of the resources of the State of Idaho, not only because it created a favorable climate for industrial expansion, but also because it represented a significant saving in cost of production for Idaho's farmers within that area. The new Bonneville Power Administration rate and repayment schedules which I mentioned earlier will reflect this situation also.

The impact of the financial assistance requirements of the lower Teton division on the Bonneville Power Administration financial studies is minor. The payout period for the Federal Columbia River power system projects presently existing and under construction extends to fiscal year 2022, which is 50 years after the scheduled completion of the last such project.

The repayment period for irrigated lands now in full production on these developments starts as soon as water is delivered. A 10-year development period is permitted for dryland farmers to make the transition and bring their lands into irrigated production before their repayment period begins. The financial assistance required by farmers now irrigating lands in the lower Teton division, which would fall due prior to fiscal year 2022, is $5,820,000. This would be equivalent to about 6 percent of the net power revenues to the Bonneville system in the year that it would fall due. This obligation obviously will have no significant effect upon the forthcoming power rate schedule adjustments. The remainder of the financial assistance requirements to the presently dry lands to be irrigated, which will be due after fiscal year 2022, is $14,967,000. Net power revenues after that date will be in the order of magnitude of $140 million annually, and the required assistance can be provided by less than 2 months' system net revenues.

We proposed in our letter of March 11 on S. 1123 the adoption of a revised version of the bill which would accomplish the purposes I have outlined briefly here this morning. We strongly recommend the enactment of the bill in the form we have proposed.

My colleagues from the Bureau of Reclamation and other agencies of the Department are prepared to discuss the specific features of these projects. We will be pleased to respond to any questions the members of the committee may wish to ask.

1 Analysis based on 100 years at 3 percent interest. All fish and wildlife costs nonreimbursable. No joint costs to recreation.

2 Analysis based on 100 years at 3 percent interest. cost. Joint costs allocated to recreation.

Fish and wildlife mitigation considered a project

Reduction in water user repayment is result of increases in amount of joint facility operation and maintenance expense allocated to irrigation. This reduces amount of payment capacity available for repayment of construction cost.

Mr. ASPINALL. You will now be permitted to refer to the table. Mr. HOLUM. Thank you, Mr. Chairman.

As the members of this committee well know, some of the problems we are having to deal with during the current session of the Congress are problems associated with cost allocation and problems dealing with reimbursability.

We have been in the position where we have had to come before the members of this committee and the companion committee in the Senate for each reclamation project, with many sets of figures, sets of figures such as are appended to my statement.

This set of figures is designed to supply to the committee the information required to bring this project into conformity with H.R. 9032.

Let me say that H.R. 9032, as submitted by the administration, or as marked up by this committee, will have the same effect as far as this project is concerned, because the amounts allocated to fish and wildlife and recreation benefits are very small, and well within the allowable limit for nonreimbursement.

The effect of H.R. 9032 on the lower Teton project is really the effect of eliminating mitigation expenses for fish and wildlife from the nonreimbursable column and transferring them to the other project functions.

In this case the mitigation costs amount to $1,005,000. The reallocation causes a slight increase in the amount of $6,000 of the nonreimbursable allocations to recreation.

The effects of this transfer of the costs of fish and wildlife mitigation to the other project reimbursable functions, is to increase slightly the reimbursement requirements for irrigation and power and the other nonreimbursable items in this multiple-purpose water-resource development.

We considered the question of reimbursability which the committee has already discussed. We automatically raised the question of whether or not the necessary revenues are available to provide the reimbursement required under reclamation law.

This project is a good project. The local water users will be able to repay a substantial portion of the investment in irrigation.

Total allocation under H.R. 9032 to the irrigation account is $38,151,000, of which the water users will be able to repay $20,635,000, which leaves a balance of $17,516,000, which must be recovered from power revenues.

When we consider the question of reimbursability, there are items of course, which merit the attention of the committee. First of all, the Department of the Interior has extended the marketing area of the Bonneville Power Administration to include southern Idaho, to include all of the Federal powerplants of the Columbia River system. We believe strongly that the whole basin which contribute to the Bonneville power system should share its benefits. These benefits have been and will be substantial.

The second question that arises is the question of where the power assistance should come from and whether or not it is available. As this committee knows, we have considered the financial problems of the Missouri Basin in detail. There are financial problems in the Bonneville area as well, but not nearly as acute however. The finan

cial situation in the Bonneville account at the present time is that we have a $20 million surplus remaining. That $20 million surplus has been declining because of our inability to market all of the power produced by the Bonneville system.

The situation is complicated at the moment by the fact that the Columbia Basin Treaty between the United States and Canada has not been ratified. All of the details have not been completed. We cannot at this time completely measure the impact of the Canadian treaty on the Bonneville situation.

In addition, as the members of this committee well know, we have been actively engaged in studies relating to a potential interconnection of the Bonneville system with other systems in southern California and the Pacific Southwest, and all of the intermountain area. This, too, because it will provide an opportunity to market surplus Bonneville power capacity, will have an effect upon the Bonneville financial picture.

With these questions in doubt, we have not been able finally to resolve all of the matters concerned with Bonneville finances at this time. However, these questions will soon be resolved. We have agreements from all of the Bonneville customers that rates may be adjusted at the end of the current year. With these questions resolved, I am perfectly willing to assure this committee that we are prepared to deal with these problems as appropriate on the basis of the decisions made on these two matters.

So the power revenue assistance which is required will be available. I repeat again, we have at the present time approximately a $20 million surplus remaining in the Bonneville power account.

That leaves the question of where the power revenue assistance should come from. We have submitted a draft of legislation to the committee recommending that this power revenue assistance come from the entire Bonneville system. We think that that is the appropriate way to handle the power revenue requirements of irrigation projects in the entire Bonneville area. We hope that the members of this committee will give our recommendation careful consideration.

The Senate committee has reported the bill on a basis that ties this project to all of the power system in Idaho. This procedure, too, will provide adequate financial assistance for the lower Teton project. However, as I said, we in the Department feel the Bonneville system is a system. The Columbia River Basin projects really constitute one project. Careful consideration should be given to the desirability of beginning to relate the financial requirements of irrigation projects to the entire system.

Mr. Chairman, I think that this constituted a brief review of the problems associated with this project before you that you wanted to hear from the Department. We think it is an excellent project. We think it provides a unique opportunity to put flood waters that have been causing damage repeatedly in this area of Idaho into beneficial use for many purposes. We hope the committee and the Congress will give it favorable consideration.

Thank you.

Mr. ASPINALL. Mr. Dominy, do you have a statement of your own? Mr. DOMINY. Yes, Mr. Chairman.

Mr. ASPINALL. You may proceed.

Mr. DOMINY. Bureau investigations of the lower Teton division plan of development have revealed that it is a sound reclamation project, well planned to meet local needs, and a wise investment for Federal funds. We present the plan for your consideration, adjusted to conform with the most recent policy and procedural criteria which were outlined by Mr. Holum. Because of those adjustments, the data in our report on the legislation and the information we present today will differ slightly from the data in our feasibility report.

Such adjustments affect only the economic and financial analyses. The physical plan of development, the actual works proposed to be built, the water supply and agricultural aspects, and the purposes to be served by the lower Teton division have not been changed.

Let me point out that I know of no project we have brought up recently that in my judgment fits more closely the facts that led Congress to establish the Reclamation Act in the first instance. Here is an area where the people have irrigated on their own ever since the 1880's. They have built many irrigation works, privately financed, and privately engineered, and through their own initiative. Here is a project beyond their capacity to finance that is needed to take care of floods and add to the economic potential of the area by establishing a more certain water supply for 114,000 acres of existing irrigated land, as well as to bring about the conversion of 37,000 acres of dry land to irrigation to enhance the economy of the area.

The bill would authorize both stages, but the second stage would not qualify for construction under the authorization until the Secretary had filed an additional report with the President and with the Congress.

I would like to have Mr. Crandall go to the map and would like to discuss for a moment just how the project would work.

In brief, we propose to build Fremont Dam and Reservoir on Teton River. It would be the regulating structure to provide the flood control and would provide the regulated storage. Some 200,000 acrefeet of storage capacity in that dam would be for multiple purposes of flood control, power, and recreation use. The irrigation water is urgently needed to supplement the present supply to a long-established irrigated land area near the confluence of Teton River and Henrys Fork.

The green area on the map is the present 114,000 acres of highly developed irrigated lands that frequently encounter a shortage of water supply in the late season for lack of sufficient carryover storage, and this project would make up that need.

Some years they would get little or nothing in the way of supplemental storage and would need little or nothing. But in other years, they would obtain and use substantial amounts of water. They would pay annually for the insurance of having this water available to them when needed.

This same area is subject to spring floods which in many years cause inundation of croplands, homes, farm buildings, and other improvements causing hazards to life and health of humans and livestock and substantial economic losses. The Corps of Engineers, at our request, has evaluated the annual benefits obtainable from flood control operation of Fremont Reservoir. Their evaluation confirms our belief that there is an immediate, urgent need for construction of Fremont Dam

and Reservoir for flood control purposes as well as for water conservation.

This month's destructive floods in the mountainous areas of Idaho and Montana demonstrate the hazard to this area. Had the storm center been moved only 200 miles south, the Upper Snake River Basin would have suffered a catastrophe.

On June 19 and 20 the area experienced the highest peak flow of record on the lower Henrys Fork, currently estimated at over 11,000 cubic feet per second. A considerable portion, approximately 5,000 cubic feet per second, of this resulted from high flow in the Teton River. The unprecedented flow in the lower Henrys Fork plus the peak flows in the Teton inundated thousands of acres of farmland and caused damage to roads and bridges. As yet the dollar value is unassessed but from visual observation it is obvious that the local economy has been dealt another setback. Considering the large percentage of the flow contributed by the Teton River, storage in the proposed Fremont Reservoir could have reduced the peak flow on the lower Henrys Fork to within bank full limits.

As far as the benefit-cost ratio is concerned, the committee properly raised the question as to the difference betwen the first stage and the second stage or the complete project.

The first stage alone has a benefit-cost ratio of 1.29 to 1. When you add the second stage, the two together bring the benefit-cost ratio of the combined project which you would be authorizing in this action to 2.23 to 1.

Mr. ASPINALL. All right, what is the benefit-cost ratio of the second stage by itself?

Mr. DOMINY. Do you have that, Mr. Nelson? The second stage by itself.

Mr. NELSON. Yes, I do. The second stage by itself would have a benefit-cost ratio of about 2.5 to 1.

Mr. HALEY. May I ask a question?

Mr. ASPINALL. If it is pertinent to this particular matter.

Mr. HALEY. Yes.

Mr. Dominy, or the Secretary, either one: inasmuch as this second phase of the project would make it a much better project, what is the explanation from the Department that they do not tie them both together now?

Mr. DOMINY. The problem was strictly one of our ability to complete all of the details which we customarily provide Congress when we come up for authorization. Our practice differs a little bit from the Corps of Engineers in this regard in that we do all of our feasibility grade planning in advance of presenting the project to Congress; whereas the corps does its presentation and conducts feasibility studies afterward.

In a sense, we are asking for authorization for both stages, but with the second stage to be predicated on the Secretary filing a subsequent report which does show the feasibility grade facts to the President and the Congress.

There is no question from all of the information we have that the second stage is fully feasible. We just do not have the detailed information that customarily is embodied in our reclamation feasibility stage studies.