Pensacola Dam, taking the tax ratio between 1935 and 1939 at 100 percent, that the three counties affected in the Pensacola Dam have increased their tax valuation since the building of that dam 167 percent, whereas the average in the State has been 139 percent over those periods of time. We find in the matter of business done by the people in the areas involved that in those three counties, taking 1935 to 1939 as 100, that those three counties have had an increase in business as reflected by the sales tax of 372 percent, whereas the average for the State is 339 percent. We make that point because we feel that that economy will replace and more than replace the loss of land. Senator Ferguson talked about the water of the Arkansas River, and yet the city of Tulsa has made application for 100,000,000 gallons of water daily, industrial water, from the Keystone Dam. They, of course, will have to acquire or rent the storage space that is involved in that. The CHAIRMAN. How far will that dam be from Tulsa? The CHAIRMAN. I see. That is what I thought. Mr. GRAHAM. The city of Cleveland, which is where this refinery is located, has also made application to the Planning and Resources Board for water rights from that area. So that rather refutes the idea that the water wouldn't be usable. The CHAIRMAN. Have you set that reply out in your statement or are you just making this in response to the Senator's statement? Mr. GRAHAM. Yes, sir. Now he spoke about oil wells, and I want to speak about that. I think, if I may, I will save time if I can read this paragraph. The CHAIRMAN. All right, read the paragraph. Mr. GRAHAM. Another reason for the State's preference of Keystone Reservoir is because Mannford Reservoir extends into the Cushing oil fields. Within the area of Mannford Reservoir, there are 270 producing oil wells, with an estimated daily production of approximately 2,000 barrels. Our estimated severance cost to acquire oil wells or platform them and relocate pipe lines in Mannford is approximately $10,000,000. This is a very high cost in view of benefits, because of limited flood control and the absence of power in Mannford. The CHAIRMAN. Are there any oil wells in Keystone? Mr. GRAHAM. Yes, sir. I will get to that. The CHAIRMAN. All right, go ahead. Mr. GRAHAM. In contrast, we estimate such costs at below $4,000,000 for Keystone. Keystone is not located in a major oil field. There are 43 small producers within the permanent pool of Keystone. These are old wells and altogether produce an average of 250 barrels per day, whereas the wells located in the permanent pool of Mannford produce 1.061 barrels per day. These 43 small wells in the permanent pool of Keystone will probably have to be acquired, but our estimate of their market value is considerably under a million dollars and is included in our over-all estimate of $4,000,000. Approximately four times that figure would be required for those located in the permanent Mannford pool. To illustrate the difference in production in the two areas, the 140 permanent pool wells in the Mannford are within 15,820 acres while the 43 producers in the permanent pool of Keystone are scattered over 22,200 acres. So far as the flood-control space above permanent pool is concerned, the only cost is in readjustment of wells and pipe lines. No oil will be lost in this area. In many cases, no provision is made to guard against floods so far as oil wells are concerned. Floods may from time to time hold up production in low areas, but floods do not hurt the wells. In other cases, pumps are put on platforms and production proceeds. There are 130 wells in the flood plain of Mannford Reservoir and 135 such wells in the flood plain of Keystone. Thus, the problem of severance, so far as oil property in the flood plain is concerned, is no greater in Keystone than it is in Mannfora, while the severance cost of such property in the permanent pool of Mannford is four times as large as in Keystone. No estimate of cost is included for unproven oil production in either reservoir because it has been found in the Texoma Reservoir and in other water areas that drilling may proceed under water at no greater cost than on land. At Texoma, a number of good producers have been brought in since that reservoir was filled. Our inquiry of the operators reveals no objections to such operations. This is important not only in the matter of Federal costs but also in the matter of the national economy, for none of us want to retard or deny development of any possible production of oil. The CHAIRMAN. Thank you very much. Mr. GRAHAM. Mr. Chairman, I would like to give you the names of the other people and, for the benefit of the committee, we will file our statement and not keep the committee any further, but I would like to give the names for the record now. The CHAIRMAN. You desire to file this statement? Mr. GRAHAM. Yes, sir; it is already with the clerk; he has it. The CHAIRMAN. It will be inserted in the record by the clerk at this point, and the following will appear and present their statements, and those statements will be filed. (Statement submitted by Mr. Graham follows :) STATEMENT OF THE OKLAHOMA PLANNING AND RESOURCES BOARD BEFORE THE FLOOD CONTROL SUBCOMMITTEE OF THE PUBLIC WORKS COMMITTEE, HOUSE OF REPRESENTATIVES, EIGHTY-FIRST CONGRESS, ON THE MATTER OF KEYSTONE DAM AND RESERVOIR PROJECT, ARKANSAS RIVER WATERSHED, OKLAHOMA GENTLEMEN OF THE COMMITTEE: A letter written by the Honorable Roy J. Turner, Governor of Oklahoma, to Gen. Lewis A. Pick, Chief of Engineers, in reply to the request for comments on the Keystone project, as required by the 1944 Flood Control Act, best reflects the position of the Government of the State of Oklahoma on this subject. The letter was written on April 25, 1949, and is as follows: "I find that the approach to the feasibility and desirability of the construction of Keystone Reservoir, in lieu of the proposed Mannford, Blackburn, and Taft Reservoirs, has been diligent and covers a period of several years. "In May 1945, in a statement to the Board of Engineers for Rivers and Harbors in Tulsa at the time they were considering the comprehensive plan for the development of the Arkansas River, testimony on the part of the Arkansas-Oklahoma Interstate Committee, appointed by the Governors of the two States, was as follows: "We believe that under his powers to modify, the Chief of Engineers may find large additional public benefits in consolidating the proposed Taft, Blackburn, and Mannford Dams in one property near Keystone, Okla.' "Before the Committee on Rivers and Harbors of the Seventy-ninth Congress, it was stated: * We show the proposed Keystone project instead of the presently proposed Mannford, Taft and Blackburn projects We believe Keystone will eventually be substituted for these three projects. We believe such change de sirable in the public interest.' "In the public hearing on Keystone project held at Tulsa on March 7, 1946, in a detailed statement, the Oklahoma Planning and Resources Board endorsed Keystone as a substitute for Mannford, Blackburn, and Taft. "Again on April 19, 1948, in a sttaement prepared for the Board of Engineers for Rivers and Harbors, the Oklahoma Planning and Resources Board added to the record further endorsement of Keystone Reservoir in lieu of Blackburn, Mannford, and possibly Taft Reservoir, either eliminated or modified. "At the present time, I further find that the best interest of the State of Oklahoma will be served by the modification of the authorized Mannford Reservoir project to provide in lieu thereof the Keystone Reservoir, which will eliminate the necessity for Blackburn and Taft Reservoirs. "I ask the maximum consideration in harmony with existing law for those who will be displaced and whose lives must be adjusted to make way for this great step in the progress of flood-control water resources development. "The State of Oklahoma, through this office, concurs in the construction of Keystone Reservoir in lieu of Blackburn, Mannford, and Taft Reservoirs." Under the Flood Control Act of 1944, States are granted the right to review and comment on plans for river development. It can be seen by the foregoing letter that this provision is effective for in this case at least the State has led in the idea of substituting Keystone for Blackburn, Mannford, and Taft, and the engineers have followed. This is no reflection on the ability of the corps; rather, it is a compliment for it shows that they accepted the State's suggestion that greater public benefits at less public cost would result from modification of the project. The corps was not arbitrary but amenable. When they had investigated and found the State's suggestion feasible, they agreed. The State of Oklahoma for many years has adopted and followed a general policy of supporting or opposing flood-control projects on the basis of what they will do in protecting bottom lands and also on the basis of the type of land to be used for reservoir space. When Taft Reservoir was proposed, for example, we knew we could not approve, for the lands which would be taken were truck croplands, producing sweet corn. peas, beans, spinach and other high income crops, not only supporting many field hands but also numerous workers in canning factories. This economy simply could not be disturbed for a project like Taft Reservoir, proposed for sedimentation purposes only. The substitution of Keystone for Mannford, Blackburn, and Taft is, we believe, very fortunate. Let us briefly review some of our reasons for this belief. FLOOD CONTROL The report on Keystone shows that substantial protection to 485,860 acres will be furnished to lands below Keystone site in the flood plain of the Arkansas River. That is, however, only part of the flood-control benefit in Keystone. Through increase in levee free-board and reduction in backwater effects of the Mississippi River, there are actually about 2,000,000 acres of land benefited. LAND The greatest industry in Oklahoma is agriculture. The greatest boon to agriculture in the valley is flood control. We have a large portion of upland, some very good, some not so good, and a small percentage of really high productive bottom land, much of which is subject to overflow. From the standpoint of stabilizing Oklahoma's agriculture production the problem, therefore, is to obtain flood control for the rich bottom lands with a minimum loss of such lands in reservoir sites. To obtain this objective is a prime policy of the State of Oklahoma operating through its planning and resources board. We find a substantial saving in good bottom land when comparing Keystone with Mannford, Blackburn, and Taft. Based on the district engineer's report, Keystone will inundate about 6,000 acres of cultivated bottom land in the perma nent reservoir area, while Mannford and Blackburn will inundate 9,200 acres of such lands and Taft 6,000 acres. Thus the 6,000 in Taft will be canceled out by the 6,000 in Keystone and leave the State a net saving of 9,200 acres of bottom lands. This is not the whole comparative story, however, because as we proceed down the valley of the Arkansas the land progressively improves in value. Heretofore we have only spoken of the value of saving river bottom cultivated land in the various proposed permanent pools. Let us now consider the land values and savings involved in Keystone over Blackburn, Mannford, and Taft based on the whole reservoir area, as of 1946: Thus the adoption of Keystone in place of Mannford, Blackburn, and Taft will leave, in the general tax economy, 51,000 acres of land and property having a valuation in excess of $11,000,000. COSTS Keystone is more economical, too, from the standpoint of construction costs. The latest available cost estimates are taken from the comments of the Board of Engineers for Rivers and Harbors and are on the basis of September 1948 price levels. The estimates are as follows: Cost of Blackburn, Mannford, Taft, and raising Frisco Bridge at Cost of Keystone, including relocation Frisco and the M. K. & T. Saving at Keystone___. Total $114, 170, 000 89, 500, 000 24, 670, 000 There is, in a certain sense, no duplication in the two substantial amounts of savings, one of land valued at $11,357,000 and the other in cost of construction estimated at $24,670,000. The $11,357,000 in land value saved by Keystone will result to the economy of the Arkansas River Valley because more and better land is left available annually for crop production. The $24,670,000 saving in construction costs at Keystone will result to the economy of the Federal Government. RECREATION Our discussion proceeds from land to recreational values because the recreational possibilities of Keystone are, to Oklahoma, second only to saving and protecting the land. Because the Arkansas Valley in Oklahoma is, under the comprehensive plan, destined to lose large tracts of land for widespread flood protection, much of which is not in our State, we must carefully plan not to reduce but to increase the economy of areas adjoining these flood-control projects. With proper planning we can develop new economic benefits to more than replace the loss of land use. Thus we can increase rather than reduce the economy adjacent to the reservoirs. We realize the Corps of Engineers and hence congressional committees are inclined to minimize the value of public benefits arising from recreation but we know from actual experience that well-developed recreation, in all branches of the vast business, is the one prime public benefit to which Oklahoma can look for the increase and stablization of property values adjacent to these reservoirs. Given an attractive lake of fair size and stability at Keystone, the Oklahoma Planning and Resources Board can say to people now living or planning to live in the lake area: "You will not be injured. On the contrary, you will benefit through the construction of Keystone Reservoir, both in property values and in business income." Fortunately we have an adequate guide for such a statement. We cite the case of Pensacola Reservoir completed early in 1940 and requiring land in Delaware, Ottawa, and Mayes Counties in Oklahoma. The Pensacola power pool has a capacity of 1,653,000 acre-feet and a surface area of 46,500 acres. The annual average value of real estate and personal property assessed locally in these three counties for the 5-year period before construction (1935-1939, both inclusive) is taken as 100 percent. On this basis, with consistent annual increase, the year 1948 shows: Now let us consider business income. Gross retail sales reflected by tax collections in these three counties show that business in this area increased in like manner. With 1935-1939, both inclusive, taken as 100 percent, 1948 compares as follows: The source of this information is the biennial reports of the Oklahoma Tax Commission. POWER Neither Blackburn, Mannford, or Taft would return a cent of cash to the Treasury of the United States. Under the present plan the Keystone is designed for an initial installation of 25,000 kilowatt which under present markets will return approximately $725,000 annually. We believe this will eventually be increased to 50,000 kilowatts and bring the Federal return to $1,500,000 annually. This installation will be located within 20 miles of the largest industrial con centration between St. Louis and Dallas, including many large steel and fabri cating plants, textile and bleaching plants, several very large oil refineries, and numerous oil-well machinery manufacturing concerns, While there is no present shortage of power in this area, the ratio of demand growth is high. There is no doubt that the market will absorb this power. IRRIGATION The Bureau of Reclamation has found that there are 30,000 acres of truck croplands lying below the Keystone Reservoir which could profitably use water from the reservoir for irrigation. The Bureau requested that storage of 40,000 acrefeet be provided so that this possible public benefit will not be lost. While it is probable this water can best be picked up after it has gone through the turbines, yet, before final planning the engineers of the corps should confer with those of the Bureau of Reclamation and the State of Oklahoma and, if found necessary, outlets for irrigation should be provided. INDUSTRIAL WATER As the committee probably knows, the whole area of the Southwest while blessed with a large rainfall does undergo very severe periodic droughts. The limit of urban growth, both domestic and industrial, is set in this region by the available water supply. The dam site of the Keystone Reservoir is in Tulsa County, Okla. This county has a fast-growing population now exceeding 300,000 people. It is a center of executive management and know-how for operations in the petroleum industry all over the world. To stabilize the economy in the matter of industrial water is not only important to our peacetime economy but also to our national defense. |