Reference in the Text. The Federal Water Power Act, referred to in the text, is the

Power 11-20
Contracts 13
General 11
Preference 12

Renewals 14
Rights-of-way 15

Water 1-10

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Act of June 10, 1920, 41 Stat. 1063. The Act appears herein in chronological order.

Apportionment 1

California allocation contract

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1. Water-Apportionment

In passing the Boulder Canyon Project Act, Congress intended to, as shown clearly by the legislative history, and did, create its own comprehensive scheme for the apportionment among California, Arizona, and Nevada of the Lower Basin's share of the mainstream waters of the Colorado River, leaving each State her own tributaries. It decided that a fair division of the first 7,500,000 acre-feet of such mainstream waters would give 4,400,000 acre-feet to California, 2,800,000 to Arizona, and 300,000 to Nevada, and that Arizona and California should each get one-half of any surplus. Congress gave the Secretary of the Interior adequate authority to accomplish this division by giving him power to make contracts for the delivery of water and by providing that no person could have water without contract. The limitation of California to 4,400,000 acre-feet, together with the Secretary's contracts with Arizona for 2.800,000 acre-feet and with Nevada for 300,000 acre-feet, effect a valid apportionment in keeping with the Congressional plan. Arizona v. California, 373 U.S. 546, 564-90, 592 (1963); Decree, 376 U.S. 340 (1964).

a

All uses of mainstream Colorado River water within a Lower Basin State are to be charged against that State's apportionment, which, of course, includes uses by the United States. Arizona v. California, 373 U.S. 546, 601 (1963); Decree, 376 U.S. 340, 346 (1964).

No matter what waters are apportioned by the Colorado River Compact between the Upper and Lower Basins, the negotiations between the States and the congressional debate leading to the passage of the Boulder Canyon Project Act show that the water apportioned therein among the Lower

Basin States is mainstream water, reserving to each State the exclusive use of the waters of her own tributaries. Arizona v. California, 373 U.S. 546, 567-75 (1963).

The Secretary may charge Arizona and Nevada with diversions from the mainstream of the Colorado River anywhere below Lee Ferry, whether above or below Hoover Dam. Arizona v. California, 373 U.S. 546, 590-91 (1963).

In case of a shortage of mainstream water in the Lower Basin, the Secretary is not bound to require a pro rata sharing of shortages among the Lower Basin States. He must follow the standards set out in the Act; but unless and until Congress enlarges or reduces the Secretary's power, he is free to choose among the recognized methods of apportionment or to devise reasonable methods of his own, since Congress has given him full power to control, manage and operate the Government's Colorado River works and to make contracts for the sale and delivery of water on such terms as are not prohibited by the Act. Arizona v. California, 373 U.S. 546, 592-94 (1963).

2. Rights of United States

Under its broad powers to regulate navigable waters under the Commerce Clause and to regulate government lands under Art. IV, 3, of the Constitution, the United States has power to reserve water rights for its reservations and its property. Arizona v. California, 373 U.S. 546, 597-98 (1963).

The United States intended to reserve water sufficient for the future requirements of the Lake Mead National Recreational Area, the Havasu Lake National Wildlife Refuge, the Imperial National Wildlife Refuge and the Gila National Forest. Arizona v. California, 373 U.S. 546, 601 (1963); Decree, 376 U.S. 340, 345-46 (1964).

When the United States created the Chemehuevi, Cocopah, Yuma, Colorado River and Fort Mohave Indian Reservations in Arizona, California and Nevada, or added to them, whether by Act of Congress or by Executive Order, it reserved not only the land but also the use of enough water from the Colorado River to irrigate the irrigable portions of the reserved lands. Enough water was intended to be reserved to irrigate, now or in the future, all the practicably irrigable acreage on the reservations, which the Master found to be about 1,000,000 acre-feet of water to be used on about

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135,000 irrigable acres of land. These water rights, having vested before the Act became effective in 1929, are "present perfected rights" and as such are entitled to priority under the Act. Arizona v. California, 373 U.S. 546, 595-601 (1963); Decree, 376 U.S. 340, 343-45 (1964).

The United States is not entitled to the use, without charge against its consumption, of any Colorado River waters that would have been wasted but for salvage by the Government on its wildlife preserves. Arizona v. California, 373 U.S. 546, 601 (1963).

3. Rights of others

The reservation of Colorado River water for Boulder City, as authorized by the Boulder City Act of 1958, has a priority date of May 15, 1931. Decree entered in Arizona v. California, 376 U.S. 340, 346 (1964).

4. Contracts with Secretary

The power of the Secretary of the Interior to apportion and distribute Colorado River water among and within the Lower Basin States through the execution of contracts for its use is subject to a number of standards and limits in the Boulder Canyon Project Act. These include (1) the limitation in § 4(a) of 4,400,000 acre-feet on California's consumptive uses out of the first 7,500,000 acre-feet of mainstream water, leaving 3,100,000 acre-feet which the Secretary properly has apportioned by contract in the quantities of 300,000 acre-feet to Nevada and 2,800,000 to Arizona; (2) thë provision in § 6 setting out in order the purposes for which the Secretary must use the dam and reservoir; (3) the § 4(b) requirement for revenue provisions in the contracts adequate to ensure the recovery of the expenses of construction, operation and maintenance of the dam and other works within 50 years after their construction; (4) the directive in § 5 that water contracts for irrigation and domestic use shall be only for "permanent service"; (5) the recognition given in § 8(a) to the Colorado River Compact, which means that the Secretary and his permittees, licensees and contractees can do nothing to upset or encroach on the Compact's allocation of water between the Upper and Lower Basins; (6) the application by 14 of general reclamation law except as the Act otherwise provides; and (7) the protection given in § 6 to "present perfected rights." Arizona v. California, 373 U.S. 546, 583-85 (1963).

In choosing between users within each State and in settling the terms of his contracts for the use of stored Colorado River water, the Secretary is not bound, either by

section 18 of the Boulder Canyon Project Act, or by section 8 of the Reclamation Act, to follow State law. Although section 18 allows the States to do things not inconsistent with the Project Act or with Federal control of the river, as for example, regulation of the use of tributary water and protec tion of present perfected rights, the general saving language of section 18 cannot bind the Secretary by State law and thereby nullify the contract power expressly conferred upon him by section 5. Arizona v. California, 373 U.S. 546, 580-90 (1963).

The fact that the Secretary has made a contract directly with the State of Nevada, through her Colorado River Commission, for the delivery of water does not impair the Secretary's power to require Nevada water users, other than the State, to make further contracts. Arizona v. California, 373 U.S. 546, 591-92 (1963).

Under the Supreme Court decision in Arizona v. California, 373 U.S. 546, 591–2 (1963), and in the absence of specific Federal legislation providing otherwise, neither the Colorado River Commission of Nevada nor any other State agency under the contract of March 30, 1942, as amended, with the United States for the delivery to the State of not to exceed 300,000 acre-feet per year from storage in Lake Mead has authority to grant permits or to approve permits to appropriate stored water from Lake Mead. Water users in Nevada must enter into contracts directly with the United States. Letter of Assistant Secretary Holum to Mr. Ivan P. Head, December 30, 1963.

The action of the Secretary of the Interior in reducing by 10 percent the amount of Colorado River water which an irrigation district might order during the balance of 1964, and at the same time providing that additional water would be made available to meet such individual hardship cases as might develop, was within the Secretary's statutory authority and not a violation of the Secretary's contract with the district to deliver, within stated amounts, so much Colorado River water "as may reasonably be required and beneficially used" by the district. Yuma Mesa Irr. and Drainage Dist. v. Udall, 253 F. Supp. 909 (D. D.C. 1966).

River to which the State of California may be entitled under the Colorado River Compact, the Boulder Canyon Project Act, and other applicable legislation; and a bill of complaint to enjoin the District from entering into the compact will be dismissed. The contract is a necessary step of all parties to secure the benefit of retained or stored water, to compromise disputes over water rights, and to serve the common good. Greeson, et al. v. Imperial Irr. Dist., et al., 59 F. 2d 529 (9th Cir. 1932).

6. Municipal supplies

The Secretary of the Interior has authority under sections 1 and 5 of the Boulder Canyon Project Act to provide increased capacity in the All-American Canal to carry water to the City of San Diego for the beneficial consumptive use of the city. Solicitor Margold Opinion, 54 I.D. 414 (1934). 11. Power-General

The fixing of financial requirements and rigid examination of the financial status of competing bidders for power is not only within the Secretary's discretion but is an absolute obligation resting upon him. Solicitor Finney Opinion, 53 I.D. 1 (1930).

The Secretary is not required to accept the highest bid if that bid is in excess of the price which can be realized for the power under competitive conditions at competitive centers. The selling standard is to be "reasonable returns," not "all the traffic will bear." The phrase "shall be made with a view to obtaining reasonable returns" was in fact a specific amendment to this section (Cong. Rec. Senate, Dec. 14, 1928, p. 618), and clearly indicates the selling basis deemed to be feasible and most in line with public interest and the equitable distribution of benefits of Boulder Dam power. If the bidder can not sell his power in competition with other sources he is not a desirable source for reimbursement of the Federal expenditure. Solicitor Finney Opinion, 53 I.D. 1 (1930).

The term "public interest," used in the first paragraph of subsection 5(c) is the Government's responsibility, financial and otherwise, to all the people of the United States for the greatest good to be derived from this project; it excludes confinement of the benefits of Boulder Dam power to one locality out of the many which comprise the "region" capable of service. It is a source of broad discretionary power in the Secretary. The "public interest" requires, first, financial security of the United States, and, secondly, equality of access to Boulder Dam power by areas composing the region in proportion to the needs of the applicants. The allocation of power passes from the

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realm of the Secretary's discretion into the area of rigid legal rights only after apportionment among the applicants whose demands for power are equally consistent with the public interest. Solicitor Finney Opinion, 53 I.D. 1 (1930).

Public interest includes the necessity for making a good business contract which will guarantee the return of the Federal investment as required by section 4(b). The primary public interest is in the soundness of the contracts and the solvency of the contractor, not in the corporate or municipal character of that contractor. All preferences are subordinate to this public interest. Solicitor Finney Opinion, 53 I.D. 1 (1930). 12. -Preference

The preference provisions of section 5 of the Flood Control Act of 1944 must be read in pari materia with the preference provisions of section 5(c) of the Boulder Canyon Project Act (43 U.S.C. §617d(c)), the Tennessee Valley Authority Act (16 U.S.C. §831k), and Section 4 of the Bonneville Project Act (16 U.S.C. §832c (d)). 41 Op. Atty Gen. 236, 245 (1955), in re disposition of power from Clark Hill reservoir project.

Concerning the question whether a municipality or a State has a preference for power which it proposes to sell outside its boundaries as against a bid for power by a privately-owned public utility proposing to sell in the same area outside the boundaries, the "preference" of the municipality is a preference in consumptive right, not in merchandising advantage. Outside its own borders a State or municipal corporation, reselling power, is on a parity with any other public utility selling in that territory. If it seeks to elect, on behalf of consumers who are not its citizens, whether those consumers shall buy from it or from another company, its decision has not the dignity of a "preference" within the policy of the Federal Water Power Act (sec. 7), but has the status of a competitive offer. Solicitor Finney Opinion, 53 I.D. 1 (1930).

The States of Nevada, Arizona, and California can not claim two separate independent preference rights, one under the Federal Water Power Act (section 7), and another under the Boulder Canyon Project Act. The importance of the preference language of the project act lies in its distinction between States and municipalities, not in any distinction as to place of use. The special reference to the preference of the three lower basin States in the project act preserves the rights of Arizona and Nevada as superior to those of Los Angeles, provided both should meet the conditions of the Federal water power act. But to indicate that no greater concession from the policy of the

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Federal water power act was intended, the restriction "for use within the State" was added. No distinction between the city of Los Angeles on the one hand, and other municipalities on the other, can be recognized. Solicitor Finney Opinion, 53 I.D. 1 (1930).

It appears to have been the intent of the language of section 5 (c) following the word "except" to convey a limited preference upon the three lower basin States. The preference of a State over a municipality given by the project act is intended to apply to these three States only. Solicitor Finney Opinion, 53 I.D. 1 (1930).

A State, and a municipality of another State, both presenting applications under section 7 of the Federal Water Power Act, stand on a basis of equality. If the conflict is between applications of a State and a municipality of that same State, the right of the State is superior. If the conflict is between a State and a municipality foreign to it, the Secretary may make an equitable allocation between them in accordance with the public interest and in accordance with what, in his discretion, appears the best method of conserving and utilizing the water resources of the region. Solicitor Finney Opinion, 53 I.D. 1 (1930).

Within 6 months a State presenting plans equally well adapted as those of a competing municipality (outside the State) and equally consistent with the public interest, might claim power in preference to the municipality. After six months the State reverts to the parity with outside municipalities established by the Federal Water Power Act. Solicitor Finney Opinion, 53 I.D. 1 (1930).

A preference right itself is not assignable either before or after the execution of a contract by the State. A contract obtained in exercise of this preference right is assignable, subject to all restrictions and conditions contained in the original contract, and without diminution of the State's liability to the United States and without waiver of the requirement of financial and legal capacity of the assignee. Solicitor Finney Opinion, 53 I.D. 1 (1930).

13.-Contracts

The Secretary of the Interior may not discriminate against the California Electric Power Company in the sale of power from Boulder Dam in such matters as granting a "load-building period” and lower rates for "secondary power." California Electric Power Co. v. United States, 60 F. Supp. 344, 104 Ct. Cl. 289 (1945).

The Citizens Utilities Company made application to purchase 5,000 kilowatts of

electrical energy from the power plant at Boulder Dam for use in Arizona, and the Department, citing the contract of April 26, 1930, with the City of Los Angeles and the Southern California Edison Co. for lease of power privileges at Boulder Dam, held that the States of Arizona or Nevada must themselves contract for the Boulder Dam power allotted to them, and that any such contract made by the State of Arizona would not constitute a ratification by Arizona of the Colorado River compact, but that Arizona "would be bound by the Compact for the duration of the power contract" (Citing Sec. 8a of the Boulder Canyon Project Act.) It was also held that secondary energy which is not used by the Metropolitan Water District or the lessees and unused firm energy allocated to the district which is not taken by the lessees, may be disposed of to the Citizens Utilities Company for use in the State of Arizona, and that such energy would not constitute a part of the allotment of firm energy made to the State of Arizona. Solicitor's Opinion, M-29291 (July 13, 1937).

In view of the sufficiency of the city and company contracts to meet all requirements of the Boulder Canyon Act, the power contract executed with the Metropolitan Water District is valid notwithstanding the fact the district has not yet voted bonds to provide funds to build the aqueduct on which the power would be used. Even if the aqueduct financing were construed as being a prerequisite, the Secretary's reservation of energy for the district is within his authority under the second paragraph of section 5 (c) of the Boulder Canyon Project Act. 36 Op. Atty. Gen. 270 (1930). 14. Renewals

Citizens Utilities Company and California Pacific Utilities Company have a statutory right under section 5(b) of the Boulder Canyon Project Act to a renewal of their contract to purchase Hoover Dam energy surplus to the needs of the Metropolitan Water District, as against the Government's contention that the statutory right of renewal extends only to those contractors who, in effect, underwrote the project by undertaking to purchase project electricity at a time when such promises were a condition precedent to the appropriation of money for the project, and even though the Government in the meantime had entered into contracts purporting to sell the energy to which plaintiff's right of renewal would extend. Citizens Utilities Co. v. United States, 137 Ct. Cl. 547, 149 F. Supp. 158 (1957), cert. denied, 355 U.S. 892 (1957).