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water rights which had accrued by priority of possession and “are recognized and acknowledged by local customs, laws, and the decisions of courts * * *.” These possessory rights were further protected by the act of July 9, 1870 (16 Stat. 217) which provided that public land patents "shall be subject to any vested and accrued water rights." See Atchison v. Peterson (87 U. S. C. 507); Basey v. Gallagher (87 U. S. C. 670); Jennison v. Kirk (98 U. S. 453); California Oregon Power Co. v. Beaver Portland Cement Co. (295 U. S. 142).

These statutes were followed by the Desert Land Act of 1877 (19 Stat. 377) which allowed the entry and reclamation through irrigation of desert lands in a Western area which now includes the States of California, Oregon, Nevada, Washington, Idaho, Montana, Utah, Wyoming, Arizona, New Mexico, North and South Dakota (Colorado was added later). This act contains a proviso that an entryman's right to use water would depend upon prior appropriation for irrigation and that,

* * * all surplus water over and above such actual appropriation and use, together with the water of all lakes, rivers, and other sources of water supply upon the public lands and not navigable, shall remain and be held free for the appropriation and use of the public for irrigation, mining, and

manufacturing purposes subject to existing rights (43 U. S. C. 321). The Reclamation Act of 1902 (32 Stat. 388) provided the basis for direct action by the Federal Government in the construction and operation of irrigation projects. From the very beginning Congress declared that this program must be carried out in conformity with State water law. Section 8 of that act provides :

"SEC. 8. That nothing in this Act shall be construed as affecting or intended to affect or to in any way interfere with the laws of any State or Territory relating to the control, appropriation, use, or distribution of water used in irrigation or any vested right acquired thereunder, and the Secretary of the Interior, in carrying out the provisions of this act, shall proceed in conformity with such laws, and nothing herein shall in any way affect any right of any State, or of the Federal Government or of any landowner, appropriator, or user of water in, to, or from any interstate stream or the water thereof: Provided, That the right to the use of water acquired under the provisions of this act shall be appurte nant to the land irrigated, and beneficial use shall be the basis, the measure, and the limit of the right.”

As other Federal programs for resource management have come into existence a number of provisions have been enacted, varying scope and detail, which were manifestly designed to avoid conflict between Federal activities and local water law principles. Among these are the following:

(1) Act of June 4, 1897 (30 Stat. 36), relating to forest reservations.

(2) Sections 9 (b) and 27 of the Federal Power Act of 1920 (41 Stat. 1068, 1077).

(3) Section 3 of the Taylor Grazing Act of 1934 (48 Stat. 1270). (4) Sections 3 (b) and 10 of the Water Conservation Act of August 11, 1939, as amended by the act of October 14, 1940 (54 Stat. 1121, 1125).

(5) Section 1 of the Flood Control Act of February 22, 1944 (58 Stat. 887).

(6) The National Parks Act of August 7, 1946 (60 Stat. 885).
(7) Section 208 of the act of July 10, 1952 (66 Stat. 560).

(8) Section 3 (e) of the Submerged Lands Act of May 22, 1935 (67 Stat. 31).

(9) Section 4 of the act of August 4, 1954 (68 Stat. 667).

(10) Section 4 (b) of the act of July 23, 1955 (69 Stat. 368). Under these statutes, which are built on the principle of comity between the Federal and State Governments in regulating the acquisition of rights to the use of water, thriving communities have been established in States once described as the Great American Desert. Today approximately 27 million acres are irrigated. Of this total about 7 million are the result of Federal projects, and the rest have been subjected to irrigation through local efforts based upon presumed security of property rights to the use of water.

At least with respect to nonnavigable waters, this presumed security of right so necessary to encourage local water development seemed well founded. Federal legislation, particularly the Desert Land Act, described above, appeared to have removed the possibility that Federal public land ownership and water development activities could jeopardize these water rights based upon State.

law. (California Oregon Power Co. v. Beaver Portland Cement Co., 295 U. S. 142; United States v. Gerlack Live Stock Co., 339 U. S. 725 ; Ickes v. Fox, 300 U. S. 82; and see Nebraska v. Wyoming, 325 U. S. 589, 611 et seq.)

In the California Oregon Power Co. case, the Supreme Court said (259 U. S. at 162–163):

“As the owner of the public domain, the Government possessed the power to dispose of land and water thereon together, or to dispose of them separately * * *. The fair construction of the provision now under review is that Congress intended to establish the rule that for the future the land should be patented separately; and all nonnavigable waters thereon should be reserved for the use of the public under the laws of the States and Territories named. The words that the water of all sources of water supply upon the public lands and not navigable 'shall remain and be held free for the appropriation and use of the public' are not susceptible of any other construction. The only exception made is that in favor of existing rights; and the only rule spoken of is that of appropriation *** What we hold is that following the act of 1877, if not before, all nonnavigable waters then a part of the public domain became publici juris, subject to the plenary control of the designated States * * *.”

In view of the recent decision in the so-called Pelton Dam case (FPC v. Oregon, 349 U. S. 435), uncertainties have arisen concerning the future interpretations of the Desert Land Act. In our judgment this situation should be clarified. Failure to do so, we believe, will lead to protracted litigation, the possible destruction of local investments in water development, and the im. position on the Federal Government of substantially all the burden of future water development in the West.

In the Pelton Dam case the applicant for a license under the Federal Power Act did not acquire water rights for power development under the laws of Oregon, notwithstanding the provisions of sections 9 and 27 of that act (41 Stat. 1068, 1077). The proposed power dam would lie between an Indian reservation dating from 1855 on one side and, on the other, a power site reserve first set aside in 1909 and later confirmed under the act of June 25, 1910 (36 Stat. 847), giving the President authority to withdraw public lands for public purposes. The stream was presumed to be nonnavigable. Nevertheless, the Desert Land Act was held inapplicable “to the use of waters on reservations of the United States”—even when the reservation has been created since 1877. The term "reservation” was used in its broadest sense to include any public lands withdrawn or reserved from sale or disposition under the public land laws.

Since 1900, millions of acres have been withdrawn from entry for a variety of purposes. Yet many water diversions and canal and reservoir rights-of-way on and over such withdrawals have been permitted in the last 50 years in the Western States, subject to compliance with State law. The possible impact of the Pelton decision was pointed out in the dissenting opinion, where Justice Douglas said (349 U. S., at 456):

“I assume that the United States could have recalled the grant of jurisdiction over water rights, saving, of course, all vested rights. But the United States bas not expressly done so; and we should not construe any law as achieving that result unless the purpose of Congress is clear.

“The reason is that the rule adopted by the Court profoundly affects the economy of many States, 10 of whom are here in protest. In the West, the United States owns a vast amount of land-in some States, over 50 percent of all of the land. If by mere Executive action the Federal lands may be reserved to the United States, vast dislocations in the economies of the Western States may follow.”

In the light of the Pelton decision it is entirely possible to argue that State law appropriations which were made on Federal withdrawals many years ago are null and void. No one can say with certainty whether the water rights “reserved" to the United States are riparian in character or whether they apply to all future beneficial uses on withdrawn Federal lands, whether or not the lands are riparian. Nor can anyone predict what effect these withdrawals will have on appropriative water rights above and below Federal withdrawals. In effect, two entirely different schemes of water law may have been imposed on the same streams, and the previous orderly development of rights to the use of water under State law criteria may be seriously disrupted.

The importance of recognizing water rights as property rights was pointed out by the report of the Presidential Advisory Committee on Water Resources Policy, where it was said :

“There has not been adequate consideration given to the proper respective relationships and responsibilities between the Federal Government and the States

and private individuals with reference to water resources rights. It is believed that the principles which recognize water rights as property rights should be accepted. Determinations as to disposition of water should recognize such rights. A study should be made by the Federal Government in cooperation with State and local bodies to develop principles concerning water rights that would assure the most effective use of water to best meet the needs of the people national, regional, State, and local.” (H. Doc. 315, 84th Cong., p. 3.)

In addition to the above general observations, we submit the following specific comments concerning the proposed substitute to S. 863 :

Section 5 requires all Federal agencies and employees to avoid interference with water rights acquired under State law in the 17 Western States prior to the effective date of the proposed legislation, unless that interference “is expressly authorized by law and upon payment of just compensation.” The usual exceptions are provided for acquisition by purchase, exchange, gift, or condemnation. This language does not attempt to delegate or limit constitutional powers of the Federal Government, and merely requires, in the exercise of those powers, application of the principle of just compensation to all cases of water rights vested under State law. However, since the phrase “expressly authorized by law” might be construed to require a detailed specification of water rights to be acquired in Federal project legislation—and this is seldom feasible at the time of authorization—we recommend deletion of the word "expressly" from this section. We also recommned that the words "eminent domain” be substituted for "condemnation" in the proviso.

Section 6 would expand the provisions of the Desert Land Act so as to apply to both navigable and nonnavigable waters in the affected States. It would, so far as the Federal Government is concerned, also make such waters available for appropriation for beneficial purposes, pursuant to State law, without the public lands limitations of the Desert Land Act. All Federal agencies, employees, permittees, and licensees would be required hereafter to acquire water rights in conformity with State law. This latter provision is nearly identical to section 8 of the Reclamation Act of 1902, which now governs the Secretary of the Interior.

The first proviso to section 6, recognizing the historical and public policy considerations in flood-control operations, excepts storage and release of water by the United States solely for the prevention of floods. The second proviso contains the usual exception for authorized acquisitions by purchase, exchange, gift, or condemnation. The third proviso preserves to the United States any defense it may have against the assertion of a water right which otherwise would be enforceable only because of a State statute discriminating against the United States. The last proviso makes clear that nothing in the bill is to be construed as permitting the acquisition of any private right to divert or store waters in any national park or monument.

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We recommend that the saving clause for existing rights at the beginning of section 6 be expanded to cover such rights, if any, under Federal law as well. Constitutional difficulties may thus be avoided. To accomplish this end the words “under State law" should be deleted. This would also preserve Indian water rights.

We recommend the substitution of the words “eminent domain” for “condemnation” in the second proviso.

The basic purpose of the bill, so far as water rights acquired previously are concerned, appears to be in the nature of quiet-title legislation. We are unaware of any State legislation which, through discrimination against the United States, has permitted the creation of water rights interfering with Federal activities. To avoid unnecessary litigation, we believe that the third proviso should be limited to rights "hereafter acquired under State law.”

Section 7 is principally concerned with reenacting, in substance, the provisions of section 208 of the act of July 10, 1952 (66 Stat. 560). Subsection (b) clarifies the process requirements of the above-mentioned section 208. Subsection (d) makes explicit the right of the United States to remove water actions in State courts to Federal courts. Since the subject matter of section 7 concerns matters of judicial procedure within the jurisdiction of the Department of Justice, we refrain from making any recommendations with respect thereto.

Section 8 reserves the defense of sovereign immunity in actions in the Supreme Court relating to the rights of States to the use of waters of any interstate

stream.

75335–56--11

Section 9 is a saving clause to assure that the bill is not construed to permit appropriations of water in any State in excess of that State's equitable apportionment under judicial decree of interstate compact, or when such appropriation would interfere with the fulfillment of treaty obligations.

As you know, the President's Advisory Committee on Water Resources Policy recently recommended the initiation of a joint Federal-State study of desirable improvements in Federal and State laws relating to water rights. I believe it would be fully appropriate for this committee to initiate legislation to'rard this end.

We recommend careful consideration of the reports submitted to your committee by other agencies, and believe that additional amendments may be de. sirable in order to avoid any serious problems of construction. Representatives of this Department will stand ready to cooperate with your committee toward this end.

We are advised that the Bureau of the Budget has no objection to the submission of this report. However, your attention is called to the adverse report on S. 863 submitted by that agency on March 15, 1956.

Senator WATKINS. From a hasty examination of this report, I do not think they are spelled out.

Senator BARRETT. Yesterday afternoon, when Senator Watkins was presiding, Mr. Bennett of the Interior Department said that he would come back at a later time and discuss the bill and submit the recommendations for amendment section by section.

Secretary McKay. Mr. Chairman, I'might say that I am appearing here on the principles involved. I am not a lawyer. I believe we have some good lawyers that will be glad to help write amendments and cooperate, but we want to be actually sure that it is spelled out accurately and not by McKay but by some smart attorneys.

Senator ANDERSON. Mr. Secretary, we appreciate your statement very much and we will regard it as a statement on principles, and if we have detailed questions on just how the amendment should work, we will direct them to Mr. Bennett or some other member of your staff.

We will now proceed to ask you a few questions.
Senator Barrett?

Senator BARRETT. Mr. Secretary, I want to commend you for that splendid statement. It certainly reflects the thinking of the West for many, many years. I would like to read to you again a statement which was made by the Court in the Pelton case out in your State of Oregon with reference to policies, and I quote:

In the Federal Power Act, there is a separation of those subjects which remain under the jurisdiction of the States from those subjects which the Constitution delegates to the United States and over which Congress vests the Federal Power Commission with authority to act. To the extent of this separation, the act establishes a dual system of control. The duality of control consists merely of the division of the common enterprise between two cooperating agencies of Government, each with final authority in its own jurisdiction. The duality does not require two agencies to share in the final decision of the same issue.

Where the Federal Government supersedes the State government, there is no suggestion that the two agencies both shall have final authority.

Are we not dealing here with something where the Federal Government has its own field, and where the Congress has acted the States have been authorized to operate in certain fields, and that runs through all of the discussion of policy here today; that the States over the years have been given the authority and they have exercised that authority and they have granted rights to the use of water making possible the building of the West, and wherever the Federal Government wants to come in, they come in on precisely the same basis as any

one else and the Federal Government is treated precisely in the same way as anyone else in the acquisition of these rights?

Secretary McKay. That is right, Senator, and also the Pelton Dam case frightened people all over the West because, as you probably remember, there was the Indian reservation on Warm Springs on one side of the river and on the other side there was a reservation for a power site. So, the Federal Power Commission, following the law, granted this with a disregard of the State rights.

Where we have jurisdiction, we have to get permission from the hydroelectric commission. So it was a disregard of the State's rights to approve or disapprove.

So we believe for that reason that the law should be more explicit so there may be no conflict of interests between the Federal.

Senator BARRETT. I am certainly glad to hear you say that.

Now, there is one other point that I might disagree with you on, and that is this matter of a study. I have taken that matter up with many, many people in the West, and as far as the West is concerned, their position on water rights is as you well know very firmly established and has been for years and years, and if you got a group of representative water people from the 17 States together, I think they could make their study and their report in 15 minutes and come back in and say, “This is it we stand on the same basis as always for State control.”

As far as the rest of the country is concerned, I think you are entirely correct and I have said repeatedly in the consideration of the small projects bill that we should have a study, because outside of the West we do not have adequate water laws in the other States. It is only natural that we are ahead of them for the reason that our water law was developed for reasons of necessity if nothing else, but I agree that the other 31 States, a study is entirely in order.

Secretary McKay. May I call attention to the fact that in that statement I said it would not take much for the Western States. We could set it up in 15 minutes. For instance, agriculture has changed.

Even in my western part of Oregori, 48 inches of rainfall, we are irrigating because a farmer cannot live on field crops and forage crops. To raise specialized crops, he has to have water in July and August. In those months there is no more water than there is in New Mexico.

Senator ANDERSON. He has to have it when he needs it?

Secretary McKay. That is right. So they have to store water. So the prior rights along the river, we have to store water. This was the Army Engineers’ flood control project, of which I was chairman for 14 years. We store 1.5 million acre-feet upstream to irrigate. This eastern seaboard area of Virginia and Maryland needs irrigation to compete in the markets today. They cannot do it under their

water rights.

Senator ANDERSON. You want to remember that the delta of the Mississippi, which is certainly one of the great agricultural areas of the world, has now started irrigating out of the Mississippi River.

Secretary McKay. In that case, they can do it, but in other cases they have to store the water. So I agree with you thoroughly, Senator.

Senator WATKINS. Here in many places in the East they do not have the places to store the water.

Secretary McKay. Then they have to go to Utah.

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