54 STAT.] 76TH CONG. , 3D SESS.-CH. 643-JULY 19, 1940 (b) Repayment to the Treasury, with interest (after making provision for the payments and transfers provided in subdivisions (c) and (d) hereof), of advances to the Colorado River Dam Fund for the construction of the project (excluding the amount allocated to flood control by section 2 (b) of the Project Act), and any readvances made to said fund under section 5 hereof; and (c) Payment subject to the provisions of section 3 hereof, in com- mutation of the payments now provided for the States of Arizona and Nevada in section 4 (b) of the Project Act, to each of said States of the sum of $300,000 for each year of operation, beginning with the year of operation ending May 31, 1938, and continuing annually thereafter until and including the year of operation ending May 31, 1987, and such payments for any year of operation which shall have expired at the time when this subdivision (c) shall become effective shall be due immediately, and be paid, without interest, as expeditiously as administration of this Act will permit, and each such payment for subsequent years of operation shall be made on or before July 31, following the close of the year of operation for which it is made. All such payments shall be made from revenues hereafter received in the Colorado River Dam Fund. Notwithstanding the foregoing provisions of this subsection, in the event that there are levied and collected by or under authority of Arizona or Nevada or by any lawful taxing political subdivision thereof, taxes upon- (i) the project as herein defined; (ii) the electrical energy generated at Boulder Dam by means of facilities, machinery, or equipment both owned and operated by the United States, or owned by the United States and operated under contract with the United States; (iii) the privilege of generating or transforming such elec- trical energy or of use of such facilities, machinery, or equip- ment or of falling water for such generation or transforming; or (iv) the transmission or control of such electrical energy so generated or transformed (as distinguished from the transmis- sion lines and other physical properties used for such transmis- sion or control) or the use of such transmission lines or other physical properties for such transmission or control, payments made hereunder to the State by or under the authority of which such taxes are collected shall be reduced by an amount equiva- lent to such taxes. Nothing herein shall in anywise impair the right of either the State of Arizona or the State of Nevada, or any lawful taxing political subdivision of either of them, to collect non- discriminatory taxes upon that portion of the transmission lines and all other physical properties, situated within such State and such political subdivision, respectively, and belonging to any of the lessees and/or allottees under the Project Act and/or under this Act, and nothing herein shall exempt or be construed so as to exempt any such property from nondiscriminatory taxation, all in the manner provided by the constitution and laws of such State. Sums, if any, received by each State under the provisions of the Project Act shall he deducted from the first payment or payments to said State author- ized by this Act. Payments under this section 2 (c) shall be deemed contractual obligations of the United States, subject to the provisions of section 3 of this Act. (d) Transfer, subject to the provisions of section 3 hereof, from the Colorado River Dam Fund to a special fund in the Treasury, hereby established and designated the "Colorado River Development Fund", of the sum of $500,000 for the year of operation ending May 31, 1938, and the like sum of $500,000 for each year of operation 775 Repayment of ad- vances, etc. 45 Stat. 1057. 43U.S. C . §617a(b). Payments to Ari- zona and Nevada. 45 Stat. 1059. 43U. S . C.§617c (b). Deductions from payments for taxes collected. Right to collect non. discriminatory taxes. 45 Stat. 1057. 43U.S.C.§§617- 617t. Payments deemed contractual obliga- tionsofU. S. Transfer to Colora- do River Develop- ment Fund.