Opinion ID: 105730
Heading Depth: 1
Heading Rank: 2

Heading: scope of the appeals and nature of the contracts.

Text: These four appeals contest the right of the United States and California to complete the venture and reap the rewards therefrom as provided by their respective laws. It should be noted that the appeal involving the Santa Barbara County Water Agency, No. 125, does not involve the Central Valley Project, as it does not lie within that area. It concerns a project to supply water for irrigation and municipal uses along the south coastal area of Santa Barbara County. It includes a dam on the Santa Ynez River impounding water in Cachuma Reservoir. This river rises on the western slopes of the Coast Range and runs into the Pacific. The Tecolote Tunnel will deliver water across the coastal range of mountains to the Santa Barbara County Agency through the lateral distribution systems of the Goleta and Carpenteria County Water Districts. The adoption of the project by the Congress in 1948 was based on the recommendation of the State Division of Water Resources Report stating that there was an urgent and immediate need for substantial supplemental municipal and irrigation water supplies . . . . The city of Santa Barbara has a critical water situation at this time. . . . The underground water supplies in the county water districts are being seriously overdrawn. In some localities . . . wells are being damaged by salt water intrusion. H. R. Doc. No. 587, 80th Cong., 2d Sess. 10. While the contract is authorized under § 9 (c) of the 1939 Act, [5] for our purposes it is identical to the others and will be discussed with them. The remaining appeals involve areas in the southern portion of the Central Valley Basin. The Madera District includes the Friant Dam and Millerton Lake, the sites for which the United States has purchased outright. Water rights surrounding these areas were involved in United States v. Gerlach Live Stock Co., supra , and have been acquired by the United States. These installations are, of course, vital to the operation of the project in the south of the valley. The Madera District will be furnished water from Millerton Lake by the Madera Canal. The Ivanhoe District is south of Friant and will be supplied water through the Friant-Kern Canal. It is interesting to note that irrigators in this district receive water diverted from the San Joaquin in which they never had nor were able to obtain any water right. The contracts to which the Supreme Court of California took exception provide, in outline, that the United States will, after construction of the water supply facilities and the lateral distribution system for the irrigation districts, furnish water to the districts and the Santa Barbara County Agency for a period of 40 years. Incorporating the requirements of § 5 of the Reclamation Act of 1902, [6] the contract provides that project water shall not be furnished to lands in excess of 160 acres in single ownership. This limitation applies only to project water and previously existing water supplies are unaffected thereby. Large landowners, i. e., those who own excess land, who wish that excess to have the benefit of project water must agree to sell their excess to other than large landowners within 10 years at a price, fixed by three appraisers, which will exclude potential enhancement of the price by reason of project water being available. Large landowners electing not to sell their excess may use existing water supplies in underground sources. Moreover, if they designate which of their holdings shall be considered nonexcess, the district would furnish water to that land under the terms provided in the contracts. The repayment provisions as to the distribution systems require liquidation of the maximum stated expenditure of the United States by installments spread over 40 years, without interest, in accordance with § 9 (d) of the Reclamation Project Act of 1939. As to the water supply facilities, such as the dams and reservoirs, the contracts employ the more liberal provisions of § 9 (e) of that Act. [7] Repayment, without interest, is to be included in the charge for water sold to the districts and the agency by the United States. The contract term runs for 40 years and, using the language of § 9 (e), the water rate is calculated so as to return to the United States revenues at least sufficient to cover an appropriate share of the annual operation and maintenance cost and an appropriate share of such fixed charges as the Secretary deems proper, due consideration being given to that part of the cost of construction of works connected with water supply and allocated to irrigation. The Congress has now supplemented these terms of the contracts by the Act of July 2, 1956, 70 Stat. 483. It provides that the districts and the agency shall be given credit each year for so much of the amount paid . . . as is in excess of the share of the operation and maintenance costs of the project which the Secretary finds is properly chargeable. . . . The provision is retroactive and runs with the contract, and when this amount is equal to the amount owing on the total water supply expenditures allocated to irrigation, no construction component shall be included in any charges made for the furnishing of water . . . . The Act also permits renewal of the contract on terms that will reflect any increases or decreases in construction, operation, and maintenance costs and improvement or deterioration in the [district's] repayment capacity. In addition, the Act provides that the districts and the agency shall . . . have a first right (to which right the rights of the holders of any other type of irrigation water contract shall be subordinate) to a stated share or quantity of the project's available water supply for beneficial use on the irrigable lands [within the district] and a permanent right to such share or quantity upon completion of payment of the amount that is due on expenditures for water supply allocated to irrigation.