the validity of it," and stating, further, "that since matters are now apparently progressing towards the early consummation of definite contracts covering these matters, Arizona's right to compact in relation thereto would be made valueless, and in that situation her only available recourse is to the courts." (Italics supplied.) That was nearly six months ago. But to make plain to you that I had no intention of foreclosing Arizona, I forwarded to you on December 2 a transcript of the record of the November 12 hearing, which closed with my following statement to the representatives present: "I propose not to complete these contracts before the second week in December, in the hope that we can bring Arizona into the picture, and I assign each of you and all of those who represent you as agents to make this, if possible, a 7-State compact." I carried out that pledge. I waited not only until the second week in December but until the last week in February before initiating the contract negotiations, and even that step was not taken until the department had taken the initiative in attempting to give the States an opportunity to settle this question by compact, by arranging an interstate conference in January and February (my suggestions of earlier dates having proved inconvenient for the States), which convened at Reno and adjourned to Phoenix. I specifically advised you that the field for agreement on power as well as water was wide open. That conference, like its predecessors, was fruitless. I do not wish you to feel that I attach any blame to Arizona for the outcome of this conference, nor of any others which have been held; I only want you to quite clearly understand that I have been patient and have borne the responsiblity for delay for many months in order to give your State a chance to work out its problems. Negotiations of the power contracts in Los Angeles consumed two months, a minimum time for contracts of this magnitude, as I think you will agree. Nevertheless, because of the delay in initiating these negotiations, occasioned by the keeping of my promise to the States at the November hearing that I would give them a chance to meet, the closing of the Los Angeles negotiations could not be effected until dangerously near the end of the present session of Congress. The contracts were concluded, as you were notified on October 23 that they would be; I signed them on April 28; and Congress has been requested for an appropriation. I have acted; but not until 16 months after the last date upon which the States, under section 8 (b) could have foreclosed the Secretary from acting. The success of this whole project means too much to the whole southwest, including very particularly your own State, to justify postponing this flood-control and irrigation measure another year to give opportunity for more interstate conferences.

I have spoken before of the fact that Arizona, although invited, has never come to the conference table to help me in working out these power problems and has never made an application for power. Yet a large part of the time consumed at Los Angeles was required by the insistence of this department on inclusion in the contracts of clauses protecting the future of Arizona and Nevada. Although your State has never asked for any power, you were allocated 18 per cent of the firm energy, or in excess of 100,000 horsepower, and, unlike all the other contractors, Arizona and Nevada are each given an allocation which does not require their firm obligation for 50 years, but gives them a 50-year option in the form of a right to contract on certain notice for blocks of power, as power is needed, and to relinquish it on like notice when the need ceases, without prejudice to the right to again take the power when wanted; and this process can be repeated indefinitely. But this is not the only contract provision in your favor. You will recall that section 5 (c) of this act permits the States of Arizona, California, and Nevada to contract for energy for ure within the State on a preferential status within six months after notice from the Secretary. I might have started that period of limitation running against your State by promulgating notice at any time. Instead, I did not do so until the contracts were actually signed, after I had required incorporation in them of a specific recognition of this 6-month privilege.

Before closing I think it is desirable that you have a clear picture of the revenue situation as it affects your State. There is no mandate in the act that I exact any sums from the power purchasers for the benefit of Arizona and Nevada. I refer you to the opinion of the Attorney General of the United States, rendered December 26, 1929, stating as follows:

"Manifestly, it was not the intention of Congress that section 4 (b) should require the Secretary of the Interior to make provision by his contracts to insure any payments to those States during the 50-year period. This was recognized in the debates on the bill."

Nevertheless, I have succeeded in negotiating contracts under which firm energy is sold at a price in excess of that for which the power can now be generated by the contracting parties by steam, and succeeded in selling secondary energy at a favorable price. In consequence, the revenues accruing to your State, if these prices are maintained when the readjustment periods required by the act are reached (and, of course, I can make no guarantee that such prices will be maintained, as the act requires that they must be readjusted upward or downward at that time to accord with competitive prices at distributing points or competitive centers), during the 50-year period of amortization, will range from $22,000,000 to $31,000,000, depending on the amount of secondary energy utilized. In addition, an amount ranging between $29,000,000 and $66,000,000, depending on the same factors, will have been paid into the Colorado River Dam fund for other developments on the river, in which your State will have a share. In other words, your State, without guaranteeing a penny toward the success of this project, is handed a sum ranging from $350,000 to upwards of $600,000 per year and given a free option on over 100,000 horsepower. The share of the firm

power given Arizona and Nevada together is 36 per cent. Compare your position, as stated above, with that of the Metropolitan Water District, which pays for an exactly equivalent amount (36 per cent) about $118,000,000 over the period of its contract, under a firm obligation which must be fulfilled whether the power is needed or not. These privileges in favor of your State mean a corresponding assumption of burdens by the California purchasers of power; and it would have been impossible to finance this project as a power project, pure and simple, under such burdens. It is a water problem in its various phases-flood control, the necessity for domestic water on the Southern California plain, and the necessity for irrigation-that has made it possible for these purchasers to assume this burden. Remember that we are transmitting power 250 miles and selling it over an oil and gas field; remember also that the quantity of fuel required per kilowatt-hour has gone down from the equivalent of 3.2 pounds of coal in 1919 to 1.76 pounds in 1928, and that even to-day the over-all efficiency of steam-electrical units is only about 27 per cent. Recollection of these facts may help your people to recall that this is a water project and not a power project. Power is being sold to build the dam; the dam is not being built to sell power.

Finally, one word about the price being charged to the Metropolitan Water District for storage of water. That price is 25 cents per acre-foot, plus the value of power lost if the water is taken out above the dam. From past communications from your commission, I gather that you want the price fixed at a higher rate so that the excess revenues coming to Arizona will be increased. I doubt whether your people have a proper vision of what they are doing when they make that request. The act provides that no charge shall be made for water furnished to Imperial and Coachella Valleys. But the act gives your State no such protection. It is in exactly the same status as the Metropolitan Water District. It is left to the discretion of the Secretary to determine the charge against you, as also against that district. As I understand it, you are asking upward of 3,000,000 acre-feet of main-stream water. Your State will some day come to the Secretary of the Interior for a contract for delivery of your water, just as the Metropolitan Water District has done. If you receive 3,000,000 acre-feet and are charged what we are charging the district for water delivered below the dam, 25 cents per acre-foot, the charge will be $750,000 per year. If we charge you what you have asked us to charge the district, that is, from $1 up, the charge against you will be upwards of $3,000,000 per year. Which of these two precedents do you wish established? Which shall pay the way: Power, which you do not want, or water, which you do? I think that consideration of these questions may help you in coming to the conclusion that I have given some thought to the future of your State.

In closing this somewhat direct statement to you I wish to reiterate my appreciation of your personal grasp of the entire situation and of the capacity shown by the members of your commission. There are, however, a number of facts which it is about time that the people of your State should know, in view of your commission's closing statement that it hopes that "when the facts of the controversy are brought to the attention of Congress, the request for this appropriation will be denied."

Very truly yours,

RAY LYMAN WILBUR,

Secretary.

VII. OPINIONS ON QUESTIONS OF LAW IN CHRONOLOGICAL ORDER

47. Opinion of the Attorney General, December 26, 1929.

48. Opinion of the Solicitor of the Department of the Interior, Jan

uary 17, 1930.

49. Opinion of the Attorney General, June 9, 1930.

50. Opinion of the Comptroller General, October 10, 1930.

51. Opinion of the United States Supreme Court in the case of

Arizona v. California et al.

609