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recouped for their legitimate expenditures in that connection. I understand that is the universal desire in the Imperial Valley and that they are willing to submit the matter to arbitration, and that the district—this is all informal—is willing to pay such award as might be made under those circumstances. I do not regard it as a matter that should be necessarily regarded as a duty of Congress to see that that adjustment is properly made; and the Government is under no obligation whatever in the matter, legal or otherwise. There is existing a contract on the subject between the Secretary of the Interior and the Imperial Laguna Water Co., and that contract provided for an investigation by Mr. Rose of the project of watering these lands, and provided that the land on the East Mesa should be restored to entry under certain conditions, provided certain other conditions were followed up. In pursuance of that contract Mr. Rose and his associates made certain surveys. They did not make the surveys thorough at all. This long, heavy cut from Pilot Knob through to the Imperial Valley [indicating] was explored only in a very superficial manner because, presumably, of the large expense of doing it thoroughly. The surveys were not extensive. It was very superficial all around, and owing to that fact the Secretary of the Interior entered into a contráct with the Imperial irrigation district to make such part as the district was interested inthat is, this part, not including the long canal |indicating]—the subject of a thorough investigation. There was $45,000 for the purpose, $15,000 of which was put up by the reclamation fund and $30,000 by the Imperial irrigation district, and that examination was, made under a board of three engineers, one representing the district, one representing the Government, and one representing the University of California as a sort of an umpire in the case. The board consisted of Dr. Elwood Mead, Mr. Grunsky, and Mr. Schlecht. The contract with Mr. Rose for his investigations contained in section 5 the requirement that when he submitted his final report one of three things should be done. First, additional investigations might be required by the Secretary if he thought them necessary. Second, he might reject the plan entirely; in which case the contract would be brought to an end; Third, he might accept and approve, in which case the company should have the right to connect with the Laguna Dam, and virtually the stockholders of that company would have had a preferential right to file on the public lands of the East Mesa. The CHAIRMAN. To what extent? Mr. DAvis. To the extent of the existing laws. The CHAIRMAN. A preferential right? Mr. DAvis. Of course, the Secretary did not in terms give anybody

such a preferential right. The correspondence shows that very

clearly, and everybody understood that; but the effect would be just the same, because The CHAIRMAN (interposing). The practical effect. Mr. DAvis. The practical effect, and that was claimed, I believe, and justly so, by Mr. Rose and his associates. However that is, I am not criticizing but am simply explaining the provisions of the contract,

and by the supply. Miihen such legal right

Now, the final report was made by the Laguna Mesa Water Co. That report, as I say, did not have sufficient evidence upon which to base an estimate of the cost. It had very little examination of the material to be moved in the great cut through the sand hills; it did not provide for nor even discuss the need of storage; and in view of those lacks of this final report I recommended to the Secretary of the Interior that the project be rejected entirely and the contract ended, according to the second alternative in section 5, provided under those circumstances.

Mr. TAYLOR. When did you make that recommendation ?

Mr. Davis. That recommendation was made early in 1918; I think in February; I haven't the correspondence here, but I can put it in the record if desired.

Mr. SUMMERS. What action was taken under that recommendation?

Mr. Davis. No direct action was taken under that recommendation, but it was under consideration a while. My principal reason for that recommendation was this: The absolutely essential character of storage. In such a hot, dry country as that to attempt to irrigate land without sufficient water I consider wrong. It would mislead settlers and would lead to suffering, and at the same time by bringing in a vast acreage without water in some years there would be a strong pressure to use the water already appropriated by Imperial Valley and by the Yuma project, and thereby incur a great diminution in their water supply. Mr. Hayden will recall that they did that in the Salt River Valley when such a condition as that existed, when new canals without any shadow of legal right to water actually took it and divided with the rest of the valley, causing them all to suffer, and millions of dollars worth of property was destroyed in that way.

Now, it was claimed by some of the Government employees in the service not in the Reclamation Service but in other bureaus—that in entering into the contract with Mr. Rose the Secretary approved in advance his plan to build this project without storage. I was very much surprised to find the opposition to my argument for the cancellation of the contract based upon the supposition and the claim that it was now too late to object to that feature because that was known in advance. Now, the terms of the contract do not bear that out at all. It says he must present a feasible project, and I understood—although I was not present when the final negotiations took place on that contract—that the whole question could be considered de novo when he brought his plan in. I didn't know what it should do, nor did I have any control over what it should cover; I found, however, that my attitude had been misunderstood, and in order to set myself right and bring the facts clearly before the Secretary I wrote his assistant the following letter, which I will read with your permission:

DEPARTMENT OF THE INTERIOR.
UNITED STATES RECLAMATION SERVICE,

Washington, D. C., April 3, 1918.
Hon. E. C. BRADLEY,
Assistant to the Secretary.

Department of the Interior. DEAR MR. BRADLEY: Recent conferences have impressed me with the grave importance of clearing up an evident misunderstanding which in my view places the honor of the department in some peril, but which can be removed if prompt and decisive action is taken in the right direction.

On May 3, 1916, at the request of Secretary Lane, I placed in the form of a letter my views concerning the proposed contract with Mark Rose, in connection with the Laguna Dam, Yuma project, Arizona-California. This letter included the following paragraphs: “I am utterly unable to indorse the view of Mr. Rose and Mr. Frisbie that the water supply for the large acreage they propose to irrigate is sufficient, or anywhere near sufficient, without storage. I am reliably informed that there was an actual shortage of water in the autumn of 1915 for a short period for the lands now under irrigation, and while the shortage was not serious, it shows that the limit of safe use without storage is nearly reached, and that a reasonable increase in use of this water upon projects where appropriations have been confirmed by heavy expenditures in the Imperial Valley, in the Yuma Walley, and in the Uncompahgre and Grand Valleys, makes it absolutely certain that no new tract of any consequence can be safely and permanently irrigated without storage. “Feasible storage sites are known to exist in the basin of the Colorado River, and storage development should be an integral part of any extensive irrigation development from the lower river.” On March 26, 1917, at the suggestion of Commissioner Tallman, I again placed of record, in the form of a letter to the Secretary of the Interior, my views concerning the engineering features of the proposed contract with Mark Rose. As my former letter had not been convincing, I took occasion to reiterate my views concerning the water Supply and to reinforce it by quotations from other authorities, in the hope of proving my point to the satisfaction of all. I quoted: Gen. William L. Marshall; Dr. Elwood Mead; a board consisting of Joseph Jacobs, D. C. Henny, and Elwood Mead; board of governors, Yuma Water Users' Association; Holtville Commercial Club. In addition to the above I made the following statement: “Late in 1915 Imperial Valley diverted the entire flow of the Colorado, and yet suffered a water shortage for a short period. While the shortage was not serious, it shows that the safe limit of use without storage has been reached or nearly so.” In the last interview which I had with you and others interested, prior to signature of the present contract, I reiterated my views that there was no feasible project on the Imperial Laguna mesa without storage, and you will recall that Mr. Gates, attorney for Mark Rose, accused me of holding that storage was necessary if Mark Rose built the project but not necessary if built by the Government. I denied this and made the emphatic statement that I had always held storage necessary whoever built the project, and when pinned down to it Mr. Gates admitted that this was true. It was my understanding when the existing contract was entered into with Mark Rose that the engineering features might be considered anew and without prejudice when the surveys that he was to make were completed. In view of the above records and statements I was astonished recently to hear the statement that in making the present contract with Mr. Rose, the secretary admitted that the water supply was sufficient for the Rose project and that I had agreed to this. This presents an imminent peril to the good name of the department as countenancing an impracticable project, which is sure to lead to hardship and disaster if carried out as planned by Mr. Rose, and to bring discredit to those who indorse the plan. If the contract is indeed susceptible of such an interpretation, it should be abrogated as early as possible for the good name of the Government and its officers, as it commits the Government to possible fraud upon settlers which will be justly criticized and bitterly resented when the day of reckoning comes. It also jeopardizes the rights of the Yuma project and of the Imperial Valley; if hundreds of thousands of acres go short of water there will inevitably come a tremendous pressure for this developed region to divide its water supply with the sufferers, and it will be just as impossible to resist this as it has !. to resist the illegal damming of the Colorado River to save Imperial alley. Mr. Rose has utterly failed to carry out the requirements of his contract for deailed surveys, specifications, and estimates of an all-American canal; he has not data enough to make any estimate whatever, detailed or otherwise. This fact is recognized by the contract recently entered into with the Imperial Walley by which it is provided that $45,000 wil be spent in getting this estimate on merely a portion of the project involved in Mark Rose's contract. He has been given considerable extension of time and has submitted his final report, and the department now can, without breaking faith or doing any legal or moral wrong, adopt one of the alternatives required by the contract and abrogate it entirely.

Under my interpretation of the contract, the chief difficulty is that he has not presented a feasible project, because he does not propose any storage; but under the interpretation proposed to be given to this contract this objection disappears, it being held fhat this point was settled when the contract was signed. There is, however, another valid reason for canceling the contract, and thus extricating the Secretary from this dilemma without violating any legal or moral obligation, namely, the lack of compliance with the requirement “to make a complete and detailed survey, specifications, and estimates of cost.” If extension of time is granted this defect will be reduced and may be entirely corrected. There will then be nothing left to do, if the department insists that the water supply is adequate but to accept alternative (c) and “accept and approve same in their entirety as representing a practical and sufficient plan and scheme of works and reclamation for the purpose of this contract,” and then it wil be impossible to escape a just charge that the department has been a party to the indorsement of the project under which settlers will be induced to settle in a very hot, sandy, and arid country with an insufficient water supply, and a menace will be created to the supply of both Imperial Valley and the Yuma project.

I do not wish to be understood as criticizing anything that the department has done in the past, but the recent astonishing revelation has proved the importance of placing my views on record in such a manner that they can not be misunderstood.

For the above reasons I recommend the immediate abrogation of the contract with the Imperial Laguna Water Co. substantially in accordance with a letter which I drafted for this purpose and sent to the department March 26, 1918, for the Secretary's signature.

Respectfully submitted.

A. P. DAVIs, Director and Chief Engineer.

Mr. SMITH of Idaho. What is the date of that letter, Mr. Davis? Mr. DAvis. April 3, 1918. That is only a week later than the first recommendation. Mr. SMITH of Idaho. No action has been taken? Mr. DAVIS. The contract has not been abrogated. The CHAIRMAN. Let me ask this. With the enactment of this bill, 11553, what extent of storage would be contemplated? Mr. DAVIS. The additional lands that have not been irrigated would all be supplied with storage. The sites vary in quantity and require study that has not been completed. We are now investigating various reservoir sites on the upper Colorado, and one on the lower Colorado below the Grand Canyon, and those estimates and examinations can be completed by the time the irrigation district is organized. It will probably cost somewhere in the neighborhood of between $10 and $20 per acre for storage, possibly more than that. I am not able to quote figures on it for two reasons; one is that I have not in mind what we do know about it in detail, and the other is that the investigation is not completed. l o Çamyas. Where would those storage sites probably be ocated . Mr. DAVIS. That has not been determined. There are some in the upper river and one on the lower river that we investigated. Mr. WELLING. Mr. Davis, referring to your recommendation that the Rose contract be abrogated in April, 1918, have the Rose representatives done anything since that time to make their contract a more valid contract? Have they done anything that has reinstated the contract so that it would be a more valid contract? Mr. TAYLOR. Have they furnished any additional data ? Mr. WELLING. That is what I mean. Mr. DAVIS. They have not furnished any additional data. They have, however, cooperated in furnishing such data as they could. I have no criticism to make of the action of the company in that matter; they have not, so far as I know, made any additional surveys, have you? Mr. Rose. No; but you recall a letter written to me just after the date of this letter probably 10 days, in which the Secretary said that he would suspend action awaiting the result of the other survey, to see whether my plans were correct? Mr. DAVIS. I think so. . Mr. Rose. And the suggestion that I cooperate with the other districts to get all the interests together in order to build this all-American canal? Mr. HAYDEN. I have here a copy of that letter. Perhaps I had better read it into the record. .

DEPARTMENT of THE INTERIOR, Washington, April 16, 1918. Mr. MARK Rose, President Imperial Laguna Water Co. Mr. WooDLAND GATES, Attorney, Colorado Building, Washington, D. C. MY DEAR MR. Rose: Your letter of January 30, 1918, and report transmitted by your chief engineer and two consulting engineers, under contract with the Secretary of the Interior, dated July 6, 1917, have been given careful consideration. The most important provision of the contract is the requirement to “make a complete detailed survey, specifications, and estimates of cost” for the works listed in the contract. An examination shows that the data furnished fails to fulfill these requirements and that such data does not afford a sufficient basis for any reliable estimates on which further procedure under the terms of the contract could be approved at this time. Under the contract the duty of the Secretary of the Interior is to adopt one of three courses: No. 1. “(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 diapproved or accepted and approved in their entirety, as provided in subdivisions (b) and (c) of this section; or (b) reject and disprove 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 reclamations for the purpose 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 no conditions Of this contract.” From the foregoing it is apparent that alternative (c) can not be exercised at this time. The question therefore presents itself as to whether further or additional surveys, specifications, and estimates should be required under the alternative (a) or whether the surveys and estimates heretofore presented should be rejected and disproved under alternative (b). As you are aware, there have been extensive negotiations and conferences with representatives of the Imperial Valley irrigation district with a view to a connection with the Laguna Dam and the construction of an All-American canal for the irrigation of the lands in the Imperial irrigation district, and to

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