and alternative to any authority in existing laws relating to particular projects. No contract relating to municipal water supply or miscellaneos purposes or to electric power or power privileges shall be made unless, in the judgment of the Secretary, it will not impair the efficiency of the project for irrigation purposes.” SEC. 3. Subdivision (2) of section 9 (d) of the said Reclamation Project Act of 1939 is hereby amended to read as follows: "That the part of the construction costs properly allocable to irrigation and repayable by the water users shall be included in a general repayment obligation of the organization; and that the organization may vary its distribution of construction charges in a manner that takes into account the productivity of the various classes of lands and the benefits accruing to the lands by reason of the construction: Provided, That no distribution of construction charges over the lands included in the organization shall in any manner be deemed to relieve the organization or any party or any land therein of the organization's general obligation to the United States."

SEC. 4. Nothing in this Act shall be construed to alter, amend, or modify in any way the provisions of section 1 of the Act of December 22, 1944 (58 Stat. 887).

Mr. ROCKWELL. May I make this very brief statement: We have some 20 to 25 persons and agencies who wish to testify concerning these bills, and many of these men have come from long distances, way across the United States, and they cannot stay very long, so it is my hope that we can complete the hearings on the bills, even if we do not complete the changes that we wish to make in executive session, by Saturday of this week.

We will meet every morning, and if it is agreeable to you probably Saturday afternoon.

Wednesday afternoon, the day the House does not meet, the full committee meets, and then the Indian Affairs Committee is going to meet, so they have been very kind to let us have the rest of the week.

Now, if it is agreeable with you, we will proceed in this manner: We discussed Congressman Jones' bill yesterday, and he said that he would be perfectly willing that we leave that bill tentatively open until these other two bills, H. R. 1886 and H. R. 1977 are taken up by the committee.

And so this morning, I should like to make a brief statement concerning the purposes of H. R. 1886, and then Mr. Lemke will do the same concerning H. R. 1977, which covers the same subjects, and then we will call on the Interior Department for their preliminary statement, and the Department of Agriculture, if we have time, and then go on to the men who come from outside the city, starting tomorrow. If that is agreeable, I will read the brief statement I have prepared, concerning H. R. 1886.

STATEMENT OF HON. ROBERT F. ROCKWELL, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF COLORADO

Mr. ROCKWELL. H. R. 1886, of which I am the author, was introduced on February 12, 1947, and referred to the Committee on Public Lands. It is a bill to amend section 9 of the Reclamation Project Act of 1939. An identical bill was introduced by Senator Butler and referred to the Public Lands Committee of the Senate.

The bill deals with a technical subject, and requires careful reading. It should be remembered that it amends only section 9 of the Reclamation Project Act of 1939, and must be considered in connection with other provisions of that act.

Reclamation of western arid lands by the Government of the United States began following the passage of the Reclamation Act of 1902. For 30 years funds for the purpose came from the sale of public lands,

oil royalties, and water-user payments. There were no general fund appropriations or allocations for reclamation by Congress until the 1930's.

Under the law as it stands today projects may be authorized by the Secretary of Interior if, after investigation, the Secretary finds them feasible under the formula set up in section 9 of the 1939 act. Appropriations for construction of projects found feasible may be made by the Congress. If not feasible under the formula, congressional authorization is necessary before beginning construction of a project.

Since 1939 very few projects have been found feasible by the Secretary, consequently little use has been made of the Secretary's power to authorize projects under the Reclamation Project Act of 1939. It is not realistic in that interest is fixed at rates higher than current cost of money to the Government. The period fixed for the amortization of the cost of power features of a project is less than the ordinary useful life of such a project. The situation under the 1939 act has been made worse by the high project cost prevailing even prior to 1945.

It appears that most small projects, particularly where no power is involved, are not capable of being authorized under it. In attempts to secure the authorization of large projects where power generation is a feature, the Department of the Interior now relies on an interpretation of the 1939 act under opinions of the Solicitor of the Department. These opinions are contrary to the view of the Bureau of the Budget and members of the Appropriations Committee of the House. Thus appropriations for the continuance of construction of western reclamation development are in jeopardy until the issue can be clarified. The National Reclamation Association in its last two conventions, agreeing with sentiment expressed in Congress, opposed the Solicitor's opinions, and also at the last annual meeting appointed a committee to study the matter, to confer with the Bureau of Reclamation and committees of Congress called upon to deal with reclamation problems and to encourage the passage of corrective legislation. The bill, H. R. 1886, which we have before us represents the findings and conclusions of that committee, which has been reviewed and approved by the association's board of directors.

I may say there are some amendments which will be offered later, which have been recommended.

The bill is designed to accomplish the following:

Abrogate the authority of the Secretary of Interior to authorize reclamation projects and returns that responsibility to the Congress. The Secretary would hereafter be required to investigate proposed projects and prepare reports thereon in accordance with prescribed standards. The true construction costs of a project, the pay-out of such costs and the engineering feasibility would be set forth in such reports. The reports would be submitted by the Secretary in accordance with the provisions of section 1 of the 1944 Flood Control Act, Public Law 534, Seventy-fifty Congress, second session, to interested States and then to the President for transmittal to the Congress. Thereby, the affected States and local interests would be given full opportunity to express their views and comments.

The Congress would determine the economic justifications of a project and could authorize it for construction upon terms and conditions determined by it.

The Secretary, in making his report, shall among other things take into account the following:

(1) Any interest required under the bill would be calculated at 2 percent per annum. This is a reduction from 3 percent per annum prescribed by the 1939 act.

(2) Project costs allocated to irrigation and repayable by the irrigation water users may be calculated for repayment over a period longer than 50 years, but with interest on any unpaid balance after 50 years.

(3) Costs allocable to municipal water supplies or other miscellaneous purposes would be calculated to be repaid over a period not exceeding 40 years together with in terest at 2 percent per annum on unpaid balances.

(4) Costs allocated to commercial power features of a project would be calculated to be amortized during the useful life of the project but within a period no longer than 67 years with 2 percent interest payable to the United States Treasury on unpaid balances for the use of money. (5) An allocation of costs to the specific functions of the project. (6) The probable returns to the United States of the costs allocable to various functions of a project, and an appropriate amount for annual maintenance and operation costs and an annual charge adequate to establish and maintain a reasonable reserve for replacements. With respect to costs allocated to irrigation features of a project but allocable for repayment from power revenues, it is specified in the bill that the power rate shall be sufficient to provide the maximum aid to irrigation compatible with the cost of generation of power within the area served when such power is or could be generated by the most efficient or least expensive available method. The bill contemplates that such aid from power revenues shall be limited to that necessary to repay that portion of the irrigation cost which is beyond the ability of the water users to repay. Any project costs allocated to irrigation but allocable for repayment from power revenues, like other irrigation costs, would bear no interest for the first 50 years but would carry interest at 2 percent per annum on unpaid balances after the expiration of such period.

Under the bill the Secretary is prohibited from applying the interest on construction costs of commercial power to aid in the repayment of any portion of the irrigation costs of a project unless specifically authorized to do so on a particular project by the Congress.

No change is contemplated as to write-off of costs which serve navigation, flood control, and fish and wildlife conservation to the extent and under the condition now permitted by law.

The bill also directs the Secretary to estimate the cost which can properly be allocated to recreation by reason of the provisions of new, enlarged, or improved facilities; or general salinity control; or silt control. Any one or all of these costs may be made nonreimbursable by the Congress in authorizing a particular project.

The bill provides that after a project is authorized by Congress the Secretary shall be authorized to enter into repayment contracts with water users for furnishing of water for irrigation, for the sale of water for municipal water supply or miscellaneous purposes, and

for the sale of hydroelectric energy. He is also authorized to enter into short-term contracts to furnish water for irrigation.

The purpose of this bill is to make possible a continued, sound reclamation program to aid small projects, including those where no power is involved, assure the maximum benefits to irrigation from power as intended by the Reclamation Project Act of 1939 and to provide a sound financing method which, it is believed, will be approved by the Congress and particularly by the Members of Congress from the more populous parts of the country where support is necessary if western reclamation is to be fully developed.

That is the end of my statement.

Now I will ask Mr. Lemke if he will just briefly make his state

ment.

STATEMENT OF HON. WILLIAM LEMKE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH DAKOTA

Mr. LEMKE. Mr. Chairman, I want to make a brief statement about my bill, H. R. 1977, and my purpose in introducing it.

First of all, Mr. Chairman, I want to congratulate you on calling these hearings on both H. R. 1886, which you introduced, and H. R. 1977, which I introduced. I hope we now can drag out into the light of day, as it were, any and all questions which seem to be bothering us about the law or policy affecting rates for power from Federal reclamation projects. I know that every member of this committee wishes to help irrigation, and also the distribution of power to the farmers and others as cheaply as possible, and as long as it helps and assists reclamation. Open and public discussion of these matters will, I feel, lead to a sound solution.

Except in a few respects which I shall mention later, my bill does not differ very much from the bill which our former colleague from Utah (Mr. Robinson) introduced last year at the conclusion of the hearings before the Irrigation and Reclamation Committee on this same subject (H. R. 6574). I became convinced myself, at the conclusion of those hearings, that Mr. Robinson's approach to the problem was sound.

That does not mean that I was satisfied, as a lawyer, with the Solicitor's opinion about which we have heard so much. On the contrary, I am going to be very frank to say that, as a lawyer, I did not then and I do not now accept that Solicitor's opinion as a good lawyer-like job. I neither agree with its conclusion nor with the method by which that conclusion was reached. I felt that it ignored a substantial part of the legislative history of the Reclamation Project Act of 1939. But I can see no reason why we should not enact a law which will authorize the determination of power rates on the basis that the interest from the power investment may be used to help pay off irrigation costs. In fact, I am in favor of doing just that.

I am in favor of it, because I want my constituents and others, who depend on electric power or who are interested in getting electric power, to get it just as cheaply as possible consistent with helping pay off irrigation costs.

So the first thing I set out to do in my bill was to endeavor to clear up this interest question. The difference between my bill and yours, Mr. Chairman, in this particular respect, seems to me to be this: My bill would recognize the use of the interest earned on the power investment to pay irrigation costs. Yours would not, unless Congress acted on it.

I am in favor, as Mr. Robinson was and as I am sure you, Mr. Chairman, and every member of this committee are, of nonreimbursable allocations to navigation, flood control, recreation, fish and wildlife conservation, salinity control, and silt control. My bill would provide for nonreimbursable allocations for those purposes. Your bill, as I read it, Mr. Chairman, would merely recognize the possibility that the Congress might, in connection with particular projects which it would authorize, make any or all of such costs nonreimbursable. However, you and I know that Congress as a whole is not overly interested in irrigation projects.

I would like to see the Bureau of Reclamation go back over the costs of existing projects and see whether some of the costs of those projects could be allocated to recreation, or salinity control, or silt control. I would like to see the Bureau make reports to Congress in cases where such reexamination of existing projects seemed to justify allocations to those purposes. My bill would authorize the Bureau of Reclamation to do those things. I want to see that done because I don't want the water and power users saddled with costs that they ought not to have to pay. Your bill, as I read it, Mr. Chairman, doesn't do anything about that problem. I think it is a problem which should be dealt with here and now.

My bill would not abandon the finding of feasibility procedure for getting projects authorized. Your bill, I feel, would abandon that procedure. It would put it in the hands of Congress, and I am sure the small irrigation projects would get scanter consideration by the Congress each time.

I feel that the present procedure should be kept in the law. That it will help to advance irrigation and get irrigation projects without too much red tape and cost in advance.

I would not repeal the present provisions of law that authorize 40-year contracts for irrigation water. Out in my part of the country, that type of contract is, I understand, more practicable than the usual repayment contract. The fact of the matter is that this "utility type" of contract has not been used much until recently on Bureau of Reclamation projects although it has been authorized in section 9 (e) of the Reclamation Project Act of 1939 for some years. It seems to me that we ought at least to give it a fair trial.

Mr. Chairman, I want to thank you for your considering these two bills at the same time, and I may state further that I am sure that you and I agree that we should consider every possible item that enters into this new law and get a law that will be for the best interests of the people of the West, and especiallly those living in irrigation States.

Mr. ROCKWELL. Thank you, Mr. Lemke. Will the Department of the Interior make its statement now?