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1975/10/03 HR543 Loans for Certain Water Resource Development Projects
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1975/10/03 HR543 Loans for Certain Water Resource Development Projects
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The original documents are located in Box 30, folder "10/3/75 HR543 Loans for Certain Water Resource Development Projects" of the White House Records Office: Legislation Case Files at the Gerald R. Ford Presidential Library. Copyright Notice The copyright law of the United States (Title 17, United States Code) governs the making of photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United States of America his copyrights in all of his unpublished writings in National Archives collections. Works prepared by U.S. Government employees as part of their official duties are in the public domain. The copyrights to materials written by other individuals or organizations are presumed to remain with them. If you think any of the information displayed in the PDF is subject to a valid copyright claim, please contact the Gerald R. Ford Presidential Library. Exact duplicates within this folder were not digitized. Signed APPROVED 0/3/75 ACTION THE WHITE HOUSE WASHINGTON Last Day: October 4 October 1, 1975 To archive 10/0 MEMORANDUM FOR THE PRESIDENT Postal FROM: JIM CANNON 10/6 SUBJECT: Enrolled Bill H.R. 543 - Rehabilitation and Betterment Loans for Certain Water Resource Development Projects Attached for your consideration is H.R. 543, sponsored by Representative Johnson, which expands the loan authority of the Rehabilitation and Betterment Act to permit small reclamation projects to be eligible to apply for rehabilitation and betterment loans. A detailed analysis of the bill is provided in OMB's enrolled bill report at Tab A. OMB, Max Friedersdorf, Counsel's Office (Lazarus) and I recommend approval of the enrolled bill. RECOMMENDATION That you sign H.R. 543 at Tab B. ReidwRends office 10/4/95 (10:30 AM) tape to Press offee, Thym Smith desk; 10/4/75 (10:35 AM) FORD : LIBRARY BERALD Digitized from Box 30 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library PRESIDENT EXECUTIVE OFFICE OF THE PRESIDENT OFFICE UNITED OFFICE OF MANAGEMENT AND BUDGET SECUTIVE STATE WASHINGTON, D.C. 20503 SEP 30 1975 MEMORANDUM FOR THE PRESIDENT Subject: Enrolled Bill H.R. 543 - Rehabilitation and betterment loans for certain water resource development projects Sponsor - Rep. Johnson (D) California Last Day for Action October 4, 1975 - Saturday Purpose Expands existing, statutory eligibility for loans to rehabilitate and improve certain Federally constructed irrigation systems to certain other Federally constructed water resource development projects. Agency Recommendations Office of Management and Budget Approval Department of the Interior No objection Discussion The Rehabilitation and Betterment Act of 1949 provides authority for the Secretary of the Interior to make rehabilitation and betterment loans to entities operating irrigation systems constructed under Federal reclamation laws. This loan authority provides a mechanism for keeping these projects in good repair and for modernizing them, where applicable, to assure the continued effective, efficient and economic operation of Federally constructed irrigation systems. 2 In 1956, the Small Reclamation Projects Act authorized a new Federal loan program to assist the construction of certain multipurpose water resource development projects. While that Act permits the Secretary of the Interior to make certain rehabilitation and betterment loans, it contains a number of limitations which could, in the case of some projects, preclude future supplemental loans for rehabilitation purposes. In addition to these restrictions, projects constructed under the Act have recently been determined to be ineligible for rehabilitation and betterment loans under the 1949 Act. Recognizing that projects constructed under the Small Reclamation Projects Act will, at some time, be in need of rehabilitation, the enrolled bill expands the loan authority of the Rehabilitation and Betterment Act to permit small reclamation projects to be eligible to apply for rehabilitation and betterment loans. The enrolled bill also requires that in the repayment of such loans, any interest payable is to be computed at the rate which applied to the original construction loan made pursuant to the Small Reclamation Projects Act. Since the bill does not make any specific monetary authori- zation, but simply expands eligibility for loan considera- tion to a class of existing projects, the cost of its enactment is speculative. As noted above, however, the loans are repayable, and Interior states in its enrolled bill letter that " the budgetary impact of this legislative change is not expected to be of great magnitude.' In its enrolled bill letter, Interior also notes that the objective of H.R. 543 could have been accomplished by amending the Small Reclamation Projects Act instead of the Rehabilitation and Betterment Act. Nonetheless, the Department supports the objective of the bill and has no objection to its enactment. The provision in the bill discussed above for computation of the interest rate for rehabilitation and betterment loans for small reclamation projects establishes an arbitrary interest rate which bears no relationship to Treasury's current borrowing costs. The interest rate formula currently produces 3 a rate of 4 3/8 percent compared with recent long term Treasury borrowing costs of about 8 1/2 percent. We have consistently objected to this arbitrary computation of interest rates for water resource development projects and accordingly oppose the interest rate provision of H.R. 543. We do not believe, however, that this provision is sufficiently objectionable to warrant disapproval of the bill. Furtheremore, we expect that a cost-sharing/reimbursement bill adjusting the rate for all water resources projects will be transmitted to the Congress next session. The interest rate specified in H.R. 543 can be corrected in that bill. James m. Director Trey for Legislative Reference Enclosures EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503 3:30p.m. SEP 30 1975 MEMORANDUM FOR THE PRESIDENT Subject: Enrolled Bill H.R. 543 - Rehabilitation and betterment loans for certain water resource development projects Sponsor - Rep. Johnson (D) California Last Day for Action October 4, 1975 - Saturday Purpose Expands existing, statutory eligibility for loans to rehabilitate and improve certain Federally constructed irrigation systems to certain other Federally constructed water resource development projects. Agency Recommendations Office of Management and Budget Approval Department of the Interior No objection Discussion The Rehabilitation and Betterment Act of 1949 provides authority for the Secretary of the Interior to make rehabilitation and betterment loans to entities operating irrigation systems constructed under Federal reclamation laws. This loan authority provides a mechanism for keeping these projects in good repair and for modernizing them, where applicable, to assure the continued effective, efficient and economic operation of Federally constructed irrigation systems. 2 In 1956, the Small Reclamation Projects Act authorized a new Federal loan program to assist the construction of certain multipurpose water resource development projects. While that Act permits the Secretary of the Interior to make certain rehabilitation and betterment loans, it contains a number of limitations which could, in the case of some projects, preclude future supplemental loans for rehabilitation purposes. In addition to these restrictions, projects constructed under the Act have recently been determined to be ineligible for rehabilitation and betterment loans under the 1949 Act. Recognizing that projects constructed under the Small Reclamation Projects Act will, at some time, be in need of rehabilitation, the enrolled bill expands the loan authority of the Rehabilitation and Betterment Act to permit small reclamation projects to be eligible to apply for rehabilitation and betterment loans. The enrolled bill also requires that in the repayment of such loans, any interest payable is to be computed at the rate which applied to the original construction loan made pursuant to the Small Reclamation Projects Act. Since the bill does not make any specific monetary authori- zation, but simply expands eligibility for loan considera- tion to a class of existing projects, the cost of its enactment is speculative. As noted above, however, the loans are repayable, and Interior states in its enrolled bill letter that " the budgetary impact of this legislative change is not expected to be of great magnitude. " In its enrolled bill letter, Interior also notes that the objective of H.R. 543 could have been accomplished by amending the Small Reclamation Projects Act instead of the Rehabilitation and Betterment Act. Nonetheless, the Department supports the objective of the bill and has no objection to its enactment. The provision in the bill discussed above for computation of the interest rate for rehabilitation and betterment loans for small reclamation projects establishes an arbitrary interest rate which bears no relationship to Treasury's current borrowing costs. The interest rate formula currently produces 3 a rate of 4 3/8 percent compared with recent long term Treasury borrowing costs of about 8 1/2 percent. We have consistently objected to this arbitrary computation of interest rates for water resource development projects and accordingly oppose the interest rate provision of H.R. 543. We do not believe, however, that this provision is sufficiently objectionable to warrant disapproval of the bill. Furtheremore, we expect that a cost-sharing/reimbursement bill adjusting the rate for all water resources projects will be transmitted to the Congress next session. The interest rate specified in H.R. 543 can be corrected in that bill. (Signed) James M. Frey Assistant Director for Legislative Reference Enclosures OF THE INTERIOR United States Department of the Interior OFFICE OF THE SECRETARY March 1849 WASHINGTON, D.C. 20240 3, SEP 26 1975 Dear Mr. Lynn: This responds to your request for our views on the enrolled bill H.R. 543, "To expand coverage of the Rehabilitation and Betterment Act (Act of October 7, 1949, 63 Stat. 724).' We would not object to Presidential approval of the enrolled bill. The Rehabilitation and Betterment Act of 1949 provides authority for, and is restricted in its use to the rehabilitation and betterment of irrigation systems on projects governed by Federal Reclamation law. H.R. 543 would extend the Rehabilitation and Betterment Act to projects constructed under the authority of the Small Reclamation Projects Act which need remedial measures to protect their financial integrity. Both Acts are administered by the Secretary of the Interior. As originally introduced in the House, H.R. 543 would have extended the authority of the Rehabilitation and Betterment Act, not only to small reclamation projects constructed under the authority of the Small Reclamation Projects Act, but also to any irrigation or drainage system operated by a State-authorized public agency. Further, it would have granted interest-free status to loans for rehabilitation of municipal and industrial water projects as well as irrigation projects. On these two points the Department disagreed with the original bill and recommended against its enactment. The House Subcommittee on Water and Power Resources, in reporting H.R. 543, amended the bill to eliminate both of those objectionable provisions. The Subcommittee, however, chose to ignore a third objection relating to the choice of which Act to amend. The House passed H.R. 543 in its present form. The Senate passed H.R. 543 without amendment. The Department supports the objective incorporated in H.R. 543 to provide authority for the rehabilitation and betterment of projects authorized by the Small Reclamation Projects Act, particularly those projects which need remedial measures to protect their financial integrity. We would note, however, that this objective could also REVOLUTION AMERICAN BICENTENNIAL 1776-1976 be accomplished by amending the Small Reclamation Projects Act instead of the Rehabilitation and Betterment Act. The Small Reclamation Projects Act already authorizes the Secretary to make certain loans for rehabilitation and betterment of projects which would be extended under H.R. 543. However, the Department recognizes that in some cases the present Small Reclamation Projects Act could preclude certain projects from being approved and con- structed. The currently authorized ceiling on total project costs and Federal loans for a project may in some cases preclude a future supplemental loan for project rehabilitation. There have been 40 projects built under the Small Reclamation Projects Act and 14 are under construction. The total cost of these 54 projects is approximately $150 million. Under the Rehabilitation and Betterment Act, 34 projects have been aided, with an average age of 30 years at the time of improvement. The cost of the assistance amounts to about 12 percent of the total investment in the projects involved. Based on this experience, perhaps as many as one-half of the Small Loan projects could require rehabilitation and betterment in the future. The estimated cost would probably range from $10 million to $15 million on a very rough calculation. This estimate is based on 12 percent of half of the $150 million total original costs of the projects. Although current construction costs are much higher than those of the past, better maintenance of projects, in contrast to the inadequate attention of the economic depression and wartime years, may be expected to reduce the need for rehabilitation and betterment. In any event, the budgetary impact of this legislative change is not expected to be of great magnitude. Therefore, the Department has no objection to H.R. 543. Sincerely yours, Jack Hoston Assistant Secretary of the Interior Honorable James T. Lynn Director, Office of Management and Budget Washington, D. C. 20503 2 THE WHITE HOUSE ACTION MEMORANDUM WASHINGTON LOG NO.: 407 Date: September 30 Time: 600pm FOR ACTION: George Humphreys on cc (for information): Jim Cavanaugh Max Friedersdorf m Jack Marsh Ken Lazarus/L Paul theis FROM THE STAFF SECRETARY DUE: Date: October 1 Time: 300pm SUBJECT: H.R. 543 - Rehabilitationaand Betterment loans for certain water resource development projects ACTION REQUESTED: For Necessary Action For Your Recommendations Prepare Agenda and Brief Draft Reply For Your Comments Draft Remarks REMARKS: Please return to Judy Johnston, Ground Floor West Wing PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED. If you have any questions or if you anticipate a delay in submitting the required material, please K. R. COLE, JR. telephone the Staff Secretary immediately. For the President THE WHITE HOUSE ACTION MEMORANDUM WASHINGTON LOG NO.: 407 Date: September 30 Time: 600pm FOR ACTION: George Humphreys CC (for information): Jim Cavanaugh Max Friedersdorf Jack Marsh Ken Lazarus FROM THE STAFF SECRETARY DUE: Date: October 1 Time: 300pm SUBJECT: H.R. 543 - Rehabilitation and Betterment loans for certain water resource development projects ACTION REQUESTED: For Necessary Action For Your Recommendations Prepare Agenda and Brief Draft Reply For Your Comments Draft Remarks REMARKS: Please return to Judy Johnston, Ground Floor West Wing October 1 TO: JUDY FROM: GEORGE W. HUMPHREYS I have no objections or additional comments. PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED. If you have any questions or if you anticipate a delay in submitting the required material, please telephone the Staff Secretary immediately. THE WHITE HOUSE WASHINGTON October 1, 1975 MEMORANDUM FOR: JIM CAVANAUGH FROM: MAX L. FRIEDERSDORF M.G. SUBJECT: H.R. 543 - Rehabilitation and Betterment loans for certail water resource development projects The Office of Legislative Affairs concurs with the agencies that the subject bill be signed. Attachments THE WHITE HOUSE ACTION MEMORANDUM WASHINGTON LOG NO.: 407 Date: September 30 Time: 600pm FOR ACTION: George Humphreys CC (for information): Jim Cavanaugh Max Friedersdorf Jack Marsh Ken Lazarus FROM THE STAFF SECRETARY DUE: Date: October 1 Time: 300pm SUBJECT: H.R. 543 - Rehabilitation and Betterment loans for certain water resource development projects ACTION REQUESTED: For Necessary Action For Your Recommendations Prepare Agenda and Brief Draft Reply For Your Comments Draft Remarks REMARKS: Please return to Judy Johnston, Ground Floor West Wing No objection. Ken Lazarus PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED. If you have any questions or if you anticipate a delay in submitting the required material, please telephone the Staff Secretary immediately. 94TH CONGRESS HOUSE OF REPRESENTATIVES REPORT 1st Session No. 94-102 EXPANDING COVERAGE OF THE REHABILITATION AND BETTERMENT ACT (ACT OF OCT. 7, 1949, 63 STAT. 724) MARCH 20, 1975.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. HALEY, from the Committee on Interior and Insular Affairs, submitted the following REPORT [To accompany H.R. 543] The Committee on Interior and Insural Affairs, to whom was re- ferred the bill (H.R. 543) to expand coverage of the Rehabilitation and Betterment Act (act of Oct. 7, 1949, 63 Stat. 724), having consid- ered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass. The amendment is as follows: Page 1, beginning on line 3, strike out all after the enacting clause and insert in lieu thereof the following: That the first sentence of the Act entitled "An Act to provide for the return of rehabilitation and betterment costs of Federal reclamation projects", ap- proved October 7, 1949, is amended to read as follows: "Expenditures of funds hereafter specifically appropriated for rehabilitation and betterment of any proj- ect constructed under authority of the Small Reclamation Projects Act (Act of August 6, 1956, 70 Stat. 1044, and Acts amendatory thereof and supplementary thereto) and of irrigation systems on projects governed by the Federal Reclama- tion laws (Act of June 17, 1902, 32 Stat. 388, and Acts amendatory thereof or supplementary thereto), shall be made only after the organizations concerned shall have obligated themselves for the return thereof, in installments fixed in accordance with their "ability to pay," as determined by the Secretary of the In- terior in the light of their outstanding repayment obligations, and which shall, to the fullest practicable extent, be scheduled for return with their construction charge installments or otherwise schdeuled as he shall determine: Provided, That repayment of such loans made for Small Reclamation Projects shall include interest in accordance with the provisions of said "Small Reclamation Projects Act." PURPOSE OF THE LEGISLATION The purpose of H.R. 543 by Mr. Johnson of California is to clarify the eligibility of projects developed under the authority of the Small Reclamation Projects Act (70 Stat. 1077) for participation in the pro- grams authorized by the Rehabilitation and Betterment Act of 1949 (63 Stat. 724) as amended. 38-006 2 3 BACKGROUND OF THE LEGISLATION COSTS The Rehabilitation and Betterment Act of 1949, as amended, pro- As H.R. 543 does not specifically authorize a program of works, vides that the Secretary of the Interior may make loans to entities op- but simply extends eligibility for consideration to a class of existing erating irrigation systems, constructed under the Federal Reclamation projects, it is speculative as to the probable cost of the measure. The law, for the purpose of rehabilitating and betterment of such systems. Department of the Interior testified that the ultimate use of the Such loans may be implemented only after the Secretary enters into authority conveyed by H.R. 543 would probably be about $9 million a repayment contract with the borrowing entity for repayment of the (at current price levels) over a term of 30 to 40 years. The Committee loan in not more than 40 years and after such contract has been before believes that this estimate is low and that actual expenditures may ap- the Congress for 60 days. This program has functioned effectively as proach twice that amount due to the continuing escalation of construc- a vehicle for assuring that Federally constructed irrigation systems tion costs. Accordingly, in terms of budgetary outlay, an average of maintain their capability to produce the services, benefits and repay- $500,000 per year for the next forty years or $20 million represents ment revenues for which they were developed. Since the inception of the Committee estimate required by the Rules of the House. the program in 1949 there have been 34 projects receiving loans-with an approximate aggregate value of $55 million. There have been no INFLATION IMPACT defaults and there are no delinquencies. In recent months, the Solicitor of the Department of the Interior The Committee does not believe that H.R. 543 has an identifiable has determined that multiple purpose water resource development inflationary impact. First of all, the same program of budgetary out- projects, constructed under the authority of the Small Reclamation lays would be possible, in theory, if applicants for Rehabilitation and Projects Act, as amended, are not eligible, legally, for consideration Betterment loans sought and obtained supplemental loans through for rehabilitation and betterment loans. His reasoning apparently is the Small Reclamation Projects Act. This option is available to the that title to "small projects" does not vest in the United States. Yet borrowing entity without further legislative action, but it involves it is reasonable to assume that such programs will in the not too distant more administrative costs, overhead and procedural delay. Secondly, future need rehabilitation and betterment assistance. the effect of H.R. 543 will be to preserve the benefit and revènue-pro- ducing capability of the applicant and thereby assure the return of the EXPLANATION OF THE LEGISLATION existing loans, thus resulting in the return of more revenues to the Treasury than are expended for the rehabilitation purpose. H.R. 543 will amend the Rehabilitation and Betterment Act to enable projects constructed under the Small Reclamation Projects Act COMMITTEE RECOMMENDATION to apply for Rehabilitation and Betterment Loans. The bill also re- quires that the repayment of such loans be in accordance with the The Committee on Interior and Insular Affairs, on the basis of a repayment requirements of the Small Reclamation Projects Act, SO voice vote, recommends that H.R. 543 be enacted. that costs allocable to interest-bearing features will bear interest. It is the intent of the Committee that the interest rate for the rehabilitation DEPARTMENTAL REPORTS and betterment loans be the same as the rate provided for the repay- ment of the original construction loan for the project. The report of the Department of the Interior is presented below The Committee also notes the continuing question of what constitutes in its entirety. This report supports the objectives of the bill but rec- "betterment" as distinct from "new construction." It is the view of the ommends that it not be enacted. The Department suggests that the Committee that new facilities and features designed to improve the same effect could be accomplished by amending the Small Reclama- operability of an existing system may properly be considered as tion Project Act. The Departmental witness testified, however, that "betterment" SO long as such facilities do not result in an increase in the Committee amendment resolved 90 percent of the Department's the scope of the original undertaking by increasing the acreage to be concern with the legislation. irrigated or the introduction of new project purposes. U.S. DEPARTMENT OF THE INTERIOR, COMMITTEE AMENDMENT OFFICE OF THE SECRETARY, Washington, D.C., February 21, 1975. The Committee adopted one amendment to H.R. 543 substituting a Hon. JAMES A. HALEY, completely new text. The amendment: Chairman, Committee on Interior and Insular Affairs, (1) limits the effect of the bill to the Small Reclamation Proj- House of Representatives, Washington, D.C. ects program only, while the bill, as introduced, would have DEAR MR. CHAIRMAN This responds to your request for this De- qualified any publicly-financed irrigation and drainage project partment's views on H.R. 543, a bill "To expand coverage of the Re- in the United States; and habilitation and Betterment Act (Act of October T, 1949, 63 Stat. (2) clarifies the repayment criteria for return of interest- 724)." bearing costs. H.R. 102 H.R. 102 4 5 As requested by your letter of January 31, 1975, we have reviewed ported, are shown as follows (existing law proposed to be omitted is the subject bill, and recommend against its enactment subject to the enclosed in black brackets, new matter is printed in italic, existing comments discussed below. law in which no change is proposed is shown in roman) : The Department supports that objective incorporated in H.R. 543 to provide authority for the rehabilitation and betterment of projects ACT OF OCTOBER 7, 1949 (63 STAT. 724) AS AMENDED (64 STAT. 11) authorized by the Small Reclamation Projects Act, as amended, par- ticularly those projects that need remedial measures to protect their That expenditures of funds hereafter specifically appropriated for financial integrity. However, we believe that this objective can be best rehabilitation and betterment of any project constructed under author- accomplished by amending the Small Reclamation Projects Act, as ity of the Small Reclamation Projects Act (Act of August 6, 1956, 70 amended, instead of the Rehabilitation and Betterment Act. We have Stat. 1044, and Acts amendatory thereof and supplementary thereto) not had sufficient time to identify the changes in the Act that would and of irrigation systems on projects governed by the Federal reclama- be necessary, but would be most willing to work with your committee tion laws (Act of June 17, 1902, 32 Stat. 388, and Acts amendatory in this regard. thereof or supplementary thereto) shall be made only after the orga- The Rehabilitation and Betterment Act of 1949 provides authority nizations concerned shall have obligated themselves for the return for the rehabilitation and betterment of irrigation systems on Federal thereof in installments fixed in accordance with their ability to pay, reclamation projects. H.R. 543 would extend that authority to cover as determined by the Secretary of the Interior in the light of their out- anv irrigation or drainage project operated by a State authorized standing repayment obligations, and which shall, to the fullest prac- public agency and any project constructed with funds provided by the tical extent, be scheduled for return with their construction charge Small Reclamation Projects Act (Act of August 6, 1956, 70 Stat. 1044, installments or otherwise scheduled as he shall determine[ Pro- and Acts amendatory thereof or supplementary thereto). Extension vided, That repayment of such loans made for Small Reclamation of the Rehabilitation and Betterment Act to any irrigation or drain- Projects shall include interest in accordance with the provisions of age system operated by a State-authorized public agency goes far be- said Small Reclamation Projects Act. No such determination of the yond that required to meet the needs of systems receiving water from Secretary of the Interior shall become effective until the expiration of reclamation projects, and perhaps would make this part of the recla- sixty days after it has been submitted to the Committee on Interior and Insular Affairs of the Senate and the Committee on Interior and mation program apply to all 50 States. The Small Reclamation Projects Act already authorizes the Secre- Insular Affairs of the House of Representatives; except that, any such tary to make certain loans for rehabilitation and betterment of proj- determination may become effective prior to the expiration of such ects which would be extended under H.R. 543. The Department does sixty days in any case in which each such committee approves an recognize, however, that in some cases the present Small Reclamation earlier date and notifies the Secretary, in writing, of such approval: Projects Act, as amended. could preclude certain projects from being Provided, That when Congress is not in session the Secretary's deter- approved and constructed. For example, the Act states that no more mination, if accompanied by a finding by the Secretary that substantial than one loan may be granted for a particular project. To date, this hardship to the water users concerned or substantial further injury to the project works will result, shall become effective when the chair- provision has been interpreted to mean that a project constructed man and ranking minority member of each such committee shall file under a Small Reclamation Projects Act loan cannot be eligible for with the Secretary their written approval of said findings. The term another loan for the rehabilitation of the same facility some time in "rehabilitation and betterment", as used in this Act, shall mean main- the future. In addition, the currently authorized ceiling on total proj- tenance, including replacements, which cannot be financed currently, ect costs and Federal loans for a project may in some cases preclude a as otherwise contemplated by the Federal reclamation laws in the case future supplemental loan for project rehabilitation. of operation and maintenance costs, but shall not include construction, In summary. the Department cannot support enactment of H.R. 543, the costs of which are returnable, in whole or in part, through "con- but would not object to amending the Small Reclamation Projects struction charges" as that term is defined in section 2(d) of the Recla- Act to permit the rehabilitation and betterment of projects authorized mation Project Act of 1939 (53 Stat. 1187). Such rehabilitation and by this Act. betterment work may be performed by contract, by force-account, or, The Office of Management and Budget has advised that there is no notwithstanding any other law and subject only to such reasonable objection to the presentation of this report from the standpoint of terms and conditions as the Secretary of the Interior shall deem appro- the Administration's program. priate for the protection of the United States, by contract entered Sincerely yours, into with the organization concerned whereby such organization shall JACK HORTON. perform such work. Secretary of the Interior. CHANGES IN EXISTING LAW In compliance with clause 3 of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as re- H.R. 102 H.R. 102 Calendar No. 374 94TH CONGRESS SENATE REPORT 1st Session No. 94-380 EXPANDING COVERAGE OF THE REHABILITATION AND BETTERMENT ACT (ACT OF OCT. 7, 1949, 63 STAT. 724) SEPTEMBER 18 (legislative day, SEPTEMBER 12), 1975.-Ordered to be printed Mr. JACKSON, from the Committee on Interior and Insular Affairs, submitted the following REPORT [To accompany H.R. 543] The Committee on Interior and Insular Affairs, to which was re- ferred the bill (H.R. 543) to expand coverage of the Rehabilitation and Betterment Act (Act of Oct. 7, 1949, 63 Stat. 724), having consid- ered the same, reports favorably thereon without amendment and rec- ommends that the bill do pass. PURPOSE OF THE MEASURE The purpose of the measure is to make available to projects devel- oped pursuant to the Small Reclamation Projects Act (70 Stat. 1077) a source of loan funds for rehabilitation and betterment purposes as pro- vided by the programs authorized by the Rehabilitation and Better- ment Act of 1949 (63 Stat. 724) as amended. BACKGROUND AND NEED In 1949, the Congress recognized the need to provide a mechanism for funding rehabilitation and betterment activities association with irrigation projects constructed under Federal reclamation laws. With the signing into law of the Rehabilitation and Betterment Act of 1949, the Secretary of the Interior was authorized to make loans to operat- ing entities of such projects for such purposes thereby assuring the con- tinued effective, efficient, and economic operation of Federally con- structed irrigation systems. By keeping the projects in good repair and in those instances where applicable, modernizing the irrigation works, the projects have continued to provide valuable food and fiber re- sources, stable incomes for participants, and the repayment of initial Federal investments. In the 26 years since the program was initiated, there have been no defaults or delinquencies and irrigators on 34 proj- ects have benefitted from loans amounting to $55 million. 57-010 2 3 In 1956, a program of assistance via loans to qualified entities for EXECUTIVE COMMUNICATIONS construction of multipurpose reclamation projects was initiated under the Small Reclamation Projects Act of 1956. During the almost 20 The executive communications regarding H.R. 543 are set forth in years since passage of the act, it has proven to be a valuable tool for full as follows: the development and effective utilization of related land and water re- U.S. DEPARTMENT OF THE INTERIOR, sources. As of January, 1975, under the Small Reclamation Projects OFFICE OF THE SECRETARY, Act, construction has been completed on 41 projects with loans total- Washington, D.C., September 9, 1975. ing $95 million and 14 projects with loans totaling $66 million were Hon. HENRY M. JACKSON, under construction. Chairman, Committee on Interior and Insular Affairs, U.S. Senate, It is evident that projects constructed under the authority of the Washington, D.C. Small Reclamation Projects Act will, in time, be in need of rehabilita- DEAR MR. CHAIRMAN: This-responds to your request for this Depart- tion and betterment efforts if the projects are to continue or improve ment's views on H.R. 543, as it passed the House of Representatives, past performance. The Solicitor of the Interior has determined that a bill "To expand coverage of the Rehabilitation and Betterment Act projects constructed. under the authority of the Small Reclamation (Act of October 7, 1949, 63 Stat. 724).' Projects Act. as amended, are not eligible for rehabilitation and better- As requested by your letter of May 18, 1975, we have reviewed the ment loans under the Act of 1949. subject bill, and recommend against its enactment subject to the com- ments discussed below. PROPOSED LEGISLATION The Rehabilitation and Betterment Act of 1949 provides authority H.R. 543 will amend the Rehabilitation and Betterment Act of 1949 for, and is restricted in its use to the rehabilitation and betterment of to provide that organizations concerned with projects constructed irrigation systems on projects governed by Federal Reclamation law. under the terms of the Small Reclamation Projects Act, as amended, H.R. 543. as passed by the House of Representatives, would extend may be eligible and apply for loans in accordance with the Rehabilita- the Rehabilitation and Betterment Act to projects constructed under tion and Betterment Act of 1949; however, repayment would be sub- the authority of the Small Reclamation Projects Act which need re- ject to the terms of the Small Reclamation Projects Act. medial measures to protect their financial integrity. Both Acts are administered by the Secretary of the Interior. COSTS The Department supports the objective incorporated in H.R. 543 to provide authority for the rehabilitation and betterment of projects In accordance with Section 252 (a) of the Legislative Reorganiza- authorized by the Small Reclamation Projects Act, particularly those tion Act of 1970 the committee provides the following estimates of projects which need remedial measures to protect their financial integ- cost: rity. However, we believe that this objective can best be accomplished Although H.R. 543 does not contain authorization for a by amending the Small Reclamation Projects Act instead of the Reha- specific monetary program, additional expenditures will be bilitation and Betterment Act. We have not identified the specific involved as qualified entities avail themselves of the benefits changes in the Act which would be necessary, but would be most willing to be derived from loans under the terms of the Rehabilita- to work with your committee in this regard. tion and Betterment Act, as amended. The Department of the The Small Reclamation Projects Act already authorizes the Secre- Interior estimates that expenditures at current cost levels tary to make certain loans for rehabilitation and betterment of projects may reach $9 million over a period of 30 to 40 years. How- which would be extended under H.R. 543. However, the Department ever, the committee, particularly in light of the enthusiastic recognizes that in some cases the present Small Reclamation Projects extent to which the Small Reclamation Projects Act has been Act could preclude certain projects from being approved and con- utilized. would estimate that rehabilitation and betterment structed. The currently authorized ceiling on total project costs and loans available pursuant to this legislation may reach or Federal loans for a project may in some cases preclude a future supple- exceed $20 million for the same period of time. However, it mental loan for project rehabilitation. should be pointed out that these costs are for the most part, We believe, however, that it would be more appropriate to amend repayable. the Small Reclamation Projects Act to provide authority for the rehabilitation and betterment of projects authorized by that Act. TABULATION OF VOTES CAST IN COMMITTEE The Office of Management and Budget has advised that there is no objection to the presentation of this report from the standpoint of Pursuant to Section 133 (b) of the Legislative Reorganization Act the Administration's program. of 1946, as amended, the following is a tabulation of votes of the Sincerely yours, Committee during consideration of H.R. 543. JACK HORTON. H.R. 543 was ordered favorably reported to the Senate without Assistant Secretary of the Interior. amendments by unanimous voice vote taken in open public session on September 10, 1975, with a quorum of members present. S.R. 380 S.R. 380 4 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 H.R. 543, 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) : ACT OF OCTOBER 7, 1949 (63 STAT. 724) AS AMENDED (64 STAT. 11) That expenditures of funds hereafter specifically. appropriated for rehabilitation and betterment of any project constructed under author- ity of the Small Reclamation Projects Act (Act of August 6, 1956, 70 Stat. 1044, and Acts amendatory thereof and supplementary thereto) and of irrigation systems on projects governed by the Federal reclama- tion laws (Act of June 17, 1902, 32 Stat. 388, and Acts amendatory thereof or supplementary thereto) shall be made only after the orga- nizations concerned shall have obligated themselves for the return thereof in installments fixed in accordance with their ability to pay, as determined by the Secretary of the Interior in the light of their out- standing repayment obligations, and which shall, to the fullest prac- tical extent, be scheduled for return with their construction charge installments or otherwise scheduled as he shall determine Pro- vided, That repayment of such loans made for Small Reclamation Projects shall include interest in accordance with the provisions of said Small Reclamation Projects Act. No such determination of the Secretary of the Interior shall become effective until the expiration of sixty days after it has been submitted to the Committee on Interior and Insular Affairs of the Senate and the Committee on Interior and Insular Affairs of the House of Representatives; except that, any such determination may become effective prior to the expiration of such sixty days in any case in which each such committee approves an earlier date and notifies the Secretary, in writing, of such approval: Provided, That when Congress is not in session the Secretary's deter- mination, if accompanied by a finding by the Secretary that substan- tial hardship to the water users concerned or substantial further injury to the project works will result, shall become effective when the chair- man and ranking minority member of each such committee shall file with the Secretary their written approval of said findings. The term "rehabilitation and betterment", as used in this Act, shall mean main- tenance, including replacements, which cannot be financed currently, as otherwise contemplated by the Federal reclamation laws in the case of operation and maintenance costs, but shall not include construction. the cost of which are returnable, in whole or in part, through "con- struction charges" as that term is defined in section 2(d) of the Recla- mation Project Act of 1939 (53 Stat. 1187). Such rehabilitation and betterment work may be performed by contract, by force-account, or, notwithstanding any other law and subject only to such reasonable terms and conditions as the Secretary of the Interior shall deem appro- priate for the protection of the United States, by contract entered into with the organization concerned whereby such organization shall perform such work. S.R. 380 H. R. 543 Ainety-fourth Congress of the United States of America AT THE FIRST SESSION Begun and held at the City of Washington on Tuesday, the fourteenth day of January, one thousand nine hundred and seventy-five An Act To expand coverage of the Rehabilitation and Betterment Act (Act of October 7, 1949, 63 Stat. 724). Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the first sentence of the Act entitled "An Act to provide for the return of rehabilitation betterment costs of Federal reclamation projects", approved October 7, 1949, is amended to read as follows: "Expendi- tures of funds hereafter specifically appropriated for rehabilitation and betterment of any project constructed under authority of the Small Reclamation Projects Act (Act of August 6, 1956, 70 Stat. 1044, and Acts amendatory thereof and supplementary thereto) and of irrigation systems on projects governed by the Federal reclamation laws (Act of June 17, 1902, 32 Stat. 388, and Acts amendatory thereof or supplementary thereto), shall be made only after the organizations concerned shall have obligated themselves for the return thereof, in installments fixed in accordance with their ability to pay, as deter- mined by the Secretary of the Interior in the light of their outstanding repayment obligations, and which shall, to the fullest practicable extent, be scheduled for return with their construction charge install- ments or otherwise scheduled as he shall determine: Provided, That repayment of such loans made for small reclamation projects shall include interest in accordance with the provisions of said Small Reclamation Projects Act.". Speaker of the House of Representatives. Vice President of the United States and President of the Senate. September 23, 1975 Dear Mr. Director: The following bills were received at the White House on September 23rd: H.R. 543 H.R. 1401 Please let the President have reports and recommendations as to the approval of these bills as soon as possible. Sincerely, Robert D. Linder Chief Executive Clerk The Honorable James T. Lymn Director Office of Management and Budget Washington, D. C.