©2019 Concerned Citizens of Western Montana
There is important unfinished business on the ground here on the Presidentially-opened Flathead Indian Reservation that should have been addressed and completed before any compact was, or is now, prematurely put before Congress for a vote.
The unfinished business involves:
- federal contracts between the United States and the irrigation districts requiring the release of construction liens on private property;
- the United States’ unmet contract obligations to the landowners within the Flathead Irrigation and Power Project; and
- the unmet legal responsibilities to turn over the project operation and management to the landowners of the project.
The completion of this unfinished business is already required by law. Because it is at the federal level, our Congressional delegation could be providing assistance to the on-going efforts by the irrigation districts themselves.
These required legal obligations cannot be used as a “bargaining chip” in any compact negotiations
Release of Federal Construction Liens on Landowner Property
Recovery of the construction costs for the Flathead Irrigation and Power Project (FIPP) by the United States was secured through repayment contracts executed between the Department of the Interior and three irrigation districts from 1924-1948. The contracts attached liens to individual property until the total costs of construction were paid off. By law, including the 1908 Act authorizing the FIPP, once the construction costs were repaid, the liens would be released and the operation and management of the Project would be turned over to the landowners.
The construction costs for the FIPP were repaid in 2004 but the liens have never been released. Here is the first paragraph of the Districts’ detailed request to then Secretary Ryan Zinke to release the federal liens, sent on March 19, 2018:
Dear Secretary Zinke:
The Jocko, Mission, and Flathead Irrigation Districts of the Flathead Irrigation Project (FIP) represent over 2,000 irrigators on 115,764 acres of private land served by the FIP. The FIP was authorized by the Act of May 29, 1908 to serve both Indian and non-Indian lands within the exterior boundaries of the Flathead Indian Reservation.
We write to formally request the Department of the Interior’s release of the liens on property within the Districts of the Flathead Irrigation Project pursuant to our repayment of construction costs in 2004. This letter transmits the necessary documentation of our contracts with the United States, repayment, and descriptive information of lands to which the construction liens apply.
The response from Secretary Zinke? Crickets.
The unreleased liens create additional problems for landowners by reducing their flexibility. The status of unreleased liens has been cited by the state district court as one of the reasons to prevent the reorganization of one of the irrigation districts to more accurately reflect their priorities and circumstances.
This is “simply” a matter of contract law, and could be enforced in a court of law. But it would be even better if the irrigation districts could receive the benefit of Senator Daines’ efforts before any movement goes forward on a “new” CSKT compact.
Audit of the Flathead Irrigation and Power Project: Power Revenues and Project Irrigator Operation and Maintenance Fees
As should be well known, the FIPP is an integrated irrigation and power project and was initially designed that way. The Newel Tunnel became Kerr Dam. The water rights of the irrigators were used to generate power, and in return the irrigation project received a low cost block of power–15 MW at the ‘cost of production’– from Kerr Dam.
The 1948 Act, still in effect and not affected by the Compact, and discussed in the attached letter, requires that the excess low cost block of power be sold, and that that net power revenue would be applied to offset the annual irrigation operation and maintenance fees. The annual net power revenue as calculated by the Bureau of Reclamation from 1950-1984 ranged from $226,000 to over $718,000 per year (Flathead Irrigation and Power Project Audit Request page 5).
In 1985 the BIA arbitrarily divided the irrigation and power division, and contracted with the Tribes to manage the power division, which included by law the requirements of the 1948 Act. The BIA unlawfully contracted the power division with the Tribes under a under a self-determination (638) contract, as a 638 contract allows the government to contract with the Tribes for a government project built for them because of their status as tribes. The FIP was built on an open reservation for everyone, not just the Tribes.
Since 1985, the net power revenues have not been delivered to the irrigation division or spent on irrigation purposes as required by law. This has resulted in serious maintenance deficits to the irrigation project and a back-breaking escalation of per acre costs to individual irrigators. But the field evidence reveals miles of canals and structures needing repair.
Where is the money going? That is the subject of the audit request, attached here. Take a look and see what has been going on for the last thirty years!
To his credit, Senator Daines has secured an “accelerated” General Accounting Office (GAO) audit to begin in about a year. However, how can the Congressional delegation in all seriousness plan to submit a the CSKT or modified CSKT Compact before the audit is done? This is the largest irrigation project in Montana and began more than 100 years ago. The United States invested millions of dollars here on everyone’s behalf. Will the Congressional delegation walk away from that, and the current waste, fraud, and abuse of federal monies in the FIPP by the BIA?
If the audit can’t be accelerated anymore, why not hold off on introducing any modified CSKT Compact until the audit can be completed? Work on the liens, or identifying the system discussed next.
The 1908 Act authorizing the construction of the FIPP also authorized the turnover of project management and operations to the landowners therein after the construction costs were repaid. The statute authorizes the landowners form a structure that is “suitable to the Secretary of the Interior”. Notice this statutory provision is not linked at all to water rights of any kind. Note also that the federal government retains the ownership of the infrastructure per the 1908 Act.
Owing to the open reservation status of the Flathead Indian Reservation, 90% of the project lands are owned by non-Indians, while 10% is owned by individual Indians or the CSKT itself. All pay irrigation operation and maintenance fees. By law, all three have to be represented in the operation and management of the FIPP and maintenance of the current instream flows in the FIP.
Within the last two years, and as part of litigation settlement discussions initiated by the irrigation districts against the BIA regarding project management, a project management plan was developed by the irrigation districts and submitted to the Department of the Interior for review. The review was positive and the only task is to ensure that the Board of this management entity fairly reflects the project’s landowners and is capable of managing the irrigation, power, fisheries, and environmental components of the FIP.
Project turnover to the landowners, like the liens, is statutorily required and should be independent of any water rights proceeding.
But note that project turnover to landowners within the context of the CSKT Compact, or the current modifications to it offered by Senator Daines, is not equivalent to and does not meet the statutory standard set out in the 1908 Act.
Neither the Compact nor Tester bill implement the statutorily-required management and operation of the FIP by landowners. In addition, under the Daines scenario, offering the irrigators “project management” will be meaningless because the Tribes will still own the landowner’s water in and the physical infrastructure of the FIP. The irrigators would be managing their own demise.
So the wisdom of pushing the CSKT Compact or modification now, including one that appeals to the irrigator’s statutory right to and desire for project management, is premature and questionable given the context of the CSKT Compact, the Tester Bill, and the Daines proposed modifications.
Of course, our answer to this issue is the People’s Compact.
The United States has some ‘splainin to do, and it might be time to get to work and meet its contract obligations to everyone, not just a select few.
- The liens on individual lands have been on those lands for fifteen (15) years.
- There is the significant potential that millions of federal dollars have been lost to waste, fraud, and abuse.
- The irrigation community has developed a plan for operation and management that is representative of everyone in the project and protects fisheries, environment, and power resources.
Will the premature introduction of a “settlement of water rights” that involves the CSKT Compact, or modifications that incorporate its plans for the FIPP, cover up and enable federal malfeasance?