Nevada the "lower division," although in fact the two "basins,' as distinguished from "divisions," each include small areas of States assigned to the opposite division.

Abandoning the plan of dividing the water among the seven States individually, the compact in Article III (a) effected an allocation as between the two basins, leaving to future adjustment the division of water within each basin.

It apportioned 7,500,000 acre-feet to each basin in Article III (a); and in Article III (b), the lower basin was given the right to increase its beneficial consumptive use by 1,000,000 acre-feet per annum.

Article III (c) provided against the contingency of a treaty between the United States and Mexico. This paragraph states that in the event the United States shall recognize in Mexico any right to the use of Colorado River water, this water will be supplied first from surplus over and above the aggregate specified in paragraphs (a) and (b) (that is, 16,000,000 acre-feet), and that if this is not sufficient, the burden shall be borne equally by the upper basin and the lower basin. The States of the upper division covenanted to deliver at Lee Ferry water to supply one-half of that deficiency.

Article III (d) binds the States of the upper division to release during each 10-year period an aggregate of 75,000,000 acre-feet.

Article III (e) provides that the States of the upper division will not withhold water and the States of the lower division will not require the delivery of water which can not reasonably be applied to domestic and agricultural use.

Article III (f) provides for a further apportionment from time to time after October 1, 1963, of any water unapportioned by paragraphs (a), (b), and (c).

Article IV provides that the use of the river for purpose of navigation shall be subservient to uses for domestic, agricultural, and power purposes.

Article IV (b) provides that, subject to the compact, water of the system may be impounded and used for generation of electric power, but that such use shall be subservient to the use of water for domestic and agricultural purposes, calling these "dominant purposes."

Article IV (c) provides that the provisions of that article shall not interfere with the regulation by any State within its boundaries of the use of appropriation and distribution of water.

Article V constitutes the Director of the Reclamation Service, the Director of the Geological Survey, and the chief water official of each State as a commission to promote systematic determination of facts as to flow, appropriation, consumption, and use of water; to publish data on annual flow, and to perform other duties assigned by the compacting States from time to time.

Article VI provides for settlement of disputes by the appointment of commissioners as an optional alternative to litigation.

Article VII provides that the compact shall not affect the obligations of the United States to Indian tribes.

Article VIII provides that present perfected rights shall be unimpaired by the compact. It adds that when storage capacity of 5,000,000 acre-feet shall be provided in the lower basin, claims of such rights shall attach to such stored water, and that all other rights to beneficial uses shall be effected solely from water apportioned to the particular basin. The meaning of this article has been the subject of some controversy.

Article IX preserves to each State its right to maintain legal or equitable proceedings necessary to protect its rights under the compact.

Article X provides that the compact may be terminated by unanimous consent, but in that event all rights claimed under it shall continue unimpaired.

Article XI provides that the compact shall become effective upon ratification by the States and by Congress, and provides for exchange of confirmation to that effect.

The compact was in fact ratified by each of the compacting States except Arizona. Controversy between Arizona and the other States gradually crystallized upon issues turning upon the relationship of the Gila River to the apportionment affected by the compact.

Article II (a) of the Colorado River Compact defines the Colorado River system so as to include all of its tributaries within the United States, i. e., the Gila River, among others. Arizona objected to the inclusion of the Gila because its waters were already largely appropri ated in Arizona and the result of including that river in the allocation reduced the quantity of water available from the main stream for apportionment to the lower basin. Arizona further objected on the ground that whereas the compact eliminated the prior-appropriation doctrine as between the two basins, it left it in force as between California and Arizona, leaving Arizona subject to the danger which

the upper basin had escaped by the compact, i. e., the establishment of priorities on behalf of California by diversions through the proposed All-American Canal.

The compact, having been ratified by six of the seven States, was finally submitted to Congress for approval some five years after its execution, without awaiting Arizona's further action. Bills for this purpose had been introduced in 1925, but had not been pressed. This brings us to consideration of the Boulder Canyon project act.

Objectives.

3. THE BOULDER CANYON PROJECT ACT

The Swing-Johnson bill was approved December 21, 1928. It was the sixth of a series of bills. The first and second 3 had provided only for the construction of a canal connecting the Imperial Valley with the Colorado River. The next four, including the successful bill, were proposals introduced by Senator Hiram Johnson and Representative Phil D. Swing. All of these provided for the construction of a dam at Black Canyon or Boulder Canyon, as well as the building of the All-American Canal.

As finally enacted, the Boulder Canyon project act accomplished three major objectives.

(1) The Colorado River compact was ratified, and provision made that in the event only six States should ratify it, the compact should become effective as a six-State compact, provided California was one of the adhering parties and provided further that California should agree to limit her use of water for the benefit of the other six States. (2) The construction of a dam at Black Canyon or Boulder Canyon was authorized.

(3) The construction of an All-American Canal connecting the Imperial and Coachella Valleys with the Colorado River was authorized. These works would be about 270 miles below Black Canyon. For the construction of these two works expenditure of a total of $165,000,000 was authorized.

In addition, the act authorized a subordinate compact between Arizona, California, and Nevada for the division of the water appor

4

3 H. R. 6044, 66th Cong., 1st sess.; H. R. 11553, 66th Cong., 2d sess.

H. R. 5773, 70th Cong., 2d sess.; Public No. 642, 70th Cong.; 45 Stat. 1057,

tioned to the lower basin by the Colorado River Compact. This three-State agreement has not been consummated."

The act also authorized the investigation of the proposed Parker_ Gila project in Arizona."

The act further authorized future agreements among the seven basin States for a comprehensive plan of development of the river, including the construction of dams, diversion works, power houses, and other structures, and the creation of interstate commissions and corporations and other instrumentalities for these purposes."

The authorization for the dam (subsequently located at Black Canyon) required that the structure be used first, for river navigation and flood control; second, for irrigation and domestic purposes and satisfaction of present perfected rights in pursuance of article 8 of the Colorado River Compact; and third, for power.

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The act established a unique method of financing the construction of the dam. A special fund was established, designated as the Colorado River Dam fund. This fund bears somewhat the relation to the Treasury of a subsidiary to a parent corporation. The act authorizes the transfer from the Treasury to this fund of $165,000,000, to be repaid with interest at 4 per cent. Appropriations to this fund from the Federal Treasury for construction of the dam were authorized.10 Earlier bills had provided for a bond issue; the bill finally enacted looks to current appropriations.

Conditions precedent.

Appropriations from the Treasury into the fund, and expenditures therefrom for construction, were made conditional upon three contingencies:

(1) Section 4-a required that no steps be taken toward construction until the seven States had ratified the Colorado River Compact and the President had so declared by public proclamation, or if seven States failed to ratify the contract within six months of the passage of the act, until six of the States, including California, should ratify the agreement.

(2) Section 4-a required that the State of California agree with the United States irrevocably and unconditionally, for the benefit of the other six States of the basin, that annual consumptive use of Colorado

5 Sec. 4-a.
6 Sec. 15.

150912-33-2

7 Sec. 19.

8 Sec. 6.

9 Sec. 2. 10 Sec. 3.

River water in California should not exceed 4,400,000 acre-feet of water apportioned to the lower basin States by Article III(a) of the compact, plus one-half of any excess.

(3) The Secretary was required to make provision for revenues by contract adequate in his judgment to insure payment of all expenses of operation and maintenance and the repayment within 50 years of the date of completion of the works of all amounts advanced to the fund, with interest made reimbursable under the act.

Construction of the All-American Canal was subjected to the same three conditions, except that section 4-b required that the Secretary make provision for revenue by contract or otherwise adequate to insure payment of expenses of construction, operation, and maintenance of the canal and appurtenant works "in the manner provided by the reclamation law." As the reclamation law does not require the repayment of interest, the two classes of expenditures from the fund are on separate bases as to interest, as well as the source of income. Revenues from operation of the dam are required to repay the cost of the dam, with interest, and contracts made as under the reclamation law (i. e., contracts with water users, districts, or associations) are required to repay the cost of the canal, without interest.

The act made a series of provisions governing the revenues for the two classes of structures.

Provisions governing Boulder Canyon revenue contracts.

Section 5 authorized the execution of two classes of contracts relating to the use of the Boulder Canyon Dam-contracts for electrical energy, and for the storage and delivery of water.

Among other provisions relating to these Boulder Canyon contracts appear the following:

(1) The contracts together must yield revenues which in addition to other revenues under the act (i. e., revenue from the All-American Canal) will in the Secretary's judgment cover all expenses of operation and maintenance and the repayments required by section 4-b.11

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(2) Contracts for water, irrigation, and domestic uses must be for permanent service and conform to section 4-a. It is provided that no person shall have the use, for any purpose, of water stored by the dam except by contract made by the Secretary."1

11 Sec. 5.