions therein relating to the Lewis and Clark and Buford-Trenton Irrigation Districts located in the Garrison Reservoir. Construction of the Garrison Dam and Reservoir project on the Missouri River was authorized by Public Law 534, approved December 22, 1944 (58 Stat. 887). In the extreme upper reach of the reservoir, in the vicinity of Williston, N. Dak., are located the Lewis and Clark and the Buford-Trenton Irrigation Districts. In their present condition the Lewis and Clark District and the greater portion of the East Bottom unit of the Buford-Trenton District would be inundated by the reservoir during those periods when the reservoir is near maximum operating level and there is relatively high inflow into the reservoir. Planning for completion of the Garrison project has included necessary provisions for protection of these areas by the construction of levees, and the approved cost estimate for the project includes the cost of the protective works. Testimony before the appropriate committees of Congress has so indicated. The Lewis and Clark Irrigation District comprises approximately 8,112 acres, representing 57 ownerships. The project was constructed in 1938 by the North Dakota Water Conservation Commission at a cost of $626,789, of which $366,867 was paid from Works Progress Administration funds not assessed against the project. Irrigation water is furnished from the Missouri River by a pumping plant into a system of canals and laterals to approximately 4,905 acres. Farm units were initially leased to selected operators and in 1945 sold to them when the project was turned over to the Lewis and Clark Irrigation District, a corporation organized and existing under the laws of North Dakota. The irrigation district now operates and maintains the irrigation works. The Buford-Trenton Irrigation District embraces four areas referred to as Zero Bottom, West Bottom, Middle Bottom, and East Bottom units comprising a total of approximately 16,800 acres. The major portion of the district lands affected by the Garrison project is in the East Bottom unit. The total acreage involved is 8,708.29, held by 42 owners including a small amount situated outside of the irrigation district. The total acreage irrigated in the East Bottom unit is 2,640, held by 27 owners. The project was organized in 1939. The irrigation works were constructed by the Bureau of Reclamation with funds obtained from the Works Progress Administration, Farm Security Administration, and the Rehabilitation Corporation. Construction costs as of June 1953, by the Bureau of Reclamation for this project, totaled $932,218. A final accounting has not been made to correlate expenditures from the various funds by the several agencies involved. The Department of Agriculture purchased 88 percent of the irrigable acreage, subdivided it into farm units, and subsequently leased the farms to selected operators. The Buford-Trenton Mutual Aid Corporation was organized in September 1942 to manage the federally owned lands and operate the irrigation system. Delivery of water commenced in 1944. Between 1947 and 1950, 80 percent of the Government-owned and developed land was sold to operators. The Buford-Trenton Irrigation District has been recently organized to take over operation of the project and to act as the contracting agency with the Bureau of Reclamation for repayment of the reimbursable project construction funds. A repayment contract with the district has been prepared by the Bureau of Reclamation. As of this time, it is understood that the contract has not been executed. Public Law 163, 84th Congress, approved July 15, 1955, provided legislation, pertaining to the Government's acquisition of land in both irrigation districts in lieu of protection. The pertinent portions of the legislation, with respect to the acquisition of land in the districts, are as follows: 76331-56 -42 (a) That in lieu of protecting the Lewis and Clark Irrigation District lands, funds not to exceed $2,050,000 shall be made available for the purchase of the lands and improvements. (b) That in lieu of protecting the East Bottom unit of the Buford-Trenton Irrigation District, funds not to exceed $1,750,000 shall be available for the purchase of lands and improvements in and contiguous to the Buford-Trenton Irrigation District, and not to exceed $2 million shall be available to the Corps of Engineers for protection of the pumping plant in Zero Bottom and for the construction of bank protection to prevent erosion in the Missouri River adjacent to the Buford-Trenton Irrigation project. (c) That substitution of land acquisition for protection of these areas shall not be made unless two-thirds of the landowners, on or before December 31, 1955, have offered to sell their property on agreeable terms. Subsequent to the enactment of Public Law 163, the Corps of Engineers contracted with 2 expert real-estate appraisers to make appraisals of the fair market value of the ownerships affected by the Garrison project within the 2 irrigation districts as well as the contiguous areas. One of the appraisers was selected by the Corps of Engineers and the other by the irrigation districts and agreed to by the corps. Both appraisers are members of the American Institute of Real Estate Appraisers and are well qualified to make a fair and impartial appraisal of the land and improvements involved. The appraised value of the lands and improvements of the Lewis and Clark Irrigation District and the East Bottom unit of the Buford-Trenton Irrigation District and contiguous lands as determined jointly by these experts appraisers is $1,305,636 and $790,370, respectively. The values represent the total appraised value of the farm units including improvements in each district. The appraisal is based on the assumption that upon purchase of the lands the owners will retain all oil and gas interests. Since the right of the owners to explore and remove oil and gas must be subordinate to the Government's right to inundate, the total damage resulting from the restrictions on development of oil and gas interests is estimated at $31,398 in the Lewis and Clark Irrigation District and $14,899 in the East Bottom unit of the Buford-Trenton Irrigation District and contiguous lands. This results in total appraised figures of $1,337,034 and $805,269 for the two respective districts. The construction charges for the irrigation works of the Buford-Trenton Irrigation District which have yet to be repaid to the Federal Government amount to about $55.80 per acre and, in the event of purchase, presumably this amount will have to be repaid from any sums which might be paid for the land. The appraisals were made of the land and improvements without regard to any indebtedness against them. The Corps of Engineers has considered the amounts mentioned in the act as a limitation which permitted, if necessary, the expenditure of funds equaling that amount. However, the language of the act has been interpreted as not making it mandatory that these amounts be paid for the land and improvements. Furthermore, it does not appear that the language gives the corps of engineers additional authority to pay more than the fair market value equivalent to just compensation. After the lands in both districts were appraised, representatives of the Corps of Engineers held separate meetings with the landowners of each district which were attended by most of the owners or their representatives. The owners were informed of the overall evaluation and individual owners present at the meeting, or represented, were furnished with the valuation of their individual properties. Owners not present or represented were later supplied with the values applying to their individual holdings. The owners or their representatives informed the representatives of the Corps of Engineers that they would not accept the values offered by the Government. The owners in the Lewis and Clark District have, through the secretarytreasurer of the district, submitted to the Chief of Engineers a written counteroffer in the total amount of $1,920,815, compared with the appraisal of $1,337,034. Also, the owners of the 27 tracts of land in the East Bottom unit of the BufordTrenton Irrigation District have, through officials of the district, submitted to the Corps of Engineers, a written counteroffer in the total amount of $1,320,806.85, compared with the appraisal of $805,269. This latter figure does not include the 15 tracts of land located outside of the Buford-Trenton Irrigation District. In fact, no offers have been received from these owners although they have refused to accept the Government's appraised values. The actions taken by the Corps of Engineers have been reviewed and it was determined that the individual owners of the lands should be offered by the Department of the Army not more than the amount of the Government appraisals. This determination was influenced by the following factors: (a) The Corp of Engineers employed 2 well-qualified appraisers, 1 selected by the irrigation districts. Their conclusions represent fair market value. (b) Approximately 89 percent of the owners who own lands required for the Garrison project have accepted the Government's appraised valuation as representing the fair market value. (c) To accept the offers of the owners whose lands are located in the two irrigation districts would place the Government in an untenable position with respect to the great majority of the landowners in the Garrison project who have accepted the appraised values developed by the Corps of Engineers. (d) To accept the offers of the landowners would set an undesirable precedent in pending and future actions. Accordingly, the official representatives of the Lewis and Clark and BufordTrenton Irrigation Districts were notified by the Corps of Engineers on December 30, 1955, that the Secretary of the Army had rejected the districts' compromise offers and further that the Secretary of the Army is unwilling to go above the appraised valuations. Further formal offers from the irrigation districts have not been received by the Corps of Engineers. Pursuant to the provisions of Senate Report 456, 83d Congress, 1st session, a report on the protection plan was submitted to the Congress in January 1954. The plan would provide for protection of the irrigation districts with levees, drainage works, and pumping facilities. The estimated cost of the plan is $3,644,000 for Lewis and Clark and $4,823,000 for Buford-Trenton, for a total construction cost of $8,467,000. The estimated costs in connection with lands required for construction purposes is $141,000 for Lewis and Clark and $469,100 for Buford-Trenton, for a total lands for construction cost of $610,100. The estimated annual cost to the Federal Government for operation and maintenance is $86,000 for Lewis and Clark and $94,100 for Buford-Trenton, for a total annual cost of $180,100. The present value of annual operation and maintenance costs of $180,100, at 2% percent interest over the 50-year period for the life of the project, is $5,108,100. The total estimated cost for protective works, including acquisition of necessary lands and the present value for annual operation and maintenance, is $14,185,200. A comparative presentation of the estimated costs to the Federal Goverenment for acquisition of lands based on appraisals values, for acquisition based on the offer of the owners and the expired provisions of Public Law 163 and for construction of protective works and operation and maintenance is as follows: Estimate of costs to the Government to acquire lands under normal Estimate of costs to the Government to acquire lands pursuant to Public Law 163, 84th Cong., the provisions of which expired Dec. 31, 1955 Estimate of costs to the Government to construct protective works, including acquisition of necessary lands and operation and maintenance Filling of the Garrison Reservoir began in 1954 and over 5 million acre-feet of water has been accumulated as of the close of 1955. Impounded water has raised the reservoir pool 100 feet at the dam to elevation 1,775. Additional water will be impounded during 1956 and the possibility of threatening the irrigation areas grows with the continued raising of the reservoir pool level. The construction of protective works would require about 3 years. The provisions of Public Law 163 relating to the problem expired December 31, 1955. In view of the past interest of the Congress in this respect, and in view of the circumstance that the cost to the Government for the protective plan exceeds the cost of land acquisition under normal procedures by approximately $10,507,000, and exceeds the cost of the expired provisions of Public Law 163 by approximately $6,969,000, this matter is brought to the attention of the Congress. Sufficient funds are presently available and are included in the fiscal year 1957 budget to either initiate the construction of protective works or to proceed under normal land acquisition procedures to acquire the lands necessary for operation of the Garrison project. In view of commitments made in testimony before congressional committees that the construction of protective works was contemplated, the Corps of Engineers is prepared to proceed with construction of the protective works unless directed by the enactment of legislation or otherwise instructed by the Congress to acquire the lands. Sincerely yours, CHAS. G. HOLLE, General POTTER, Sir, that letter addressed to the Honorable Clarence Cannon is one of the clearest expositions of the problem that faces us that I have seen. I would like to have written the letter myself. It does clearly show that it would be cheaper to buy these irrigation districts out than to protect them, but the statement of policy has been made and taken by the Secretary of the Army that we cannot go beyond the normal appraised value in the taking of land, and based on that policy it will be necessary to proceed with the protection of these two irrigation districts. Mr. JENSEN. What districts? General POTTER. Buford-Trenton and Lewis and Clark. Mr. RABAUT. What is the condition? Is it a peaceful condition? What is the temperament around there? General POTTER. Off the record. (Discussion held off the record.) General POTTER. A proposal has been made by the landowners in both of these irrigation districts that the Government buy their land at a value approximately 50 percent above appraised value. They did, however, after last year's appropriation bill, give us authority to purchase up to a value that they had stated. We hired appraisers to go in, appraisers approved by them, and they appraised these irrigation districts. Those appraisers came out with a value substantially less than they had asked. The Secretary made the decision that it would be unwise policywise to buy land at over appraised values. The other solution would, of course, have been for us to condemn and have these people take their chances before the Federal court. They are unwilling to give permission for that, and the Corps of Engineers has been on record since 1944, of course, that we would protect these two irrigation districts. We will therefore go ahead with this protection unless some other action is taken by the Congress. Mr. RABAUT. Why in your opinion does the protection of the irrigation districts cost more than if you really bought the land at a real fair and equitable price? General POTTER. Fair and equitable price, sir? Mr. RABAUT. Yes. General POTTER. The appraised value of those two irrigation districts, including costs to the Government in purchase, and relocations that would be required by their purchase, would be $3,678,203. The cost of protection of those districts is about $14 million including $5 million of the capitalized maintenance and operation of those levees and pump houses in perpetuity. The cost of buying them at the landowners' price demand, and protecting the banks of the irrigation districts upstream would be $7,200,000, approximately. General ITSCHNER. May I supplement that information to give you the specific answer to your question, sir, based upon the figures that General Potter has given you? COST OF PROTECTION VS. PURCHASE OF IRRIGATION LANDS It would cost $10,507,000 more to protect the property than it would cost to purchase it at the appraised prices, or it would cost $6,969,000 more to protect the property than it would to purchase it at the prices asked by the local interests, plus doing the protective work that they would require. Senator Young, in the last session of Congress, introduced a clause in Public Law 163 which provided for the procurement of this real estate and doing certain other work, and the $6,969,000 difference that I gave you is based upon doing the work provided in this clause in Public Law 163. Mr. RABAUT. Am I to get from what you said that if we took a man's farm away from him, or his home, or whatever piece of property it might happen to be, he would have something of equal value to that in another location, or perhaps a better location because he would have artificial protection? General POTTER. The way the local people say it, sir, in so many words, is this: We would rather sell at our price, but if we cannot sell at our price we want the protection. Mr. RABAUT. If they sell at their price how much is the saving? |