It will avoid the delays and excessive costs that are usually incident to construction and operation of publicly owned works. It will avoid the withdrawal from taxation of the physical properties involved and the issuance of millions of dollars of additional tax-free securities with the consequent increase in the burden of taxation imposed upon lands and other privately owned property. It will insure more effective regulation by the Government of the operation of the reservoir for flood control and irrigation purposes than would be the case if political subdivisions were in control of the power. It will result in a more equitable allocation and distribution of the power throughout the several States and the communities thereof, than would be possible with municipal ownership of the power end of the project which would inevitably result in the power falling into the hands of one or more of the larger cities, the smaller towns and communities not possessing the bonding ability or financial strength to finance their portion of the generating works and the transmission and distribution facilities required in their service. PROTECTION AFFORDED PUBLIC IN CASE DEVELOPMENT MADE BY PRIVATE CAPITAL Finally we wish to point out that there is much popular misapprehension as to what will be the situation if the proposed project is delegated to private capital to carry through. It is often intimated that this situation would permit the exploitation of the rights granted at the expense of public interests. Nothing could be further from the facts. The development of the Colorado by private enterprise can be done only under and in accordance with the provisions of the Federal water power act and the rules and regulations of the Federal Power Commission, an examination of which provisions will clearly demonstrate that the rights of the Government would be in every wise protected, natural resources preserved from exploitation, and every objection on account of threatened high rates and undue profits thoroughly silenced. The license can not be granted for a term to exceed 50 years, and at the expiration of the license, whether for 50 years or less, the United States has the right to take over the project upon paying to the licensee the net investment in the project. Rates and charges are required to be fair, reasonable, and nondiscriminatory, and are subject to the regulation of State regulatory bodies or commissions. Earnings are limited to a fair return upon the actual legitimate investment in the project, and the Government has the right to appropriate to itself all excess profits above such reasonable return. The United States. or any State or municipality, can condemn the project at any time by eminent-domain proceedings, and the compensation to be paid is limited to actual net investment of the licensee in the project. As rental the licensee must pay the Government for the first calendar year 5 cents per horsepower of installed capacity; for the second year, 10 cents: and for the third and succeeding years, 25 cents. Thus a development of 600,000 horsepower would, after the first two years, bring a rental of $150.000 annually to the Public Treasury. The plans of development must be approved and may be modified by the Federal Power Commission, so as to provide a complete scheme of development. and construction must be begun within the time fixed by the commission. which period can not be extended for a greater term than two years. Accounts must be kept in the form provided by the commission and annual reports rendered to the Government in accordance with its regulations. In short. the private company assumes all the risk of the enterprise. The Government or other public authorities are in a position to benefit to the full extent of the success which the venture may meet with, while the licensee is limited to a fair return upon the naked net investment, and even this may be terminated at any time by the exercise of the right of eminent domain. THE ALL-AMERICAN CANAL We believe that the building of the proposed "all-American eanal" is wholly unwarranted by existing conditions, and that it is questionable as to whether the project can ever be justified from an economic standpoint. 92265-24-PT 4 -6 Our conclusions are based upon the following grounds: That at a time when the farming interests of the country are in serious economic distress, due to an excess of production over present market demands. it is not wise for the Government to undertake bringing in additional thousands of acres of new producing lands which will come into competition with the lands now under cultivation. That with over 25 per cent of the land under the present canal system in Imperial Valley, with all facilities for their immediate irrigation and culti vation installed, now lying unworked and uncultivated, it will be unwise to spend millions of dollars on the extension of the existing irrigation system. Mr. RAKER. Is that 25 per cent of land unused? Mr. WEST. Yes, sir. And I will add that last year the official records showed 40 per cent; however, there is probably an extension in the irrigated area there. Mr. RAKER. That is, the area under the ditches that could be irrigated? Mr. WEST. Yes, sir. Mr. RAKER. Do not let me interrupt you. I just wanted to see if I understood you correctly. Mr. WEST. Yes, sir. [Reading:] That the building and maintenance of an open canal of the capacity proposed for a distance of 12 miles through moving sand hills, necessitating cuts from 50 to 140 feet in depth, presents serious engineering problems, and, if possible at all, can only be accomplished at excessive cost both in construction and maintenance. That the estimate of the construction costs of the project are inadequate and that if built, the ultimate charge to be made against the land benefited will, as in the case of nearly all of the reclamation projects, largely exceed the original estimates. That if even built within the estimated cost, the charge to be imposed against the land lying within the present irrigation district (approximately $40 per acre), will be in excess of any benefit to be derived and so burdensome as to seriously affect the future development of Imperial Valley. That the charge against new lands to be brought in, estimated by former Director Davis of the Reclamation Service at $90 per acre, will be practically prohibitive at this time of any extensive development of such lands. That the construction of both the all-American canal and the Boulder Canyon dam will not relieve the Imperial Irrigation District from the maintenance of the present protective levee system against flood waters, as the Imperial Valley will still be exposed to flood waters from the Gila River, from whicu source the highest floods on record have come. That the construction of the all-American canal will not relieve the district from the continued upkeep and maintenance of the present canal system, as it will be necessary to maintain such system to safeguard a continuous flow of water into the valley, as appears from the report of Grunsby and Anderson, consulting engineers for the Imperial Irrigation district. In short, the all-American canal, while more than doubling the present indebtedness constituting a prior lien against the lands in the irrigation district and greatly increasing the annual expense of providing water, will not eliminate the so-called Mexican problem; it will not do away with the expens incident to protecting the valley against flood waters of the Colorado River; it will not relieve the valley from the maintenance of the present main canal system, nor will it provide an acre-foot of additional water available for the district. THE SOUTHERN SIERRAS POWER Co,. Mr. HAYDEN. Your opinion is that it is better to permit the regu lation of the river to be undertaken by private enterprise? Mr. WEST. Yes, sir. Mr. HAYDEN. Rather than by the Federal Government? Mr. WEST. And I may say that, in any event, we favor the construction of these reservoirs. If Congress shall see fit to, for instance, deny the development by private agencies. we then want to see the Government itself go ahead and do the job. Mr. HAYDEN. But if that were done and power were developed, you would like to have a share of the power produced for the benefit of your company? Mr. WEST. Yes, sir; we think that our territory is entitled to it, and that our company is entitled to it. Mr. HAYDEN. You must have arrived at that conclusion by reason of some study of the best way of bringing about development. Have you agreed with the Southern California Edison Co. and the other interested power companies upon a comprehensive plan for the development of the Colorado River? Mr. WEST. No, sir; we have not. Our only understanding or agreement with the Southern California Edison Co. is that in case that company shall be allowed to undertake the development we shall be permitted to participate to an extent commensurate with the needs and requirements of our territory. Mr. HAYDEN. Is your request to them the same as your request to the Government? Mr. WEST. The correspondence covering that understanding is on file with the Federal Power Commission, I believe. Mr. HAYDEN. Your request to them is the same as your request to the Federal Government, if it builds the dam? Mr. WEST. Yes, sir; I think that states it fairly. Mr. HAYDEN. How about the order of development? Have your engineers considered where the first dam should be built? Mr. WEST. We have not; I will answer that question in this way: That the development is altogether too large for a company of our size to undertake. And so we have not had any detailed study made by our own engineers. It has been our feeling that the problem is primarily one for the Government and the Government engineers to work out. And there are so many questions involved-the rights of the States, and possibly the rights of Mexico, and all of those things so that all together we think it is a Government problem. Mr. LITTLE. Well, what effect would the building of the allAmerican canal have, if any, on the present canal through Mexican territory? Mr. WEST. In our judgment, it is going to be necessary to continue to maintain the protective works on the Mexican side. Mr. LITTLE. How about the water supply? Mr. WEST. Even with the construction of the all-American canal and the Boulder Canyon Dam, for instance--- Mr. LITTLE (interposing). But the water supply would remain the same in Mexico, would it? Mr. WEST. That is, with the construction of the all-American canal? Mr. LITTLE. Suppose the all-American canal were built. My inquiry is: What would happen over in Mexico on that canal? You say that they would have to keep up the river embankments; but the water supply would remain the same, would it? Mr. WEST. It is also our belief that they would have to maintain the present main canal system leading to the Imperial Valley, as an assurance of supply Mr. LITTLE (interposing). But the Mexican lands would be the same? Mr. WEST. The waters available for these Mexican lands? Mr. WEST. I do not see that that would change that situation at all. Mr. LITTLE. The water supply would be the same, then? Mr. LITTLE. Well, I may be a little obscure, but there is a lot of water running there now Mr. WEST (interposing). But I do not assume that the land in Imperial Valley will take any more water than it is taking to-day. Mr. LITTLE. It would not take any more at all from this Mexican canal, would it? Mr. WEST. I think it would at times take water from that Mexican canal: yes. Mr. LITTLE. Now, let us say they are going to build that allAmerican canal. What I am trying to get at is whether that would interfere in any way with the Mexican farmers getting water just as they are now? Mr. WEST. I do not think it would, particularly with the construction of the Boulder Dam or some other dam on the Colorado River I think there is going to be plenty of water available for all lands down there, both on the American side and on the Mexican side. Mr. LITTLE. It would not hurt the Mexican lands at all? Mr. WEST. I do not think so; no, sir. I can not see how it would hurt the Mexican lands. Mr. LEATHERWOOD. There would be water enough to water all of the American lands as proposed: to take care of the Mexican lands Mr. WEST (interposing). Yes, sir. Mr. LEATHERWOOD (continuing). To take care of Mr. Hayden's State? Mr. WEST. I think so. Mr. LEATHERWOOD. And still leave plenty of water for the upper basin? Mr. WEST. And still leave plenty for the upper basin. Mr. HAYDEN. Have you made any study of the lands in Arizona that might be irrigated? Mr. WEST. I have not, Mr. Hayden. I know there are some very large irrigation possibilities in Arizona, but whether they are feasi ble or not I do not know. I might say-and this may be in connection with some of the questions that may be put to me here—that. following my testimony, Mr. Thomas Means will be put on the stand. He is a consulting engineer. He is conversant with all of these problems that are involved here, as covered by our statement: and by reason of his engineering training and experience, he will probably be able to answer your inquiries more effectively than I can. Mr. LEATHERWOOD. Mr. West, does your company, through you as a representative, desire to be understood by this committee as favoring the immediate construction of the so-called Boulder Dam by the Federal Government Mr. WEST (interposing). No; I do not. Mr. LEATHERWOOD (continuing). Irrespective of the ratification of the Colorado River compact? Mr. WEST. We favor the immediate construction of a dam on the Colorado River, of sufficient size to furnish flood control and supply such water as is needed for irrigation. Giving my personal views as to the question of whether this can be done ahead of the ratification of the compact, I will say that I seriously question it. But I do not express that as the position of our company; but it is my personal opinion Mr. LEATHERWOOD (interposing). We will be glad to know, in the upper basin, that you ally yourselves with what we think is pretty respectable authority. Mr. WEST. Our immediate concern, though, as a company, is to see some development on the Colorado River; and although there is time to study this problem, and the menace to Imperial Valley is not such that it is necessary for Congress to rush through legislation, yet the advantages that will accrue from the construction of a reservoir on the Colorado River are so manifold; they cover, not only a more or less complete solution of the flood-control problem-I will not say the complete solution, but until Mr. LEATHERWOOD (interposing). Mr. West, has your company Mr. WEST (interposing). I would like just to finish that sentence. But also the construction of the reservoir would give great relief in the matter of the handling of the silt, which is a very serious question; and then it will provide the water that is going to be shortly needed, and urgently needed, to bring in additional lands. Mr. LEATHERWOOD. Has your company, or the engineering department of your company, given any consideration to the question of whether the control of the river should be by one gigantic dam, as planned or contemplated in this bill, at or near Boulder Canyon, or by a series of dams, at feasible points along the course of the river? Mr. WEST. I can not say that our engineers have made such a study, Mr. Congressman. Mr. LEATHERWOOD. Well, as a general proposition, would you not think it would be better to control the flood waters of this river by a series of dams along its course than to attempt to control the entire flood in one dam? Mr. WEST. I am inclined to say that I would. I have this thought: That in view of the present situation of the Government with reference to finances, and the necessity of reducing its budget so that taxes can be curtailed, the initial expenditure, if the Government is to make it, on the Colorado River, should not be larger than is necessary to give the immediate relief required in the way of additional water to supply the new lands that will be brought under at this time, and to handle this silt problem for the time being. Mr. LEATHERWOOD. In other words, you believe in sensible economy on the part of the Federal Government, as well as on the part of companies and individuals? |