California Limitation Act (1929)

The consent of the United States to the Compact was conditioned by Section 4(a) of the Boulder Canyon Project Act upon California passing a Limitation Act whereby the required storage dam would be built only if California would agree "irrevocably and unconditionally" to limit her annual consumptive use of Colorado River water to 4.4 maf/yr of the 7.5 maf/yr apportioned to the Lower Basin by Article III(a) of the Compact, plus not more than one-half of any excess or surplus waters unapportioned by the Compact. California met this requirement by passing the California Limitation Act of March 4, 1929.

Boulder Canyon Project Act (1928)

The purposes of the Act, as stated in Section 1, were controlling the floods, improving navigation, regulation of flows, the storage and delivery of stored water for reclamation of arid lands and other beneficial uses "exclusively within the United States, and for the generation of electrical energy ... to make the project self-supporting and solvent."

In Section 1 Congress authorized the construction of Hoover Dam and Powerplant and the All- American Canal to Imperial and Coachella Valleys in California. Congress also consented to the Colorado River Compact. However, Section 4(a) of the Act provided that in the absence of the seven-State approval of the Compact, the Act would become effective only when the Compact was approved by California and five of the other seven States, and it further provided that California would be required to limit its consumptive use to 4.4 million acre-feet (maf) of the 7.5 maf/yr apportioned to the Lower Basin by Article III(a) of the Compact, plus not more than one-half of any surplus. California did so by enactment of the California Limitation Act on March 4, 1929 (see below).

The Project Act, with this limitation on California, not only reserved Lower Basin water for the States of Arizona and Nevada, but it provided protection to the Upper Basin against unlimited development in the Lower Basin with prior appropriative rights to the water so used, as well as assurance that the Colorado River Compact would not be nullified.

Section 4(a) of the Boulder Canyon Project Act authorized the Lower Basin States of Arizona, California and Nevada to enter into an agreement providing that of the 7.5 maf/yr annually apportioned to the Lower Basin by Article III(a) of the Compact there shall be apportioned to: (1) Nevada, 300,000 acre-feet annually; 2) Arizona, 2.8 million acre-feet annually, plus one-half of any excess or surplus waters unapportioned by the Compact, and exclusive beneficial consumptive use of the Gila River and its tributaries within the boundaries of Arizona; and (3) California, 4.4 million acre-feet annually, plus one-half of any surplus waters unapportioned by the Compact.

The three State apportionment proposal was never agreed upon by the Lower Basin States despite negotiations in 1929 and 1930. However, the Supreme Court Opinion of June 3, 1963, in Arizona v. California (373 U.S. 546) concluded that Congress had made such an apportionment by authorizing the Secretary of the Interior to accomplish this division. This was done by the Secretary's contracts for the delivery of water in the Lower Basin States and by providing (Section 5) that no person could have the use of Colorado River water without a contract with the Secretary for permanent service.

Conditions Precedent to Act:

Section 4(a) of the Boulder Canyon Project Act provided that the Act shall not take effect until either all seven States signatory to the Compact had ratified the Compact or, if that ratification did not occur within 6 months from the passage of the Act, then until six States, including California, shall have ratified, and California shall have enacted legislation irrevocably limiting its consumptive use to 4.4 maf of the waters apportioned to the Lower Basin States by Article III(a) of the Compact plus one-half of any excess or surplus waters. Section 4(b) provided that before any money should be appropriated for the construction of the dam or powerplant, or any construction work done or contracted for, the Secretary of the Interior should make provisions for revenues by contract adequate to assure repayment of all expenses of operation and maintenance and the repayment of the Federal investment within 50 years from the date of completion of such works, together with interest thereon. Similarly, before any money was appropriated for construction or construction work was done on the main canal to Imperial and Coachella Valleys, the Secretary had to provide for revenues, by contract or otherwise, adequate to assure payment of all expenses of construction, operation and maintenance in the manner provided in the Reclamation Law.

Other Major Provisions:

Section 2 created the Colorado River Dam Fund through which all appropriations ($165 million were authorized) and income were to pass. Hoover Dam and the All-American Canal accounts were to be separately maintained. Hoover power revenues were not to pay for any canal costs; lands benefiting from the canal were to repay its costs but were not to be charged for water or for its use, storage or delivery.

All costs of Hoover Dam, its powerplant, and appurtenant structures, including interest at 4 percent, were reimbursable, but $25 million was allocated to flood control to be repayable out of 62 1/2 percent of the surplus revenues during the 50-year amortization period. Pursuant to Section 4(b), 18-3/4 percent of excess revenues was to be paid to each of the States of Arizona and Nevada, in lieu of taxes which the States might have collected if the project had been built with other than Federal funds. After repayment of all costs, charges were to be made on such basis and revenues expended within the Basin as hereafter prescribed by Congress. These provisions were changed by the Boulder Canyon Project Adjustment Act.

The All-American Canal costs were required to be repaid under Reclamation Law in 40 years without interest. In addition, the $1.6 million of Laguna Dam costs were also to be repaid, even though it was never used as a diversion structure for Imperial Valley.

Power Contracts:

Section 6 of the Act provided that energy was to disposed of by contract. Section 5 provided that the disposition of energy by the Secretary be done under general and uniform regulations conforming essentially to those of the Federal Power Commission to "responsible applicants" under established standards of preference, e.g., to public bodies and States. Their contracts were not to be longer than 50 years from the date at which energy is ready for delivery. The contracts were to be subject to readjustment at the end of 15 years and each 10 years thereafter as justified by competitive conditions at distributing points or competitive centers.

By November 1931, contracts for the sale of energy were executed with ten entities (Arizona, Nevada, MWD, Los Angeles, Pasadena, Glendale, Burbank, So. Cal. Edison, So. Sierra Power Co., and L.A. Gas and Electric Co.) providing for the sale of 4,240,000,000 kWh of firm energy annually. Storage of water began in Lake Mead on February 1, 1935. Power generation began September 11, 1936, although the 50-year period covered by the power contracts began June 1, 1937.