Earl Warren: State of Arizona, Complainant versus California et al.
Hugo L. Black: Number 9, State of Arizona against the State of California et ux.
Speaker: Mr. Justice Black, may it please the Court. Last January -- on behalf of the State of California and the other defendants, I discussed at some length the catastrophic effect upon the defendants of the Master's Report. Due to the limitation of time for this presentation, I will not repeat any part of that statement that was previously made but merely introduced to the Court, Mr. Northcutt Ely, Special Assistant Attorney General for the State of California representing all of the defendants including the State of California and the other codefendants.
Earl Warren: Mr. Ely.
Northcutt Ely: May it please the Court. California has two basic exceptions to the report of the Special Master which is before you. These relate primarily to his interpretation of Section 5 and Section 4 (a) of the Boulder Canyon Project Act. Section 5 appears at the pages 384 and 385 of his report and in essence, it provides so far as water for consumptive use is concerned, that the Sectary of Interior is authorized under general regulations which he may prescribe to contract for the storage of water in the reservoir and for its delivery on such points upon the river or the canal, meaning the all-American canal, as he may agree upon. It provides that contracts for water for irrigation and domestic use shall be for permanent service and shall conform to paragraph (a) of Section 4 of the Act. The final sentence upon which the Master relies heavily provides that no person shall have or be entitled to have the use for any purpose of the water stored as aforesaid except by a contract made as herein stated. Section 4 (a) of the Act appears beginning at pages 300 -- page 381 of the Report and in essence, it provides this. This statute as you may recall authorized the construction of a dam, now known as Hoover Dam, and of the all-American canal. And the grant of the consent of Congress to the Colorado River Compact, an agreement which had been signed by representatives of the seven States of the Basin in 1922 had been ratified by six, but Arizona had refused to ratify it. Section 4 (a) provides that the Act shall not become effective until these seven States shall have ratified the Compact or in the alternative, if seven shall fail to ratify within six months after the effective date of the Act, then until six who ratified including California, and in addition, California in that event should have enacted a limitation upon her use of the waters of the Colorado River. This limitation is stated on page 382, about two-thirds of the way down appear the operative words. It provides that the legislature of California shall pass an Act which shall limit California's uses of the water to two components: first, not to exceed 4,400,000 acre-feet per annum of diversions less returns consumptive use of the waters apportioned to the Lower Basin States by paragraph (a) of Article III of the Colorado River Compact plus not to exceed one-half of the excess or surplus waters unapportioned by the Compact, such uses always to be subject to the terms of the said Compact. The Colorado River Compact, to which reference is made, appears at page 373 of the Report. Article III (a), apportions to the Upper Basin and to the Lower Basin respectively, in perpetuity the beneficial consumptive use of 7,500,000 acre-feet per annum of the waters of the Colorado River System. The System is defined in Article II as including the main river and its tributaries. The 7,500,000 acre-feet shall include all water necessary for the supply of any rights which may now exist. The two issues involved in these two sections are -- I'll illustrate in a moment by reference to the map which is behind me. But in essence, they are these. Section 4 (a) required of California a covenant, an agreement with the legislates -- between the legislature of California and the Congress of United States which is explicit a limitation in two categories: 4,400,000 acre-feet plus one-half of the excess or surplus. California enacted that limitation. We undertook that agreement. The President so proclaimed and the Act became effective because we did it. We say that the figure of 4,400,000 acre-feet is a quantitative limitation. It is the absolute minimum, the irreducible minimum of the requirements of California's projects and that we agreed to prorate with other users the excess and sub-surplus. We agreed to limit ourselves to one-half of that. The Master construes Section 5 as authorizing the Secretary of the Interior to treat these 4,400,000 acre-feet not as a quantitative limitation, as an irreducible minimum as we call it, but as simply one component, not a contractual allocation scheme that is, that Section 5 delegated to the Secretary of the Interior to “impose a federal apportionment” upon these States if they should fail to agree upon an interstate compact and that the Secretary did so by contracts which he made with users in California in 1931 to 1934 and with Arizona and Nevada, those two States in 1944. That is to say that they came into existence. In 1944, a contractual apportionment made by the Secretary which had the effect of imposing upon these three States a proration scheme. The decree would put the -- this result into effect that if the Secretary releases from Lake Mead enough water to sustain 7,500,000 acre-feet per annum of consumptive use below Lake Mead, that seven and a half million shall be apportioned 4,400,000 acre-feet to California, 2,800,000 acre-feet to Arizona, 300,000 acre-feet to Nevada. The latter two figures being derived from the 1944 contracts, the 4,400,000 figure being the first component of our limitation. If there's excess, if the Secretary releases enough water to sustain more than seven and a half million acre-feet of consumptive use, that excess is to be divided one-half to California, one-half to Arizona and Nevada. But, and here is the rub, if the Secretary releases insufficient water to sustain 7,500,000 acre-feet of consumptive use from Lake Mead and below, then the supply made available shall be prorated. California shall have forty-four seventy fifths of the quantity which the Secretary in his discretion neglects to make available, Arizona twenty-eight seventy fifths, Nevada three seventy fifths. With the result that California cannot have the 4,400,000 acre-feet to which we agreed, we may have forty-four seventy fifths of X, X being the quantity which the Secretary in his discretion decides to make available. The difficulty with this is that, if the Colorado River Compact is enforced, the Secretary is precluded. If he obeys the Compact, which the statute tells that we must for making available below Lake Mead enough water so that forty-four seventy fifths of it is 4,400,000 acre-feet. In short, the Master construes Section 5 as delegating to the Secretary the authority to use the 4,400,000 acre-feet which is our limitation as a starting point for further reduction. We construe Section 4 (a) as imposing a quantitative limitation upon the rights of California to stored water or in a natural flow and accumulatively. And we attribute to Section 5 not the authority to impose a -- an interstate apportionment by contract with the States individually but as simply to make users in these States contracts of a type familiar in the reclamation law since 1902, contracts which with actual users, give to those users rights to appropriate stored water and that the rights in that stored water are required not by the contract in a form of a grant or a patent but in a form -- but by putting the water to use. That is in a classic language of Section 8 of the reclamation law, “beneficial use is the basis, the measure, and the limit of the right.” Now, the map behind me illustrates both of these issues. It shows in two colors, the waters of the Lower Basin. The Lower Basin as defined in the Compact includes the main river from Lee Ferry to the Mexican boundary and it includes all the tributaries. These tributaries are primarily the Gila River which rises in Western New Mexico traverses Arizona and discharges into the Colorado near Yuma. The Little Colorado which rises in Northwestern New Mexico crosses a corner of Arizona and discharges into the Colorado, the Virgin River which arises in Utah and crosses a corner of Arizona and a portion of Nevada before reaching the main river. The resources of the Lower Basin quantitatively are somewhat like this.Coming in at Lee Ferry, the river brings from the Upper Basin, waters which are controlled by the Colorado River Compact. Article III (d) of that Compact provides that the four upper States: Colorado, New Mexico, Utah and Wyoming, shall not deplete the flow of the river at Lee Ferry below an aggregate of 75,000,000 acre-feet in any period of 10 consecutive years. The Lower Basin tributaries according to Arizona's evidence supplied about 3,000,000 acre-feet per year to the main river. Of this about half or about a million and a half was supplied by the Gila and about half accumulatively by the Little Colorado, the Virgin and the other Lower Basin tributaries. These are the waters of the Lower Basin. With respect to Section 4 (a), the cross reference to paragraph (a) of Article III, if it is read as written means that California is restricted to 4,400,000 acre-feet of a 7,500,000 acre-feet of consumptive use which is sustained by the main river and the tributaries that is the stream shown in both blue and red on this map and is excluded from 3,100,000 acre-feet of the waters apportioned by Article III (a) found in the same fund of water, tributaries and main river and excluded from half the excess or surplus. Now, the Master construes Section 4 (a) at page 173 of his Report as making an inappropriate reference to Article III (a) of the Colorado River Compact and about the center of the page appears his key holding with respect to that. He says, “Thus I hold at Section 4 (a) of the Project Act and the California Limitation Act refer only to the water stored in Lake Mead and flowing in the mainstream below Hoover Dam.” Despite the fact that Article III (a) of the Compact deals with the Colorado River System which is defined in Article II (a) as including the main -- the entire mainstream and the tributaries. That is to say the Master construes Section 4 (a) as intending to fine for California the 4,400,000 and to fine for Arizona, and California and Nevada the 3,100,000 out of that segment of the Lower Basin waters colored red on this map. The result is that 3,100,000 acre-feet which if the Compact referenced in 4 (a) means what it says, must be supplied by the tributaries as well as the main river shall be supplied from Lake Mead alone. The Colorado River Compact does not make available to the Secretary, water in sufficient quantity to sustain 7,500,000 acre-feet from the Red River, Lake Mead and below, it makes that quantity available out of the whole Lower Basin, blue plus red. Consequently, the problem with respect to Section 4 (a) is simply this, may Arizona and Nevada having exhausted a portion of the Compact apportionment to the Lower Basin by the uses on the tributaries. Nevertheless, claim that same quantity a second time out of Lake Mead. The consumptive uses which are in fact sustained by these tributaries measured as diversions less returns are of the order of 2,000,000 acre-feet. That is to say that tributaries supply to the main river and the state of nature about 3,000,000 and about 2,000,000 of that is now consumed and has been for many years by projects located on these tributaries, primarily, in the Phoenix area on the Gila River. That 2,000,000 acre-feet plainly according the Master is chargeable to consumes -- burdens up exactly that same quantity of the apportionment to the Lower Basin. Consequently, that use on the tributaries has reduced in precisely that amount the quantity that Arizona, California and Nevada may claim or may appropriate out of the main river. May Arizona and Nevada nevertheless, having reduced the quantity available in the aggregate to California, Arizona, Nevada by those uses on the tributaries, claim that use a second time, this time C
Arthur J. Goldberg: (Inaudible)
Northcutt Ely: The greater part of it Mr Justice Goldberg, in Arizona, we calculate about 50,000 acre-feet or thereabouts, in New Mexico about a million 700 odd thousand in a -- on the Gila and Arizona and the balance of the 2,000,000 is made up by uses on the other tributaries primarily the Little Colorado and to some degree the Virgin. With respect to Section 5, the Master equates Section 5 with Section 4 (a), that is to say, he says that Section 5 applies to the Red River, Lake Mead and below and indeed it does. That is the authority given to the Secretary to contract for storage in Lake Mead and deliver that water below. And he construes Section 5 as being a delegation to the Secretary to impose a federal apportionment upon the States if they don't agree to apportion among themselves the water referred to in Section 4 (a). We say there is no identity, whatever between these two funds of water. The authority given to the Secretary in Section 5 relates to only a segment of the Lower Basin waters which are covered by Section 4 (a). Now there are, nevertheless, substantial areas of agreement between the Master and ourselves. He finds or he concludes that in the event of shortage in the so-called -- what I call the Red River, that is Lake Mead to the Mexican boundary, this shortage shall be disposed of by respect for the law which prevails generally throughout the Colorado River Basin, that is a law of priority of appropriation and this Court's doctrine of equitable apportionment and with certain exceptions, the exceptions are important and decisive but the general principally accepts. This Court's doctrine of equitable apportionment course contains two primary elements as you have pounded it out here on the envelope, Nebraska versus Wyoming and other cases. The first is a recognition of interstate priorities of appropriation and the second is the protection of existing uses, even the projects with junior appropriations are protected against the destruction of their economy by senior appropriations and whereas in our case, the two situations merged at the existing economy as based upon senior appropriations, the reasons for the two rules uniting. Now, the Master applies -- spells it out, applies the doctrine of interest -- of equitable apportionment and the principles of priority in a number of instances and does it very illusively. He applies this principle of equitable apportionment for example on deciding the issues between New Mexico and Arizona on the Gila River. He says, that these principles will control future disputes on the tributaries which he finds not now justiciable, the Virgin and the Little Colorado and he holds that this principle of equitable apportionment will control any dispute that may arise between a user below Hoover Dam and a diverter above Lake Mead in some future litigations here. The instances, in which he applies priorities and the instances in which she -- he denies their effect are very cleanly identified in the report. For example, and I should emphasize this, he creates no dichotomy between rights in natural flow, the unregulated flow to which a priority shall attach on the one hand and contract rights under Section 5 on the other, not at all. He recognizes that priority principles apply to rights which originate in Section 5 contracts with the single exception that I shall shortly identify. For example, in the event of a dispute between two users below Lake Mead, whose rights originate solely in contract, never had any appropriations of natural flow at all but they're in the same state. Priority is attached and controls the decision of that dispute.
William O. Douglas: Is that state law?
Northcutt Ely: State law. He says that the questions of priorities within a State, in fact, the question of whether a contract with the United States confers a water right is a matter for a decision by state law and he consequently looks to priorities established by the relative dates of the contract --
William O. Douglas: Well that -- in that respect, he was following Ickes versus Fox then?
Northcutt Ely: Ickes versus Fox, in principle, yes.
William O. Douglas: In principle, yes.
Northcutt Ely: That is right, and he buttresses although in that case we -- the ultimate resolution depended upon appropriations under the state law. These do not, that's my point. He applies priority principles to water rights originating in Section 5 contracts and that is the point I desire to make. He gives a --
William O. Douglas: Is this -- are you talking about intrastate appropriations in Arizona or intrastate in California or both?
Northcutt Ely: Either. If the dispute involves one between two contractors within Arizona neither of whom ever had any appropriation of unregulated flow both dependent wholly on Section 5 contracts, he applies priority principles to determine that dispute. He does not relegate the application of priority principles to rights in unregulated flow originating in state law. To the contrary, he recognizes priorities attached to contract rights. He applies priority principles interstate (Voice Overlap) --
Potter Stewart: I don't quite understand what you're saying. How could these -- what kind of a controversy would this be? It would -- there's no such controversy before the Master here, isn't it?
Northcutt Ely: Well, he spells outs in -- that is correct. There is not as yet because there's no shortage yet.
Potter Stewart: Shortage of water.
Northcutt Ely: But he spells out in detail what the intrastate rights of the various contractors shall be. They shall be controlled by priorities.
Potter Stewart: And I'd understood that in -- within California, within the State of the people you represent that it all have been worked out as a matter of agreement.
Northcutt Ely: That is correct. And our --
Potter Stewart: So there'd be no controversies there, would there?
Northcutt Ely: That is -- that is correct. He respects that agreement. That agreement I shall describe a little later. But he -- my point is that if the -- if you accept the Master and his word, he applies priority principles to contracts rights. He denies the application of those priorities only where the two contractors in conflict are on opposites sides of the river. Let me pursue this a little further. If a contractee below Lake Mead, has a dispute with a diverter above Lake Mead, this dispute is to be resolved by the application of priority principles, the holder below Lake Mead relying entirely upon the contract may sue a junior above Lake Mead who is relying upon a diversion right acquired under state law that priority created by the contract establishes a relative date of the two and priority principles control. Moreover --
Potter Stewart: These two users would now be in two different states, is that it?
Northcutt Ely: Whether in different states or the same state. Now, if they are in different states, he applies priority principles and the doctrine of equitable apportionment. The contractee below Hoover Dam if located in California, for example, may sue the diverter above Lake Mead and enjoin shutdown a junior -- a diversion. If you look up the map, you'll see the interesting application of this principle in the two blue lines which take off above Lake Mead into the Central Arizona area. Those are two of the three proposed routes for the Central Arizona Project whose demand for water triggered this lawsuit. If the Arizona or the Bureau of Reclamation decide to divert for that project above Lake Mead, the priority is junior to that of the Metropolitan Water District in California let us say, California may sue, the Master says, to enjoin that diversion. Suppose we win the suit, a million and 200,000 acre-feet of diversion is enjoined. That water flows in the Lake Mead is explicit that having reached Lake Mead, the water is then controlled by his contractual allegation scheme. We don't get what we've just won, we got 44 seventy-fifths of it. And Arizona users below Lake Mead get 28 seventy-fifths of it even though they may have been junior to the defendant who may just successfully enjoin above Lake Mead. And Nevada gets three seventy-fifths. Now, if the successful plaintiff were a Nevada user, it's even more extreme. She keeps three seventy-fifths of her winnings and California and Arizona projects theoretically might be junior to the defeated upstream diverter get the balance of it. Now, he applies priority principles interstate with respect to use -- to the uses which had been established prior to 1929, the effective date of the Project Act but measured only by the quantity in fact used as of 1929. For example, in the event of a -- an interstate dispute now, between two users on opposite sides of the river, both holding contracts with the Unites States, he will respect the interstate priority of a -- by dates of appropriation but only up to the extent of the quantity used in 1929. With respect to a federal reservation below Lake Mead, if it is created before 1929, he will recognize the interstate priority of that of federal reservation not limited to the quantity used in 1929 but applied to the full ultimate requirements of that reserved area which he adjudicates in this report. He fixes quantitatively their ultimate requirements. But if that -- if that reservation is created after 1929, then it is dependent for its water upon this proration formula interstate. And the ultimate -- extreme of his logic is reached on pages 352 and 353 in the terms of his proposed decree relating to the wildlife refuges which would be -- which are created by the -- by executive order behind the -- two of the dams on the river. These, he gives that priority of 1941, these wildlife refuges straddle the river. They're in Arizona and in California. Now, with respect to ninth -- to California, 1941 is too late a date to give these ducks any water at all. In Arizona, it's a very good priority, these wildlife refuges will have water. The result is that these ducks are going to be as confused as lawyer's are at the moment if they land on the California side of the Colorado River, they are dead ducks, it's dry. 1941 priority is no good but if a land in the Arizona side, they have a plenty of water because the Arizona apportionment given by this decree is less than half used. Now, we say simply that, priorities apply under the reclamation law of which the Boulder Canyon Project Act is a supplement, is a part of. They apply interstate. They apply whether the right is generated by a state law appropriation or generated by a contract made under Section 5. Now, the Master, as I have said, refuses recognition of this great principle of equitable apportionment in one instance only and that is where the contestants are on opposite sides of the river, are fighting over water that neither of them used prior to 1929 and both of them hold contracts with United States. In that event, and in that single instance, they prorate under a formula created by the Secretary of the Interior. Now, let me say here that this is not a formula created by the statute. He is clear as can be on that. He says the statute itself did not create any formula for a division of the water among Arizona, California, and Nevada. It created no mandatory -- no mandatory formula. It delegated to the Secretary of the Interior the power to impose this federal apportionment that the Secretary was not under any obligation to contract with Arizona or Nevada or with anybody else for any fixed quantity stated in the statute. He had complete discretion. He could've contracted with Arizona for 2,000,000 acre-feet instead of 2,800,000 of consumptive use. That this apportionment came into existence therefore and on February 21, 1944 the Secretary of the Interior made a contract with the State of Arizona and not until that. And in the interval, between a 15-year interval between the enactment of the Project Act, and 1944, when the Secretary made that contract there was not in existence any contractual allocation scheme. There was no proration formula. Nobody knew what it would be until 1944 but the California projects were built during precisely this period between 1929 and 1941. The youngest of them, the Metropolitan Water Districts, Colorado River Aqueduct was completed in 1941. The all-American canal was in service by 1941. Both have been serving water for three years before the Secretary made any contract with Arizona. But that retroactively, this contractual allocation scheme, this proration formula was imposed upon us in 1944 and that the bargain that controls this is not that made between the legislature of California and the Congress of the United States in 1929, a limitation act which fixed a quantitative limitation of 4,400,000 acre-feet upon our contracts and our appropriative rights under state law but it was fixed in 1944 by a proration formula in which our 4,400,000 acre-feet is just one component, the starting point for a reduction downgrade. We say that we are entitled to rely upon the contract made, the bargain made in 1929 with the Congress. If you compare what the Master sees as happening in 1944, it's all there -- it had been compressed into 1929, all the intervening events. And that somehow the Secretary of the Interior had promulgated regulations, say in 1930 or 1931, the same in effect the statute provides the States can agree. They have not agreed. The statute provides that in that event I may impose a federal apportionment. I now do so and in the following terms. I don't like interstate priorities, I prorate and I now decide that I'm going to make a contract with Arizona for 2,800,000 acre-feet and with Nevada for 300,000 and I impose proration in the event of shortage. And furthermore, I'm going to find all of this water out of Lake Mead, although the Boulder Canyon Project Acts as I must conform to the Colorado River Compact. I think that Section 4 (a) made it inappropriate reference to the Colorado River Compact says the Secretary in these hypothetical regulations in 1930 or 1931. I think what Congress really meant was to divide up 7,500,000 acre-feet of consumptive use below Lake Mead. Now, if any Secretary has sat down and done that in 1930 or 1931, it needs no elaboration to say that that kind of an interpretation of the statute by general regulations would've been promptly corrected. The Secretary never did that.You would expect to find this the most important single act of any Secretary of the Interior in the history of our country, one that divides the waters of a great river which imposes to use the Master's word, imposes a federal apportionment upon the States would've been spelled out in regulations, unless a statute authorize general regulations.
William O. Douglas: Well, the Secretary of the Interior tried to do substantially that in Ickes versus Fox, that happens to be -- that's the part of the country I come from and the valley that was developed under State Water Act. That was the effort there, I think (Voice Overlap) --
Northcutt Ely: That is right and that definitely was repelled by this Court. In fairness, I should say that deterring the fund, the question of whether the water rights were referring to the land under state law but that makes no difference. Section 8 of the Reclamation Act which is incorporated as a part of this law, Section 14 of the Project Act incorporates reclamation law, makes this a part of the reclamation law. In Section 8, to which Mr. Justice Douglas -- which is involved in the case Mr. Justice Douglas referred to, Section 8 provides that beneficial use shall be the basis to measure the limit of the right and directs the Secretary of the Interior to proceed in accordance with state law in acquiring water rights. No, I don't say to you that that means that a state law of California, ex proprio vigore controls the Secretary of the Interior in the administration of Lake Mead. I do not. What I do say is that Congress as well as this Court has had respect for the philosophy, the doctrine of priority of appropriations throughout the west and that Congress not only in this Section 8 but in some 36 statutes has directed that the federal officials conform to this way of life in the west, priority of appropriation and shall not -- shall not arrogate to themselves the authority to prorate water, which is the inherent, the important features (Voice Overlap) --
William O. Douglas: I suppose that there would be two questions of that -- in that category, one is, whether the Secretary of -- the Bureau of Reclamation proposes to depart from the state law theory here or secondly, whether that presents a -- any justiciable question at this time.
Northcutt Ely: Well, the great point that I -- the Master makes and that I try to emphasize is that the problem here is not whether state law appropriations control the disposition of water from Lake Mead. It is whether under federal law, the Boulder Canyon Project Act, Section 5, Congress intend that in the event of shortage, power was delegated to the Secretary to prorate, to impose a formula or whether it reserve to this Court the power under the -- its rules of equitable apportionment to decide how the burden of shortage shall be born. And that is my central message in an attempt to (Voice Overlap) --
William O. Douglas: Is that -- do you think that's a justiciable question now?
Northcutt Ely: Well, if it is not, then the whole case is not justiciable because the Master's whole report is premised upon the belief that the statute delegated to the Secretary the authority to make that apportionment and he did. That he “forever allocated.” We say he didn't do any such thing. And touching this question of justiciability, of the 2,800,000 acre-feet of consumptive use referred to in the Arizona 1944 contract, only some million -- a million hundred thousand has been put to use. Now, this contract as -- is not on its face an attempt to agree to deliver that quantity to anybody. It's not -- it doesn't purport to be a reservation of that quantity for anybody. What it is says is that the Secretary will make contracts with users in Arizona, users in Arizona who may qualify under the reclamation law up to this aggregate. They haven't yet done so. You don't know who they're going to be nor under what federal statutes they'll be created. Now, if the statute that comes along later and authorizes a project that creates a shortage, there's no shortage now, provides on its face respect for the priorities of existing projects then it's questionable whether we ever have any quarrel of such a project. We may very well be litigating the wrong statute right now. But, if you adopt this -- the Master's premise, that this contract forever allocated, forever apportioned like an interstate compact would, then and only upon that premise do you reach the basis of a justiciable controversy. And you don't really reach that event unless, unless you give respect to the Colorado River Compact as restricting and controlling the water available for division in the Lower Basin. If as the Master does, you treat the Compact as something rather a distant, as irrelevant as he calls it. Then it's difficult to find where there is a disparity between supply and demand that would create a present justiciable controversy. Water always has come down at Lee Ferry in sufficient quantities to satisfy the maximum demands, I repeat, the maximum demands of all of the States now before you plus the Mexican Water Treaty plus all the losses. It is only because the Compact is known to be controlling the Secretary of the Interior and to be imposing a restriction upon the quantity we may appropriate from the main river as well as the tributaries that there is any shortage at all. You cannot, on the one hand, treat the Compact as irrelevant as the Master does, and on the other hand, find a shortage to be adjudicated here. We say that the Compact is operative. It is fatuous to assume that it will not be enforced and that there is a shortage, a shortage so dire indeed that if the Master's Report is applied to the quantity lawfully available to the Lower Basin, one at least of our great projects would be destroyed. But if you treat the Compact as not meaning that, there's no assurance of any such projects will ever be built to create a shortage then you better wait till you see the statutes that authorize those projects to find what it does with respect to existing uses. We say the controversy is justiciable but because the Compact is enforceable and it is about to be enforced and we say that the -- as among the Lower Basin States, the controversy is justiciable. But if you he had held the Master's premise with respect to the Compact, it is probably not. Now, I should like to turn, if I may, to this provision in my argument. I'd like to treat first Section 5, just what kind of contracts, what kind of contracts did these -- this section anticipate the Secretary would make. Did it ever contemplate a contract with the State which would be in effect an interstate apportionment, the compact? It did not, plainly. What it did do was to authorize contracts with equit -- with actual water users. The true question in Section 5 results for in the Act, where in the statute is any section that cut off at state lines the doctrine of priority of appropriation? This -- the water rights to which Section 4 (a) refers are in two categories, rights which may now exist and rights required by contract under this Act. It is -- it was a quantitative limitation. Section 4 (a) demonstrates how Congress knew how to draw the difference between a quantitative limitation of 4,400,000 acre-feet on the one hand and a fractional allocation, one-half of the excess or surplus on the other. Had it intended to treat 4,400,000 acre-feet as simply the numerator in a fraction, it was very easy to say so. If Congress meant not 4,400,000 acre-feet but 44 seventy-fifths, it was just as easy to say that as it was to say one-half of the excess or surplus. It didn't do it. Now, this limitation, the Master says and we think he's right, is not a source of right for California. Congress didn't grant us anything. It's a limitation upon rights derived from other sources. These other sources are spelled in the statute, rights which may now exist, what could they be except rights acquired under state law. Rights acquired by contract under this Act. And it provides that no step shall be taken to initiate or perfect a right under this statute except upon the proclamation of the effect of this limitation. Now, what does initiate or perfect mean? These steps are separated by years in point of time. You initiate a project by filing a notice of appropriation or as we say by making a contract with the Secretary of the Interior. You perfect it by building your works and putting the water to use. They are separated by five years, 20 years, 50 years. You don't initiate and perfect simultaneously. Let me direct your attention, if I may, to that language of the statute. It is at the top of page 382, it directs that no water rights shall be claimed or initiated hereunder. Well, you -- that is under the statute. And no step shall be taken by the United States or by others to initiate or perfect any claims to the use of water until this limitation has become effective. That's the language of appropriation. That's not language of grant. Section 5, certainly on its face does not purport to convey to the Secretary of the Interior any power to prorate, to apportion and to allocate. It is in the familiar pattern of the reclamation law, familiar for 30 years before that. And the last sentence of that section upon which the Master relies so heavily that no person shall have a right to the use of a stored water without a contract was simply a device inserted in the statute by the representatives of the Upper Basin States confronted by the probability that Arizona would not ratify the Colorado River Compact and indeed she didn't for 15 more years. And they provided in this way that this contract -- that such a contract must be read in tandem with Section 8 (a). Now, Section 8 (a) provides that the United States -- I'll find that for you. It's at page 389. It provides that the United States, its permitees, licensees, contractees, and all users and appropriators of water stored, appropriators of water stored shall be subject to and controlled by the Compact anything in this Act to the contrary notwithstanding. This, when read with Sections 13 (b), (c), and (d), simply provided a device by which all users of water below Lake Mead should be subjected to the Colorado River Compact by a covenant in the water delivery contracts even though that water is used in Arizona in a State that refused to ratify the Compact and that's all that that sentence means. This legislative history is clear as a bell. The Upper Basin spokesman was Delph Carpenter, the principal author of the compact. He explained that before the Congressional committees that this was precise in his purpose. It was not intended to affect interstate the rights of Arizona and California. Section 5 we say --
Potter Stewart: What --
Northcutt Ely: Pardon me.
Potter Stewart: I just want -- what was its effect? What was the effect of making you subject to the compact in your view?
Northcutt Ely: Right. It meant that the --
Potter Stewart: (Voice Overlap)
Northcutt Ely: As Mr. Carpenter explained -- let me have it -- perhaps I can simply give it in Mr. Carpenter's language as -- better than this. The thought of his amendment, that's this last sentence of Section 5, is that any water stored in this reservoir under the terms of the Compact when released from storage shall be burdened by the Compact wherever it goes. As far as water is concerned, existing claims of the lower States are protected by the compact. Water must pass through this reservoir to take care of their present existing lower claims. As the further development from the main river, we insist that water stored in this structure by the United States would be stored and released upon the expressed condition that the persons who received the water shall respect and do so under the Compact. It has nothing to do with the interstate relations between Arizona and California. That is to say that Arizona users -- Arizona's failure to ratify the Compact, the Arizona users must have contracts. Those contracts say they are subject to and controlled by the Compact. Therefore, these users in Arizona cannot be treated as appropriations raged on the river free of and outside the quantitative limitation imposed by Article III on the Lower Basin. That is if seven and one-half million acre-feet as being used in the tributaries plus the main river that exhaust the Lower Basin apportionment. Arizona, failing to ratify the Compact cannot increase the appropriations upon the system by uses beyond that below Lake Mead because those contracts provide for this quantitative overall limitation. That was the purpose of Section -- of that sentence in Section 5. Now, of a -- controls upon the Secretary upon Section 5 imposed by this Act, Section 14 is of preeminent importance. Section 14 appears at page 394, it says this Act shall be deemed to a supplement to the reclamation law which said the reclamation law shall govern the construction operation and management of the works here and authorized except is otherwise herein provided. Of the reclamation law, Section 8 is a section that most directly controlling here and I've already told you what it contains. We say that the language in Section 8 that provides the beneficial use shall be the basis, the measure and the limit of the right, makes it impossible for the Secretary of the Interior --
William O. Douglas: 225.
Northcutt Ely: -- to reserve, to set aside in block a quantitative water for Arizona by the Arizona Water contract in 1944 which is not initiated by use, it's not lost by disuse, is an apportionment in perpetuity that it is ultra vires if given that effect in the teeth of Section 8. And as I shall indicate later, sect -- the Arizona contract doesn't purport to do any such thing. Section 5 provides that this contract shall be for a permanent service. Now, the Master twice based in clear terms the purpose of the meaning of the words “permanent service”, great projects such as the Metropolitan Water District must have a stable source of water supply. Permanent service is the equivalent of a principal feature of the law of priority of appropriation. Certainty, you can get certainty under the appropriation law because you can ascertain what priorities are superior to yours, you build -- you are protected against juniors. You do not face the possibility that some administrative officer 15 years later after you built will impose a proration formula. The law of appropriation gives stability. Permanent service was intended, says the Master to give stability, to do more than simply outlaw term contracts. Section 5 provides that it is -- shall -- the Secretary's contract shall conform to Section 4 (a). We say conform means conform and doesn't mean that the Secretary may reduce our 4,400,000 acre-feet by a proration formula discovered 15 years later and imposed by a contract then made. And to come to the ultimate of the application of the Master's contrary theory of what Section 5 meant, he holds that the Arizona contract which purports to allocate to Arizona 50% of the excess or surplus, and to give Cal -- Nevada a right to 4% of that 50% that that contract made with Arizona by implication reserves to California one-half of the excess or surplus because the only contractor to give half of it Arizona. Now, think what this means, this means that our right to one-half of the excess or surplus, however you define excess or surplus, doesn't originate in the Section 4 (a) of the Project Act, the bargain we made with Congress by passing our limitation act, not at all. But we got our right to one-half of the excess or surplus by implication and the terms of the contract made with by the Secretary of the Interior with Arizona 15 years later and that's where Nevada got 4% of excess or surplus. Now, we say you can't read into Section 5 any kind of a delegation like that. We made our bargain in 1929. We're not dependent for our right to one-half for excess or surplus upon an implied reservation made by the Secretary in the contract to somebody else 15 years later and three years after our projects were completed. We say that Section 5 was controlled also by Section 18 of the Boulder Canyon Project Act. Section 18 appears at page 395 and it says that nothing herein shall be construed as interfering with such rights as the States now have either to the waters within their borders or to adopt such policies and enact such laws as they may be necessary with respect to the appropriation, control and use of waters within their borders -- pardon, except as modified by the Colorado River Compact or other interstate agreement. That section went into the Act as an amendment offered by Senator King of Utah who had become vastly disturbed by the representation of Senator Hayden that this Act somehow is going to authorize some kind of a federal apportionment. Hayden was talking not about Arizona versus California but the imposition of the Colorado River Compact upon Arizona without her consent. And Senator King after a famous colloquy with Hayden in which he denied the power of the Federal Government to put its hands on a river in that fashion offered Section 18, it was adopted. After that, King supported the Act, the bill. This Section 18 is given respect by the Master, intrastate. He uses it to buttress his conclusion that within the State priorities of contract holders controlled their relative rights in reliance upon Section 18. He believes and we are willing to an extent, he believes that a Section 5 contract putting to one side this interstate apportionment effect to the Arizona contract, a Section 5 contract with the water user doesn't necessarily give that water user a water right. State law determines that that the user must find under state law under Section 18 a right to take and receive that water and Section 5 is the Secretary's consent that he may do so. Now, Section 18 was given interstate effect by this Court and refers to Arizona versus California case in 283 U.S. Arizona sued here to enjoin the construction of Hoover Dam and to have the Colorado River Compact declared inoperative on two grounds: One that the construction of the dam would invade her sovereignty; second, as she put it that the mere existence of the Act, Section 5 I supposed, would prevent the State of Arizona to an exercise in her sovereignty to prevent or permit appropriations of water from the Colorado River. Mr. Justice Brandies for this Court quoted Section 18, held that nothing in this Act, the Boulder Canyon Project Act, interferes with Arizona's right to initiate or perfect appropriations. Now, if Judge Rifkind is correct, the Court must've been mistaken in 283 U.S. because the whole premise of this report of the Special Master is that the Project Act had done exactly what Arizona then complained of. It had cut off. It had ended the right of States to appropriate the waters of the Colorado River below Lake Mead. If the Master is right, you got such a right only out of a federal contract and in the Secretary's discretion. Before I leave Section 8 of the reclamation law, I've talked now about Section 18 of the Project Act. Let me revert to Section 8 of the reclamation law incorporated by Section 14. This Court in Wyoming versus Colorado and Nebraska versus Wyoming cited Section 8 in interstate cases. You treated it not as necessarily applying a State appropriation to control the federal official but as expressing the intent of Congress to treat as federal interstate common law the principle established by state law of priorities of appropriation applied across state lines that as federal law, you picked up the philosophy of a western law of appropriation in Section 8 for the Reclamation Act. And we think the Master is wrong in restricting Section 8 to intrastate effect as he also restricts Section 18 of the Project Act. In the United States versus Arizona, this Court again had occasion to consider the Boulder Canyon Project Act. This was the case as you may remember in which Arizona had called out the militia to stop the construction of Parker Dam. The United States sued to enjoin that military interference. The injunction was denied because of lack of the authority of the unite -- of the Secretary's statutory authority to build the dam. But in the course of that opinion, this Court said that Arizona owns the land under this navigable stream to the thread of the stream and has a right to appropriate an equitable share of the flow of the stream. And the Court cited Section 14 of the Boulder Canyon Project Act as incorporating -- as incorporating the reclamation law, the Court went on to say that Arizona had this right unaffected by any provision of the Colorado River Compact or a federal reclamation law. Now, if the Master is right, that pronouncement by this Court in United States versus Arizona must have been mistaken because if he is right, the Project Act had cut off Arizona's right to appropriate the waters of the stream. In short, the Master deduces from the existence of contracts made some 15 years apart, the Arizona contract of 1944 or contracts made in 1931 to 1934. A contractual allocation scheme and apportionment as -- so that had been made by the statute, not by the statute itself, I should be clear upon that but by the Secretary immediately after enactment of the statute. If you look at the Arizona contract itself, you don't find any support for this. If any contractual allocation scheme, any federal apportionment was ever created, that's the single piece of paper that did it. You don't find the regulations. You don't find any document with a signature of the Secretary that can have any such effect except the Arizona contract, and it doesn't purport to do that. This contract says that it is made pursuant to the provisions of the reclamation law including the Boulder Canyon Project Act. It provides that the Secretary of the Interior agrees to deliver to make contracts, to make contracts with users in Arizona who may qualify under the reclamation law, but that he will make such contracts only up to a total delivery obligation of 2,800,000 acre-feet of consumptive use. But in Section -- in Article VII now, he provides that this contract does not impair any present perfected rights. And speaking of 1944, that's three years after our con -- our projects were completed in operation, 1944 present perfected rights, what does it mean? It is surely a promise of respect by the Secretary for the doctrine of priority of appropriation interstate, what were the present perfected rights except ours? It also provides in so many words in Article X that nothing in this contract shall be deemed to determine the allocation to any State of the waters apportioned by any category of the Colorado River Compact in order to determine any question of interstate priorities. In an accompanying decision by the Secretary of the Interior in 1944, he said that this language of Article X was intended to reserve for a judicial determination all of these questions. We say it did. That there does not exist any document which effects a -- an interstate apportionment, none ever purported to. This is a synthesis by the Master. Now, I referred earlier to what had happened in this 15-year period. Let me emphasize it again. In 1931, the Metropolitan Water District of Southern California entered into a contract with the United States in 1930 and 1931. Under both Sections 5 and Section 4 (b) of this Act, Section 4 (b) provided that the Secretary of the Interior should not undertake the construction of Hoover Dam unless and until he had in hand contracts which would liquidate the Government's investment with interest and plus operation and maintenance. He was able to do this by making power contracts and contracts of the storage and delivery of water. The first grade -- when he made was with the Metropolitan Water District. It committed itself to pay for 36% of the firm energy to be generated in Hoover Dam, to be paid for whether used or not but to be used only for pumping water into and in the aqueduct to propose the bill. The Project Act's legislative history is full of references through the intent of this project to furnish water for the coastal plain of Southern California to an aqueduct to be built by these cities at their own expense however. These two contracts remained, the water contract provides for permanent service. In 1931, the Secretary about to make a contract under Section 4 (b) as well as Section 5 with the -- those to use the all-American canal called upon the perspective users in California to get together with the State and submit a schedule of internal priorities to which Mr. Justice Stewart referred earlier. This was done. That is incorporated in all of the California water contracts. It provides respect for the California priorities internally at least. It -- the figures in it are not taken out of the air. The relative priority dates are those established by state law appropriations. The quantities are those appropriated under state law. The Secretary agrees to deliver those quantities subject to the availability of water in California under the Project Act in the compact. The Metropolitan Water District proceeded to construct this aqueduct, sold over $200 million worth of bonds but it didn't do that until this Court's decision had come down in 283 U.S. in which you construed Section 18 as sustaining interstate -- the priorities acquired under state law. At least you said that -- the Court said that Arizona's right to appropriate was not cut off by the Project Act and you've cited Section 18. They were senior to the Metropolitan Water District, the rights of the other agriculture users in California, the Palo Verde Irrigation District, the Imperial Irrigation District and the Coachella Valley County Water District to the extent of 3,850,000 acre-feet, the Metropolitan's contract call 4,212,000. Only half of that is within our 4,400,000, 550,000, 612,000 is dependent upon the availability of excess or surplus. The District proceeded to bill this aqueduct at its own expense. It went into service in 1941. Never throughout any of this history was there any indication from anyone that the Secretary of the Interior believed that he had been delegated power by Congress to cut down the 4,400,000 acre-feet by an interstate apportionment he might later make. In fact, the district's contracts were before Congress on three separate occasions in an Act which authorized a right of way for this aqueduct across public lands in an Act which ratified this Parker Dam contracts and gave the Secretary power to build it after the adverse decision in United States versus Arizona. And finally in 1941, when the Congress passed the Boulder Canyon Project Adjustment Act which in terms requires the Secretary of the Interior to rely upon this District for some 35% of the funds to repay the cost of Hoover Dam. And in 1941, in that same statute, Congress reenacted Section 18 provided in so many words that the provisions of the Project Act should continue to be operative except as special -- specifically amended here. The District began in service in 1941. The All-American Canal was finished in 1941. Now, bear in mind that both of these great projects are not just projects built under Section 5 with water contracts with the Secretary, these are the projects which under Section 4 (b) were required to underwrite Hoover Dam and the all-American canal. These are not paper filings. These are not some sort of exotic contracts not dependent upon the chemistry of offering acceptance and considerations, as the Master says. The Metropolitan Water District undertook a contract with United States calling for some $80 million in cash for power and some $12 million for payment for storage of water. It built an aqueduct which has cost over $400 million. It serves eight million people. Half of the water supply for the coastal plain of Southern California comes through this aqueduct. If the Master's Report is sustained, this supply in its entirety will be lost whenever the Colorado River Compact's restrictions upon the water supply available to the Lower Basin is enforced. This is inevitable. Here, let me emphasize perhaps what I should have earlier the meaning of the term “consumptive use” the common denominator of the Master, the Master's Report, his decree, our contracts, the Project Act, the Colorado River Compact. What is consumptive use? It is not the flow of the river at Lee Ferry or in these tributaries at some designated point. It is not the quantity diverted by a project. It is a quantity diverted minus the part of that that returns to the stream. Now, that has this very great significance. As the Master says, “75 million acre-feet of water flow in each decade at Lee Ferry”, under Article III (d) the guarantee of the compact, as he calls it. While it may be regulated by Hoover Dam into an annual discharge from Lake Mead of 7,500,000 acre-feet will not sustain 7,500,000 acre-feet per year of consumptive use below Lake Mead but much less for two reasons. First, because of losses in transit, evaporation losses, channel losses; and second, because of the returns to the river which must be deducted from this quantity even if diverted. And the significant example of that is the Mexican boundary. When I was here before, Mr. Justice Douglas asked about the troubles of Mexico arising from the quality of water reaching Mexico. This is return flow at the Mexican boundary. It is salty. Every irrigation project must keep alive by maintaining salt balance as much salt must flow out of the project as enters it. This is agricultural sewage. The quantity of water that finally leaves the United States at the Mexican boundary must be deducted from the 75 million acre-feet received at Lee Ferry even if you had no losses in transit to discover how much consumptive use. The III (d) delivery at Lee Ferry will support. Whenever the Compact becomes fully operative and we are getting only 75 million acre-feet at Lee Ferry, the guarantee of the Compact, we cannot sustain 7,500,000 acre-feet of consumptive use below Lake Mead (Voice Overlap) --
Arthur J. Goldberg: Mr. Ely, may I check a few figures?
Northcutt Ely: Yes sir.
Arthur J. Goldberg: Perhaps you could answer this in the original argument. In relation to what you're talking about now, do I understand correctly the following that right now California is using -- for existing uses 5,362,000 acres of water, is that correct?
Northcutt Ely: Of last year, about 5 million. We're not at a full capacity quite --
Arthur J. Goldberg: Arizona about 1,200,000?
Northcutt Ely: A little less, yes sir.
Arthur J. Goldberg: Is that about a 120,000?
Northcutt Ely: Counting the tributaries, the uses from the main river about 25,000 to 30,000 acre-feet.
Arthur J. Goldberg: Now the Central Arizona project, is it contemplated that this would have about 1,200,000?
Northcutt Ely: That is correct sir.
Arthur J. Goldberg: Now, if we were to apply the pro rata basis of the Master, assuming the loss of about 600,000. I'm using the example I think you'll use in some as a material that's before us. Would it be correct that California would then be diminished to about 4 million acre-feet?
Northcutt Ely: No, somewhat less. If the compact is enforced, the Lower Basin may appropriate from the main river, Lee Ferry to Mexican boundary about six and one half million acre-feet and -- of consumptive use and no more. If we got 44 seventy-fifths of that, we've got 3,800,000.
Arthur J. Goldberg: But if you took my example just as an example. I'm trying to work out the differences between the priority and the pro rata basis. If it were assumed that the supply -- the loss was 600,000 applying the pro rata adjustment from the Master, I think it's correct that it comes to about 4 million.
Northcutt Ely: Well, I haven't undertaken to work those figures too but you cannot be far wrong --
Arthur J. Goldberg: No, no.
Northcutt Ely: We state 3 million eighth.
Arthur J. Goldberg: Now, would be there -- the difference therefore be, assuming this same posture but -- that if the priority basis was used, the basis you are arguing for that you would continue to get about your 400 -- 4,400,000 but that Arizona would then bear the entire 600,000 shortage?
Northcutt Ely: No, Your Honor --
Arthur J. Goldberg: Assuming Nevada got the 300,000 --
Northcutt Ely: No. I'm happy to have the opportunity to straighten this out. The water supply that's going to be available for actual division under this decree whatever form the decree it takes is going to be of the order of 6 million acre-feet of consumptive use. It cannot be more than six and a half million. The 6 million figure represents the remnant available entry flow of Lee Ferry as reduced to about 75 million acre-feet to guarantee the compact. Wet water to the extent of 6 million acre-feet of consumptive uses, all the three States can expect to divide up. The 6,500,000 acre-feet figure results from the second restriction of the compact imposed by Article III (a) that is that our appropriations cannot exceed from that whole system, 7,500,000 million under III (a). And that consequently -- if that were the restriction and not the reduced flow under III (b) we could get up perhaps to 6,500,000 million. Now, at page 311 of the report, the Master shows what would happen in the event that there is a 6 million acre-foot supply of consumptive use. California would get 44 seventy-fifths of that or 3,520,000 acre-feet, a reduction of about 1,500,000 below our current users. Arizona in the same circumstances, he does not give the translation of the 28 seventy-fifths but it is 2,240,000 acre-feet. Arizona would get something like a million acre-feet more than her maximum uses by all of her projects when fully developed. Last year they used about a million, when fully developed that required a million and two. Out of a 6 million acre-foot supply whereas California would be reduced from present uses by a million and a half acre-feet, Arizona would be permitted to approximately double her present uses. It would find a million acre-feet for the Central Arizona project.
Arthur J. Goldberg: Is this the assumption of the Master that there would be no deduction for the diversion above the dam?
Northcutt Ely: That is correct.
Arthur J. Goldberg: Now, would that -- how would that be changed if there were deduction for the diversion above the dam?
Northcutt Ely: If Arizona diverts above the dam then if the Master's scenario is followed, we bring suit here again to enjoin that diversion under doctrines of equitable apportionment. And if we win that suit, then she can't divert above the dam, the -- we get 44 seventy-fifths of what we've just saved, she have to divert below the dam in which event, she will then be able to take the 12,200,000 as part of the 2 million eight. But if -- to take a smaller example, the Master doesn't see any prospect of substantial diversions above the dam, since he wrote his report, the Phelps Dodge Corporation for example has appropriated 18,000 acre-feet and is about to build a smaller project. That is that the threshold of what we do about these equitable apportionment suits above the dam. Shall we pursue each of these? Why -- one suit after another and in what court? But if Arizona does divert that 18,000, it doesn't affect at all under the Master's Report a right to precisely 28 seventy-fifths of what comes out below the dam.
Arthur J. Goldberg: But assuming that the Master was wrong in that aspect of the case, so the diversions above the dam were charged to Arizona, how would -- would you mind spelling out again how that would affect the hypothetical example used by the Master?
Northcutt Ely: Yes. Instead of having 2,240,000 acre-feet from Lake Mead, she had have 2,240,000 minus the consumptive uses above the dam.
Arthur J. Goldberg: Dam?
Northcutt Ely: If I understand correctly the Government's suggestion.
Potter Stewart: And is that the consumptive uses above the dam from the main stream or from the main stream of the tributaries between Lee Ferry and the lake?
Northcutt Ely: Well,--
Potter Stewart: Which?
Northcutt Ely: -- the Master redefines the main river from Lake Mead to upper to Lee Ferry as a tributary. That's inherent in his scheme. Consequently, he treats them all alike. It makes no difference whether the depletion takes place on Little Colorado or after Little Colorado enters the main river.
Potter Stewart: In that section between Lee Ferry and Lake Mead?
Northcutt Ely: That is correct.
Potter Stewart: I see.
Northcutt Ely: Now, if the -- let me revert again, if I don't -- if I answered your question. Let me revert again to page 311. This displays why the other figure that he uses 3,600,000 acre-feet of California consumptive uses, one of the most dramatic effects of the report are -- he calls a present perfected right the quantity in fact used before June 25, 1929, except that he treats all federal reservations as having fully perfected rights as of that date whether they ever used any water or not.
Arthur J. Goldberg: Isn't he applying Section 6 of the Project Act in so doing?
Northcutt Ely: Yes. I will come to Section 6 at present. Now, he says if -- hypothetically, California's present perfected rights of 3,600,000 acre-feet, that I might say is not a figure picked out of the air. It's not far off from what our present perfected rights would be under his definition. Note what happens. We get only the quantity of water we are using prior to June 25, 1929, 3,600,000 upon this assumption. Although, the flow which support 6 million, therefore all of the benefits of the stored water, all of the incremental supply, 2,400,000 acre-feet in its entirety goes to Arizona and Nevada. Our apportionment of the stored water, the incremental stored water which we think Section 5 was meant to touch at all is zero. All of it goes to the other two states. And we say that the report by this single page is -- its inconsistency with the intent of the Project Act becomes obvious. When Congress gave the authority to the Secretary, the contract for stored water under Section 5, this was surely not the intended result that the dam that we had to underwrite under Section 4 (b), the Metropolitan Water District had to pay for, the benefits of storage in its entirety go to the state which three times sued in this Court to stop that project. And none of it at all go to the project, the Metropolitan Water District is paying for.
Byron R. White: (Inaudible)
Northcutt Ely: Yes.
Byron R. White: (Inaudible)
Northcutt Ely: Yes. Your Honor, the --
Byron R. White: (Inaudible)
Northcutt Ely: Yes, we do. I hold --
Byron R. White: Even though (Inaudible)
Northcutt Ely: Yes, let me try to spell that out. First of all, Article III (d) has nothing at all to do with the apportionment of consumptive use to the Lower Basin but the Master is clear on that. We think he is exactly correct in his interpretation of the compact. Article III (d) deals with flow, wet water, Lee Ferry, Article III (a) and III (b) which apportion consumptive use or allocate consumptive use in the Lower Basin, first of all are dealing with consumptive use not flow as III (d) does. Second, they're dealing with the tributaries as well as the main river.We believe that it -- inevitable that the flow at Lee Ferry will be depleted by the Upper Basin to the -- what the Master calls this guarantee of the compact, III (d), 75 million acre-feet every ten years.
Byron R. White: (Inaudible)
Northcutt Ely: That is correct. Even though that may result in their inability to use the full quantity apportioned to the Upper Basin by paragraph (a) of Article III.
Byron R. White: (Inaudible)
Northcutt Ely: That is right. That they may not reduce that flow at Lee Ferry below 75 million but I do not assert Your Honor that that 75 million is available for appropriation in the Lower Basin, part of it is going to be lost by evaporation. A part of it is undoubtedly available in discharge to the Mexican Treaty burden. The fact that there's 75 million acre-feet of flow guaranteed at Lee Ferry above the points of use in Arizona, California and Mexico doesn't mean that it'll --
Byron R. White: (Inaudible)
Northcutt Ely: Oh, yes, the pluses and minuses slowly vary and upon the minus side. The inflow below Lee Ferry is not as great as evaporation losses. Well, evaporation losses alone exceed the total inflow from Lee Ferry to the Mexican boundary by something of the order from a million acre-feet. As to Mexico, the best we could hope for is that the return flow at the Mexican boundary from the Lower Basin diversions will supply most of the Mexican Treaty requirement.
Byron R. White: (Inaudible)
Northcutt Ely: Yes sir.
Byron R. White: (Inaudible)
Northcutt Ely: I'm assuming the plus. A plus is an algebraic -- negative as a matter of fact because the losses exceed the inflow. But we have -- the record shows magnificent testimony by hydrologists in an effort to appraise the resource at Lee Ferry, can we recently expect more than 75 million acre-feet every 10 years? The answer is that if we got every break conceivable, you could expect perhaps a million acre-feet more than that by every break conceivable, I mean the optimum regulation of all Upper Basin reservoirs and the restriction of Upper Basin uses in that fashion. But that about half of this excess would have come in tremendous years, five or six years of flood so great that Hoover Dam could not have controlled them. So the apparent prosperity is illusory. We cannot expect actually below Lake Mead, for years below Lake Mead more than the consumptive use of about 6 million acre-feet.
Arthur J. Goldberg: Well, am I wrong that at the present time about 6,500,000 acre-feet is being used currently?
Northcutt Ely: That is not far off, a little over 6 million. That is correct. We are now using in the Lower Basin about all that we can expect to use on a permanent basis. But it is impossible to find Your Honor, water for the proposed Central Arizona project an additional burden of a 1,200,000 without either taking it away from existing California projects or from the Upper Basin.
Arthur J. Goldberg: Now, assuming that example that you -- the Master was dealing with to which the loss is down to 6 million, applying your priority to the argument.
Northcutt Ely: Yes.
Arthur J. Goldberg: What then would happen? What would California get and what would Arizona get with --
Northcutt Ely: Yes.
Arthur J. Goldberg: -- of this six million in Nevada?
Northcutt Ely: Right. If six million acre-feet is the consumptive use as a resource could be divided by the decree and if we are sustained upon both our priority argument and our limitation argument, California would get approximately 4,600,000 acre-feet of that, 4,400,000 plus 200,000 acre-feet of excess or surplus which I'll try to explain a little later. And Arizona and Nevada would get about a 1,400,000 acre-feet. That is to say something like 200,000 or 300,000 acre-feet more than the requirements of all of their existing projects when fully completed.
Arthur J. Goldberg: Except that they wouldn't be able to then embark upon the Central Arizona project.
Northcutt Ely: You're exactly correct.
Arthur J. Goldberg: That would be excluded.
Northcutt Ely: That is right. They would have room for expansion on the main river by 200,000 or 300,000 acre-feet. Now, however, I want to call your attention Mr. Justice Goldberg to a 1961 statute of Arizona which provides this with respect to the Central Arizona project. It authorized a contract between the State of Arizona and the Bureau of Reclamation for the investigation of these same three routes that are shown upon the map. But it says this, provided further that the contract for the Bureau of Reclamation shall provide that the investigations and studies shall be restricted to only that quantity of water which may be available for use in Arizona after the satisfaction of all existing water delivery contracts between the Secretary of the Interior and users in Arizona for the delivery of main stream water and that nothing shall be done there under which will impair existing rights in Arizona for the diversion use of Colorado River Water. In short, Arizona lakes priorities fine, she thinks that her existing projects should be protected against this Central Arizona project but not our projects. We're not entitled to that protection.
Hugo L. Black: How much -- how much did you say the other states would get if you win --
Northcutt Ely: If we --
Hugo L. Black: -- this time?
Northcutt Ely: If we prevailed, Your Honor and the -- on all issues and the supply is adequate to sustain 6 million acre-feet of consumptive use, Arizona and Nevada would have 1,400,000, we would have 4,600,000. This 4,600,000 is less by about half a million acre-feet than our present uses but its 900,000 acre-feet more than the Master would give us -- pardon me 1,100,000 acre-feet more than he would give us. Arizona and Nevada, if they got 1,400,000 would be getting 200,000 or 300,000 feet more than their existing projects required.
Hugo L. Black: Is this the nub of the existing controversy as it has developed up to date?
Northcutt Ely: It is sir.
Hugo L. Black: Are there any other actual controversy in existence so far as the dispute with the Secretary is concerned?
Northcutt Ely: If you mean this Your Honor, we have no quarrel, whatever with existing projects in Arizona and Nevada, there is none.
Hugo L. Black: Is there any quarrel with reference to the -- whether the Secretary had decline to give contracts to users which uses (Inaudible)?
Northcutt Ely: Not as far as I know.
Hugo L. Black: Is there any dispute within the State as to whether the Secretary and the time up to date to give contracts which the State provides?
Northcutt Ely: Not as far as I know. The whole problem here is whether this Court shall render a decree which in a sense is an advisory opinion that Arizona may take back to the Congress to say that the Secretary of the Interior has forever allocated -- has apportioned to us 2,800,000 acre-feet of consumptive use which contains a margin above our existing projects of a 1,600,000 therefore there is water enough to support the Central Arizona project irrespective of its effect on California. There is no quarrel between the three California projects and any existing Arizona projects. There has never been a shortage of water at Lee Ferry out of it to sustain all our demands.
William O. Douglas: What you're saying is that we have no justiciable issue here?
Northcutt Ely: Well, it may -- it comes to that if you decline to give effect to the Colorado River Compact, we say that justiciability that's found here must be upon a theory of this case entirely different from that developed here by the Special Master. There is no quarrel with any Arizona project. This case wouldn't be here except for the demand for the proposed Central Arizona project --
William O. Douglas: But when you say Arizona project, that may be a misleading not purposefully but maybe just -- maybe misleading because you include pres -- you're talking about existing projects --
Northcutt Ely: No. Well, --
William O. Douglas: -- is that right?
Northcutt Ely: Permit me to make that very plain. We have no quarrel with any existing or authorized, presently authorized Arizona or Nevada project. They are not using up the full quantity to which --
William O. Douglas: Well, I suppose from the first argument, I gather that the impression that the importance of this decision, a decision in this case was to let the States know authoritatively how much water each had so that it could turn it over to its politicians and its engineers and whatnot for future additional legislation and financing, if any of that was needed.
Northcutt Ely: That's a fair statement. That is why the Master finds it justiciable.
Arthur J. Goldberg: Arizona could not proceed with the Arizona project unless there were a determination here.
Northcutt Ely: Well, yes Your Honor it could. It could in this sense. If our opponents are -- really mean what they say about the abundant water supply, if they really think that there is 7,500,000 acre-feet of consumptive use available below Lake Mead and not 6 million or less as we say, then they may exceed, they may acquiesce in recognition of our priorities that the 4,400,000 acre-feet goes here unhurt. There's plenty of water for them too including the Central Arizona project if the new project will take the risk which every new project in the history of the west so far has had to take of the availability of the water supply. It is only upon the premise of shortage that there need to be a concern by the recognition of our priorities up to 4,400,000 feet.
William J. Brennan, Jr.: Well, really -- if my memory serves me at all, I thought something with an agreement last year that the Central Arizona project is in limbo because the inability to get any financing until these problems are solved, am I wrong about that thing?
Northcutt Ely: Well, that is correct but the solution isn't necessarily one that says that yes, we -- Arizona goes back to Congress with a decree that says the Arizona contract did too apportion -- reserve water for us. If their content with a decree that says that the priorities of California up to 4,400,000 acre-feet, the quantitative limitations are to be respected then the availability of water for the Central Arizona project depends upon their convincing somebody, I suppose Congress that enough water is going to come out of the Upper Basin so that after giving respect to our existing priorities there's a margin for a new project and that is something I'm very sure they don't want to do.
Arthur J. Goldberg: Then you believe they would be foolish to do it because you don't think that that water supply is available?
Northcutt Ely: Exactly.
Arthur J. Goldberg: (Voice Overlap)
Northcutt Ely: If they have professed -- excuse me.
Byron R. White: If there's 6 million acre-feet as you suggest to the permanent basis and if the Master's formula is applied, there will be water for the main Central Arizona.
Northcutt Ely: That's correct.
Byron R. White: But no water for Metropolitan?
Northcutt Ely: That is correct. We would be cut back to 3,500,000 acre-feet against present uses of 5 million, Arizona would be allowed to increase from present uses of a little over a million to 2,200,000 which by a happy coincidence is just the additional margins he wants from the Central Arizona project. Now, the Master just doesn't believe our worries about the water supply. We have pending here a motion for the determination of that. It is truly inconceivable to me that the matter involving the destiny of these States be decided upon any guess work or any assertion of the irrelevance of this great fact of life to how much water is there? If you don't believe our experts, the finest in the land, the -- really, there never was such a battery of competent men from both sides on this subject. If you don't believe that, if you think that the water is going to be abundant for the indefinite future that nothing can happen until vast new projects are built, that Congress has never even thought about yet. If there's that kind of a dichotomy between what's real and what the world that might be then let's find out about it and then Congress is -- as well as the Court will have a firm foundation of some decisions here. But you don't need really to argue much about what the hydrologist would say if you look at the Colorado River Compact. If it's enforced, we can't claim appropriations of more than 6,500,000 acre-feet out of that river. And if III (d) is our whole water supply, if we don't get any windfalls out of the Upper Basin we can't get more than 6 million of consumptive use. And if that's true, either the Metropolitan Water District goes out of business or it doesn't.
Arthur J. Goldberg: Or perhaps the (Inaudible) but then would you not tell me why if that is so, you are using what's happened to the 500,000 that you are now using?
Northcutt Ely: The 5 million?
Arthur J. Goldberg: The -- as I understood it, you are using 6,500,000 acres presently out of the supply at Lake Mead and you are now saying, as I further understood you, you say you believe that what is really available is only 6,000,000 acre-feet. What has happened to the other 500,000 acre-feet?
Northcutt Ely: Right. The quantity now being used from and below Lake Mead by Arizona, California and Nevada is of the general order of 6,000,000 acre-feet, 6,000,000 to 6,500,000. I do not have the precise figure in mind. But that is because the Upper Basin is not developed. The Upper Basin depletions of Lee Ferry do not now reduce the flow there to 75,000,000 acre-feet for a decade. The law will say then -- has been 110 million that is 11 million acre-feet per year. There is now this paradox a present abundance. There's never been a shortage of water in the Lower Basin. There can't -- there couldn't be before the Colorado River Compact. If equitable apportionment where the rule unrestricted by the compact could have no lawsuit, all of our projects in Arizona, California and Nevada plus the Central Arizona project would be senior to projects later authorized in the Upper Basin, no shortage, no lawsuit. The problem exists because the Colorado River Compact touch right across this supply with what it says as an apportionment of perpetuity of the Upper Basin. The Master doesn't quite believe that.He says that these apportionments truly are nothing but ceilings on appropriations and if there's no assurance, these great projects are never going to get built in the Upper Basin. I -- may I have the chart that shows the 14 million (Inaudible). Now, he said for example that there's nothing to show that the depletions of the Upper Basin are ever going to exceed 3,840,000 acre-feet. But there's water for -- the Metropolitan Water District, our junior project to the time of our children, our great grandchildren, there never going to be a shortage. Well, since last January when we argued this case here, Congress has authorized new projects in the Upper Basin, the San Juan-Chama and Navajo and others that increase depletions to 4,500,000. The Master said that the Dixie Project on the Virgin River in Utah hadn't been presented to Congress. It hadn't cleared Secretary, there's no assurance it ever would and that consequently this was the only Utah project that might deplete the Lower Basin supply; we'll cross that bridge when we come to it. The Secretary of the Interior has submitted the Dixie Project for authorization to Congress. The Secretary of the Interior has closed reclaiming gorged dams since we were here last January into stored water. The Glen Canyon Dam would be closed in February to start to store water. These great Upper Basin dams will accumulate 35,000,000 acre-feet of storage. If they did it at a rate of -- if it took 30 years to do it, that's over a 1 million acre-feet a year of depletions. By the time the reservoirs are full, 20-30 years from now at that rate, the projects now authorized in the Upper Basin will be fully operative, Upper Basin depletions will surely never be less than 5,000,000 acre-feet and they'll gradually rise. We offer to prove in our motion now pending before you that by 1990, 28 years from now, by the time these Upper Basin reservoirs are full, the permanent Upper Basin depletions would be of the order of 6,200,000 acre-feet. Now, if you look at the map -- of the chart behind me, you'll see the range of estimates of the water supply. The maximum that can be hoped for is 15,200,000 acre-feet of Lee Ferry if we had a repetition of all the wonderful estimated years when there are no gauges, the minimum is 13,100,000, this is how much water would've been there and had there been no Upper Basin depletions at all. The range is somewhere between those. Now, at that time, we were here in January, the Upper Basin depletions authorized were 3,900,000 and we subtracted those from the water supply, they showed that they had a margin for Upper Basin expansion of 1,300,000 acre-feet. In the event the undepleted or diversion flow which is great in the future is 15,200,000. If it's as low as 13,100,000, we already pay some shortage. Since that time, the Upper Basin depletions authorized by Congress have increased to 4,500,000 and the gates are now shut upon their -- the first of the great storage dams.
Arthur J. Goldberg: This is an authorization. This doesn't mean that the depletion is now taking place at this rate.
Northcutt Ely: No, Your Honor but by the time the Upper Basin reservoirs are filled, by the time they've accumulated their 35,000,000, the depletions will be at this rate according to Bureau of Reclamation's Program of Construction.
Arthur J. Goldberg: In about 30 years?
Northcutt Ely: Less than that. We offer to prove that by 1990, 28 years from now, the permanent Upper Basin depletions according to Reclamation Bureau's forecast would be 6,200,000 acre-feet.
Hugo L. Black: Believing that -- assuming these must true, that much water will be taken out which does not return to the river.
Northcutt Ely: Yes. The flow at Lee Ferry will be depleted by that quantity. I'm not speaking now of consumptive use, diversions less returns but in the diminution of our supply at Lee Ferry.
Byron R. White: Which would mean what?
Northcutt Ely: Pardon me.
Byron R. White: Which would mean what for the --
Northcutt Ely: For the Lower Basin? If the flow of the so-called virgin flow at -- to Lee Fairy, assume it would 13,000,000 you subtract six, we'd have something like seven. If you subtract then the losses from Lee Ferry to Mexico, it would be about six. Now that's not any provision for Mexico at all. I don't know where the Mexican water had come from. If it -- it might have to be meant by further reduction of our residue of 6,000,000. If we were fortunate enough to have a virgin flow of 15,200,000 and the depletions were 6,200,000, it leaves nine. And out of that nine, we'd have to come the losses below of 1 million getting us down to eight and somewhere the water from Mexico has to be found. I cannot -- may I have this --
Byron R. White: At what point do you in time do you say the Metropolitan Water District would begin to feel the depletion, if the development in the Upper Basin goes on as you offer to prove that it wasn't going to go on --
Northcutt Ely: Yes.
Byron R. White: But 1963, that you thought --
Northcutt Ely: At about 19 --
Byron R. White: 1970?
Northcutt Ely: It -- well, I -- by 19 -- or the early 1970's, if the decree becomes operative and the Central Arizona project is built. As soon as that project is operative and assuming the Upper Basin depletions proceed at the rate we forecast, the Metropolitan's supply would be half lost in the early 1970's and totally lost by 1990.
Hugo L. Black: That's a long time (Inaudible)
Northcutt Ely: Well, if I may comment on the two halves of that. First, if I may say so respectfully Your Honor, it's not a long time. This Court has said that in the case of Economy, Light and Power Company, that a hundred years there's a short time in the history of a nation and so it is. 28 years is less than the time and has gone by since the signature of the Colorado River Compact. It is less than the time that the Boulder Canyon Project has been operative. Great projects must be built for a quarter century, a half century in the future or they suffer the fate of New York City which has to ration the water because it didn't do it, or we'd still have to ration water. 28 years is a short time. It takes years upon years to construct these great projects and to say that we shall be entirely out of water, in the Metropolitan Water District in a period as long as 28 years is not very reassuring. Second, as to what the alternative sources are available, I say to you, Your Honor this is completely outside the scope of this lawsuit. And as to rejected evidence upon it, correctly. He said, if we're going to try the issue of desalting the sea or bringing water from the Columbia or from the rivers in Northern California, we have some bigger lawsuits than the one you've got now and that's true. There is no evidence on that subject that the Master took cognizance of and none that we feel you should take cognizance of. The question now is, what are the water rights -- what is the agreement made by California with the Congress of the United States in 1929 upon which we have invested our $500 million by which we support our 8 million people? Not -- what can we do if we abandon that aqueduct to the sun, how can we do something else about it? Nobody's offered to pay for the alternative source that would take our water to give it to the Central Arizona project. It's outside the scope of this case if I may respectfully say so.
Hugo L. Black: Now, may I ask you, Mr. Ely, how would you reply to Justice Douglas, assuming the Master's Report (Inaudible)
Northcutt Ely: Well, I first want to --
Hugo L. Black: I thought (Inaudible) --
Northcutt Ely: I first want to give this hedge, Your Honor if I understood his question properly. It was -- what is the aggregate of the present -- existing project's claims against the river? And that aggregate of the claims of existing projects is not in excess of the supply. It is the pressure for a new Central Arizona Project that brings this case here at all. The existing supply given 6 million acre-feet if it's reduced to that would approximate --
Hugo L. Black: That is the real controversy.
Northcutt Ely: Pardon?
Hugo L. Black: That is the real controversy.
Northcutt Ely: Yes, and which is --
Hugo L. Black: Between California and Arizona.
Northcutt Ely: The real controversy is, shall water be found for the proposed Central Arizona project at the expense of existing California projects. It's the only reason we're here.
Speaker: I want to ask you. There is an area above -- this accosted you to suggest justiciability and there's an area above Lee Ferry in the portion of the Arizona border that lies in the Upper Basin.
Northcutt Ely: Yes.
Speaker: And I haven't heard any discussion as to the prospects of Arizona being able to satisfy or control or in part her requirements out of that section which would be a charge not against the Lower Basin but against the Upper Basin.
Northcutt Ely: The area above the Lee Ferry in the -- in Arizona is accommodated by the Compact among the Upper Basin States --
Speaker: Right.
Northcutt Ely: -- which provides that 50,000 acre-feet as apportioned to Arizona for that -- in the consequence of that area in the Upper Basin. It's geographically so located that I don't think any major diversion could take place there. If it does, then to the extent of 50,000 acre-feet, the upper states would acquiesce then. That's chargeable there (Voice Overlap) --
Speaker: Chargeable there, yes.
Northcutt Ely: Yes. Your Honor, I think I have fairly referred to our position with respect to the interpretation of Section 4 (a) and I went into that at great length when I was here before. I want to summarize it very briefly. First, before I do I've been reminded that I did not fully answer one question here as to what would happen if California, I said a minute ago that if California prevailed on both the priority issue and the limitation issue that I'm going to briefly discuss now, we'd get 4,600,000 acre-feet out of, let's say 6 million. If we prevail only upon the priority issue, that is to say if you sustain our priorities up to the quantitative ceiling of 4,400,000 acre-feet then there being 6 million acre-feet available I'll assume, Arizona and Nevada would have 1,600,000 acre-feet about a half million acre-feet more than they used last year. In other words, there would be that quantity available for any project they want to use it on. If you decide with us on priorities but if you reject the limitation argument that I'm about to make, if you accept both of them then against a supply of 6 million acre-feet we'd get the 4,600,000, I'm not sure. Now also, it would be fair to say that if there's as much as 7,500,000 acre-feet below Lake Mead which means more than 10 million flowing in at Lee Ferry then happily, we'd get as much as 5,400,000 acre-feet in Arizona and Nevada to get 2,100,000, plenty of water for everybody. We'd get our full supply for our projects and they would get 2,100,000, a million more than they're now using in the middle -- Central Arizona project but to get into that happy state, we have to have at Lee Ferry more than 10 million acre-feet and the Upper Basin has to reduce its uses to not over a 3 million or 4 million acre-feet not the 7,500,000 they thought they got under the compact. What were the realistic supply here is of the order of 6,000,000 to 6,500,000 acre-feet, weren't nearly six.
Potter Stewart: Six million to 6 and-a-half million acre-feet in what -- in what body of -- in --
Northcutt Ely: From -- from --
Potter Stewart: -- the main stream from the Lake Mead down or what?
Northcutt Ely: In the Red River that the Master uses, Lake Mead to Mexico.
Potter Stewart: And when you say that Arizona presently is using how much of that?
Northcutt Ely: Let me back up. Let me back up Your Honor. There is not more -- let us say 6 million acre-feet to avoid two figures. 6 million acre-feet of consumptive use available in the Lower Basin under the terms of the compact from the main river, Lee Ferry to Mexico, Lee Ferry to Mexico.
Potter Stewart: Lee Ferry to Mexico.
Northcutt Ely: That is correct.
Potter Stewart: Alright.
Northcutt Ely: To the extent that this is consumed between Lee Ferry and Lake Mead as that much less below Lake Mead.
Potter Stewart: Alright. Then of that 6 million, Arizona is now using how much?
Northcutt Ely: Arizona is now using a little over a million.
Potter Stewart: A million?
Northcutt Ely: Yes sir.
Potter Stewart: And -- then in addition, Arizona so far -- is getting the -- use of the Gila, isn't that correct?
Northcutt Ely: That is correct.
Potter Stewart: And that's an additional.
Northcutt Ely: That is correct. And let me make this clear, Your Honor. I should've done this of course. When I say that -- if you agree with us, they would have a 1,400,000 acre-feet, I mean out of the main river plus the tributaries and all the tributaries sustained consumptive uses of about 2 million acre-feet. So if you're allocating the waters of the Lower Basin which you are or New Mexico and Utah wouldn't be here because they use only the tributaries and they were -- and pleaded here, if you're allocating the waters of the Lower Basin including the tributaries then Arizona's share if we prevail on all issues is not only of about a 1,300,000 out of the main river but 2,000,000 on the tributaries or nearly that, the 1,700,000 let us say, 3 million altogether. Now, briefly on this question of the limitation issue, what it boils down to is simply this. In our agreement with Congress, when we restricted our uses to 4,400,000 acre-feet plus half of the excess or surplus of the waters available to the Lower Basin under the Colorado River Compact --
Speaker: (Inaudible)
Northcutt Ely: Thank you.