APPENDED MATERIAL-BUDGET CIRCULAR NO. A-47

Benefit-cost analysis for a 50-year period is presented previously in this statement. The benefit-cost ratios are 1.14 to 1 considering total benefits and 1.06 to 1 considering direct benefits only.

Cost allocation with use of the separable costs-remaining benefits method for a 50-year period of analysis is shown on the next page. In this study project costs, interest during construction, and operation, maintenance, and replacement are allocated concurrently.

As discussed previously under adjustment of allocations for repayment it is necessary to again adjust the initial allocations to offset Federal operation, maintenance, and replacement costs for flood control and fish and wildlife by a downward adjustment in reimbursable irrigation costs and upward adjustments in nonreimbursable flood control and fish and wildlife costs. These adjustments are shown in a subsequent table. Because the Bureau of the Budget has indicated its desire that local beneficiaries share in flood control costs, the following data are on the basis of reimbursement of those costs set forth previously under alternate analysis-flood control.

Additional tabulations attached to this statement summarize the allocated nonreimbursable and reimbursable costs and the repayment of irrigation and local flood control costs. Under the latter analysis there are no changes in anticipated reclamation district revenues and repayment period which are described previously in the statement. Also, content of the statement on the interest-bearing costs for future commercial power is applicable in this analysis. Allocation of costs, 50-year analysis

Interest bearing allocation: Deferred commercial power paid as part

of Missouri River Basin project power system :

11, 793, 000 9, 493, 000

163,000

1, 149, 000

81, 467, 000

Amount $81, 467, 000 43, 000

81, 510, 000

8, 321, 000 9,493, 000 163, 000

17,977, 000

63, 533, 000

1, 149, 000 43, 000

1, 192, 000

58,869, 000 3,472, 000

62, 341, 000

63, 533, 000

Amount $58, 869, 000 3,472, 000

62, 341, 000

19, 112, 000

Total___.

Paid by Missouri River Basin project power revenues--

Total repayment---.

11, 651, 800

30, 763, 800

31, 577, 200

62, 341, 000

Mr. ROGERS. Now the legislation which the subcommittee will consider this morning would authorize the Secretary of the Interior to construct, operate, and maintain the Mid-State reclamation project. in Nebraska. It provides for including the Nebraska Mid-State unit in the Missouri River Basin project and for its integration physically and financially with other Federal works of the Missouri River Basin project. The Mid-State project is a multiple-purpose development providing for irrigation, flood control, fish and wildlife, and recreation.

This is not a new subject for the subcommittee. Hearings on this project were held in 1958, in 1959, and in 1960.

The project works would consist primarily of a diversion dam, a supply canal, 23 interconnected reservoirs, and supply and floodway canals. The project would include one hydroelectric powerplant with a capacity of 16,800 kilowatts which would be used for project pumping only. There is no commercial power development proposed at

this time.

Storage water would be delivered to about 140,000 acres and the ground water supply would be replenished. The project is estimated to cost about $81.5 million, of which about $52 million is allocated to irrigation, $17.3 million allocated to flood control, $10.8 million to fish and wildlife, and the remainder allocated to recreation and penstocks for possible future power.

Without objection, the Chair at this time will ask Mr. McFarland to bring us up to date on this project after which the distinguished chairman of the full committee, the gentleman from Colorado, Mr. Aspinall, will be recognized for a statement.

Mr. MCFARLAND. Mr. Chairman, the chairman of the full committee and I were discussing before the hearings the relation of this project to the Pick-Sloan plan.

The area served by the Mid-State project was included in the PickSloan plan for the Missouri Basin which was authorized in 1944. However, the plan that the Bureau of Reclamation had at that time was different in the physical aspects. That plan called for storage in one reservoir, it called for diversion of water from the Loup within the State. There was interpretation within the State of Nebraska that this plan was in conflict with State law. The Mid-State district developed its own plan by private engineering and originally this legislation called for a partnership development with a loan to the district.

It was not until the 86th Congress that the legislation called for a Federal unit to be integrated into the Missouri Basin, integrated physically, integrated financially into the Missouri River Basin project.

I believe that is the information that the chairman wanted me to give you.

Mr. ROGERS. The gentleman from Colorado, Mr. Aspinall.

Chairman ASPINALL. Mr. Chairman, as we begin these new hearings on the Mid-State project, I want the committee members to know, as well as the supporters of the project from Nebraska, that I am sympathetic toward the program and they will have all of my efforts in endeavoring to get this legislation authorized under the policies and principles that this committee has been following for many years.

I have met with the representatives from the area, the last two Governors, relative to the project, and I think I know the value that it has and the benefits that will flow to the people of that area if we can get this legislation in line for congressional authorization.

However, I do think there should be a little bit of history that has come to the attention of the committee as well as the sponsors of the project. Heretofore when we have had this project before us, we have suggested that there were two reasons why we couldn't give immediate attention. One was the priority of other projects. That has been taken care of. We have the other projects out of the way and, in time, we can give attention to this project which has been on the planning board for many years.

The other matter had to do with questions I think far more serious. I make this statement that by some means or other the people who are in control of the flood control programs should be satisfied in their demands for local contributions for the flood control allocation.

The second was that by some means or other this committee had to be assured that the payout period would be in line with our established policy. That brings us up to a little discussion on the question of payout. When reclamation came into the program of the Federal Government in 1902 the payout period was a 10-year period. It was soon found out that that period was not satisfactory and it was increased to 20. Then it was increased to 40 years. At the present time the policy, if there can be said to be any policy, is the 40-year payout period for the irrigation cost plus a 10-year development period during which there will be no request for payment.

Now, while this was the policy this held true until 1939, all projects were single-purpose projects, practically if not quite completely. In 1939 when we passed the amendment to the Act, we provided for multipurpose projects. We also provided at that time for authorization and construction of irrigation projects for which the irrigators themselves could not make full payment, providing that those amounts charged to irrigation for which the irrigators could not make payment would receive contribution from other sources, to wit, public power, power produced by the project or in some instances, perhaps moneys received from the sale of municipal and industrial water. We also provided for a much extended program of nonreimbursement.

In the four areas, basin areas, we have many multiple-purpose projects, in the Northwest the Columbia River Basin, the Central Valley of California, and the upper Colorado River program and in the Missouri Basin.

No one apparently ever gave very much attention to keeping the allocations to irrigation to be reimbursed from power revenues as far as their payout period was concerned in line with the 40 plus 10-year payout period policy. No policy had been established up until the authorization of the Colorado River project which carried the formula that all irrigation charges to be paid by the irrigators as well as to be paid from power revenues or other contributors would have to be paid within the 50-year period.

I think it is only fair to state that as far as the Central Valley is concerned, although there has not been too definite a study, we have been assured, and I think the studies show, that even in the Central Valley of California, the payout period of all irrigation allocation will

be within the 50-year payout period. The same thing is true of the Columbia Basin. Although in the basin we do not have a basin fund; nevertheless, we have been assured by testimony which has been given, by tying irrigation projects to certain power-producing projects the payout period authorized as we understood in this committee, and in the House of Representatives is in keeping with the 50-year payout. In our study of the projects for Nebraska, to wit, the Sargeant project, the Ainsworth project and the Farwell project, many questions were presented to the witnesses downtown in the Department of the Interior as to the payout period.

Apparently several of us were not quite as detailed in our questioning as we should have been. Always when we asked the question what the payout period would be from the contribution of the power revenues for that part of the irrigation allocation which the irrigators themselves couldn't pay, the statement that we got in answer was simply this, or something to this effect: the repayment of irrigation charges to be taken from power revenues would be well within the useful life of the irrigation works. And of course we accepted that, I think, as a statement, at least I did, that that would be within the 50year period.

Now, it is found that that is not accurate, and in this great project to which Mr. McFarland has made reference, the Pick-Sloan project of 1944, we have a different situation which exists as far as the payout period is concerned. As we go into these hearings, I for one, would like to know where the exception is going to be. I cannot say, at this time, that I shall oppose the project at all if it does not stay within the 50-year payout period, but I certainly want a case made for it because I don't wish the people who are sponsoring this project, the people at home, as well as members of this committee, to have this project taken over on the floor of the House and then have somebody begin to ask questions which cannot be answered, or if they are answered, they are answered with reservations. It may appear to you that the Congress of the United States is reclamation minded today because we got through three projects recently, but I can tell you there is a whole lot more to that than just votes on these three projects.

A great deal of legwork was done behind the scenes, and in each instance the projects which have been authorized by Congress, two of them already and one of them I think will be shortly, they were on all fours with the established principles of reclamation as far as the feasibility formulae were concerned, physical feasibility, as far as the financial feasibility and as far as the economic feasibility. This project should be made to fit by some means or other into those formulas. If it does, we won't have any trouble. If it is an exception, my opinion is that we are going to have trouble. I think the sponsors of the project should know this at this time rather than wait until it is too late.

Thank you very much.

Mr. ROGERS. Our first witness scheduled this morning is the Honorable Carl T. Curtis, U.S. Senator from Nebraska.

Senator Curtis, if you will come forward you will be recognized.