The works for irrigation purposes last described shall be constructed and the cost thereof shall be repaid to the United States in accordance with the reclamation law.

SEC. 2. (a) There is hereby established a special fund to be known as the Columbia Basin fund (hereinafter referred to as the fund), to be available, as hereafter provided, only for carrying out the provisions of this act. All revenue received in carrying out the provisions of this act shall be paid into and expenditures shall be made out of the fund under the direction of the Secretary of the Interior.

(b) The Secretary of the Treasury is authorized to advance to the fund, from time to time, and within the appropriations therefor, such amounts as the Secretary of the Interior deems necessary for carrying out the provisions of this act, except that the aggregate amount of such advances shall not exceed the sum of ($260,000,000 per revised bill).

(c) The Secretary of the Interior shall determine the proportion of cost which properly should be charged to flood control, which amount is not to be reimbursed to the fund.

(d) Interest at the rate of 4 per centum per annum accruing during the year upon the amounts so advanced for construction and operation of said dam in the Columbia River at Grand Coulee, power plant and appurtenant structures and remaining unpaid shall be paid annually out of the fund.

(e) Moneys in the fund advanced under subdivision (b) shall be available only for expenditures for construction and the payment of interest, during construction, to the extent required, upon the amounts so advanced. No expenditures out of the fund shall be made for operation and maintenance except from appropriations therefor.

(f) The Secretary of the Treasury shall charge the fund as of June 30 in each year with such amount as may be necessary for the payment of interest on advances made under subdivision (b) at the rate of 4 per centum per annum accrued during the year upon the amounts so advanced and remaining unpaid.

(g) The Secretary of the Interior shall certify to the Secretary of the Treasury, at the close of each fiscal year, the amount of money in the fund in excess of the amount necessary for construction, operation, and maintenance, and payment of interest. Upon receipt of each such certificate the Secretary of the Treasury is authorized and directed to charge the fund with the amount so certified as repayment of the advances made under subdivision (b), which amount shall be covered into the Treasury to the credit of miscellaneous receipts.

SEC. 3. There is hereby authorized to be appropriated from time to time out of any money in the Treasury not otherwise appropriated, such sums of money as may be necessary to carry out the purposes of this act, not exceeding in the aggregate ($260,000,000 per revised bill).

SEC. 4. Before any money is appropriated for the construction of said dam in the Columbia River at Grand Coulee and/or power plant, and before any construction work thereon is done or contracted for, the Secretary of the Interior shall make provision for revenues by contract, in accordance with the provisions of this act, adequate in his judgment to insure payment of all expenses of operation and maintenance of said works incurred by the United States and for the repayment, within fifty years from the date of the completion of said works, of all amounts advanced to the fund under subdivision (b) of section 2 for such works, except for the amount allocated to flood control, together with such interest thereon as is made reimbursable under this act.

SEC. 5. Before any money is appropriated for the construction of diversion dams, pumping plants, canals, laterals, or other facilities for the irrigation of lands embraced within or tributary to said project, and before any construction work thereon is done or contracted for, the Secretary of the Interior shall make provision for revenues by contract or otherwise adequate in his judgment to insure repayment of all expenses of construction, operation, and maintenance of said works in the manner provided by the reclamation law. Such works may be constructed by divisions or units as specified in section 1 hereof, and contracts for repayment therefor may be made accordingly.

SEC. 6. That the Secretary of the Interior is hereby authorized, under such general regulations as he may prescribe, to contract for the sale of the stored

water in said reservoir and for the delivery thereof at such points as may be agreed upon, for irrigation and domestic uses, and for the generation of electrical energy and delivery thereof (at the switchboard) to States, municipal corporations, political subdivisions, associations, and private corporations, of electrical energy generated at said dam upon charges that will provide revenue which, in addition to other revenues accruing under the reclamation law and under this act, will, in his judgment, cover all expenses of operation and maintenance incurred by the United States on account of works constructed under this act, except for the amount allocated to flood control, and the payments to the United States as required by sections 4 and 5 hereof. Contracts respecting water for irrigation and domestic uses shall be for permanent service. No person, organization, or body of whatsoever kind shall have or be entitled to have the use for any purpose of the water stored as aforesaid except by contract made as herein stated.

After the repayments to the United States of all money advanced with such interest as is required by this act, charges shall be on such basis and may be fixed by law or regulation and the revenues derived therefrom shall be disposed of as may hereafter be prescribed by Congress.

General and uniform regulations shall be prescribed by the said Secretary for the awarding of contracts for the sale and delivery of electrical energy, and for renewals under subdivision (b) of this section, and in making such contracts the following shall govern:

(a) No contract for electrical energy or for generation of electrical energy shall be of longer duration than 50 years from the date at which such energy is ready for delivery.

(b) Contracts for the use of water and necessary privileges for the generation and distribution of hydroelectric energy or for the sale and delivery of electrical energy shall be made with responsible applicants therefor who will pay the price fixed by the Secretary of the Interior, with a view to meeting the revenue requirements herein provided for. In case of conflicting applications, if any, such conflicts shall be resolved by the said Secretary, after hearing, with due regard to the public interest, and in conformity with the policy expressed in the Federal water power act as to conflicting applications for permits and licenses, except that preference to applicants for the use of water and appurtenant works and privileges necessary for the generation and distribution of hydroelectric energy, or for the delivery thereof (at the switchboard of a hydroelectric plant) shall be given; first to States for the generation or purchase of electric energy for use only within their respective borders; second, to municipalities and other political subdivisions primarily for their own use and purposes incidental thereto; and, third, to associations, corporations, and individuals: Provided, however, That no application of a municipality or a political subdivision for allocation of electricity shall be denied or another application in conflict therewith be granted on the ground that the bond issue of such municipality, or political subdivision necessary to enable the applicant to utilize the electrical energy applied for has not been authorized or marketed, until after a reasonable time, to be determined by the said Secretary, has been given to such applicant to have such bond issue authorized and marketed.

The rights covered by such preference shall be contracted for within six months after notice by the Secretary of the Interior, and the energy or privilege shall be paid for on the same terms and conditions as may be provided for in other similar contracts made by said Secretary.

SEO. 7. This act shall be deemed a supplement to the reclamation law, which said reclamation law shall govern the construction, operation, and management of the irrigation works herein authorized, except as otherwise herein specifically provided.

SEC. 8. The use is hereby authorized of such public and reserved lands of the United States as may be necessary or convenient for the construction, operation, and maintenance of main transmission lines to transmit said electrical energy. SEC. 9. The Secretary of the Interior shall prescribe and enforce rules and regulations conforming with the requirements of the Federal water power act, so far as applicable, respecting maintenance of works in condition of repair adequate for their efficient operation, maintenance of a system of accounting, control of rates and service in the absence of State regulation or interstate agreement, valuation for rate-making purposes, transfers of contracts, contracts extending beyond the lease period, expropriation of excessive profits, recapture and/or emergency use by the United States of property of lessees, and

penalties for enforcing regulations made under this act or penalizing failure to comply with such regulations or with the provisions of this act. He shall also conform with other provisions of the Federal water power act and of the rules and regulations of the Federal Power Commission, which have been devised or which may be hereafter devised, for the protection of the investor and

consumer.

Collections from licensees under the Federal water power act resulting from assessments made pursuant to section 10 (f) of that act shall be covered into the fund and be available for transfer and expenditure in the same manner as other accruals to the fund.

SEC. 10. Nothng herein shall be construed as interfering with such rights as the States now have either to the waters within their borders or to adopt such policies and enact such laws as they may deem necessary with respect to the appropriation, control, and use of waters within their borders.

SEC. 11. "Political subdivision " or “political subdivisions" as used in this act shall be understood to include any State, irrigation or other district, municipality, or other governmental organization.

"Reclamation law" as used in this act shall be understood to mean that certain act of the Congress of the United States approved June 17, 1902, entitled "An act appropriating the receipts from the sale and disposal of public lands in certain States and Territories to the construction of irrigation works for the reclamation of arid lands," and the acts amendatory thereof and supplemental thereto.

"Maintenance" as used herein shall be deemed to include in each instance provision for keeping the works in good operating condition.

66

The Federal water power act" as used in this act shall be understood to mean that certain act of Congress of the United States approved June 10, 1920, entitled "An act to create a Federal Power Commission; to provide for the improvement of navigation; the development of water power; the use of the public lands in relation thereto; and to repeal section 18 of the river and harbor appropriation act, approved August 8, 1917, and for other purposes," and the acts amendatory thereof and supplemental thereto.

SEC. 12. The Secretary of the Interior is authorized to promulgate and enforce any rules and regulations necessary to effectuate the purposes of this act. SEC. 13. The short title of this act shall be "Columbia Basin project act." The CHAIRMAN. We are very delighted to have Senator Jones, of Washington, and Congressmen Hill and Summers of the same State, with us at the beginning of the hearings on this bill. It will be the policy of the chairman to leave this matter largely in the direction of these gentlemen to present their information to the committee bearing upon this problem. Judge Hill, I will call upon you first and then Doctor Summers, and I know we will have the statement of Senator Jones as quickly as you can arrange it. I think he would like to return to his committee work.

STATEMENT OF HON. SAMUEL B. HILL, A REPRESENTATIVE FROM THE STATE OF WASHINGTON

Mr. HILL. You have a copy of the bill before you.

The CHAIRMAN. Yes.

Mr. HILL. I would like to present for the record at this time a letter of the Secretary of the Interior to the chairman of this committee accompanied by a memorandum upon which the letter is based, from Dr. Elwood Mead, Commissioner of Reclamation, and would ask that the letter with memorandum attached be made part of the record.

The CHAIRMAN. Very well.

(The letter referred to is here printed in full as follows.) DEPARTMENT OF THE INTERIOR, Washington, May 20, 1932.

Hon. ROBERT S. HALL,

Chairman Committee on Irrigation and Reclamation,

House of Representatives.

MY DEAR MR. CHAIRMAN: I have your request for my report on H. R. 7446, a bill to provide for the construction, operation, and maintenance of the Columbia Basin project in Washington, and for other purposes.

Examination of the reports of the Bureau of Reclamation and of the Chief of Engineers of the War Department leads without difficulty to the conclusion not only that the construction of the Columbia Basin project is highly desirable, but it is both physically and financially feasible under the plan contemplated by the proposed legislation for the development of power and for the utilization of power profits after repaying the cost of power development— in amortizing, together with water user repayments, the cost of the irrigation developments in such units and at such times as economic conditions may justify.

Nevertheless, I must recommend that the proposed legislation await a later and healthier condition of the Treasury. The Chief Executive and the Congress are grappling with a deficit of $900,000,000 for the fiscal year 1931 and a prospective deficit of $2,500,000,000 for the fiscal year 1932 and $1,700,000,000 for the fiscal year 1933; and measures that would normally be considered of a drastic character are now being presented for the purpose of preventing deficits in succeeding years.

I assume that the report of the Chief of Engineers of the War Department is before you. For your information, I am inclosing a report of the Bureau of Reclamation on this project, together with a memorandum submitted to me by the Commissioner of Reclamation with reference to the instant bill, H. R. 7446. He proposes certain amendments to the measure. I believe that when and if the bill is enacted these amendments should be included.

For the above reasons I can not recommend favorable action on this bill at this time.

Very truly yours,

RAY LYMAN WILBUR.

Memorandum for the Secretary.

DEPARTMENT OF THE INTERIOR,
BUREAU OF RECLAMATION,
Washington, May 16, 1932.

Attached letter of January 14 from Hon. Robt. S. Hall, chairman Committee on Irrigation and Reclamation, House of Representatives, requests report upon H. R. 7446, a bill to provide for the construction, operation, and maintenance of the Columbia basin project in Washington, and for other purposes.

This bill is substantially the same as S. 2860, upon which memorandum was submitted March 30, 1932, and on which the Secretary made report to the Senate committee on May 11.

The bill authorizes the construction, operation, and maintenance of the Columbia Basin project in Washington, the purpose of which is to conserve the waters of the Columbia River and make them available for the development of hydroelectric power and for the ultimate irrigation of 1,200,000 acres of fine agricultural land to be developed only as demand and economic conditions justify. This is the largest and finest compact body of land feasible of irrigation remaining undeveloped in the United States. The possibilities of this area under irrigation have been fully demonstrated by what has been accomplished in the Yakima and Wenatchee Valleys on the west and at Lewiston and Coeur d'Alene on the east.

As a conservation measure this ranks among the greatest yet attempted in this country. The water of the Columbia River is the most valuable resource of the Northwest. It has the immeasurable value of being permanent, of being made the basis of a great industrial and agricultural development. The average annual discharge at the mouth of the Columbia is 180,000,000 acre-feet, or enough to irrigate all the arid land irrigated or irrigable in the United States. That is far more than can be reclaimed from the river because suitable land

is lacking, but it insures for all the land to be irrigated from this project the first requisite of successful irrigation, and that is an ample water supply for all years and all seasons of the year.

The Columbia is the second largest stream of the United States, being exceeded in size only by the Mississippi. Its annual discharge at the point of diversion fixed in this bill is twice that of the combined flow of the Sacramento and San Joaquin Rivers in California, and three times that of the Colorado River at Hoover Dam. To utilize this water for irrigation and the generation of hydro-electric power it is proposed to construct a dam across the Columbia River at the head of the Grand Coulee, which will raise the water surface of the river 350 feet and create a reservoir 150 miles long, extending to the international boundary; to install a power plant at the dam having a generating capacity of 1,500,000 kilowatts, and to construct distributing works for irrigation to supply water to 1,200,000 acres. The river at Grand Coulee has a minimum annual flow of 55,000,000 acre-feet, or enough to irrigate ten times the amount of land which can be reached by the proposed works.

The estimated cost of construction of the project is as follows: Columbia River Dam___

Columbia River Power Plant---.

Subtotal_

Interest during construction on above_-_.

Subtotal__.

Irrigation development for 1,200,000 acres

Total cost____

$125, 750, 000

42, 616, 000

168, 366, 000

17, 524, 000

185, 890, 000

208, 265, 000

394, 155, 000

The maximum estimated investment in the combined power and irrigation project up to the time when power revenues are sufficient to reduce the investment is $260,000,000. Therefore the maximum amount of money which the bill authorizes to be appropriated from the United States Treasury is limited to $260,000,000.

Eight hundred thousand kilowatts of firm continuous power, equivalent to 7,000,000,000 kilowatt-hours of energy annually, would be available for sale commeriially and in addition there would be a large amount of secondary power which would be utilized for irrigation pumping. Studies of the cost of competitive power from other sources indicate that the firm energy could be sold at from 2 to 2.25 mills per kilowatt-hour.

The economic feasibility of the project depends in large measure upon the ability of the power market to absorb the power. During the past decade the power requirements in the territory within economic transmission distance have increased at the rate of 9.5 per cent compounded annually. It is estimated that the power requirements will continue to increase in the future as they have in the past, but at a gradually reducing rate of increase, starting with 8 per cent in 1930 and gradually decreasing to 4 per cent in 1960. This is a somewhat more conservative estimate than the one in the report on the Columbia River by the Corps of Engineers of the United States Army which assumed a rate of increase of 9.5 per cent in 1930 and gradually decreasing to 4.75 per cent in 1960.

The amount of energy generated in the market area in 1930 was approximately 4,000,000,000 kilowatt-hours. If the power requirements increase as predicted, the amount of energy generated in 1940 will be approximately 8,000,000,000 kilowatt-hours and by 1955 this will have increased to over 20,000,000,000 kilowatt-hours. The increase in power requirements up to the time that Grand Coulee power first becomes available would have to be supplied from other sources and during this period most, if not all, of the power from new developments which the various power companies and municipalities have under construction would be utilized. Power from the proposed Columbia River development could not be made available before 1940 at the earliest, and from then until 1955 the amount of energy generated is expected to increase 12,000,000,000 kilowatt-hours. The Columbia River power plant would produce 7,000,000,000 kilowatt-hours of firm energy, or sufficient to supply a little more than one-half of the expected increase, during the 15-year period following completion of the dam. With full cooperation on the part of the power companies and municipalities it should be possible for the power to be absorbed