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of such revenues for payment of the principal of such expenditures, it did not intend that they should be reached to pay interest thereon. It appears that the cost of the canal and appurtenant structures is expected to be nearly $40,000,000. Under the reclamation law repayment may not be accomplished for forty years. Interest at four per cent upon that sum for that period would constitute an amount of such magnitude that the failure of Congress to specify any revenues out of which it could probably be paid creates a strong inference that it was not intended to be paid.

The apparent conflict between the provisions of the Act above discussed is, in large part, explained by its legislative history, which, in my judgment, makes it clear that it was the intention of Congress that advances for the cost of construction of the All-American Canal should not bear interest.

The bills originally introduced by Senator Johnson in the Senate (S. 728, 70th Cong., 1st sess.) and by Congressman Swing in the House (H. R. 5773, 70th Cong., 1st sess.) did not differentiate the manner in which the expenditures for the canal were to be reimbursed from that which was to govern the repayment of the expenditures for the dam and power plant, and it was plain that interest was to be paid upon all sums advanced from the Treasury for the construction of any of the works thereby authorized. Section 1 did not contain the words:

"the expenditures for said main canal and appurtenant structures to be reimbursable, as provided in the reclamation law, and shall not be paid out of revenues derived from the sale or disposal of water power or electric energy at the dam authorized to be constructed at said Black Canyon or Boulder Canyon, or for water for potable purposes outside of the Imperial and Coachella Valleys."

The last sentence of section 2 (b), requiring the payment of interest upon advances, was not qualified by the words "except as herein otherwise provided." Section 4 (b) contained but one paragraph, reading as follows:

"(b) Before any money is appropriated or any construction work done or contracted for, the Secretary of the Interior shall make provision for revenues, by contract or

otherwise, in accordance with the provisions of this Act, adequate, in his judgment, to insure payment of all expenses of operation and maintenance of said works incurred by the United States and the repayment, within fifty years from the date of the completion of the project, of all amounts advanced to the fund under subdivision (b) of Section 2, together with interest thereon."

Section 7 did not contain the words "reimbursable hereunder" following the word "interest." Sections 5, 9, and 14 (originally numbered 13) were, so far as here material, substantially in their present form. It was thus anticipated that revenues would be received by the fund under the reclamation law. But those revenues and the revenues from power and other sources were to be used indiscriminately for the repayment of advances to the fund and interest thereon.

The report of the Senate Committee on Irrigation and Reclamation (Rept. No. 592, 70th Cong., 1st sess., March 20, 1928), however, recommended several amendments, of which the following are here significant: To insert in section 1 part of the language above quoted, namely, "the expenditures for said main canal and appurtenant structures to be reimbursable, as provided in the reclamation law," the committee explaining the purpose of this amendment as "avoiding conflict with well-established precedent" (Rept. p. 4); to add to the last sentence of section 2 (b) the words. "except as herein otherwise provided"; to add to section. 4 (b) the words "made reimbursable under this Act"; and in section 7 to insert, after the words "with interest," the words "reimbursable hereunder."

The Senate bill, with these proposed amendments, was thereafter extensively debated in that body, but no action was taken thereon before adjournment sine die on May 29, 1928 (Cong. Rec., vol. 69, p. 10678). Meanwhile, the House had passed its bill, unamended in any respect here material, on May 25, 1928 (id., p. 9990). After the commencement of the second session of the Seventieth Congress in December, 1928, the Senate substituted the House bill for the Senate bill, Senator Johnson offering an amendment striking out all after the enacting clause and substituting therefor the Senate bill with the proposed amendments (Cong. Rec., vol.

70, p. 68). The subsequent debates hereinafter referred to were in the Senate on the House bill as thus amended.

The committee amendments above discussed, which segregated the canal project and made the land benefited bear the cost of its construction were apparently proposed for the purpose of meeting opposition to the use of revenues from power for any payment on account of the canal, which was regarded as a reclamation project for the benefit of the Imperial and Coachella Valleys in California. (See minority views, Sen. Rept. 592, pt. 2, pp. 25-26; see also Cong. Rec., vol. 69, pp. 9457-9459, 10295, 10495; vol. 70, pp. 230– 231, 236, 244.)

The committee report contains language indicating that it regarded the effect of the amendment as also making expenditures for the reclamation features noninterest bearing. The statement is made (Rept., p. 7) that "this tremendous enterprise * I will cost the Federal Government nothing except loss of interest on reclamation features, the same as in all other works of this kind." The report further states (pp. 7-8):

* *

"While the Government will in the first instance advance funds for the construction of the works, all advancements will be repaid to the Government within 50 years and those for purposes other than reclamation, with interest at 4 per cent per annum."

The report is not wholly clear on this subject because it goes on (p. 8) to refer to the authorized appropriation as including an item for interest during construction of the then estimated cost of the works including the canal. It is to be observed that the items embraced in the appropriation were made up before the committee amendments segregating the canal were proposed (id., p. 27), and it is probable that the committee overlooked the fact that its discussion of the interest item was not consistent with its earlier language regarding loss of interest on reclamation features. The report, moreover, refers to the interest item as "largely a bookkeeping arrangement to fix the amount for which beneficiaries of the project will be charged." In the subsequent debates, Senator Johnson, who was in charge of the bill, in a colloquy with Senator King on May 1 (Cong. Rec., vol. 69, p. 7623), made the direct statement that the pay

ments by the land owners, the beneficiaries of the canal, were to be without interest. The colloquy is as follows:

"Mr. KING. I think the Senator ought to state that with respect to the All-American canal it is not contemplated that interest shall be charged upon any advancement, even if the people in the valley are ever able to pay it; in other words, that the interest is to be remitted, and that they are to have an indefinite period-40 years at least-within which to make payment.

"Mr. JOHNSON. No; they are to repay under the reclamation law.

"Mr. KING. That means without interest.

"Mr. JOHNSON. Exactly."

(See, also, id., pp. 7389-7390; 7627, 9457.)

While there are other statements in the debates during April and May from which it might be implied that it was not clearly understood that interest was not to be payable upon advances for the construction cost of the canal (id., pp. 7389, 7536, 7538), this was definitely recognized in the debates in December which immediately preceded the passage of the bill. During the discussion on December 11 Senator Johnson referred to the report of the Board of Engineers appointed by the Secretary of the Interior, with the approval of the President, under authority of Joint Resolution approved May 29, 1928 (Document No. 446, H. R., 70th Cong., 2d sess.), and the following colloquy then occurred between him and Senator King (Cong. Rec., vol. 70, p. 402):

"Mr. KING. It is important in the discussion of the question of amortization. The Senator stated that under the plan suggested by the commission the all-American canal would be constructed under the reclamation project and therefore nothing would be a charge under the terms of the bill. The Senator forgot for the moment, I think, that the interest would have to be borne by the Government for the advances which were made for the construction of the allAmerican canal.

"Mr. JOHNSON. The Senator is right, but it would be only the interest which would have to be borne.

"Mr. KING. But it would be several million dollars."

On December 13 Senator King pointed out the difference between the reclamation fund, which under the reclamation law was a revolving fund produced from the sale of public lands, oil royalties, and so forth, and the Colorado River dam fund, which was created by direct advances from the Treasury. He said (id., p. 519):

"It is true that the Secretary of the Interior is required to make contracts with those whose lands are to be irrigated from the canal for the repayment to the Government of the cost of the canal, covering a period of 40 years, but without interest. It seems, therefore, that the Government derives no interest whatever from the $38,500,000, or the $11,000,000 should the canal to the Coachella Valley be constructed."

The following colloquy then took place between Senator King and Senator Phipps, who was chairman of the committee on Irrigation and Reclamation (id., p. 521):

"Mr. KING. Is not the Senator in error in stating that the Government receives interest upon the entire amount of $140,000,000 [being the $165,000,000 provided in the bill, less $25,000,000 allocated thereby to flood control]? According to the amendment of the Senator, $25,000,000 is deducted for the moment. Then the Government makes the advancement for the construction of the all-American canal, and that is not to draw interest. That is to say, we are to pay it out of the fund, but the Government does not get back interest for the amount which is utilized in the construction of the canal.

"Mr. PHIPPS. No; that would come under the Reclamation Act under the provisions of this bill.

"Mr. KING. The Senator knows that while we label it as coming under the Reclamation Act, as a matter of fact the amount needed for the construction of the all-American canal does not come from the reclamation fund, but comes from this $165,000,000, and no payment is made to the Government of interest upon the advance. In other words, the all-American canal will be constructed with moneys taken from this fund, and no interest whatever will be paid to the Government by those who get that enormous sum. "Mr. PHIPPS. The Senator is correct.

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