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Mr. MEEHAN. Unfortunately, for the moment I am unable to comment on this as much as I would

personally like to. Mr. SAYLOR. That is all, Mr. Chairman.

The CHAIRMAN. For the benefit of the record, Mr. Wylie, what is the Wisconsin Valley Improvement Co.? Is it a private or nonprofit corporation ?

Mr. WYLIE. It is a private organization which is chartered by the State of Wisconsin for the purposes of regulating the Wisconsin River for hydroelectric power and flood control. The company is owned by 12 private corporations, 8 of which are paper mills and 4 are investor-owned utilities. They have built the reservoir system which enables us to do our job of streamflow regulation. They have maintained our operation through a system of semiannual tolls since our formation in 1957.

The CHAIRMAN. Has there been any public criticism of the operation that you know of?

Mr. WYLIE. Well, it depends on how far you want to carry the public criticism. There are the minor type criticisms which are received on reservoir water levels and that type of thing, but in the Midwest particularly, more particularly in Wisconsin, there has been great general agreement that this is a well worthwhile job, a needed job, well done.

The CHAIRMAN. Operating entirely within the State of Wisconsin?

Mr. WYLIE. Entirely within the State. The river originates at one border line and ends on the other where it empties into the Mississippi. We are in the upper Mississippi watershed.

The CHAIRMAN. Have there been any criticism from people in the lower States ?

Mr. WYLIE. None whatsoever. Our operation does a great deal toward eliminating flooding on the Mississippi and increasing the low flows in the Mississippi during the low-flow period.

The CHAIRMAN. Mr. McFarland.

Mr. McFARLAND. Your statement seems to indicate your feeling that the States aren't given an adequate role in this proposal. The States seem to believe they will have a bigger role in the planning of their water resources. We have on record most of the States in favor of this bill. How do you explain that?

Mr. WYLIE. Oh, I know the Council of State Governments favors this bill with possibly a few suggestions for change. This bill, as written, is a great improvement over the S. 2246 of several years ago, which they did not like. However, I cannot fully agree with them that this is best for them.

Mr. McFARLAND. Mr. Wylie, did you prepare this statement?
Mr. WYLIE. Yes; I worked on this statement.
Mr. McFARLAND. Have you studied S. 1111?
Mr. WYLIE. Yes; I have. I have it right here.

Mr. McFARLAND. The reason I ask that, you have several inaccuracies in your statement. For instance, the matter of votes. There is no provision in the S. 1111 where the States would have a vote and the Federal Government one vote?

Mr. WYLIE. The difference between these two bills is as follows: H.R. 3620, as I understand it, allows for the vote, one by the Chairman and one by the Vice-Chairman for the States.

S. 1111 does not provide specifically for a vote in those words, but talks about a concensus of all members.

Mr. McFARLAND. Do you think we can have any basin plan, where there is not full agreement? We are talking about planning between the Federal Government and the States involved.

Mr. WYLIE. I don't think you will ever have complete agreement between all of the participants in any river basin commission.

Mr. McFARLAND. Do you understand that under this bill the Federal Council can change the plan of the river basin commission?

Mr. WYLE. I don't believe they can change it. They can suggest changes before they pass it up to Congress.

Mr. McFARLAND. But it comes to Congress just the way it is developed by the commission. Is that your understanding?

Mr. WYLIE. With the Council's modifications or suggested changes; yes.

Mr. McFARLAND. With their recommendations?
Mr. WYLIE. Recommendations.

Mr. McFARLAND. You refer to the fact that if we don't have comprehensive planning there is a provision in the bill that permits the Federal Government to use alternative methods. You say the bill does not prescribe what these alternative methods are.

The bill specifically says, "as provided by law.” That, in effect, is what we are doing now. Each agency has the laws under which it is doing planning in these basins. So if we can't get a river basin commission, we will just continue to do it the way we are doing it now. Is that not right?

Mr. WYLIE. Both the bills say "as by law.”
Mr. MCFARLAND. That is all, Mr. Chairman.

Mr. SAYLOR. Mr. Wylie, is the river in which the Wisconsin Valley Improvement Co. operates a navigable stream!

Mr. WYLIE. Yes, sir; it is. It has so been declared by the courts.

Mr. SAYLOR. Are you a member of that board? Are you vice president and general manager of it?

Mr. WYLIE. I am the operating head of the Wisconsin Valley Improvement Co.

Mr. SAYLOR. Has your solicitor_handed you an opinion as to whether or not, like in the Pelton Dam case, you are subject to control by the Federal Government!

Mr. WYLIE. We presently have a Federal Power Commission license, which we received in 1959, which is effective as of 1943, based on the famous Tomahawk case, a famous case in the courts, on a hydroelectric dam, on our particular river.

We do have the Federal license and the Federal license has very little to do with our day-to-day or weekly operations in any way. We feel that the Public Services Commission of Wisconsin is our primary supervisory body.

Mr. SAYLOR. You say in 1943 you received a license from the Federal Power Commission?

Mr. WYLIE. In 1959 we received it, but it has an effective date as of 1943. This is the date on which the Wisconsin River in this area was declared navigable in the Tomahawk case, which means that is the effective time at which the Federal license can be considered as issued.

Mr. SAYLOR. What is the term of years of that license! Mr. WYLIE. Fifty years. Mr. SAYLOR. Well, let's move ahead to 1993. What will be the effect of the then Federal Power Commission, if it refuses to renew the license?

Mr. WYLIE. The effect will be that they have the power at the present time to take over that operation or issue the license to another party and, of course, when takeover comes, it will be based on the cost estimates of the system which we are presently preparing. However, I guess we are always optimistic and would like to think that the powers of the Federal Power Commission in that respect will be changed by then.

Mr. SAYLOR. I would just like to say to you, Mr. Wylie, I don't know whether I will be around here or you will be around here, but I wouldn't be at all surprised in 1993, when your license expires, that the power industry in this country will be nationalized and among other things that license will not be renewed. I am sorry to have to make that statement, but from the attitude of certain people in the Interior Department, certain people in certain branches of Government which are set up for other purposes, I think they have a grandiose plan that it would be impossible to put into effect at any one time, but I think they are moving steadily forward with a plan for nationalization of the power industry. It is a movement that I regret, I think it is a step in the wrong direction, but every term of Congress that I have been here, I have seen the agencies downtown spreading their tentacles farther and farther, until they are now to the stage where they are even anticipating requesting that REA's be permitted to come in and borrow money to set up thermal plants, and the first thing you know, we will have the entire Federal grid.

When that day comes, as a former great President of this country said, this country cannot exist, half slave and half free, so I am satisfied this country cannot exist half public and half private power. The yardstick theory which was suggested many, many years ago was a fine theory, providing you use the same yardstick. When you measure one with the yardstick of 36 inches together with one that is variable to the size of the Government's foot, I am afraid that your children and mine and our grandchildren will not have the same advantages that you and I have enjoyed.

Mr. WYLIE. I personally have enough confidence in the Congress and the people of this country to recognize the fact that these jobs for flood control, streamflow regulation and power production can be done

The CHAIRMAN. Let the chairman say we are here for the purpose of taking testimony. We will get into this when we write up the bill.

Thank you very much. You gentlemen have been good witnesses and you have given us very constructive criticism. The ideology of my friend from Pennsylvania and I will be tested later.

The next witness is Mr. Daniel W. Cannon, committee executive of the Conservation and Management of Natural Resources Committee of the National Association of Manufacturers.

very well.



Mr. CANNON. Mr. Chairman, if I might have permission to have my statement printed in the record in full, I would like to skim over it and discuss it a little bit.

The CHAIRMAN. Without objection, it is so ordered. (The prepared statement follows:)



My name is Daniel W. Cannon. I am committee executive of the Conservation and Management of Natural Resources Committee of the National Association of Manufacturers. My testimony is presented on behalf of our association, a voluntary organization of industrial and business firms, large and small, lo cated in every State, which vigorously support principles that encourage industrial freedom and which through the association develop and engage in sound programs for the advancement of the economic well-being and social progress of the American people.

We are well aware of the fact that water is an essential element in the manufacturing process, and we use large quantities of it both for cooling and for processing purposes. Fortunately, industry's consumption of water is only a small percentage of the quantity which it uses, and industry is continuing to make great strides in the fields of more efficient use of water and in water quality management. In our association work, water resources matters are handled by our conservation and management of natural resources committee and by its water resources subcommittee. Our interest in water resources is evidenced by the pioneer national survey of industrial water use cosponsored by the National Association of Manufacturers and the Conservation Foundation in 1949–50. The result of this survey was the publication of the report, “Water in Industry," which revealed for the first time the salient characteristics of industral water use in this country. This pioneer study has since been translated by other organizations into several languages and is still cited as the most authoritative work of its kind, whenever water resources matters are under discussion. I offer herewith two copies of this survey report, entitled “Water in Industry," for inclusion in the files of the subcommittee. I also offer two copies of our recent publication, “Our National Water Resources," setting forth the views of industry on the wise use and management of our national water resources, for inclusion in the files of the subcommittee. We are currently completing a new industrial water survey which will show trends in the 10-year period since the first survey. Preliminary data from this latest survey indicate great strides by industry in reducing the water required to be used per unit of product. This background makes it obvious that we are highly appreciative of this opportunity to comment on proposed legislation dealing with water resources planning.

We note that H.R. 3620 provides for the creation of a Water Resources Council to be composed of the Secretary of the Interior, the Secretary of Agriculture, the Secretary of the Army, and the Secretary of Health, Education, and Welfare to carry out a declared policy “that the conservation, development, and utilization of the water and related land resources of the United States shall be planned and conducted on a comprehensive and coordinated basis with the cooperation of all affected Federal agencies, States, local governments and others concerned." There is no doubt that these four Departments should coordinate and work together in carrying out their responsibilities which affect water resources, as should the other departments and agencies of the Federal Government. However, it is questionable whether it is absolutely necessary to create a new entity in order to achieve such coordination. It is the viewpoint of our association that many of the duplications and conflicts in Federal agency policies, programs and practices will only be overcome if the Congress itself undertakes a thorough and comprehensive revision, correlation, and improvement of the statutes relating to natural resources. The duplication and conflicts have risen over long period of years as a result of the Congress delegating

specific missions to various departments and agencies by individual pieces of legislation which have never been fitted into a comprehensive consistent pattern.

Therefore, requiring the heads of 4 of the 10 departments of the Government to meet together as a Water Resources Council may be somewhat fruitless and frustrating so long as the underlying natural resources leglislation remains in a somewhat chaotic state.

If it is decided, nevertheless, to create such an entity, we would strongly urge that, at least, the Secretary of Commerce be added to its membership. The Congress created the Commerce Department with the declared statutory purpose of fostering commerce and industry. Water resources planning and development will be a futile and costly exercise if it does not lead to sound economic development of the Nation. The importance of including the Secretary of Commerce is empasized by the fact that the bill would require the Council to determine the effect of a river basin plan "on the achievement of other programs for the development of * * * energy, industrial * * * and other resources of the entire Nation" and to “determine the contributions which such plan * * * will make in obtaining the Nation's economic * * * goals * * *.”

We also note that the Council would be charged with the duty of establishing “principles, standards and procedures for the * * * evaluation of Federal water resources projects.” This is a function which was for many years carried on by the Bureau of the Budget. Therefore, if it is decided to create a new entity in an effort to achieve coordinated water resources planning, we also strongly urge that the Director of the Bureau of the Budget be designated as a member of such a group.

In connection with formulating standards for the evaluation of Federal water resources projects (and we assume that this involves benefit evaluations, cost allocations and analysis of financial feasibility), bills have in past years been introduced in both the Senate and the House for the purpose of establishing such standards by statute, and the House Public Works Committee held hearings on such a bill, H.R. 8, in 1960. It is proposed in the instant bill that the establishment of such standards be delegated by the Congress to these four Cabinet officers. However, under our constitutional division of legislative and executive powers, it would be more appropriate if the Congress itself should establish the policy and criteria under which all Federal water resources projects will be authorized and built. It would appear that the Council might have the power to alter present standards so as to lengthen the amortization period for Federal water projects ; place the computation of interest costs on the basis of other than the true cost of money to the Federal Government; authorize the inclusion of features with costs exceeding benefits; alter the methods of cost allocations and thereby minimize the cost attributable to electric power; and require the inclusion of intangible or conjectural benefits in project evaluations so as to justify the construction of uneconomic projects.

In fact, the bill would authorize a very broad delegation of quasi-legislative functions without any clear policy guidelines laid down by the Congress. The Council would be directed, upon receipt of a river basin plan or a revision thereof, to recommend "such modification in such plan or revision as it deems desirable in the national interest.” This raises questions such as whether, if a plan called for construction of electric generating facilities or electric transmission facilities by investor-owned electric companies, the Council would have the power to change the plan so as to specify construction of such generating or transmission facilities by the Federal Government. We strongly urge that any legislation of this type include a declaration of policy in favor of private enterprise development of natural resources so as to avoid outlays from the Public Treasury and so as to place such developments on an income-producing taxpaying basis.

Recommendations for modifications of river basin plans might also be made by the Council which would contemplate infringements upon States rights and responsibilities in administering the water resources within their spective boundaries and infringements on private water rights as established by State authority. Therefore, we strongly urge that any legislation adopted on the subject of water resources planning should include a declaration of States' water rights by the Congress which would acknowledge the authority of the States relating to the control, appropriation, use, and distribution of water within their boundaries; require that Federal agencies comply with State laws relative to the use of water; and require that Federal agencies respect private rights to use water established by State authority, recognizing that the right to use water is a property right which should not be taken from any person without due process of law and adequate compensation.

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