All-American Canal in Imperial and Coachella Valleys, Calif

Mr. SMITH of Idaho. Because of the money he expended under the contract?

Mr. GATES. Because of the existence of the contract, and, in addition, the moneys the company expended. To act without taking care of the contract would be to violate the obligations thereof.

Mr. BARBOUR. Why not state briefly there the substance of that contract?

Mr. GATES. The contract provides-it is a 20-page document and it is difficult to recollect all its provisions in detail; but

Mr. SMITH of Idaho. Is that township of land in the public domain now?

Mr. GATES. Yes; but it is withdrawn from entry excepting a little more than two school sections.

Mr. ROSE. All but two sections of it.

Mr. GATES. I have the whole history of this matter from the time Mr. Rose first took it up in 1912, but do not know whether you gentlemen wish to go into this entire history or merely to consider the question raised by the letter of Secretary Lane referring our offer to this committee.

Mr. BARBOUR. State it briefly.

Mr. GATES. Mr. Rose was here first in 1912, asking that those lands, which were withdrawn first in 1903 and again at later dates, be restored to entry under the desert-land law.

Mr. SMITH of Idaho. Why were they withdrawn?

Mr. GATES. They were withdrawn under the reclamation act, and in 1913 the Director of the Reclamation Service reported to the Secretary of the Interior that they were no longer needed in connection with the Yuma project. We thought then that, following the provisions of the reclamation act, the Secretary would restore the land. It has never been restored. After several years' effort we finally obtained the contract of July 6, 1917-the Imperial Laguna Water Co. contract with the Government. This contract provided that we should make surveys, plans, specifications, and estimates of cost of the construction of certain canals and works therein specified, and that upon the submission of our engineers' report the Secretary was to take one of three courses.

The CHAIRMAN (interposing). What kind of a survey was to be made For what purpose?

Mr. GATES. I will read that portion of the contract.

Mr. TAYLOR. I suppose that contract ought to go into the record. The CHAIRMAN. Yes.

Mr. GATES. Regarding surveys that contract provided as follows: SECTION 1. Surveys.-That immediately on the execution of this contract the company shall proceed with diligence to make a complete and detailed survey, specification, and estimates of cost for the following:

(a) All necessary works and structures for the diversion of water from the Colorado River at and through said Laguna Dam, thence through said existing main canal of the United States supplying said Yuma project and such enlargement and modifications thereof as may be sufficient to divert and carry all water needed by the company for the reclamation of the lands herein described as contemplated by this contract without impairing the utilization of said diversion works and canal of the full extent necessary to supply said Yuma project on its complete development.

(a) above at or about said point described as "Syphon Drop" as may appear most feasible and practicable, and thence continuing and extending, either in part through the Republic of Mexico or entirely in the United States, as hereinafter provided, on such line of elevation and to such points as to cover and supply water for all requisite laterals and ditches for the practical and sufficient irrigation and reclamation of all lands susceptible thereof described in the permises and contemplated by this contract: Provided, That the company shall make and submit separate surveys, specifications, and estimates of cost for a canal built partially in the Republic of Mexico and for a canal built entirely within the United States.

(c) Any and all works, structures, and equipment for power development or pumping operations which may appear feasible and practicable in connection with or as a part of said irrigation system contemplated by this contract.

(d) Also to make sufficient preliminary investigation upon which to base estimate of the cost of sufficient main laterals and appurtenant works connecting with the said main canal described in (b) above to convey all water needed for irrigation purposes as herein provided for, within one mile, over which a practicable ditch can be constructed, of every smallest legal subdivision (40 acres) of land for which the company is under contract to furnish water for irrigation purposes.

SEC. 2 Time for surveys.-That said surveys, specifications, and estimates of costs aforesaid shall be completed and full report thereof submitted to the Secretary of the Interior within six months from the date of this contract, or such extension of time as the Secretary of the Interior may in writing grant. Mr. GATES. With the permission of the committee I will at this point insert the contract in the record.

CONTRACT BETWEEN THE UNITED STATES AND THE IMPERIAL LAGUNA WATER CO.

This agreement, made and entered into this 6th day of July, A. D. 1917, by and between the United States of America, acting in this behalf by Franklin K. Lane, Secretary of the Interior, hereinafter styled the United States, party of the first part, and the Imperial Laguna Water Co., a corporation duly organized and existing under and by virtue of the laws of the State of California, hereinafter styled the company, party of the second part,

Witnesseth:

Whereas, there are now withdrawn from entry certain public lands located in the county of Imperial, State of California, lying north of the international boundary line between California and Lower California, Mexico, and north and east of the East Side High Canal in Imperial Valley in township 9 south, range 13 east, sections 13, 14, 15, 16, 17, 18, 21, 22, 23, 24, 25, 26, and 36; township 9 south, range 14 east, sections 19 to 36, inclusive; township 10 south, range 14 east, sections 1, 2, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 21, 22, 23, 24, 25, 26, 35, and 36; township 10 south, range 15 east, all; township 11 south, range 15 east, sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 21, 22, 23, 24, 25, 26, 27, 28, 34, 35, and 36; township 12 south, range 15 east, sections 1, 2, 11, 12, and 13; township 10 south, range 16 east, sections 19, 20, 21, 28, 29, 30, 31, 32, and 33; township 11 south, range 16 east, west half; township 12 south, range 16 east, west half; township 13 south, range 16 east, sections 4, 5, 9, and 16; townships 14, 15, and 16 south, range 17 east, all; townships 15 and 16 south, range 18 east, all; township 16 south, range 19 east, all; fractional township 17 south, ranges 17, 18, and 19 east, all; fractional townships 14, 15, and 16 south, range 16 east, sections 1, 12, 13, 24, 25, and 36; fractional township 17 south, range 16 east, sections 1, 11, 12, 13, and 14, all of San Bernardino meridian; and

Whereas in connection with the Yuma project, Arizona-California, a dam on the Colorado River known as the Laguna Dam, situate about 10 miles northeast of Yuma, Ariz., together with a main diversion and supply canal extending from said dam southerly to a point known as Syphon Drop," situate in section 10, township 16 south, range 22 east, San Bernardino meridian, has been constructed and completed by the United States Reclamation Service under the provisions of the reclamation act of June 17, 1902, and acts amendatory thereof and supplementary thereto; and

Whereas the company proposes to construct an irrigation system for the purpose of irrigating the above-described lands and is for that purpose desirous of connecting said irrigation system with said Laguna Dam and canal and making

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its main and principal diversion of water for irrigation from the Colorado River at said Laguna Dam and through said canal or enlargement thereof; and

Whereas by the act of February 21, 1911 (36 Stat., 925), the Secretary of the Interior is authorized to cooperate in the construction and use of reservoirs and canals under reclamation projects with irrigation districts, water users associations, corporations, entrymen, or water users, for the construction of such reservoirs, canals, or ditches as may be advantageously used by the Government and irrigation districts, water users' associations, corporations, entrymen, or water users, for impounding, delivering, and carrying water for irrigation purposes:

Now, therefore, for and in consideration of the mutual covenants, agreements, and considerations to be kept and performed and paid as hereinafter stipulated and provided, it is hereby agreed as follows, to wit:

SECTION. 1. Surveys.-That immediately on the execution of this contract the company shall proceed with diligence to make a complete and detailed survey, specifications, and estimates of cost for the following:

(b) A main supply canal, with all necessary appurtenant structures for the practical operation thereof, of sufficient capacity and proper and durable construction, connecting with said main canal of the United States referred to in (a) above at or about said point described as syphon drop" as may appear most feasible and practicable, and thence continuing and extending, either in part through the Republic of Mexico or entirely in the United States, as hereinafter provided, on such line of elevation and to such points as to cover, and supply water for, all requisite laterals and ditches for the practical and sufficient irrigation and reclamation of all lands susceptible thereof described in the premises and contemplated by this contract; provided that the company shall make and submit separate surveys, specifications, and estimates of cost, for a canal built partially in the Republic of Mexico and for a canal built entirely within the United States.

(d) Also to make sufficient preliminary investigation upon which to base estimate of the cost of sufficient main laterals and appurtenant works connecting with the said main canal described in (b) above to convey all water needed for irrigation purposes as herein provided for, within 1 mile, over which a practicable ditch can be constructed, of every smallest legal subdivision (40 acres) of land for which the company is under contract to furnish water for irrigation purposes.

SEC. 2. Time for surveys.-That said surveys, specifications, and estimates of costs aforesaid shall be completed and full report thereof submitted to the Secretary of the Interior within six months from the date of this contract, or such extension of time as the Secretary of the Interior may, in writing grant. SEC. 3. Federal and State inspection and cooperation. That in the making of said surveys, specifications, and estimates of costs aforesaid, the company shall employ at its sole expense, deposit sufficient to cover which shall be made in advance, one engineer to be designated by the Secretary of the Interior at a compensation to be fixed by him, such engineer diligently to work and cooperate with the engineers of the company and to have available all data procured by the company and its engineers, in making such surveys, specifications, and estimates, but with the privilege and duty of making a separate and independent report to the Secretary of the Interior in case he is unable to concur in the conclusions arrived at by the company and its engineers; likewise, the State of California shall be entitled to assign an engineer to work and cooperate with said company engineers, with the same privileges as said engineer appointed by the Secretary of the Interior, such engineer to be designated by the governor of California, and his services to be rendered at the sole expense of the State of California.

SEC. 4. Mexican concession.-That in case said company shall decide or prefer to build its said canal partially in the Republic of Mexico, then it shall submit to the Secretary of the Interior satisfactory evidence that it has procured from the Republic of Mexico a franchise or concession for such privilege which in the judgment and opinion of said Secretary is satisfactory and sufficient for the purposes sought to be accomplished by this contract, otherwise construction of a portion of said canal through the Republic of Mexico shall be rejected, abandoned, and not further considered; but said Secretary may nevertheless require said canal to be built entirely in the United States, notwithstanding any franchise or concession granted by the Republic of Mexico.

SEC. 5. Action on report of survey.-That on receipt and consideration of the report or reports of said surveys, specifications, and estimates as hereinabove provided for, and of evidence of the procurance of said franchise or concession from the Republic of Mexico in case same shall be submitted, the Secretary of the Interior shall

(a) Require further or additional surveys, specifications, and estimates, or a changed or modified plan in whole or in part to be made and submitted, together with such other requirements as may by said Secretary be deemed necessary to insure the permanency and success of the enterprise, all within such time or times as said Secretary may prescribe, whereupon the plans, surveys, specifications, and estimates as so modified and amended may be rejected and disapproved or accepted and approved in their entirety, as provided in subdivisions (b) and (c) of this section; or

(b) Reject and disapprove of said surveys, specifications, and estimates in their entirety for any reason in his judgment deemed sufficient, in which case this contract shall be and become void and of no further force and effect whatsoever; or

(c) Accept and approve same in their entirety as representing a practical and sufficient plan and scheme of works and reclamation for the purposes of this contract, in which event the company shall have the right to connect its said proposed irrigation system with the said Laguna Dam and to enlarge said main canal of the United States on compliance and in accordance with the terms and conditions of this contract.

SEC. 6. Change of articles of incorporation and by-laws.-That prior to any acceptance or approval of the surveys, specifications, and estimates hereinabove provided for the company shall cause its articles of incorporation and by-laws to be so modified and amended, not inconsistent with the laws of the United States or of the State of California, as to conform with the requirements of the Secretary of the Interior, and no change shall be made in said articles of incorporation without the consent and approval of the Secretary of the Interior until after the payment to the United States of all sums provided to be paid under sections 10 and 12 of this contract.

SEC. 7. Contracts for sale of stock to be approved by Secretary. That pending the completion of all payments to be made to the United States hereunder, except for operation and maintenance as provided for in section 15 hereof, or pending the prior termination of this contract, the company shall not sell or otherwise dispose of any of its stock or rights to the use of water, except upon such terms and conditions as shall have been approved by the Secretary of the Interior.

SEC. 8. Sales of stock.---Sales of stock or rights to the use of water or contracts therefor by the company may be in amounts sufficient to furnish a water supply appurtenant to 160 acres of land and no more, to any one person, at a price not exceeding actual and necessary cost of constructing said irrigation system, and all such sales or contracts shall be subject to the conditions and limitations of section 2 of the act of February 21, 1911 (36 Stat., 925). SEC. 9. Escrow deposit of first payments for stock. That the first payments on account of the purchase of stock or water rights in said company pursuant to the terms hereof, shall be not less than $10 per irrigable acre of the land to be reclaimed by use of water thus procured, and the entire amount of such first payment shall be deposited in escrow in such national banks as the Secretary of the Interior may designate, not exceeding $300,000 in any one bank, to be later paid over to the company, its authorized officers and agents or returned to the purchasers of the stock, as hereinafter provided.

SEC. 10. Requirements as to sales of stock or water rights.-That in case the company shall have sold or contracted to sell stock or water rights sufficient for the reclamation of 120,000 acres of said lands, and first payments on account

of such sales shall have been made in escrow, as aforesaid, and applications of the purchasers of said stock or water rights to enter an equal or greater area of said lands have been approved, or are entitled to be approved by the Land Department of the United States, within 90 days from and including the day on which said lands are opened to entry by order of the Secretary of the Interior, then and thereupon on the direction of the Secretary of the Interior, such escrow banks shall, out of such escrow deposits, pay over to the United States, to be covered into the Treasury to the credit of the Yuma project, pursuant to the provisions of the act of February 21, 1911 (36 Stat., 925), the sum of $200,900 to apply on the total amount to be paid by said company for the permanent and perpetual right to use said dam and diversion works and enlarged canal of the United States as in this contract provided, and the balance remaining, together with any accrued interest, of such funds deposited in escrow as aforesaid, shall be paid over to the company, its authorized officers and agents.

SEC. 11. Result of rejection of plans, specifications, and estimates or of insufficient sales of stock or water rights.-That in the event of the rejection by the Secretary of the Interior as provided in section 5 hereof, of the plans, specifications, and estimates, or in case the stock or water rights sold and areas entered shall fail to equal the amounts specified in the last preceding paragraph within the time therein specified or such extension of time as the Secretary of the Interior may elect to grant, then and thereupon all of such deposits on account of the purchase of stock or of water rights, together with any accrued interest, shall, on the certificate of the Secretary of the Interior, be repaid by said escrow-holding banks to the respective purchasers of stock or water rights, or their successors in interest in law entitled thereto, whereupon this contract shall be and become terminated and of no further force or effect: Provided, That no extension of time by the Secretary of the Interior under this or the previous section shall extend to a date more than one year from the date of the order of the Secretary opening said lands to entry on a specified future date, as provided in section 10 hereof.

SEC. 12. Cost of connection with the Laguna Dam.-That in case the conditions and payments provided for in section 10 hereof shall be complied with and made as therein provided, then the company shall pay to the United States for the credit of said Yuma project the further sum of $760,000, in six equal annual installments, the first installment thereof to be due within 2 years from the date of the payment provided for in section 10 hereof, the remaining installments to be paid within 3, 4, 5, 6, and 7 years from the date of said first payment, respectively, making a total of $960,000 to be paid to the United States to the credit of said Yuma project for the right to the perpetual use of said Laguna Dam, diversion works and enlarged canal as in this contract provided; and on the failure of the company to make any such payment at the time and in the amount specified, then and thereupon all or any payments theretofore made shall be and become forfeited to the United States to the credit of said Yuma project, as liquidated damages, and as further consideration for entering into this contract on the part of the United States, the said company hereby releases and relinquishes any and all claims whatsoever for said moneys or any portion thereof so forfeited and paid as liquidated damages as aforesaid: Provided, That the Secretary of the Interior may, in his discretion, extend the time for any such payment on the payment of 4 per cent interest in advance: Provided further, That said entire sum of $960,000 shall in any case be paid within 10 years from the date of said first payment; also, on failure to make such payment or payments within the time or extension thereof as herein specified, this contract may be canceled in its entirety by the Secretary of the Interior.

SEC. 13. Construction.-That in the event said balance of said first payments for stock or water rights is paid to the company as provided in section 11, the company shall proceed at once with diligence to build, construct, and install such diversion works, canals, laterals, and other structures and equipment, all pursuant to and in strict accordance with such plans, surveys, specifications, and estimates of costs theretofore approved by the Secretary of the Interior as in this contract stipulated, and said company shall continue such construction operations to the completion of said works and appurtenant structures in their entirety with all reasonable diligence commensurate with the size and importance of the enterprise: Provided, That, in the judgment of the Secretary of the Interior, all or any part of such work of construction and installation as pertains to the connection with the Laguna Dam or the enlargement or modification of any existing works of the United States may be per

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All-American Canal in Imperial and Coachella Valleys, Calif: Hearings Before ...