Mr. CANNON. You think this proposal would carry out the reasonable intention of the law?

Mr. WATHEN. Yes, sir.

Mr. CANNON. How much is involved in it?

Mr. WATHEN. This year there was very little involved, but in subsequent years there will be considerable involved. We try to carry a balance in our receipts fund each year for the various projects. We collected a total this year of around $700,000 from water users. We usually try to carry a balance in that fund of 25 percent.

Mr. CANNON. Suppose you put in the record a statement as to the projects and the balances?

Mr. WATHEN. I will do so.
(The statement is as follows:)

INCREASING DIESEL POWER PLANT ON SAN CARLOS PROJECT, ARIZONA

Mr. CANNON. You have a draft of a proposed provision pertaining to the appropriation "Construction, etc., irrigation systems, Indian reservations (reimbursable)", as follows:

The Secretary of the Interior is hereby authorized to enter into a contract or contracts prior to July 1, 1938, for the development of additional power, San Carlos project, Arizona, at a total cost of not to exceed $300,000, reimbursable. Mr. DODD. I submit the following justification for the record:

Beginning in 1929 with a 12,500-kilovolt-ampere hydroelectric generating station at Coolidge Dam and two 44,000-volt transmission lines, each 22 miles long, to the Hayden mill of the Kennecott Copper Co., the power system of the San Carlos project has now been expanded by the construction of 24.3 miles of 44,000-volt line to Schultz (Mammoth Mine), 84 miles of 69,000-volt line and 4 substations on the project, 106 miles of 11,000-volt distribution circuits to 80 project pumping plants and the installation of a 2,330-kilovolt-ampere, 1,864kilowatt Diesel electric generating station near Coolidge. There is also a 44,000volt transmission line to the San Carlos Indian Agency.

A major problem on this project is the economical use of the potential hydroelectric power at Coolidge Dam. In an average year this totals 30,000,000 kilowatt-hours. This energy is available only when water is released from the San Carlos Reservoir during the irrigation season. In order effectively to utilize and sell this hydroelectric power, it is essential that the project have available power from other sources which may be used during the nonirrigation season. As a beginning in the supply of stand-by power the present diesel electric plant was constructed in 1935 from funds provided by the appropriation for Public Works. During 1936 electrical energy was delivered to the lines as follows:

Hydro plant, Coolidge Dam..
Diesel plant.--.

Total...

Source

Kilowatt-hours

14, 502, 364 5,784, 000

20, 286, 364

Of this quantity there was delivered to the consumers 18,445,335 kilowatt-hours, distributed as follows:

It will be noted in the foregoing table that about one-third of the delivered power was sold to customers for $62,637. The remaining power was used for project purposes and is not on a commercial basis. Most of it was used to pump water from underground to supplement the gravity irrigation supply.

During 1936 the Diesel electric plant was operated for several months at practically full capacity. If additional hydroelectric power is to be conserved it will be necessary to increase the available stand-by power. In the past, efforts have been made to arrange for an interconnection with the system of the Salt River Valley Waters' Association. At the present time the association states that it has no additional firm power available for sale. The cost of interconnecting the two systems has been estimated at $237,000. This expense is not warranted when there is no assurance of a power supply at the time when it is needed. A second possibility is interconnection with the Tucson Gas, Electric Light & Power Co. which is estimated to cost $415,000 for a circuit which would form a loop with the present system. Half this sum would provide a single connection but because of the long lines involved the full estimate will ultimately be necessary to obtain satisfactory service from this source. The price at which the Tucson Gas, Electric Light & Power Co. will sell energy to the San Carlos project has not been determined. This plan contains the possibility of selling some project dump power to the Tucson company at a low price.

The third plan immediately available is an increase in the capacity of the existing Diesel plant at Coolidge. In order to obtain the needed service this plant should be doubled in capacity and the cost of this enlargement is estimated at $300,000.

The cost of operating and maintaining the San Carlos project power system during 1936 was distributed as follows:

New contracts have been practically completed which will materially increase the possible sales. It is believed that the following is a conservative estimate of the load and revenues that may be expected if adequate power is assured:

The number of kilowatt-hours needed for project pumping will vary with the character of the seasons. When there is ample gravity water, pumping will be reduced and water allowed to accumulate in the underground reservoir. In dry years this reserve will be drawn upon to maintain the deliveries to the project farmers. The year 1936 was one of heavy pumping.

The cost of operating the hydroelectric plant is not affected by the output. Additional production by the Diesel plant will not increase the cost proportionately It is estimated that for the average year the entire cost of operating and maintaining the project power system, with the Diesel plant doubled in capacity, will not exceed $90,000, at least not until after the annual sales have expanded beyond 14,000,000 kilowatt-hours and the revenue is over $150,000. This takes into account the fact that the power system will be called upon to deliver for irrigation pumping and other project uses an annual average of 6,000,000 to 7,000,000 kilowatt-hours from which no direct revenue will be returned.

Development of the irrigation project will be greatly aided by the availability of power for use in the farms, in the towns and by project industries. Further profitable sales of electric power and efficient conservation of the hydroelectric energy at Coolidge Dam are dependent upon the acquisition of the proposed stand-by equipment.

Following is a detailed estimate of the cost of increasing the capacity of the Coolidge Diesel plant by approximately 2,000 kilowatts:

Mr. WATHEN. This authorizes the Secretary of the Interior to enter into a contract or contracts, prior to July 1, 1938, for the development of additional power at the San Carlos project, Arizona. Mr. CANNON. Tell us what you propose to install.

Mr. WATHEN. The proposal there is to install an additional standby Diesel generating unit. The present Diesel plant, and the plant at the Coolidge Dam for the San Carlos project, is not sufficient. Mr. CANNON. Is this to be a replacement?

Mr. WATHEN. It is a new addition.

Mr. CANNON. Is it to provide for additional acreage, or did the plant prove to be inadequate?

Mr. WATHEN. The plant is inadequate. We have a hydroelectric power development at the Coolidge Dam, and the release of water from the Coolidge Dam merely for irrigation purposes results in an inadequate supply of electric current for 3 or 4 months for the use of those who are using it in mining operations, and for other customers who use it in pumping water, as well as for use on our own project. The real justification for this item is simply this: The Diesel manufacturers advise us that it will be 9 or 10 months after we place the order before they can get the shaft for this engine. Therefore, we are asking the authorization now, although the money will not be expended until the next fiscal year. It will be appropriated in the regular appropriation for the next fiscal year. We are asking authority to contract. We would let the contract, so as to have it ready for delivery in time.

Mr. CANNON. The money will not be required in this fiscal year. Mr. WATHEN. No, sir.

Mr. CANNON. This will be a self-liquidating proposition, will it not?

Mr. WATHEN. Yes, sir.

Mr. CANNON. You have estimated the amount of additional current required for consumption?

Mr. WATHEN. Yes, sir.

Mr. CANNON. What time will be required for its amortization? Mr. WATHEN. The original San Carlos Project Act provided for the installation of an electric plant and the sale of electric current. It provides that the net revenues shall be first applied against liquidating the cost, but that of the revenues are insufficient to liquidate the total cost of the power development, the deficiency shall be made up from the lands. It will be liquidated, probably, within 30 or 40 years. Mr. TABER. Is this an Indian proposition?

Mr. WATHEN. Yes, sir. The total project is 100,000 acres, of which 50,000 acres are Indian lands and 50,000 white lands.

Mr. TABER. The Indians pay their share of the cost?

Mr. WATHEN. They pay their share of the operation and maintenance cost, but not construction charges. The whites pay both maintenance and operation costs and construction charges. The power development cost, however, is repaid to the Government through receipts from the sale of current.

Mr. CANNON. Why was not this presented to the subcommittee in charge of the regular bill? It seems to me that this is a matter that should have been taken up at the time the bill was before the appropriations subcommittee last year.

Mr. WATHEN. This matter came up in this way: It came up last fall after we had presented our Budget request to the Bureau of the Budget, and this was the reason: We expected to be able to carry on down there for a few more years without installing the additional plant, through the purchase of power from the Salt River Water Users' Association, which operates the Salt River project. Now, the copper industry in Arizona has been on the "blink", for several years, and they have had plenty of available power to sell us. Last year the copper mines started up at Hayden, Miami, and other places, so that the Salt River Valley Water Users' Association are actually faced with a shortage of power.

Mr. CANNON. Was this known at the time you were appearing before the subcommittee in charge of the regular bill?

Mr. WATHEN. No, sir; it developed after we presented our requests to the Bureau of the Budget. We took it up with the Bureau of the Budget, and they agreed to support an estimate so we could get the engine ordered, to be paid for out of next year's money. The real reason for the deficiency is the fact that it takes from 9 to 10 months to get the shaft for the engine.

PURCHASE AND TRANSPORTATION OF INDIAN SUPPLIES

Mr. CANNON. In Senate Document No. 67 there is an item in connection with the purchase and transportation of Indian supplies, 1935 and 1936, as follows:

Not to exceed $30,000 of the unobligated balance of the appropriation under this head contained in the Interior Department Appropriations Act for the fiscal year 1936 is hereby made available for the same purpose for the fiscal year 1935.

Tell us what is the occasion for this proposal.

Mr. DODD. This amount is to provide for the settlement of claims filed by various transportation companies for freight and other expenses incident to the transportation of supplies purchased for the Indian Service. To date the Indian Service has received notification of certificates of settlement aggregating approximately $22,000. It is estimated that additional claims yet to be reviewed and settled by the General Accounting Office will aggregate $8,000.

Appropriations for this purpose ranged from $576,405 in 1925, to $875,000 in 1932, progressively increasing each year. In 1933 the appropriation was $865,000, in 1934 $650,000, and in 1935 $643,900. The reduction in the annual expenditures from this appropriation is accounted for by the closing of numerous boarding schools, the transfer of freight costs on building materials and road construction, repair and maintenance, to public-works funds in 1934, and a change in bidding whereby bidders quoted f. o. b. delivery rather than point of origin. Our road appropriation for 1935 was made a part of the regular appropriation act and transportation costs were charged in part to this appropriation. We foresaw a deficit during 1935 and requested Congress to increase the appropriation to $785,000. Our request was granted. We had not obtained the benefits of changing conditions and when our budget for 1937 was prepared we discovered for the first time that more than was necessary had been allowed in this appropriation. We, therefore, suggested a reduction in the item and in 1937 only $685,000 was appropriated.

Transportation companies have 1 year within which to submit bills after the services are rendered. After these bills are submitted it takes considerable time for them to be considered by the General Accounting Office.

This estimate is to cover actual costs of services performed by common carriers. The obligations have been incurred, the vouchers examined by the General Accounting Office, and certificates of settlement issued for a large portion of the amount requested.

This item makes available for the purchase and transportation cost of Indian supplies $30,000 of surplus that we had at the end of the fiscal year 1936. That amount is needed to pay the freight charges on goods and supplies purchased for the Indian Service, and paid for from other appropriations. The amount requested will permit the settlement of numerous claims which have already been passed on by the General Accounting Office, as well as several other claims not yet finally reviewed.

Mr. CANNON. What proportion of these claims have been adjudicated?

Mr. DODD. I would say that today 95 percent of the claims have been adjudicated.

Mr. CANNON. This goes back for the last 2 years.

Mr. DODD. Yes, sir; principally for the fiscal year 1935.

Mr. WIGGLESWORTH. Have they been adjudicated since you appeared before the Interior Department Subcommittee?

Mr. DODD. We told the Interior Department Subcommittee that we had this deficiency. This is a straight deficiency, and has no place in the regular bill.

Mr. LUDLOW. Is this for replacement purposes?

Mr. DODD. No, sir. What we do is to buy goods and supplies from other appropriations, and because of the land-grant freight rates,

148745-37-33