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term royalty in connection with power produced on the stream-I contend that Arizona, as Nevada or other States, where works are constructed in her territory, has the right to tax that property in the same manner that she taxes other individual property, and I can not see that any reasonable tax which Arizona, Nevada, or California might impose upon a structure on their own territory would in any manner be objected to by the neighboring States.

Senator ASHURST. Nothing I have said would indicate that anybody would contemplate a refusal to sell power to the upper States.

Senator Phipps. Oh, no.

Senator ASHURST. I must make this clear. Arizona will not be content merely with taxing industrial developments and plants. Arizona will be content only when she is clearly given the right to levy—I will not confine myself to the word royalty-to levy a tax, a proper and a reasonable tax, upon the kilowatt-hours or horsepower developed.

I do not want any misunderstanding. Arizona is a State of slow development, and it must be obvious that we should reserve the right to Arizona in clear and specific terms to levy a tax and to obtain a revenue from the horsepower or kilowatt-hours generated on the Colorado River in Arizona.

Mr. CARPENTER. Senator, I understood your question to apply only to the State of Colorado.

Senator ASHURST. Yes.

Mr. CARPENTER. I just wanted to remind you that Utah is, of course, interested in the Glen Canyon Reservoir. Colorado, of course, has not a direct interest.

Senator ASHURST. You will recall that I asked this question of the governor.

Mr. CARPENTER. Yes.

Senator Johnson. The principle that you announce would be, of course, applicable to any of the other States ?

Senator ASHURST. One principle.

Senator PHIPPS. Mr. Chairman, I would like to ask the witness a question or two.

Mr. Carpenter, in your testimony yesterday you referred to the attitude of the Reclamation Service on the Colorado River matter, and you were evidently reading from a memorandum there. If you have a memorandum on that subject, will you include that in the record ?

Mr. CARPENTER. I have a memorandum of part of it. It consists. of paragraphs copied from the typewritten report on the Colorado River that is in the offices of the Reclamation Service. It is copied from the discussion of legal problems by District Attorney Eggleston, of the United States Reclamation Service. I have that before me. I will be glad to put this in the record.

Senator Phipps. You have covered the Henrylyn tunnel proposition in your statement, but this other is not very lengthy, and I thought it would make the record more complete to have those quotations from the declarations of men connected with the Reclamation Service.

Senator SHORTRIDGE. As to what point was that, Senator ?

Senator PHIPPS. As to their desire to control the distribution of the water stored by any dam or other structure that might be placed on the river, or any water taken out for purposes of reclamation.

Senator SHORTRIDGE. That the Federal Government had a superior right to exercise control over the subject matter?

Senator PHIPPS. Yes; and not only as to Government reclamation projects, but private reclamation projects, they were inclined to assert and exercise rights that are in conflict with what we understand to be the superior rights of the States and the citizens.

The CHAIRMAN. Senator Phipps, are you asking for excerpts from a certain public record to be placed in the record of these hearings?

Senator PHIPPS. Yes, sir.

The CHAIRMAN. Do you desire to have them inserted in the record at this point ?

Senator PHIPPS. At this point, Mr. Chairman; yes. (The memorandum referred to is here printed in full, as follows:)

PARAGRAPHS FROM DISCUSSION OF LEGAL PHASES OF WATER RIGHTS ON COLORADO

RIVER, BY W. J. EGGLESTON, DISTRICT COUNSEL UNITED STATES RECLAMATION SERVICE, APPEARING AS PART 19, VOLUME I, OF A FOU'R-VOLUME REPORT ON THE COLORADO RIVER.

Arizona and California River Regulation Commission organized by the Los Angeles Chamber of Commerce passed resolutions, filed with Secretary of the Interior. Mention illegal diversions and request that “applications for rights of way for conducting water the Colorado River Basin over Goyernment lands be held in abeyance until a survey shows that sufficient surplus and unappropriated water exists to meet such appropriations.

*

The main question which is the basis of this inquiry “What rights to the use of the waters of the Colorado River are invested and must be respected?” can be answered only by an adjudication of the entire basin. The term “adjudication can be used only in its limited sense, and any finding which may be presented as a result of the present investigation will be of no value as indicating rights until they are indorsed, confirmed, and agreed to by the States, the United States, and the individual water users.

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There is no office or bureau of the Government so well equipped now to furnish any essential fact in regard to this great region, and there can be no individual, company or institution in the future which can make a similar exhaustive and necessarily unbiased investigation. The Reclamation Service, both the legal and engineering sides, must become the repository of all in. formation regarding this subject so that the individual States, Congress or the Supreme Court will finally and inevitably turn to this service for exact and authentic intelligence on the subject. The need for such intelligence is present. When it will be asked for is a question. But the work of this special investigation should be continued so that the longer the period before the results are used, the more thoroughly digested and comprehensive will be the results submitted.

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Since all international questions are in control and custody of Congress and the Department of State and the existing laws and treaties will be noticed and respected by the Supreme Court in any controversy which may be brought before it by the United States, it is apparent that the Supreme Court of the United States will eventually adjudicate the rights in the Colorado River basin.

The question will be presented by one State against one other State; all the remaining States and presumably the United States will intervene. Physical conditions and its relative location for the diversion and use of water, make the rights of California the most precarious of any of those in the United States.

The controversy which will bring about the adjudication of the Colorado River basin will, therefore, naturally be initiated in connection with the use of water farthest from the source of the river. The Supreme Court of the United States will be the tribunal. It will require facts-a multitude and mass of information difficult to conceive of except to the investigator, who has made long and painstaking study and has literally grown up with the growth and development of the question he is studying. The Reclamation Service is the natural, logical, and should be the responsible fountain head of authentic information from its studies, investigations, compilations, and records of the past 14 years, and with the mass of material covering all recorded appropriations and rights which this report transmits.

As suggested heretofore in this report, it will be not only the natural office of this service but its plain duty to complete its work and make sure the results are before the court for the benefit of all the people of the Nation and for all time.

The court may then find in a so-called private adjudication of water rights and plans for future development the basis for its decree with few, if any modifications. Such a decree must be administered and enforced. A Federal commission appointed by or under the authority of the court would be the usual vehicle for the execution of the court's findings or right. What commission appointed from private life could be found with the knowledge of and capacity for handling this enormous work or with such resources of executive ability in emergency or with such an unbiased and nonpartisan outlook upon the subject in hand as the Reclamation Service.

Senator PHIPPS. Along some lines the Department of Justice has been taking a hand and setting up what we conceive to be obstacles to development, and there is probably some action that should be taken with reference to the waters of these western streams which is not in accord with what we believe to be the policy of the Department of Justice. I think you have some views on that subject that would be enlightening.

Mr. CARPENTER. I mentioned in my testimony, I believe, the arguments advanced by the Department of Justice in the second and third oral arguments, and also by brief, in the case of Wyoming v. Colorado, where they contended that the United States of America is the owner of all of the unappropriated waters in our Western rivers, and that those waters are wholly removed from State control and only come under the jurisdiction of the State when segregated by the appropriator in the form of an appropriation.

Senator JohnSON. Who was the individual that made that argument, if you please

Mr. CARPENTER. That was made by the Department of Justice through Solicitor General Davis first, and Assistant Solicitor General Reitler in the third argument. Now, Senator, that policy is said to have had its origin in the department through the work of the Special Assistant Attorney General Ethelburt Ward, of Denver, who is in charge of legal matters of the Reclamation Service. Under him are a number of assistants, and he and his assistants are pressing that theory at this time wherever possible before the Federal district courts in the evident hope of getting a precedent in their favor. The most imminent case is that of the Truckee River in Nevada. I see no more practical way to avoid the promotion of the theory than to prevail upon the Department of Justice to desist from pressing that argument. It is abhorrent to the laws and offensive to the people of all the Western States.

Senator PHIPPS. Could not that point be covered by suitable legislation or instructions or authority to the Federal Power Commission?

Mr. CARPENTER. The Federal Power Commission would have no jurisdiction. Congress would have jurisdiction, and a declaration by Congress would doubtless be controlling upon the Department of Justice. There should be some effort made, or the possibilities are that if allowed to go by default the Western States will awaken to find that a new theory of law has been imposed upon them.

I might say that the danger lies in the second step in the enforcement of that doctrine, which is this, that inasmuch as the water is said to belong to the United States her courts will decree the rights of the appropriators, and having decreed the rights of the appropriators, her courts, by appointments of bailiffs, will then take perpetual charge of administration of water distribution, thus supplanting and displacing the State authorities in that respect.

Senator Phipps. This is, in a measure, perhaps, foreign to the purpose of these hearings, but it is important incidentally. I should like very much to follow that up with you, aside from these hearings, unless you have something in concrete form that you could present to this committee at the present time.

Mr. CARPENTER. I have nothing in concrete form. In fact, I had not thought of preparing any such, and I merely mentioned it as one of the theories advanced with respect to the control of the western rivers that were before us at the time we suggested the Colorado River compact.

Senator KENDRICK. Do I understand you to say, Mr. Carpenter, that a declaration by Congress would have the effect of nullifying the decisions of the court in reference to priority of right?

Mr. CARPENTER. No. The courts have not decided this Government-ownership proposition which has been advanced in the Wyoming case. The Supreme Court laid it to one side and did not rule upon it; they passed it over. Government counsel are now trying to get some Federal district court to hold with them. They then will have the benefit of a precedent in further proceedings.

Senator GOODING. Mr. Carpenter, you mentioned the other day the American Falls Dam, that the Department of Justice was taking some action there. Will you be kind enough to tell the committee what that is?

Mr. CARPENTER. Since I gave that testimony I have searched the libraries for more accurate information, but I was informed at Denver, and it was in the press, that this same doctrine had been urged in the proceeding before Judge Dietrich, as I remember, at American Falls, and that Judge Dietrich had the matter under advisement. This Government-ownership doctrine is followed by all of the Department of Justice representatives, and is being pressed wherever an opportunity affords, in the hope, as I say, that they will get a precedent from some court,

To show you the extent to which that has been going on, there was a request, about two years ago, upon the Department of Justice to bring suit on the North Platte River, consisting of the part of the Platte that is in the State of Nebraska and the part in the State of Wyoming; to adjudicate in the Federal District Court at Omaha the individual rights of water

users on the North Platte and Main Rivers in Wyoming and Nebraska, and possibly in Colorado, with the idea that the Federal court would fix the relative status of individual proprietors in each of those three States, or at least two thereof, and

would therefore enforce that decree in perpetuity by masters in chancery appointed by the Omaha Federal District Court.

The matter was called to the attention of Secretary Work, and he revoked the order and called upon the governors of the three States to appoint commissioners to try and settle the matter by compact, the matter including as it does the Federal reclamation project on the North Platte River. The commission was appointed and has since been functioning, and it is hoped the matter will be adjusted without suit.

Senator PHIPPS. Mr. Carpenter, was not that question involved in a decision of the Supreme Court of the United States at the time the Department of Agriculture sought to assess charges for the use of water on nonnavigable streams in California and Nevada, when the forest reserves were set up, which decision resulted in a change of base by the department and under which they began to assess and did assess, and have been collecting charges against hydraulic horsepower produced on these streams, based upon their supposed conservation of the flood waters in the upper reaches?

Mr. CARPENTER. I knew that they were in certain sections attempting to extort from the power companies some such toll and that it had been in the courts, but I am not familiar with the decisions.

Senator PHIPPS. We will have that looked up. That is all I care to say on that particular topic, but there is one other question I want to ask you before you leave the stand.

Mr. Carpenter, has it come to your knowledge that an attempt is being made by anyone to secure a modification of the proposed compact in its present form, as relates to the upper basin particularly?

Mr. CARPENTER. No; I know of no such action. The only action I know of is that now taking place between California and Arizona, in the form of conversations, and once or twice individuals in Phoenix have suggested that the upper States might deprive themselves of a little more water in order to facilitate negotiations; that is all.

Senator PHIPPS. What I am fearful of is any movement or action that would involve added delay in reaching a final agreement. It seemed to me that as far as the testimony presented before this committee is concerned the lower basin States were not objecting to the quantity of water that might be used in the upper basin, but, on the other hand, asserted their desire to see us go ahead and construct the reservoirs and dams and thereby help, through equating the flow of the stream, in bringing about a constant and dependable supply of water for irrigation and other purposes in the lower stream. It seems to me that the lower basin States should be able to compose their differences without making it necessary to send the compact back to the upper basin States for further consideration of the legis. latures of those States, they having already acted and given their approval.

Mr. CARPENTER. I have no knowledge of any such proposal, or even any intimation of any such, as far as the Northern States are concerned.

Senator PHIPPS. Very well.

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