lands to be served are owned by the United States; (c) contracts relating to municipal water supply may be made without regard to the limitations of the last sentence of section 9 (c) of the Reclamation Project Act of 1939; and (d), as to Indian lands within, under or served by any participating project, payment of construction costs within the capability of the land to repay shall be subject to the Act of July 1, 1932 (47 Stat. 564). All units and participating projects shall be subject to the apportionments of the use of water between the Upper and Lower Basins of the Colorado River and among the States of the Upper Basin fixed in the Colorado River Compact and the Upper Colorado River Basin Compact, respectively, and to the terms of the treaty with the United Mexican States (Treaty Series 994). SEC. 4. (a) There is hereby authorized a separate fund, to be known as the Upper Colorado River Basin Fund (hereinafter referred to as the Basin Fund), which shall remain available until expended, as hereafter provided, for carrying out the provisions of this Act other than section 7. (b) All appropriations made for the purpose of carrying out the provisions of this Act, other than section 7, shall be credited to the Basin Fund as advances from the general fund of the Treasury. (c) All revenues collected in connection with the operation of the Colorado River Storage project and participating projects shall be credited to the Basin Fund, and shall be available, without further appropriation, for (1) defraying the costs of operation and maintenance of, and emergency expenditures for, all facilities of the Colorado River Storage project and participating projects, within such separate limitations as may be included in annual appropriation acts, (2) payment as required by subsection (d) of this section, (3) payment of the reimbursable construction costs of the Paonia project which are beyond the ability of the water users to repay within the period prescribed in the Act of June 25, 1947 (61 Stat. 181), said payment to be made within 50 years after completion of that portion of the project which has not been constructed as of the date of this Act, and (4) payment in connection with the irrigation features of the Eden project as specified in the Act of June 28, 1949 (63 Stat. 277): Provided, That revenues credited to the Basin Fund shall not be available for appropriation for construction of the units and participating projects authorized by or pursuant to this Act. (d) Revenues in excess of operating needs shall be paid annually to the general fund of the Treasury to return: (1) the costs of each unit, participating project, or any separable feature thereof which are allocated to commercial power pursuant to Section 6 of this Act, within a period not exceeding fifty years from the date of completion of such unit, participating project or separable feature thereof: (2) the costs of each unit, participating project, or any separable feature thereof which are allocated to municipal water supply pursuant to Section 6 of this Act, within a period not exceeding fifty years from the date of completion of such unit, participating project, or separable feature thereof; (3) interest on the unamortized balance of the investment (including interest during construction) in the commercial power and municipal water supply features of each unit, participating project, or any separable feature thereof, at a rate determined by the Secretary of the Treasury as provided in subsection (e), and interest due shall be a first charge; (4) the costs of each unit, participating project, or any separable feature thereof which are allocated to irrigation pursuant to Section 6 of this Act, within a period not exceeding fifty years, in addition to any development period authorized by law, from the date of completion of such unit, participating project or separable feature thereof, or, in the cases of the Paonia project and of Indian lands, within a period consistent with other provisions of law applicable thereto. (c) The interest rate applicable to each unit of the storage project and each participating project shall be determined by the Secretary of the Treasury as of the time the first advance is made for initiating construction of said unit or project. Such interest rate shall be determined by calculating the average yield to maturity on the basis of daily closing market bid quotations during the month of June next preceding the fiscal year for which said appropriation is enacted, on all interest-bearing marketable public debt obligations of the United States having a maturity date of 15 or more years from the first day of said month, and by adjusting such average annual yield to the nearest % of 1 per centum. (f) Business-type budgets shall be submitted to the Congress annually for all operations financed by the Basin Fund. On SEC. 5. Upon completion of each unit, participating project or separable feature thereof the Secretary shall allocate the total costs (excluding any expenditures authorized by Section 7 of this Act) of constructing said unit, project or feature to power, irrigation, municipal water supply, flood control, navigation, or any other purposes authorized under Reclamation Law. Allocations of construction, operation and maintenance costs to authorized nonreimbursable purposes shall be nonreturnable under the provisions of this Act. January 1 of each year the Secretary shall report to the Congress for the previous fiscal year, beginning with the fiscal year 1955, upon the status of the revenues from and the cost of constructing, operating, and maintaining the Colorado River Storage project and the participating projects. The Secretary's report shall be prepared to reflect accurately the Federal investment allocated at that time to power, to irrigation, and to other purposes, the program of return and repayment thereon, and the estimated rate of progress, year by year, in accomplishing full repayment. SEC. 6. The hydroelectric powerplants authorized by this Act to be constructed, operated, and maintained by the Secretary shall, to the extent fully consistent with the purposes of this Act, the Colorado River Compact and the Upper Colorado River Basin Compact, be operated in conjunction with other Federal powerplants, present and potential, so as to produce the greatest practicable amount of power and energy that can be sold at firm power and energy rates. Neither the impounding nor the use of water for the generation of power and energy at the plants of the Colorado River Storage project shall preclude or impair the appropriation for domestic or agricultural purposes, pursuant to applicable State law, of waters apportioned to the States of the Upper Colorado River Basin. No contract or agreement for the sale of electric power generated at plants authorized by this Act shall be made for a period of more than ten years when such power is disposed of for use outside the States of the Upper Colorado River Basin, unless the Secretary of the Interior shall have determined that such power is surplus to the probable needs in such States. All other contracts for the sale of electric power pursuant to this Act shall be for periods not to exceed forty years. SEC. 7. In connection with the development of the Colorado River Storage project and of the participating projects, the Secretary is authorized and directed to investigate, plan, construct, operate, and maintain (1) public recreational facilities on lands withdrawn or acquired for the development of said project or of said participating projects, to conserve the scenery, the natural, historic, and archeologic objects, and the wildlife on said lands, and to provide for public use and enjoyment of the same and of the water areas created by these projects by such means as are consistent with the primary purposes of said projects; and (2) facilities to mitigate losses of and improve conditions for the propagation of fish and wildlife. The Secretary is authorized to acquire lands and to withdraw public lands from entry or other disposition under the public land laws for the construction, operation, and maintenance of the facilities herein provided, and to dispose of them to Federal, State, and local governmental agencies by lease, transfer, exchange, or conveyance upon such terms and conditions as will best promote their development and operation in the public interest. All costs incurred pursuant to this section shall be nonreimbursable and nonreturnable. SEC. 8. Nothing contained in this Act shall be construed to alter, amend, repeal, construe, interpret, modify, or be in conflict with, any provision of the Boulder Canyon Project Act (45 Stat. 1057), the Boulder Canyon Project Adjustment Act (54 Stat. 774), the Colorado River Compact, the Upper Colorado River Basin Compact, or the Treaty with the United Mexican States (Treaty Series 994). SEC. 9. Expenditures for the units of the Colorado River Storage project may be made without regard to the soil survey and land classification requirements of the Interior Department Appropriation Act, 1954. SEC. 10. Construction of the projects herein authorized shall proceed as rapidly as is consistent with budgetary requirements and the economic needs of the country. SEC. 11. There are hereby authorized to be appropriated, out of any moneys in the Treasury not otherwise appropriated, such sums as may be required to carry out the purposes of this Act, but not to exceed $950,000,000. SEC. 12. As used in this Act The terms "Colorado River Basin", "Colorado River Compact", "Colorado River System", "Lee Ferry", "States of the Upper Division", "Upper Basin", and "domestic use" shall have the meaning ascribed to them in Article II of the Upper Colorado River Basin Compact; The term "States of the Upper Colorado River Basin" shall mean the States of Arizona, Colorado, New Mexico, Utah, and Wyoming; The term "Upper Colorado River Basin" shall have the same meaning as the term "Upper Basin"; The term "Upper Colorado River Basin Compact" shall mean that certain compact executed on October 11, 1948, by commissioners representing the States of Arizona, Colorado, New Mexico, Utah, and Wyoming, and consented to by the Congress of the United States of America by Act of April 6, 1949 (63 Stat. 31); and The term "treaty with the United Mexican States" shall mean that certain treaty between the United States of America and the United Mexican States signed at Washington, District of Columbia, February 3, 1944, relating to the utilization of the waters of the Colorado River and other rivers, as amended and supplemented by the protocol dated November 14, 1944, and the understandings recited in the Senate Resolution of April 18, 1945, advising and consenting to ratification thereof. Amend the title to read: "A bill to authorize the Secretary of the Interior to construct, operate, and maintain initial units of the Colorado River Storage Project and participating projects, and for other purposes." JUNE 14, 1954. Hon. HUGH BUTLER, Chairman, Committee on Interior and Insular Affairs, DEAR MR. CHAIRMAN: Reference is made to your request for the views of the Department of the Army with respect to S. 1555, 83d Congress, a bill "to authorize the Secretary of the Interior to construct, operate, and maintain the Colorado River storage project and for other purposes.' The Department of the Army has considered the above-mentioned bill. The purpose of the bill is to authorize the principal features of the Colorado River storage project and participating projects of the Bureau of Reclamation. Comments on 3 of the major units (Flaming Gorge, Navaho, and Curecanti) in the comprehensive plan covered by S. 1555 and on the participating projects are not practicable from an engineering and economic standpoint without an up-to-date engineering and economic report. However, with respect to the 2 remaining major units (Echo Park and Glen Canyon), the Department of the Army has recently reviewed a report of the Department of the Interior and has commented to that Department that these 2 storage projects appear to be justified. Although the Department is authorized to undertake certain examinations and surveys in the upper Colorado River Basin and has an interest in the Rio Grande Basin which is involved in the bill to the extent of the diversion contemplated in one of the participating projects, there appears to be no basic conflict between the project units proposed in the bill and any which the Department now has or might have an interest in as a result of future investigation or construction. However, because of the departmental interest in flood control, it is recommended that the bill be amended in the following manner: (1) In section 2, page 3, line 25, after "Provided," insert: "That allocation of costs to flood control as nonreimbursable costs shall be determined by the Secretary after consultation with the Chief of Engineers and the Secretary of the Army and any necessary investigations or studies therefor may be performed under a cooperative agreement with the Secretary of the Army: Provided further,"; (2) In section 1, page 3, lines 8 and 14, after "affected States", insert: "and the Secretary of the Army". In connection with S. 1555, the attention of your committee is invited to substitute draft legislation which was submitted by the Secretary of the Interior to the Congress on April 1, 1954. The substitute draft bill is intended to bring the proposed legislation into correlation with the project report referred to above in that it would authorize only the Echo Park and Glen Canyon storage units and would grant provisional authorization only for certain of the participating projects. The Department of the Army considers the draft bill as being preferable to S. 1555 and offers no objection to the authorization of the improvements proposed in the substitute draft legislation. However, the insertion sug gested in (1) above would apply as well to the substitute, with the exception that the language would be inserted in section 3, page 4, line 6. Also, the Department is inclined to feel that section 1 (c) of the Flood Control Act of 1944, having to do with consultation with affected States and the Secretary of the Army and providing for comment by those parties, should be applicable to supplemental reports on participating projects, whereas the last sentence of section 1 of the draft bill provides that the section will not be so applicable. The Bureau of the Budget advises that there is no objection to the submission of this report. Sincerely yours, ROBERT T. STEVENS, FEDERAL POWER COMMISSION, Re S. 1555 (administration's substitute draft), 83d Congress, 1st session. Hon. HUGH BUTLER, Chairman, Committee on Interior and Insular Affairs, United States Senate, Washington, D. C. DEAR MR. CHAIRMAN: With reference to your request for the views of this Commission on the bill S. 1555, 83d Congress, "to authorize the Secretary of the Interior to construct, operate, and maintain the Colorado River storage project and participating projects, and for other purposes," the Commission desires to bring to the attention of the committee that reports on both the original bill and on the administration's substitute draft bill S. 1555 were submitted to the Bureau of the Budget for clearance. We have just been advised that there is no objection by the Bureau of the Budget to the presentation of the Commission's report on the administration's substitute draft bill to the Committee on Interior and Insular Affairs. Enclosed herewith are three copies of this report. Sincerely yours, JEROME K. KUYKENDALL, Chairman. FEDERAL POWER COMMISSION REPORT ON S. 1555 (ADMINISTRATION'S SUBSTITUTE DRAFT), 83D CONGRESS A BILL To authorize the Secretary of the Interior to construct, operate, and maintain the Colorado River storage project and participating projects, and for other purposes Section 1 of the bill would authorize the Secretary of the Interior to construct, operate, and maintain the Echo Park and Glen Canyon units of the Colorado River storage project, consisting of dams, reservoirs, powerplants, transmission facilities, and appurtenant works. It would likewise authorize 11 enumerated participating reclamation and power projects provided that the authority to construct any such participating project shall not become effective until the Secretary has reexamined its economic justification and, accompanied by appropriate documentation in the form of a supplemental report, has certified to the Congress through the President that, in his judgment, the benefits of the project will exceed its costs. Such supplemental reports would not, however, be subject to section 1 (c) of the Flood Control Act of 1944 (58 Stat. 887) which provides that the Secretary of the Interior, in making investigations and reports on works for irrigation and purposes incidental thereto, shall give the affected State or States opportunity to cooperate in the investigations. Section 2 of the bill declares it to be the intent of Congress to authorize further units of the storage project and new participating projects upon the basis of the data which may be made available to it in the future in accordance with this bill and also in conformity with beneficial consumptive use provisions of article III of the upper Colorado River Basin compact. The costs of any participating projects thus authorized shall be amortized in accordance with the Federal reclamation law and this bill. Although the Commission does not have sufficient data to enable it to weigh the relative merits of the Echo Park project and alternative projects in terms of their relation to the Dinosaur National Monument, the Commission, based upon a consideration of the power features involved, believes that authorization of the Echo Park and Glen Canyon Dam and Reservoir projects as provided for in this bill is desirable for inclusion in the initial program for future development of the Colorado River Basin. The Echo Park project is favorably located to assist in serving powerloads of the northerly part of the upper Colorado River Basin, and the Glen Canyon project is favorably located for assisting in serving powerloads to the south. With respect to the participating reclamation and power projects which would be conditionally authorized by the bill, the Commission agrees that such action is very properly made to be dependent upon the findings and recommendations of supplemental detailed reports dealing with their economic and engineering feasibility. The Commission does not feel, however, that the public interest requires or justifies the exemption of such supplemental reports from the opportunity for State cooperation afforded by section 1 (c) of the Flood Control Act of 1944. Section 4 provides that revenues in excess of operating needs shall be paid annually to the general fund of the Treasury to return the costs of each unit, participating project, or any separable feature thereof which are allocated to commercial power within a period not exceeding 50 years from the date of completion of such unit, participating project, or separable feature thereof. It also provides that revenues in excess of operating needs shall be paid annually to the general fund of the Treasury to return interest on the unamortized balance of the investment (including interest during construction) in the commercial power features of each unit, participating project, or any separable feature thereof at a rate determined by the Secretary of the Treasury as of the time the first advance is made for initiating construction of said unit or project. The repayment provisions correspond generally with the Commission's established practice in analyzing and evaluating Federal multiple-purpose power projects of assuming amortization of power investments in not to exceed 50 years from the "in-service" date, with interest, usually at the rate of 22 percent. Section 5 provides that upon completion of each unit, participating project, or separable feature thereof, the Secretary of the Interior shall allocate the total costs of construction of said unit, project, or feature to power, irrigation, or other purposes authorized under reclamation law. The Commission believes that the bill should provide for such cost allocations to be made in conformity with those standards and procedures which may have been established for interagency use at that time. Section 5 also provides that the Secretary would be required to report to the Congress, on January 1 of each year, beginning with the fiscal year 1955, upon the status of the revenues from and the cost of constructing, operating, and maintaining the Colorado River storage project and the participating projects. The Secretary's report would be prepared to reflect accurately the Federal investment allocated at that time to power, to irrigation, and to other purposes, the progress of return and repayment thereon, and the estimated rate of progress, year by year, in accomplishing full repayment. This requirement of periodic detailed reports on the financial aspects of the proposed improvements appears to be a highly desirable feature. Section 6 provides that no contract or agreement for the sale of electric power generated at plants authorized by this act shall be made for a period of more than 10 years when such power is disposed of for use outside the States of the upper Colorado River Basin, unless the Secretary of the Interior shall have determined that such power is surplus to the probable needs in such States. All other contracts for the sale of electric power shall be for periods not to exceed 40 years. Assuming that the Colorado River Basin constitutes the logical market area for the power from the Glen Canyon project, studies by the Commission staff indicate that the power from this project could be utilized in the lower basin in about 10 years from the time that the first unit would become available. Based upon the assumption that the upper Colorado River Basin constitutes the market for the power from Glen Canyon and Echo Park, the staff studies indicate that it would require about 20 years to utilize the power from both projects. In several statutes (e. g., sec. 5, act of December 22, 1944, 58 Stat. 887, 890; act of July 31, 1950, 64 Stat. 382) Congress has provided that the rate schedules for power sales from certain Federal power projects shall be subject to approval by the Federal Power Commission. The Commission is of the opinion that similar rate control should be provided in this instance and that it should be authorized not only to approve the initial rate schedules, but should have authority to review the rates at appropriate intervals and prescribe those rates which will return to the United States the costs which are properly chargeable to power under the criteria laid down by Congress. If rate supervision is thus given, the Commission is of the further opinion that it should be authorized to make the final allocation of the costs of multiple-purpose projects to the several |