referred to as the reclamation law: Provided, however, That the said Secretary shall so fix annual installments as to provide for complete repayment to the United States of the total construction, operation, and maintenance charges within twenty years from and after he completion of said canals and appurtenant structures. SEC. 2. That the Secretary of the Interior is empowered to receive applications for the right to use for the generation of electrical power portions of the water discharged from said reservoir and avaiable for the generation of electrical power at said dam, and, after full hearing of all concerned, to allocate to such applicants such portions of such power privileges as in his judgment may be consistent with an equitable distribution thereof among the various interested States and among the various interested communities in each State. Subject to such distribution the said Secretary shall give preference to applications made by political subdivisions, provided the plans for the same are deemed by said Secretary equally well adapted, or shall within a reasonable time to be fixed by the said Secretary be made equally well adapted, to utilize such power privileges in the public interest; and as between other applicants he may give preference to the applicant the plans of which he finds and determines are best adapted to utilize such power privileges in the public interest, if he be satisfied as to the ability of the applicant to carry out such plans: Provided, however, That no application of a political subdivision for an allocation of power privileges shall be denied or another application in conflict therewith be granted on the ground that the bond issue of such political subdivision, necessary to enable the applicant to utilize the allocation of power privileges applied for, has not been authorized or marketed, until after a reasonable opportunity has been given to such applicant to have such bond issue authorized and marketed. SEC. 3. That the said Secretary is authorized to make leases of the power privileges so allocated, limited to fifty years, on such terms and under such general regulations as he may prescribe, and to fix what he may find to be a reasonable compensation therefor: Provided, That the compensation to be paid by each allottee shall include the payment to the United States of one-half of the total rentals prescribed by the said Secretary for the allotment, in five equal annual installments, of which the first one shall be paid within one year after such allotment and upon execution of the lease therefor, and one each year thereafter for four successive years. Upon or after the expiration of any such lease, or renewal thereof, the United States may take over the property of the lessee which is dependent for its usefulness upon the continuation of the lease, and if it shall do so shall pay to the lessee its net investment in the property taken, not exceeding the fair value thereof at the time it is so taken, with reasonable severance damages to property of the lessee not taken. Such net investment or fair value and damages, if not agreed upon, shall be fixed by a proceeding in equity in the district court of the United States in the district in which such property, or some part thereof, is situated. If the United States does not exercise its right to take over such property, the Secretary of the Interior may renew the said lease for not more than fifty years, or, in his discretion, may make a lease under the terms hereof to a new lessee, upon the condition that such new lessee shall pay to the former lessee such net investment and damages determined as aforesaid. If such property is not taken over by the United States, or such new lessee, or such lease renewed, the said Secretary shall extend such lease from year to year until such property is so taken over or such lease renewed. Compensation for leases, renewals, extensions, and new leases shall be fixed with a view to the United States receiving such payments and revenue therefrom, as, with the payments and revenue from rights disposed of under section 4 hereof, will cover all expenses of operating and maintaining the said dam and incidental works, and in addition thereto reimburse the United States for the entire cost of such dam and incidental works, including the acquisition of necessary lands and rights of way for said reservoir and incidental works, together with interest at the rate of 4 per centum per annum, within a period of not to exceed 50 years from completion thereof. SEC. 4. That any such political subdivision, instead of entering into a lease, may, as the consideration for such power privileges as may be allocated to it as above provided, pay to the United States in annual installments, during such period not exceeding 25 years as may be agreed upon, a total sum which shall bear the same proportion to the cost of constructing such dam and incidental works and acquiring lands and rights of way for said reservoir and incidental works as the water allocated to such political subdivision bears to all the water available for the generation of power at said dam, together with a like proportion of the annual expense of operating and maintaining such dam and incidental works, and interest at the rate of 4 per centum per annum on the unpaid portion of such proportionate part of such cost. Any or all of the installments of such proportionate part of such cost may be paid in advance: Provided, That, in any event, such political subdivision shall pay to the United States within five years from and after the making of such allotment one-half of the total amount to be paid by such political subdivision under this section. The right to use for the generation of electrical power the water so allocated shall continue after the completion of the payment of such proportionate part of such cost so long as such political subdivision shall pay annually its proportionate part of such expense of operating and maintaining such dam and incidental works. The said Secretary is authorized on such terms and under such general regulations as he may prescribe to make any contracts which may be necessary to carry into effect the provisions of this section. The use is hereby authorized of such public and reserved lands of the United States as the said Secretary shall determine to be necessary or convenient for the construction, operation, and maintenance of power plants, works, and transmission lines under the allocations in this act provided for. SEC. 5. The title to canals and incidental works in connection therewith shall remain in the United States until such time as the United States shall have been reimbursed for the cost thereof, together with expenses incurred in their operation and maintenance, whereupon the said Secretary shall transfer title to such canals and incidental works to the districts or other agencies or owners of land paying therefor: Provided, That the right to develop power from the water in any canal constructed under this act, at points along such canal, shall belong to the districts, communities, and lands which contribute to the construction costs of such canal and appurtenant structures, in proportion to their contributions: And provided further, That so long as any money is owing to the United States on account of the construction of said canals and appurtenant structures, the net proceeds from any power development in said canals shall be applied upon such construction charges and covered into the Treasury of the United States, and credited to the various districts, communities, and lands in accordance with their interests in said canals. SEC. 6. That no part of the cost of the construction of said dam or incidental works, or the acquisition of lands or rights of way for said reservoir or incidental works, shall be charged against any lands to be irrigated therefrom. SEC. 7. That the dam and reservoir provided for by section 1 hereof shall be used first, for river regulation and flood control; second, for domestic and irrigation use; and third, for power. The title to said dam and incidental works and reservior created thereby shall forever remain in the United States and the United States shall always control, manage, and operate the same. SEC. 8. (a) That the United States, in managing and operating the dam, canals, and other works herein authorized, including the delivery of water for the generation of power, irrigation, or other uses, shall observe and be subject to and controlled by the Colorado River Compact as signed at Santa Fe, New Mexico, on November 24, 1922, and particularly described in section 13 herein. (b) All rights of the United States in or to waters of the Colorado River howsoever acquired, as well as the rights hereafter arising of those claiming under the United States, shall be subject to and controlled by said compact. (c) Also all patents, grants, contracts, concessions, leases, permits, licenses, rights of way, or other privileges from the United States or under its authority, necessary or convenient for the use of waters of the Colorado River, or for the generation or transmission of hydroelectric power generated by means of the waters of said river, shall be upon the express condition and with the express covenant that the rights of the recipients or holders thereof to waters of the river, for the use of which the same is necessary, convenient, or incidental, shall likewise be subject to and controlled by said compact. (d) The conditions and covenants referred to herein shall be deemed to run with the land and water right, and shall attach as a matter of law, whether set out or referred to in the instrument evidencing any such patent, grant, contract, concession, lease, permit, license, right of way, or other privilege from the United States or under its authority, or not, and shall be deemed to be for the benefit of and be available to the States of Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming, and the users of water thereunder, by way of defense or otherwise, in any litigation respecting the waters of the Colorado River. SEC. 9. That all lands of the United States found by the Secretary of the Interior to be practicable of irrigation and reclamation by the irrigation works authorized by the terms of this act shall be withdrawn from public entry. Thereafter when such works shall have been so far constructed as to permit the delivery of water to any portion of said withdrawn lands, which the Secretary of the Interior shall deem proper to open for entry, such portion of said lands shall be opened to entry in tracts varying in size but not exceeding one hundred and sixty acres, as may be determined by the Secretary of the Interior, in accordance with the provisions of the reclamation law. and any such entryman shall pay the proportionate share, as determined by the said Secretary, or the construction cost of the canal or canals and appurtenant structures constructed for the irrigation and reclamation of said lands, as provided for by this act, such construction cost to be paid in such installments and at such times as may be specified by the Secretary of the Interior, in accordance with the provisions of the said reclamation law; Provided, That all persons who have served in the United States Army, Navy, or Marine Corps during the war with Germany, the war with Spain, or in the suppression of the insurrection of the Philippines, and who have been honorably separated or discharged therefrom or placed in the Regular Army or Navy Reserve, shall have the exclusive preference right for a period of three months to enter said lands; and also, so far as practicable, preference shall be given to said persons in all construction work authorized by this act: Provided, That in the event such an entry shall be relinquished at any time prior to actual residence upon the land by the entryman for not less than one year, lands so relinquished shall not be subject to entry for a period of sixty days after the filing and notation of the relinquishment in the local land office, and after the expiration of said sixty-day period such lands shall be open to entry, subject to the preference in this section provided. SEC. 10. That for the purpose of constructing said dam and incidental works, canals, and appurtenant structures and acquiring lands and rights of way therefor there is hereby autthorized to be appropriated from any moneys in the Treasury not otherwise appropriated such amounts as may be necessary to carry out the purposes of this act, nat exceeding in the aggregate the sum of $70,000,000, to be appropriated from time to time, upon estimates made by the Secretary of the Interior, and transferred to a subfund of the reclamation fund established under said reclamation law and to be designated "Boulder Dam project fund." All moneys received from the allocation of power rights or privileges at said dam or moneys received under contracts respecting the construction of canals and not used for construction purposes shall be covered into the Treasury of the United States. Moneys thus received during the course of construction are hereby reappropriated for said construction purposes for which said moneys were received, and moneys received on account of expenses of operation are hereby reappropriated for such purposes. SEC. 11. That nothing in this act shall be construed as modifying in any manner the existing contract, dated October 23, 1918, between the United States and Imperial irrigation district, providing for a connection with Laguna Dam; but the Secretary of the Interior is authorized to modify the said contract, with the consent of the said district, or to enter into a new contract or contracts with the said district or any private corporation or any corporation subsidiary to said district, in order to provide for the construction, in accodance with the terms of this act, of a canal, or canals, and appurtenant structures, adequate to serve the lands of said district, and other lands that may be served thereby, and to equitably allocate the costs thereof. SEC. 12. "Political subdivision " or "political subdivisions" as used herein shall be understood to include any State, irrigation, or other district, municipality, or other governmental organization. "Net investment" as used herein shall be understood to mean net investment" as defined by the Federal water power act, plus such portions of annual or other payments as shall be used by the Secretary of the Interior for construction purposes or to amortize the cost of said dam, lands, rights of way, and incidental works, which portions of said annual or other payments are hereby declared to be capital investment. SEC. 13. The Colorado River compact signed by the commissioners of the States of Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming, and by Herbert Hoover, as the representative of the United States of America, at Santa Fe, New Mexico, November 24, 1922, pursuant to act of Congress approved August 19, 1921, entitled "An act to permit a compact or agreement between the States of Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming, respecting the disposition and apportionment of the waters of the Colorado River, and for other purposes,' is hereby approved by the Congress of the United States, and the provisions of the first paragraph of article 11 of the said Colorado River compact, making said compact binding and obligatory when it shall have been approved by the legislature of each of the signatory States, are hereby waived, and this approval shall become effective when by act or resolution of their respective legislatures at least six of the signatory States shall have approved or may hereafter approve said compact, and shall consent to such waiver. SEC. 14. This act shall be deemed a supplement to the reclamation law, which said reclamation law shall govern the construction, financing, and management of the works herein authorized, except as otherwise herein provided. The CHAIRMAN. This bill was referred to the Secretary of the Interior for a report on the 14th of January, and on the 18th the Secretary responded in a letter giving his opinion in a general way and in some detail on the especial features of the legislation. This bill was read at a previous meeting, and the letter, and without objection, it will be inserted in the record this morning without reading. (The letter of the Secretary of the Interior is printed here as follows:) Hon. ADDISON T. SMITH, DEPARTMENT OF THE INTERIOR, Chairman Committee on Irrigation and Reclamation, House of Representatives. MY DEAR MR. SMITH: I have received your letter of January 14 transmitting, with request for report, a copy of H. R. 6251, entitled "A bill to provide for the protection and development of the lower Colorado River Basin." This bill is identical with S. 1868, upon which report was made under date of January 12 to Hon. Chas. L. McNary, chairman of the Senate Committee on Irrigation and Reclamation. A copy of this report is herewith transmitted. Very truly yours, Hon. CHAS. L. MONARY, HUBERT WORK. DEPARTMENT OF THE INTERIOR, Chairman Committee on Irrigation and Reclamation, United States Senate. MY DEAR SENATOR MCNARY: I have received your letter of December 23 transmitting, with request for report, a copy of S. 1868, entitled "A bill to provide for the protection and development of the lower Colorado River Basin." Instead of discussing the provisions of this bill section by section, I desire to submit some suggestions regarding the policy and procedure to be followed in this development and the legislation required to secure the desired results. It is assumed that the dam and reservoir to be created are essentially those described in a report of the Bureau of Reclamation dated February 28, 1924, which proposes a dam 550 feet high and a reservoir to impound 26,000,000 acre-feet of water, and that the all-American canal for connecting the Colorado River with the Imperial and Coachella Valleys is substantially the one described in Senate Document No. 142 and in the report of the all-American Canal Board, published in 1920. It is my understanding that the primary purpose of this scheme is to regulate and control the flow of the river below the dam so as to lessen the menace from floods to low-lying land below; to increase the water supply for irrigation in seasons of dought and provide an adequate water supply at all seasons of the year for household, and industrial uses in growing cities and towns; and to generate electric energy both as a means of making this project a financially solvent undertaking and contributing to the general prosperity of the southwestern part of the country. The general plan and purpose of this measure has my support and I favor it being made a national undertaking, to be carried out and administered by the Federal Government. Interstate and international rights and interests involve the diversified benefits from the construction of these works, the waiting necessities of cities for increased water supplies, the large development of latent agricultural resources, the protection of these already developed and the immense industrial benefits which may come from the production of cheap power, which together appear to render the construction and subsequent control of these works a measure of such economic and social importance, that no agency but the Federal Government should be intrusted with the protection of rights or distribution of its opportunities. All uses can be coordinated and the fullest bene fits realized only by their centralized control. I shall therefore consider this development as including three features: (1) A dam approximately 550 feet high creating a reservoir holding 26,000,000 acre-feet of water. (2) Works for the generation of electric power. (3) An all-American canal starting at Laguna Dam and delivering water to the Imperial and Coachella Valley canals. The reservoir should be regulated, primarily to safeguard the valleys in Arizona and California, including Imperial Valley with its present extensive development from the destructive effect of large floods. Water levels in the reservoir would be raised during flood periods and lowered at other times, thus equalizing the discharge of the river below and securing a regulated flow for irrigation and power. The water so impounded should be sold to cities requiring it for domestic purposes and other municipal uses and to irrigation districts, like that of the Imperal Valley, desiring a complete or supplemental water supply under the provisions of the Warren Act, payment to be made for a definite volume of water each year. The electric energy generated should be sold to the highest and best bidders, with due regard to public interest, at the switchboard of the power plant. Contracts should not exceed 50 years in duration. Transmission of power and its distribution to be provided by the purchasers, Water supplied for domestic, industrial, or irrigation uses should be delivered at the dam, at points along the river agreed upon and at the terminal of the All-American canal. Prices for this water should be such as to at least repay all of the cost of operation and maintenance of the canals and an equitable part of the operating expenses of the dam. This with the revenues from power, will, we believe, repay the entire investment in this development, with 4 per cent interest. The money for this development should, I believe, be provided by a bond issue of the United States. It should be for a sum sufficient to provide for the construction of the dam, the power plant, and the all-American canal. An additional sum should be included in the authorization to pay interest on bonds sold during the period of construction, and until such time as the revenue will meet interest charges. Providing the money for this development through a special bond issue will obviate disturbance of the regular fiscal operations of the Government. It will obviate provision by the Budget for the money needed during construction. The bonds could be sold as money would be needed. Construction would extend over a period of between five and ten years if work were carried on at a rate to secure the greatest efficiency. In the sale of water to irrigation districts and municipalities the provisions of the reclamation act and of the Warren Act would apply. Such an adjustment of burdens and benefits should stimulate irrigation development because of the generous terms on which water will be supplied and at the same time result in a considerable revenue from the water furnished for irrigation, domestic, and industrial uses. But the money-earning feature of this development is power. The revenue from the sale of power |