The Chief of Engineers in his report divides the total cost of the project, expressed in terms of annual charges as follows:

Federal share of the construction cost including interest and amortization charges at 3 percent for a 50-year period__

* $645, 600

Local share of the construction cost, and the cost of lands and rightsof-way, including interest and amortization at 3% percent for a 50-year period, plus the annual cost of maintenance and operation 1, 015, 500

Total cost expressed as an annual charge

140 percent.

2 60 percent.

2

1,661, 100

Under this division of costs, as recommended by the Chief of Engineers, local interests would bear 60 percent of the total economic cost of the project. It should be noted that this local share of $1,015,000 annually includes maintenance and operation of the completed project estimated at $792,000, which leaves a residue of $223,500 annually to be repaid to the Federal Government. Thus, in the 50-year period of repayment set up in the report local interests would repay $9,170,000 or 48 percent of the construction cost, in addition to other requirements of local cooperation.

Let us consider one further point which has been overlooked by the agency which opposes this project. On page 56 of his report, the Chief of Engineers points out that the cost of maintenance and operation represents the largest part of the local share in the cost of this project, and that this maintenance and operation is necessarily an estimate. He, therefore, states that the actual amount of repayment should be determined when detailed plans have been prepared and all costs are known in detail. The Chief of Engineers indicates that it may be possible to reduce maintenance and operating costs from the conservative estimate given in the report; and that in such event local interests would repay a larger share of the construction cost. This might result in local interests repaying as much as 80 to 90 percent of the construction cost, although the total local share of cost would be reduced.

In brief, the Chief of Engineers has set up a realistic division of cost, leading to a repayment by local interests which recognizes local ability to repay and also protects the Federal interest by insuring a substantial local repayment of from 48 to 85 percent of the construction cost; and the determination of the exact amount and the method of its repayment is left to the Secretary of Agriculture, since that Department is operating in Arkansas and is thoroughly familiar with agricultural matters in that State.

On the other hand, if the cost of the Grand Prairie project was divided and repayments made under Federal reclamation law and the procedures of the Bureau of Reclamation, several possibilities would obtain. Representatives of the Bureau of Reclamation indicated this at the hearings before the Public Works Committee by showing that the local share of cost on an annual basis would be:

(a) Using a theoretical 40-year repayment period, the local share would be $1,297,000, or 28 percent higher than the total local share recommended by the Chief of Engineers.

(b) Using a 50-year repayment period, comparable to the period used by the Corps of Engineers, the local share would be $1,196,000, or 18 percent higher than the total local share recommended by the Chief of Engineers.

Under either of these two procedures, according to the Bureau statement at the hearings, local interests would repay the entire construction cost of $19,259,000. With due deference to the figures presented by the Bureau of Reclamation, it is important to note two factors which were not brought out by the Bureau. First, the Bureau, when it so desires, may recommend to Congress a longer repayment period after considering local repayment ability. Its representatives have discussed before the Appropriations Committee of the House repayment periods of as long as 100 years and the Bureau has actually recommended repayment periods of 78 years. I am confident that the Bureau, if it had reported to Congress on the Grand Prairie project, would have recommended a repayment period longer than 40 or 50 years. Thus, using the 78-year period of repayment favored by the Bureau we find that the local share of total cost expressed on an annual basis would be $1,051,000, which you will note would be essentially the same local annual charge recommended by the Corps of Engineers.

You will immediately say, however, that the Bureau's annual charge will extend for 78 years, while that proposed by the Corps of Engineers would be for only 50 years; and that, therefore, a larger part of the cost would be returnedć to the United States under reclamation law. This brings me to the second factor

which was not developed by the Bureau in its testimony at the public works hearings. The facts seem to be that regardless of theoretical annual repayments and periods of repayment set up by reclamation law, it appears that actual repayments of construction costs of Bureau of Reclamation projects have been very small and that under Bureau administration even some part of the costs of maintenance and operation are actually paid by the Federal Government. Consequently, there is no basis for confidence that any exact proportion of the cost of the proposed Grand Prairie project would be repaid under reclamation law.

The voluminous testimony of officials of the Bureau of Reclamation in hearings before Committees on Appropriations of the House and Senate, when the Interior Department appropriation bills for fiscal years 1949 and 1950 were under consideration, is replete with information supporting this conclusion. It is difficult, however, to obtain from this testimony just what part of the cost of the Federal reclamation projects has been or will be repaid by water users. It is my understanding, however, that as yet very few such projects have paid back to the Treasury their construction costs.

It appears that numerous devices such as extension of repayment periods, contract revisions, and programs for rehabilitation which would place costs of maintenance on the Federal Government, are utilized to reduce or defer local repayments. It is interesting, however, to note (on p. 979 of the Interior Department appropriation hearings for fiscal year 1949) from testimony of the Bureau of Reclamation that repayments by water users to June 30, 1947, totaled $140,144,000. In the same hearings before the Appropriations Committee of the House, a tabulation of expenditures by the Bureau of Reclamation since 1903 is given (on p. 2211) which totals $1,264,000,000. It thus appears that in over 40 years of Federal reclamation operations only 11 percent of the total expenditures had been repaid by water users to June 30, 1947. I realize, of course, that these expenditures include Bureau overhead costs which the Bureau indicates are low, as well as certain special projects where repayment is not involved. Nevertheless, the amount repaid appears very low in relation to the total Bureau expenditure over the 40-year period.

I can only conclude, therefore, that the amount of construction cost of the Grand Prairie project, which would be repaid by local interests under recommendation of the Chief of Engineers would result in repayments to the United States which are at least fully comparable in amount to those which have been obtained in the practical application of the reclamation laws.

Furthermore, the approach to establishing a proper amount of local repayment for the Grand Prairie project as used by the Chief of Engineers is precisely that followed by the Bureau of Reclamation. In recent testimony before the Appropriations Committee of Congress, the Bureau of Reclamation compared its past procedure on repayments with present procedure under the 1939 Reclamation Project Act (see p. 519 of hearings on Interior Department Appropriation Act for 1950) as follows:

"In the early years of reclamation, repayment of project cost was provided for in general by a simple mathematical approach of dividing the total cost of the project by a fixed number of years-whatever was permitted by the law at the time to determine what the water users would be required to pay each year. Time has proved that this simple approach has often failed to fit the complex repayment situation on many projects."

It is pertinent to note that this admittedly outmoded approach to repayment is the one which the Bureau applied to the Grand Prairie project in its analysis and objections at hearings before the Public Works Committee. By using this outmoded procedure they were able to imply that the repayment proposed by the Corps of Engineers would be less than that which would obtain under reclamation law; and that its effect would, therefore, be to set a precedent destructive to the reclamation program in the 17 Western States.

On the other hand, to continue with a quotation from Bureau testimony, the present and approved procedure is as follows:

This experience led to passage of the 1939 Reclamation Project Act, which was a great step forward in reclamation history. That act permits the consideration of enhe project and its special operating intricacies in developing a repayment plan and is the basis for the Bureau's repayment program today.

"Up-to-date techniques of analysis are used whereby the payment capacity for each project is determined in an objective manner. Payment capacity is the maximum amount that water users on a given project are able to pay for operation and maintenance of the project, and retireemnt of project construction costs and, at the same time, maintain a suitable standard of living."

94522-50-pt. 3- -4

This latest approved procedure is that used by the Corps of Engineers in developing the amount of local repayment recommended for the Grand Prairie proj ect; and if the Bureau of Reclamation was to follow its own preferred procedure under reclamation law in analyzing repayment ability of the Grand Prairie project it is probable that it would arrive at essentially the same amount as that recommended by the Chief of Engineers. To admit this, however, would be to void the argument that the amount of repayment proposed by the Chief of Engineers would be injurious as a precedent to western reclamation.

The second objection raised by the Bureau of Reclamation, that with respect to method of repayment, may be discussed briefly. The recommendation of the Chief of Engineers provides that repayments by local interests may be "in such installments in the form of either agricultural products or cash as may be determined by the Secretary of Agriculture, after consultation with local interests." This is no intention that the United States shall be repaid in rice or in any other agricultural product. The language in the recommendation was merely a recognition of an established local custom whereby farmers in the Grand Prairie region now pay for water by contracting to pay a certain part of their crop to owners of water sources, such as reservoirs. A local agency set up in Arkansas to administer the Grand Prairie project could make such an arrangement with farmers, but that agency would have to convert crops to cash and make its payments to the United States in cash. The Public Works Committee has inserted language in the bill which will remove any possibility of confusion on this point.

Furthermore, with respect to the method of repayment it should be noted that the language of the Chief of Engineers' recommendation would allow the Secre tary of Agriculture to obtain variable rather than fixed annual payments. This, too, is in accord with the procedures approved by the Bureau of Reclamation. In the testimony this year on appropriations for fiscal year 1950, to which I have previously referred, the Bureau of Reclamation reports as follows:

"Payments should be permitted to vary from year to year in some direct relation to farm prices, local farm production, and the parity relationship."

It was precisely this thought which is incorporated into the repayment method recommended for the Grand Prairie project.

It appears, therefore, that the method of repayment proposed is in accord with the spirit and principles of reclamation law, and differs only in that repayments would be handled by the Department of Agriculture which is operating in Arkansas, rather than the Bureau of Reclamation which does not operate in that State.

This leads me to the third and final point of objection raised by the Bureau of Reclamation. That agency points out that authorization of the Grand Prairie project would place three Federal agencies in the business of irrigation, rather than one-the Bureau. And that this would involve duplication and confusion of Federal effort. On the contrary, the fact seems to be that both the Corps of Engineers and the Department of Agriculture are now operating legally in Arkansas and can accomplish this improvement with their present organizations; and it would be a duplication to bring in an entirely new organization, the Bureau of Reclamation, which would have to build up an additional organization to handle this work.

I can only conclude, therefore, that the arguments advanced by the Bureau of Reclamation are not valid objections, as the amount and procedure for local repayment conforms sufficiently with reclamation law in all except two particulars:

First, they do not provide for administration by the Bureau of Reclamation and could not do this unless Congress, by legislation, authorized the Bureau to operate in Arkansas.

Second, they do not provide for the acreage limitations and other restrictions involved in Bureau of Reclamation repayment contracts, as it is obvious that such limitations, designed originally as antispeculation features and for application to reclamation of new lands in the West, are not applicable to longsettled areas in Arkansas, such as the Grand Prairie, where reclamation of new land is not involved.

It is thus evident that the real reason for interest in this project by the Bureau of Reclamation is the desire of the agency to extend its operations into Arkansas and the eastern part of the country, together with the limitations and restrictions on land and water use which are entailed in reclamation law and its administration by the Bureau. This is merely another attempt by the Bureau to accom plish a purpose which was specifically denied by Congress in its unfavorable action on legislation to extend reclamation laws to Arkansas and Louisiana.

Senator MCCLELLAN. I am also inserting certain remarks made by Congressman Norrell, of Arkansas, in whose district this project is located, during the debate in the House on H. R. 547.

(The matter referred to is as follows:)

STATEMENT OF HON. W. F. NORRELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARKANSAS

Mr. Chairman, on March 17, 1943, I became a member of the Interior Department Subcommittee of the Committee on Appropriations. On that same day the gentleman from Ohio, Mr. Kirwan, and the gentleman from Iowa, Mr. Jensen, also became members. We are now, from the standpoint of seniority, the oldest members of the subcommittee. The gentleman from Ohio, Mr. Kirwan, is our able chairman. I am next to him on the majority side, and the gentleman from Iowa, Mr. Jensen, is the ranking minority member. The other members are the gentleman from Pennsylvania, Mr. Fenton, and the gentleman from Washington, Mr. Jackson. In 1943, when we assumed membership on this subcommittee, the total appropriations from the general revenue fund for the then designated Bureau of Reclamation amounted to about $89,000,000. This year, 6 years later, the total appropriations for the Reclamation Service-so designated now-from the general revenue fund will be in excess of $250,000,000. This does not include amounts appropriated from the reclamation fund, the several trust accounts, nonreimbursable, and other sources against which appropriations are made. Why do I mention this? It is in order to show that we, the members of this subcommittee, know something about reclamation and, owing to our sincere interest in the service, we have been doing a very substantial job. This is as it should be. Grand Pairie consists of all that area between the White River, Bayou Meto, and Wattensaw Bayou, comprising about 2,240 square miles, of which about 180 square miles are hill land, and the remaining is flat and alluvial land.

Local interests are alarmed at the rate of lowering of ground water throughout the Grand Prairie region, which is estimated to be about 1 foot per year. Many wells are being abandoned because of ground water depletion. This is the riceproducing area of Arkansas. Last year we produced 19,740,000 bushels of rice and we stand No. 3 in rice production in the Nation.

Local interests also desire relief from ponding behind the Bayou Meto and Little Bayou Meto floodgates during periods when the floodgates are closed due to high stages on the Arkansas River. They desire relief from flooding, together with major drainage improvements.

The pending project-Grand Prairie-Bayou Meto-is one project and is largely for flood-control purposes. We have flood-control projects and problems through out the entire area, for it is in that area that the St. Francis, White, and Arkansas Rivers enter the Mississippi River. Other tributaries empty into these rivers and the water flows into the Mississippi.

All of our problems are flood control in nature. The Grand Prairie-Bayou Meto project would take water from the White River, using flood-control dams to the north to accumulate the supply of water we need. As we take the water out of the river, the flood hazards to the south would be lessened accordingly. This project, the Grand Prairie (supplemental water) and Bayou Meto (flood control) as stated, must be considered as a whole, the water problems are so closely related, not only to each other, but to the major flood-control improvements authorized and under construction on the Mississippi River and throughout the Arkansas and White River Basins. We need flood control in the Bayou Meto Basin, the importation and delivery of water for agricultural use in the Grand Prairie region, and major drainage improvements throughout the entire area. This coordinated plan of improvement, including flood control, major drainage works, and the importation of supplemental water for agricultural purposes, appears best for us and, considered together, are engineeringly sound and economically feasible.

The plan would provide for the use of flood-control dams already constructed on the White River in connection with the water-supply project. We would, of course, use water collected in the reservoirs of these dams. In doing this, we would in no way interfere with the operation of those dams either for flood control or power.

Congress recognized that the Corps of Engineers is the only Federal agency with authority to make these improvements when it passed the resolution providing for the investigation, in 1945. The existing reclamation laws do not apply to Arkansas They are confined exclusively to that area lying west of the

ninety-seventh meridian, and Arkansas, as you know, is located east of the ninety-seventh meridian. Several attempts have been made to amend the law to include Arkansas in the reclamation area. These efforts have all failed. There is no way that we can provide for the construction of any works in Arkansas by the Reclamation Service unless and until the law is amended to include Arkansas in the jurisdiction of the Reclamation Service.

However, may I say, the Grand Prairie-Bayou Meto project is not a reclamation project. It is for the preservation and improvement of a long-established agricultural area, devoted largely to rice cultivation. There is involved no question regarding reclamation in this project. We have no arid or semiarid, or otherwise unused land in the Bayou Meto area. We have no public domain, no federally owned land, no State owned land, no land to be reclaimed. All of the land in the Grand Prairie area is privately owned and in a high state of improvement and devoted to agricultural production.

The reclamation laws were designed for arid territory, located in whole or in part in public domain areas, land to a considerable extent located in deserts, land not in cultivation, land needing to be reclaimed. The reclamation laws were never intended to be applied to an improvement in a developed area, with lands in private ownership and devoted to a type of agriculture peculiar to its own region.

Probably Arkansas should have been included in the reclamation area, but it has not been, and under no circumstances can the Reclamation Service do the job, regardless of our wishes. Either the engineers will do the work or it will not be done.

I have been working on the project now before us for about 10 years. We began trying to secure the desired assistance for the good people of the Grand Prairie-Bayou Meto region a long time ago. The projects for flood control and water supply, considered separately, have not been considered feasible. However, in 1945, Congress passed a resolution authorizing and directing the Corps of Engineers to investigate the Grand Prairie region and Bayou Meto Basin in Arkansas, and to include a study of the flood control, drainage, and water needs of the entire area. We appropriated sufficient funds. The investigations have been made over a period of several years, and all expenses have been paid. The report of the Army engineers has been filed and is now before us for consideration. It is House Document No. 255, of the Eighty-first Congress, first session.

The Secretary of the Interior objects to the recommendations made by the Corps of Engineers. He says they do not conform entirely to all Federal reclamation law. I say there is no justification or authority for making the requirements of the reclamation laws applicable to Arkansas. Then, too, this is not a reclamation project.

The project before us is for the preservation and improvement of a longestablished agricultural area, devoted to rice farming. There is no similarity in this project to the projects located in the reclamation areas.

However, our farmers should pay on a comparable basis with water in the reclamation areas. Of course we all know that the basic law provides for allocations of costs between several subjects such as flood control, navigation, irrigation, power, and so forth, and then in the reclamation areas the farmers do not have to pay any interest on construction costs of irrigation projects. Also, they have the benefits of what is known as the reclamation fund, which is established for the water users throughout the West.

Let me compare the costs as proposed by the Army engineers for the water users of the Grand Prairie area to pay, with a number of the outstanding reclamation projects in the West: