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purposes as prescribed by Congress. In this connection, the Commission points out that it is not an operating agency, but was created by Congress to act as its agent, a function which is directly related to the rate supervision here recommended.

The Commission favors this legislation as a desirable means for achieving fuller development of the water resources of the upper Colorado River Basin and offers no objection to the administration's substitute draft of the bill, provided it is amended as herein recommended to give the Commission supervision over rates and final authority over cost allocations, and provided further that it is amended as hereinabove suggested to make section 1 (c) of the Flood Control Act of 1944, relating to opportunity for State participation, applicable to supplemental reports of the Secretary of the Interior on participating projects.

FEDERAL POWER COMMISSION,

By JEROME K. KUYKENDALL, Chairman.

Hon. HUGH BUTLER,

DEPARTMENT OF AGRICULTURE,
Washington, D. C., June 30, 1954.

Chairman, Committee on Interior and Insular Affairs,

United States Senate.

DEAR SENATOR BUTLER: This is in reply to your request for a report on S. 1555, 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.

The bill would authorize the Secretary of the Interior to construct, operate, and maintain 5 specified initial units of the Colorado River storage project and 15 specified participating projects, consisting of dams, reservoirs, powerplants, transmission facilities, and appurtenant works. It would declare the intent of the Congress to authorize additional units of the Colorado River storage project and new participating projects. All projects would be treated and accounted for as one project. The bill would also provide for creation from revenues of a nonreimbursable special continuing fund to be available for use by the Secretary of the Interior for making studies and investigations relating to the development, conservation, and utilization of the waters of the upper Colorado River Basin. The Secretary of the Interior would be authorized to plan, construct, operate, and maintain public recreational facilities on lands withdrawn or acquired for Colorado River storage project units and participating projects, except on lands in Indian reservations.

The Bureau of the Budget has advised us that the Secretary of the Interior submitted to the Congress on April 1, 1954, a substitute draft bill. This administration substitute draft bill would authorize the Secretary of the Interior to construct, operate, and maintain 2 specified initial units of the Colorado River storage project and 11 specified participating reclamation projects, consisting of dams, reservoirs, powerplants, transmission facilities, and appurtenant works; provided that authority to construct any of the listed participating projects would not become effective until the Secretary of the Interior had reexamined the economic justification of each such project and certified in a supplemental report to the Congress that the benefits therefrom would exceed the costs. Each supplemental report would include (a) a reappraisal of the prospective direct agricultural benefits of the project, made by the Secretary of the Interior in cooperation with the Secretary of Agriculture, and (b) a reevaluation of the nondirect benefits of the project. The bill declares the intent of the Congress in the future to authorize further units of the Colorado River storage project, additional phases of participating projects included in the bill, and new participating projects as additional information becomes available and needs are indicated, and declares the policy of the Congress that costs of any participating project authorized in the future would be amortized from its own revenues to the fullest extent consistent with provisions of the bill and reclamation law. The bill would authorize the Secretary of the Interior to investigate, plan, construct, operate, and maintain public recreational facilities on lands withdrawn or acquired for the Colorado River storage project and participating projects.

Since both S. 1555 and the administration substitute draft bill relate primarily to Department of the Interior authority this Department takes no position regarding enactment of the bills.

However, the Department of Agriculture has a responsibility, commensurate with its national responsibilities, in the agricultural phases of the development, conservation, and utilization of water in the upper Colorado River Basin which would be authorized by such bills. This includes the furnishing of reports to the President and the Congress on the agricultural aspects concurrently with reports by other agencies on other aspects of the proposed developments and the planning, operation, and maintenance of public recreational facilities on those portions of storage project units or participating projects that are within national forest boundaries.

Accordingly, in the event favorable consideration is given to legislation, we recommend (1) that it provide, as the administration draft bill specifically provides for 11 initial participating projects, for cooperation by the Department of Agriculture with the Department of the Interior in the appraisal, before authority to construct projects becomes effective, of the prospective direct agricultural benefits of each proposed project that is expected to produce such benefits; and (2) that it provide that the Secretary of Agriculture shall be granted the same authorities as the Secretary of the Interior under the provisions of section 9 of S. 1555 and section 7 of the administration substitute draft bill when any unit or project is within or partly within the boundary of a national forest. The Bureau of the Budget advises that there is no objection to the submission of this report.

Sincerely yours,

E. T. BENSON, Secretary.

[H. R. 4449, 83d Cong., 2d sess.]

[Report No. 1774]

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

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, in order to initiate the comprehensive development of the water resources of the Upper Colorado River Basin, the Congress, in the exercise of its constitutional authority to provide for the general welfare, to regulate commerce among the States and with the Indian tribes, and to make all needful rules and regulations respecting property belonging to the United States, and for the purposes, among others, of regulating the flow of the Colorado River, storing water for beneficial consumptive use, making it possible for the States of the upper basin to utilize, consistently with the provisions of the Colorado River Compact, the apportionments made to and among them in the Colorado River Compact and the Upper Colorado River Basin Compact, respectively, providing for the reclamation of arid and semiarid land, the control of floods, the improvement of navigation, and the generation of hydroelectric power as an incident of the foregoing purposes, hereby authorizes the Secretary of the Interior (herein called the Secretary) (1) to construct, operate, and maintain the following initial units of the Colorado River storage project, consisting of dams, reservoirs, powerplants, transmission facilities, and appurtenant works: Echo Park, Glen Canyon, and Curecanti: Provided, however, That the Curecanti Dam shall be constructed to a height which will impound not less than nine hundred and forty thousand acre-feet of water or will create a reservoir of such greater capacity as can be obtained by a high waterline located at seven thousand five hundred and twenty feet above mean sea level: Provided further, That construction of the Curecanti unit shall not be undertaken until the Secretary has, on the basis of further detailed engineering and economic investigations, reexamined the economic justification of such unit and accompanied by appropriate documentation in the form of a supplemental report, has certified to the Congress and to the President that in his judgment, the benefits of such project unit will exceed its costs; and (2) to construct, operate, and maintain the following additional reclamation projects (including power generating and transmission facilities related thereto), hereinafter referred to as participating projects: Central Utah (initial phase), Emery County, Florida, Hammond, LaBarge, Lyman, Paonia (including the Minnesota unit, a dam and reservoir on Muddy Creek just above its confluence with the North Fork of the Gunnison River, and other necessary works), Pine River Extension, Seedskadee, Silt, and Smith Fork: Provided, That construction of any participating project listed in the foregoing clause (2) shall not be undertaken until the Secretary has reexamined the economic justification of such project and, accompanied by

appropriate documentation in the form of a supplemental report, has certified to the Congress and to the President that, in his judgment, the benefits of such project will exceed its costs, and that the financial reimbursability requirements set forth in section 4 of this Act can be met. The Secretary's supplemental report for each such project shall include (a) a reappraisal of the prospective direct agricultural benefits of the project, made by the Secretary after consultation with the Secretary of Agriculture, (b) a reevaluation of the nondirect benefits of the project and (c) allocations of the total cost of construction of each participating project or separable features thereof, excluding any expenditures authorized by section 7 of this Act, for power, irrigation, municipal water supply, flood control or navigation, or any other purpose authorized under reclamation law. Section 1 (c) of the Flood Control Act of 1944 (58 Stat. 887), shall not be applicable to such supplemental reports.

SEO. 2. In order to achieve such comprehensive development as will assure the consumptive use in the States of the Upper Colorado River Basin of waters of the Colorado River system the use of which is apportioned to the Upper Colorado River Basin by the Colorado River Compact and to each State thereof by the Upper Colorado River Basin Compact, it is the intent of the Congress in the future to authorize the construction, operation, and maintenance of further units of the Colorado River storage project, of additional phases of participating projects authorized in this Act, and of new participating projects as additional information becomes available and additional needs are indicated. It is hereby declared to be the purpose of the Congress to authorize as participating projects only projects (including units or phases thereof)—

(1) for the use, in one or more of the States designated in Article III of the Upper Colorado River Basin Compact, of waters of the Upper Colorado River system the consumptive use of which is apportioned to those States by that article; and

(2) for which pertinent data sufficient to determine their probable engineering and economic justification and feasibility shall be available. It is likewise declared to be the policy of the Congress that the costs of any participating project authorized in the future shall be amortized from its own revenues to the fullest extent consistent with the provisions of this Act and Federal reclamation law.

SEC. 3. Except as otherwise provided in this Act, in constructing, operating, and maintaining the units of the Colorado River storage project and the participating projects listed in section 1 of this Act, the Secretary shall be governed by the Federal reclamation laws (Act of June 17, 1902, 32 Stat. 388, and Acts amendatory thereof or supplementary thereto): Provided, That (a) irrigation repayment contracts shall be entered into which, except as otherwise provided for the Paonia and Eden projects, provide for repayment of the obligation assumed thereunder with respect to any project contract unit over a period of not more than fifty years exclusive of any development period authorized by law; (b) prior to construction of irrigation distribution facilities repayment contracts shall be made with an "organization" as defined in paragraph 2 (g) of the Reclamation Project Act of 1939 (53 Stat. 1187, 43 U. S. C. 485) which has the capacity to levy assessments upon all taxable real property located within its boundaries to assist in making repayments, except where a substantial proportion of the 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 Colarado 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, maintenance, and replacements 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 fifty 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 5 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 5 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; and

(4) the costs of each unit, participating project, or any separable feature thereof which are allocated to irrigation pursuant to section 5 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.

(e) 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 fifteen or more years from the first day of said month, and by adjusting such average annual yield to the nearest one-eighth of 1 per centum.

(f) Business-type budgets shall be submitted to the Congress annually for all operations financed by the Basin Fund.

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. On 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 progress 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 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, but no exercise of the authority hereby granted shall affect or interfere with the the operation of any provision of the Colorado River Compact, the Upper Colorado River Basin Compact, the Boulder Canyon Project Act, the Boulder Canyon Project Readjustment Act, or any contract lawfully entered into under said Acts without the consent of the other contracting parties. 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 ap propriation for domestic or agricultural purposes, pursuant to applicable State law, of waters apportioned to the States of the Upper Colorado River Basin. 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 necessary 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 Glen Canyon and Echo Park 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 purpose of this Act but not to exceed $1,000,000,000.

SEC. 12. The Secretary of the Interior is directed to institute studies and to make a report to the Congress and to the States of the Colorado River Basin of the effect upon the quality of water of the Colorado River, of all transmountain diversions of water of the Colorado River System and of all other storage and reclamation projects in the Colorado River Basin.

SEC. 13. In the operation and maintenance of all facilities, authorized by Federal law and under the jurisdiction and supervision of the Secretary of the Interior, in the basin of the Colorado River, the Secretary of the Interior is directed to comply with the applicable provisions of the Colorado River Compact, the Boulder Canyon Project Act, the Boulder Canyon Project Adjustment Act, and the Treaty with the United Mexican States, in the storage and release of water from reservoirs in the Colorado River Basin. In the event of the failure of the Secretary of the Interior to so comply, any State of the Colorado River Basin may maintain an action in the Supreme Court of the United States to enforce the provisions of this section, and consent is given to the joinder of the United States as a party in such suit or suits.

SEC. 14. 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";

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