There is authorized $2,000,000,000 worth of works which will need. appropriations in order to get the projects constructed. Instead of costing the original amount of $300,000,000, as was estimated back in 1901, already the authorized works, so far, are to cost $3,000,000,000 when we get the money expended. It seems to me that the reclamation fund, as originally established, and the conception which was had of it, was entirely sound, and there ought to be a ceiling on the amount that could be spent and the money that should be provided for that purpose should come from the territories to be served. I think that origin was sound. I think for the long range best interest of reclamation, that that theory should be developed and prevailed upon and should be continued. That theory was continued until the middle 1930's, where allocations of relief funds were made from the general fund of the Treasury for the uses and purposes of reclamation. Then, in 1938, following the 52 Stat. 322 enactment, which was legislation on an appropriation bill, and subsequent to that time, $496,000,000 has been appropriated directly out of the general fund of the Treasury to supplement the appropriations available from income that has accrued to the reclamation fund. So, at the present time, as we stand today, with a billion dollars worth of reclamation projects constructed, 1,000,000 investment in them, the Federal Government shall carry as a result of the Code section, title 43, section 392 (a), for the entire investment of $13,760,000. That is to say, if there were not 1 cent appropriated out of the general fund of the Treasury in any year for reclamation, the Government would still be investing $13,760,000 annually, which is interest at 2 percent on the $496,000,000 of directly appropriated funds, and $192,000,000 of relief, FERA, ERA, and other emergency relief allocations, for reclamation purposes. Now, if you will go into the matter a little further, for the $496,000,000 appropriated directly, and we can forget about the relief allocation, consideration of the relief allocations, as investment in permanent works, and as nothing more nor less than the Federal Government investing in leaf raking and other items that were not of permanent nature, and do not charge for that at all, but just consider the $496,000,000 in the direct appropriations at 2 percent, you get $9,920,000 annual interest charged that the general fund of the Treasury bears for its investment in these reclamation projects without reference to any appropriation in the Interior Department bill for reclamation purposes. Now, today, as we consider the picture of the United States Treasury under the present law, under title 43, section 392 (a), the Federal Government does not get one cent back in return. The reclamation fund is getting the proceeds up until they equal the amount that has been expended from the general fund. The bill, H. R. 1772, as I said, attempts to recover proportionately, according to the investment, either from the reclamation fund or the general fund, as each bears to the total spent from both funds, which shall be returned at the end of each fiscal year on such projects. The corrected bill-which may cause some question-the corrected bill which I have before the committee and have presented to you, would provide that the general fund of the Treasury be fully reimbursed before the reclamation fund gets any reimbursement from the income. I realize that may be a point of severe criticism of the author of the bill, but in fairness, I think it is sound. I think it is fair inasmuch as there is not enough money in the reclamation fund each year to carry on the program at the rapid pace that the western Congressment and Senators and the Bureau of Reclamation hope for. So, the first page of the bill, the typewritten copy, contains the references to the Code section in relation to disposition of moneys received by the United States in connection with irrigation projects including the incidental power features thereof, constructed by the Secretary of the Interior through the Bureau of Reclamation, and section 392 (a) is amended to read as follows: All moneys received by the Bureau of Reclamation in connection with irrigation projects, including the incidental power features thereof, constructed by the Secretary of the Interior through the Bureau of Reclamation and financed in whole or in part with moneys heretofore appropriated or allocated therefor by the Federal Government from the general fund of the Treasury, shall be coyered into the general fund of the Treasury of the United States until said general fund is fully reimbursed with interest at three per centum, for and on account of such allocations and appropriations, except in cases where provision has heretofore been made by law or contract for the use of such revenues for the benefit of users of water from such projects: Provided, That after the net revenues derived from the sale and use of both power and water shall have fully repaid those construction costs of such projects allocated to power and irrigation to be repaid by power and water revenues therefrom, and shall no longer be required to meet the contractual obligations of the United States, then said net revenues derived from the sale or use of power and water developed in connection with such projects shall, after the close of each fiscal year, be deposited to the credit of the Reclamation Fund until it is fully reimbursed for any expenditures made therefrom: Provided further, That when the Reclamation Fund is fully reimbursed as aforesaid, all net revenues derived from the sale of power developed in connection with any of said projects thereafter shall be deposited in the general fund of the United States Treasury, and all net revenues from the sale or use of water shall be covered into the Reclamation Fund: Provided further, That no funds appropriated or allocated from the general fund of the Treasury shall be obligated or expended for the construction of any such reclamation project or any part thereof unless and until the prospective users of water therefrom shall have obligated themselves fully to repay the entire cost of the irrigation features of such project as estimated by the Secretary of the Interior through the Bureau of Reclamation at the time any such appropriation or allocation from said general fund shall be requested: Provided further, That nothing in this section shall be construed to amend the Act of December 21, 1928 (45 Stat. 1057), or title 43, sections 617-617t, United States Code, or to apply to irrigation projects of the Office of Indian Affairs. The point that I want to urge may seem harsh to you at first consideration. I would like to say here for the record that I would rather forget about the reimbursement to the general fund of the Treasury entirely for the $496,000,000 direct appropriation, and the $192,000,000 for allocations from relief funds. I would rather forget about that and wash it off the books, and wash repayment off the books entirely. If the accretions to the reclamation fund could be put on a sound basis to bring it in line with the original intent of the framers of the reclamation law, that could be done. The reason I say that is apparent from an examination of the income of reclamation projects financed in whole or in part with general fund money which appears in last year's appropriation hearings wherein in tabular form you will find Grand Coulee has a net return from power generation of three-fourths of a mill a kilowatt-hour. Central Valley has a net return of some 2 mills a kilowatt-hour after the expenses of generation of power have been deducted. That is the net profit. Turning again to the colloquy of Senator Spooner and Senator Hansbrough, when his bill, which later was passed, was under discussion, Senator Spooner asked him if the income from the sale of public lands from any particular State was to be confined to works in that particular State, and you will remember that Senator Hansbrough said: "For that particular area, including all the States and Territories, the 13 States and 3 Territories named in the bill." As you gentlemen know, I think, Mr. Barrett has appeared before our committee and has stated, in years past that Wyoming has never received the return of the amounts of money that have been paid in accordance with the reclamation law for accretions to that fund. That that has never been returned in the project works. The amount each year that has been paid for revenue from that State. me Mr. BARRETT. I might state this at this time, if you will permit Mr. JONES. Yes, sir. Mr. BARRETT. That the Federal Government has received in the last 25 years, not going back to the time of the reclamation law, because that is now 46 years ago, but in the last 25 years, the Federal Government has received $89,000,000 from Wyoming, and 622 percent of that money was retained here by the Federal Government. Ten percent went into the general fund, and 522 percent went into this reclamation fund. The total received amounts to $55,000,000. Now, I certainly do not like to refer to the few million dollars spent out in Wyoming on relief, Mr. Jones. Mr. JONES. That is the reason why, Mr. Barrett, I emphasized the point, separating the two figures between relief funds in the reclamation projects, and the contract for the repayment by the terms of the law which has been made. That is the reason why they are a necessary part of the discussion here, by the terms of the reclamation law. Mr. BARRETT. Of course, if you are coming in here and your theory is now saying to the people of Wyoming, "We want you to get down here and forget the fact that we have taken $89,000,000 out of the public lands of Wyoming and we are going to stop these projects until you can dig enough oil, or other minerals, out of the soil, so that we can take care of our reclamation projects in the 17 Western States," you are giving me a pretty big order to try to sell to the people of Wyoming. Mr. MURDOCK. Mr. Chairman, may I ask a few questions? Mr. ROCKWELL. Mr. Jones may finish his statement first. Mr. D'EWART. Would you furnish the accruals for the record at this time? Mr. JONES. I do not have the accruals, sir. I just remembered the testimony of Mr. Barrett. The point I wanted to emphasize was that originally conceived in the colloquy between Senator Spooner and Senator Hansbrough, that by States, the fund was not considered a lien for any particular State. It was considered for the whole 13 Western States and the three territories mentioned in the bill. I would like to see the income for reclamation projects, particularly the power income, considered on that same basis, for the reason that it will help build up the reclamation fund and will stop the necessity for the appropriations from the general fund of the Treasury, and will keep autonomous and complete the integrity of the reclamation fund for the purposes for which it was originally intended. It will provide for a faster expansion within the framework of the reclamation law. I think, first, that the base upon which the reclamation fund is builded, should be broadened. Instead of just covering a few minerals and oil, it should be broadened to as many different sources of income as you could get. The only other great source of income is from power. And just before the colloquy between Mr. Barrett and Mr. D'Ewart and Congressman Murdock, I said that the profit for the sale of tremendous power at Grand Coulee was only three-fourths of a mill per kilowatt-hour, and in Central Valley there was a profit of some 2 mills a kilowatt-hour. I think the policy that has been followed by the Bureau of Reclamation, and which is in accordance with the 1939 act in regard to paying back by projects, has tended to break the power market so that the reclamation fund is doomed not to grow as fast as it should. And you gentlemen from the West who are vitally interested in reclamation are constantly, therefore, requested to come and urge appropriations from the general fund of the Treasury. What I am urging, gentlemen of the committee, is that the reclamation fund be self-sustaining and that new avenues be approached to make it self-sustaining so that you can expand $2,000,000,000 worth of work within the framework of the reclamation fund. Mr. MILLER. Does the gentleman take into consideration at this point that the new lands brought under irrigation bring in a tremendous new wealth to the United States which has returned moneys to the Treasury many times more than the cash cost of these irrigation projects? Is that a part of the picture that should be considered here, or should that be ignored? Mr. JONES. I do not emphasize that part of the picture, sir. As a matter of fact, when anybody makes a private investment in the United States any place, there is new wealth created. There is wealth created by the private investment of people as well as the Government investment, whether it be in Maine or New Hampshire or New York, Pennsylvania, Ohio, Kentucky, or Nebraska, or wherever it may be. Mr. MILLER. Well, does not the gentleman, who is a member of the Appropriations Committee, realize that we have certain resources in this country, and that all new wealth really comes from the resources, such as lands and mines and forests and fisheries? That is the new wealth. But here when we bring these lands into production, the arid lands producing nothing, that in return we get new moneys pouring into the Treasury directly and indirectly that far offset the moneys that might be spent here for irrigation projects. Does not the gentleman consider those things in his approach to the problem of reclamation? Is that not to be considered? Mr. JONES. I do not think it makes any difference whether the Government invests money or private individuals invest the money, sir. The theory upon which the Government is supported depends entirely upon the income that people can make by producing, manufacturing, selling, or bartering, exchange of goods, and whether the Government does it or whether the private individuals do it, makes little difference. Mr. ROCKWELL. Does that finish your statement, Mr. Jones? Mr. ROCKWELL. Mr. Murdock wants to ask a question or two. Mr. JONES. By the same token that Senator Hansbrough said that the funds from any particular State should not be confined to that particular State, I think that by the same token, the income from these projects should be looked upon as a means to increase the reclamation fund itself by income on an area basis. I think the present law is retrogressive in that, for instance, in the Columbia River and in the Snake River, tremendous amounts of water are there, and when all of the dams that are presently authorized are constructed, and the tremendous amount of generation of power has been generated at the present ceiling of power, sales at wholesale power prices will cause the reclamation projects to suffer, because there are some areas within the transmission distance of the dams which cannot generate power as cheaply as Grande Coulee and the other dams that are to be constructed along the Columbia River. Therefore, by the policy of the present law, the reclamation program is being broken because they are breaking the market for the sale of power at higher generation cost projects. Therefore, there should be a national power policy as there was a policy in setting up the reclamation fund, so that income from any project should be considered as a means to increment and increase the return to the reclamation fund. Mr. FERNANDEZ. Pardon me, Mr. Jones. I did not quite understand what you mean by the expression "breaking the market for power." Would you mind explaining that? Mr. CARROLL. Do you mean power for market, or power for private utilities? I think that is a good point. Mr. JONES. Well, as a matter of fact, sir, to emphasize the point, you will find in last year's hearings of the Interior Department appropriation bill, where a private utility purchased all of the power at Shasta Dam, and it can produce it at 5 mills plus a kilowatt-hour, yet it is buying power at an average rate of about 2 mills per kilowatt-hour, the top rating being 3.4, which is 3.3 mills less than the private utility can generate that power with the tax component in its facilities. Therefore, I say that the Reclamation Bureau is breaking the market. It should be able to get the full amount that the private power company would pay, if it were using its own facilities, 5 point plus a kilowatthour. Do you understand what I mean? Mr. FERNANDEZ. In other words, in simple language, it just means we are not selling power for enough money. |