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&. . - . n 0 215 ~strict literal sense without regard to its .A.xt. It has In th'ose ~io~s the traditional c?ncept o~ re~aymen'i' frequently been stated in discussions of this ~ection that contracts was .dlrectly involve~. W,thout gOing Into un- there is nothing in the legislative history that gives any necessary detad, it will be sufficl".nt to state a' fundamental indication whatever of the intent of Congress in its enact- feature of the Federal reclamatIon laws always .has been ment. However, I do not believe that such is the case. On that costs allocated to irrigation and to be repaId by the the contrary, I believe that there is an authoritative source water users is without interest, and such re"ayment can which enables an ascertainment of the general circum- only be accomplished by means of contracts between the stances under which resort to the section is authorized. United States and water user organizations, similar to irri. This particular point will be referred to later. gations districts, for the repayment by each such organi. ' zation of its proper pro...ata share of the project cost allocated to irrigation and to be returned to the Federal treasury by the w4ter users, without interest, over a max- imum period of 40 years. Under these decisions it is held that in develop- Ing and operating such projects the United States must acquire such' water rights as are necessarY pursuant to State law; that the United States is a mere carrier and distribuflOr of the water and that Its primary interest is the recovery of the reim. bursable project costs; and that water rights ac- quired by the United States for Irrigation purposes are held in effect In trust for project beneficiaries who on applying the water to beneficial use will acquire vesterl rights thereto appurtenant tothe land irrigated in accordance with State law. The Reclamation Project Act of 1939 r..states this tra- ditional concept in Section 9(d) with the added provision that in addition to the 40-year repayment period, in the discretion of the Secretary a maximum development period of 10 years may be 4dded. The purported primary objective of the Reclamation Project Act is stated in' the title to be the formulation of a variable payment plan to provide solutions for a rium. ber of aggravated repayment problems which h4d arisen under numerous repayment contracts throughout the West. In explaining the bill before Congressional committees administration leaders unequivocally stated that there was nothing in the bill at variance with the traditional concep- tion of repayment contracts. The variable payment plan is set forth in Sections 3 and 4 of the Act, but other sections relating to repayment contracts overshadow in importance the provisions relating to the variable payment plan. These sections are Sections 7 and 9. Both sections contain a number of subsections; Section 9(d) contains a faithful restatement of the tradi. tional concept of repayment contracts; but S;ction 9(?) is a sharp departure from all past precedent, If taken In a 6 As applied in the contract program of the United States Bureau of Reclaniation in California, Section 9(e) contracts are resorted to in substitution for repayment contracts. An essential question in the pending validation suits is whether this substitution is valid under Federal and State law. As a, preliminary to a consider4tion of this question, 1 do not believe it is possible to give consideration to the question of validity of the 9(e) contracts from the standpoint of Federal law apart from State law or vice versa, but rather that the problem must be arproached on the basis of a coordination of both Federa and State law. This I believe to be inherently true. The contract before the court in the Ivanhoe case is typical of the numerous contracts which have been exe- cuted as a' part of the contract program of the U. S. Bureau of Reclamation for the Central Valley Project. It contains two parts - A and B. Part A comprises the 9(e) contract, so-called, and is essentially a 40-yeer term contract for water delivery at prescribed annual rates. Part B is a tra- ditional repayment contract for return to the Federal treasury of the construction costs of a distribution system to enable the district to utilize the water to be delivered under Part A. In Part A there is no breekdown or explena- tion of the items entering into the rete base and no mention of conswuction charges or. construction cost com- ponent in the rates. The contrect expresses no obligation to apply a construction cost component of the retes to repayment of construction charges ellocated to irrigation and to be returned by the water users. Neither does the contract contein eny reference to delivery of water after expiration of the term of the contract - it is completely silent regarding this subject. It is clear however, that full repayment of a definite proportion of the costs of the project allocated to irrigation end to be returned by the weter users is not contemplated by Part A of the contract within the 4O-yeer period. How then is repayment of those costs to be accomplished under contracts of this nature? rhe answer os given by concerned federal authorities is that repayment will be accomplished within the useful life of the project by a successIon of term contracts for delivery of both water and power 7