A month had not even passed since the grand celebration held at Litchfield for the completion of the Bly Tunnel at Eagle Lake, that things were not good. Grant Smith & Company of Seattle, Washington was the contractor to build the tunnel. In June 1923, the company asked for a special meeting with the Baxter Creek and Tule Irrigation Districts who financed the $1.25 million project with bonds. Grant Smith informed those gathered they experienced a number of problems during construction and requested that they leave and return in the fall after irrigation season to correct the defects. The bondholders said no. They sensed if they allowed Grant Smith to even leave temporarily, the odds of them returning were nil. The situation would turn real ugly over the next year with some startling revelations that would in part doom the whole irrigation enterprise.