WSP00671

• File Number: 8210.140.20 A
• Description: Colorado River Basin Organizations - States Forum ‎(CRBSF)‎ - Colorado River Board Of California
• State: CA
• Basin: Colorado Mainstem
• Water Division: 5
• Date: 2/2/1954
• Author: Irrigation Dists Ass
• Title: Which Way California
• Water Supply Pro - Doc Type: Publication

00037'!

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W', ; all the contracting organlzatlans wit" .~he
service area of the project.

I~ the year prior to the enactment of the Reclamation
Prol8Ct Act I a special provi,ion of an appropriation act wa,
en,acted, approved May 9, 1938, known as the Hayden_
o Mahoney Amendment. This special provision appears
based on a principle fraught with the gravest danger to
the West. This danger appears ;nherent in the cUlTent
contract program to substitute 9(eJ contracts for repay-
ment contracts. That principle can be stated as follows:
Federal funds expended in construction of power features
of reclamation projects are perpetual Federal investments.
Th~ p~esent 9(e) contract program poses the hazard that
a 51m,lar principle will be applied to funds expended in
constru~tion of irrigation features of such projects. This
~anger " due to the close similarity of the wording of Sec-
tion 9(e) with the wording of Section 9(cJ authorizing power
co~tracts. Also, the Hayden-O'Mahoney Amendment re-
qUires that both irrigation and power revenues must be
deposited in the Reclamation Fund of the U. S. Treasury
and cannot be expended except pursuant to Act of Con-
gress and there is no legislative direction as to the method
of recordation within the fund. The essential basis of both
water and power contracts is identical. Indeed, the lan-
guage of Section 9(c) of the act authorizing power con-
!racts, and.the l~nguage of 9(e) relating to water delivery
IS almost Identical. If, therefore, construction costs of
power features are perpetual Federal investments, the
question arises - Are construction costs of irrigation
features likewise a perpetual Federal investment?

The Federa' authorities under the Federal recla-
motion laws are obligated to acquire water rights
for project purposes from the State pursuant to
State law and under the reclamation laws hold
such rights as trustee for beneficiaries of the proj-
ect. Here the United States has acquired from the
State applications to appropriate water, but no
permits have been issued pursuant to such appli..
cations. Under State law no right to the actual
present use '0' water may he acquired unt;' after
issuance of permit. Nevertheless, firm 40-year con-
tracts have been executed, including those now
being litigated, for the delivery of water without
reference to State 'ow precisely os though the
United States had unqualified ownership of both
works and water.

The defects of Part A of the contract concerning
water delivery are therefore (a) no assurance of
permanent water service; (b] no assurance of

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e"" Juol repayment of construction costs; ~ ,im-
plication of perpetual Federal control of the proj-
ect; and (d) implication of Federal ownership and
control of project water.

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Part B of the contract consists in a true repayment con-
tract for the return to the Federal treasury within a period
of 40 years in annual installments, without interest. of
Federal funds expended in the construction of a distribu-
tion system for the purpose of enabling the contracting
district to utilize the water delivered under Part A of the
contract and to apply that water to beneficial use within
the district. The two parts - A and B - of the contract
are therefore in the strongest contrast with each other.
Inherent in the combination is an inference that w~ter will
be delivered after the 40-year period provided the parties
can agree on the terms. but this is an inference only.

Federal law requires that "no water shall be delivered"
from a project until e repayment contract shall be exe-
cuted with an organi..tion formed under State law for the
repayment of a proportion of the cost of the project allo-
cated to irrigation and to be returned by the water users.
Section 9(d) of the act in terms unequivocally so requires.
The 9(e) contract before the Court in the Ivanhoe case
evidentfy is not a repayment contract, and clearly is not
designed for that purpose. The question then arises, "What
purpose was Section 9(eJ designed to serve?"

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It is believed the .nswer can be found in the report of
the Special Repayment Commission (House Document No.
673, 75th Congress, 3d Session) entitled "Repayment of
the Construction Costs of Federal and Indian Reclamation
Projects." The Reclamation Project Act of 1939 was en.
acted responsive to this report. At page 20 of the report
under the heading "Projects Requiring Special Consider-
ation" several projects are discussed which the Commission
finds require special consideration: and at page 38 of the
report it is recommended that the Secretary of the interior
arrange for a special study of such projects, and concludes
"During the period of this work water should be delivered
on a rental basis, the repayment of construction charges
s~ould stand suspended and a consideration of the ques-
t,on of further ,ayments should be postponed until the
establishment 0 a program as a result of such studies."
8ased on these highly revealing portions of the report of
the Repayment Commis.s.ion, it is. my c.onsidered opinion
that resort to a contract under Section 9(eJ is authorized
only in the event that due to special considerations it is
impracticable to execute a repayment contract and resort
is had to water delivery under Section 9(eJ to remain in
effect until a repayment contract can be negotiated and
e.xecuted pursuant to the provisions of Section 9{d} or Sec-
tion 7(a) of the Act. The latter subsection provides for a

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