Seven states split Colorado River into two basins to stop the race

In June 1922 the U.S. Supreme Court ruled in Wyoming v. Colorado that the doctrine of prior appropriation — first in time, first in right — applied to water rights across state lines, meaning whichever state's users diverted Colorado River water first would hold the senior, permanent legal claim to it. California's Imperial and Yuma valleys had already begun large-scale irrigation diversions as early as 1901, and California was pushing Congress to fund the Boulder Dam and All-American Canal to develop even more of the river's flow.

The four Upper Basin states — Colorado, Utah, Wyoming and New Mexico — were developing their own water infrastructure far more slowly than California and Arizona downstream, and under the ruling, every year of delay meant ceding more of the river's water permanently to whichever state built the canals and dams first. Negotiating fixed shares state by state would have meant settling each state's precise future water needs immediately, a political impossibility no state under that kind of time pressure was going to agree to quickly.

Split the river into two regional shares before assigning any to a state, so no state's development timeline mattered for that first cut and the race stopped immediately.

Prior appropriation made first use a permanent legal claim, so delay meant permanent loss.

Splitting into two basins removed the incentive to develop fast, as each basin's share was fixed regardless of internal timing.

Deferring state-level allocation let negotiators solve the urgent race problem immediately, without impossible future forecasts.

The basin-level split was credible enough to hold, despite Arizona's holdout, because it addressed the core threat.

When a shared resource rewards first movers, split it at a higher level of aggregation first, deferring finer allocations until the race pressure is gone.

The basin-level split removed the race-to-develop-first pressure immediately: an Upper Basin state no longer lost anything by taking its time to build infrastructure, because its region's total allocation was fixed regardless of who used it first internally. Arizona alone refused to ratify the compact, holding out for 22 years over its own dispute with California, until the 1928 Boulder Canyon Project Act locked in additional protections and let development proceed under the compact's basin framework anyway.