Texas, which specifically is authorized under 43 United States Code Annotated 600b and 600c, supplies primarily municipal and industrial water, and also water for irrigation, flood control, fish and wildlife, and facilities for silt retainment. The cost allocable to flood control and fish and wildlife is nonreimbursable. The repayment period is 50 years from the date of completion of the municipal and industrial features, the interest rate is the same as the rate paid by the United States on long-term bonds, and title to the municipal features will pass to the municipalities when payment is completed.

Use of money to build a project, interest free until the project is completed and operating, is a subsidy. The reclamation laws, the Defense Public Works Act, and other laws give ample precedent for this type of subsidy. In addition, subsidies are given in the form of nonreimbursable expenditures when the project produces incidental benefits to the general public such as flood control, preservation of fish and wildlife, and sometimes silt control. Two Forks Reservoir can be used for flood-control purposes and for the preservation of fish and wildlife, and return flow from Denver sewers will benefit downstream lands. The United States contributed $4 million or $5 million to San Francisco for flood-control benefits incidental to the construction of its Cherry Valley project, a part of its municipal water system (hearings before Subcommittee on Irrigation and Reclamation, May 18, 21, and 22, 1951, 1st sess., 82d Cong., p. 33).

Mr. SAUNDERS. I would like to emphasize one thing particularly with respect to our request that this bill contain such language as will permit us to pay for the conflict between our diversions and the diversions for hydroelectric energy at Green Mountain.

Senator WATKINS. What will it do if you buy that power?

Mr. SAUNDERS. If we were to buy that power, it would, in effect, completely recompense the United States Government for any loss which it might suffer by reason of our diverting water upstream and away from the Green Mountain powerplant.

Senator WATKINS. What will it do to anyone else? Is anyone else involved other than the United States?

Mr. SAUNDERS. No one else will be involved, provided we leave the storage of 150,000 acre-feet at Green Mountain intact, and we do not propose to buy that storage. That was built for the use of the people of western Colorado, and we do not believe that we should ask to interfere with that storage, and we do not ask for that.

Senator WATKINS. What you are attempting to buy, then, is the nonconsumptive right?

Mr. SAUNDERS. Yes, sir.

Senator WATKINS. And that is the power?

Mr. SAUNDERS. Yes, sir. And that nonconsumptive right was referred to in the President's recommendations which Senator Millikin offered here as the first item in your exhibits, being the recommendations of March 20, 1954. I refer particularly in that to the H. R. 4449, the reprint No. 1774, at page 23, lines 22 and following, in which the principle is recommended by the President and it is exactly the principle that the 4 upper basin States agreed upon, that no downstream power use should ever interfere with or impair upstream consumptive uses.

This is strictly in accord with the 1922 Colorado compact and the upper basin compact, both of which provide that uses of water for

hydroelectric generation shall always be inferior and subordinate to uses for agriculture, and domestic consumptive uses.

Senator WATKINS. That is not the law of Colorado, is it?

Mr. SAUNDERS. The law of Colorado makes the same preference, but it requires the preferred user to pay in full for the inferior use. And since the United States Government cannot be sued by the State of Colorado or by the city and county of Denver, we are not in a position to acquire by condemnation this right at Green Mountain Reservoir.

Senator WATKINS. If this were a private party that owned this reservoir, if it were someone other than the Government that you could sue, then you would institute condemnation proceedings if you couldn't buy it?

Mr. SAUNDERS. If we couldn't negotiate a purchase price, we could acquire it by condemnation, and we seek nothing in this bill that we couldn't acquire from a private party by condemnation. But since we cannot sue the Government, we seek authority from the Government for the executive branch to negotiate with us that price. We think we will not have trouble with that price, if we are given that power, because the Bureau of Reclamation in its own statements and analyses has clearly defined the value of that power.

Mr. Moseley, who follows me, will explain that more clearly.

Senator WATKINS. Just for my information, this land you want to buy, is that connected with any reclamation project at the present time?

I am not acquainted with the reclamation projects over there very well.

Mr. SAUNDERS. The Green Moiuntain Reservoir was built as a part of the Colorado-Big Thompson project, but the director of the region has informed us, informed both Mr. Mosely, the manager of the water department and Mr. Crawford, the director of the Colorado Conservation Board, that the revenues of this project are going directly to the General Treasury of the United States and not to the Big Thompson project. Therefore, we assume there is nobody else interested other than the United States in the profits of this electrical energy. Senator WATKINS. Has the entire cost of the Green Mountain Reservoir been repaid?

Mr. SAUNDERS. Not yet. But it will have been amortized completely before we can complete the Blue River tunnel.

Senator WATKINS. You of course will not need that water until that time?

Mr. SAUNDERS. That is correct. And even after we have completed the tunnel, we will not need to acquire all of the conflict, if one exists, because at first we will not use the entire flow of water. We can only divert so much as we can put to beneficial use.

Senator WATKINS. Have you an idea of the value of this right you would like to acquire?

Mr. SAUNDERS. $1.35 an acre-foot, I believe. Mr. Mosely has the details on that figure.

Senator WATKINS. Is that what it would sell for on the market, or is that the cost of it?

Mr. SAUNDERS. I understand that is the value on the market.

Senator WATKINS. As I remember, you said that if the city of Denver had this power water right and could get this land for the

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Two Forks Reservoir down on the south Platte, it probably could arrange to finance this diversion by itself; is that right?

Mr. SAUNDERS. That is my personal opinion, that the project would be so sound, financially, that Denver could finance it itself if it had the Green Mountain Reservoir conflict taken care of and the right-of-way. Senator WATKINS. What about the city of Denver? Does it have the same view as you have?

Mr. SAUNDERS. The city of Denver is sitting on my left and I think it does. Mr. Petry is the city of Denver because he is the president of the Board of Water Commissioners, which has all the powers of Denver affecting its plans.

Senator WATKINS. The committee would like to know officially whether the city of Denver has the same view.

Mr. SAUNDERS. I wish Mr. Petry would express it.

Mr. PETRY. Senator, I believe that as president of the Denver Water Board, I can answer in the affirmative to that question.

Senator WATKINS. You would be able to finance it?

Mr. PETRY. Yes, sir.

Senator WATKINS. I assume a city the size of Denver probably could borrow enough money to do that.

Mr. PETRY. The question cannot be answered officially without a vote of the people. It would have to be presented to the citizens of Denver for a vote, through a bond issue, but it would be merely my opinion, and I would recommend the sale to the citizens of Denver, as president of the Denver Water Board.

Senator WATKINS. I am not making a commitment as far as I am concerned, nor as far as the committee is concerned. I cannot commit the committee. But I would say that the suggestion ought to be before the committee for consideration, whether they want to do it or not, and whether they want to consider the first applications made with respect to a loan, or whether they want to leave it out entirely.

Mr. PETRY. Bond issues that have been recommended before by the Denver Water Board to the citizens of Denver have never been voted down. They have always been voted in favor. We have expert testimony to follow that will produce evidence showing that this could be financed privately.

Senator WATKINS. I get the impression from what you said, Mr. Saunders, that there would be no possible damage to the United States, if you purchased this right, this power water right.

Mr. SAUNDERS. That is what we would propose, to fully reimburse the United States.

Senator WATKINS. Even though the cost may be more than you just mentioned?

Mr. SAUNDERS. Yes, sir. A note has been laid here that perhaps I have not made it clear that under our proposal, the stored waters of Green Mountain Reservoir would be fully available for downstream uses. We do not propose to buy anything except the power water, that is, the direct-flow power water.

Senator WATKINS. You ought to make clear why you have to have that.

Mr. SAUNDERS. The reason we have to have that is because if that right should turn out to be senior, and we don't wish this committee to enter into that litigation at all, that is up to the courts to decide, but

if it should be senior and the courts should decide that, we will have to abide by that decision, and it it is senior, then those power rights can command all the water at Dillon and require us to turn down at Dillon all the water to supply the hydroelectric plant at Green Mountain. That would completely destroy the possibility of Denver getting any water through the Montezuma tunnel out of the Blue River.

Senator WATKINS. You are asking this committee to approve a proposition whereby you will get waters from the Blue River to take over there. What you want fundamentally is water.

Mr. SAUNDERS. Yes, sir. And we wish to be able to compensate the United States to whatever extent our diversions interfere with priorities at Green Mountain hydro plant, so that by paying the United States the value of that water at the hydro plant, the water will be released to us from the hydro plant so that we can take it over to Denver for beneficial consumptive use.

Senator WATKINS. Do you have a filing with the State engineer from the water board?

Mr. SAUNDERS. Yes, sir; we have a filing and a conditional decree. Senator WATKINS. That is now in dispute?

Mr. SAUNDERS. That is now in dispute by us, because we want an earlier date than the decree gives us.

Senator WATKINS. You have appealed from that decision?
Mr. SAUNDERS. Yes, sir.

Senator WATKINS. That is the one that is pending in the State court?

Mr. SAUNDERS. Yes, sir.

I believe that, as a result of the questioning of the Senator, I have only one other thing to do and that is to offer as an exhibit the material that is shown, Denver water requirements that I have been referring to, and I offer the 15 copies, required by the committee for the committee members, of that exhibit, Denver water requirements.

Senator WATKINS. That will be received and filed with the committee.

Does that cover your statement?

Mr. SAUNDERS. Yes, sir.

Mr. PETRY. The next witness is Mr. Earl Mosley, secretary-manager of the Denver Water Board, civil engineer of wide experience, and manager of the board since 1950.

Mr. Mosley.

STATEMENT OF E. L. MOSLEY, MANAGER, DENVER BOARD OF WATER COMMISSIONERS, DENVER, COLO.

Mr. MOSLEY. Mr. Chairman, 43 out of each 100 people in Colorado live in the Denver metropolitan area. This urban population represents about 19 percent of the total number of inhabitants making their homes in the 4 upper Colorado River Basin States of Colorado, New Mexico, Utah, and Wyoming.

Denver proper is the center of one of the fastest-growing metropolitan areas in the West, the average annual increase in population since the 1950 census having been approximately 24,000. The population increase for the city and county of Denver alone for the decade 1940 to 1950 was 29 percent, as compared with 18 percent for the State and 14.5 percent for the continental United States as a whole.

Furnishing an adequate supply of potable water for domestic, commercial, industrial, and military uses to more than 660,000 Denver area residents is, at this time, largely the responsibility of the Board of Water Commissioners for the City and County of Denver.

Recognizing the many problems connected with this responsibility, the board has, in the past 8 years, expanded its water plant at a cost of more than $29 million.

A 10-year program of additions and betterments to the Denver water system, exclusive of the Blue River unit, was begun in 1953 and is now going forward on schedule. The cost of these improvements, when completed in 1963, is estimated at $40 million.

This work will complete the development of all available sources of raw water supply except that to be taken from the Blue River.

The annual increments to be added to plant under this program have been assigned priorities so that supply will be kept in step with demand, if the assumption proves to be correct that the past 8-year rate of growth will continue without appreciable change for the coming 9 years.

Since this program is, at best, the result of short-time planning, it is obvious that work on facilities referred to by Mr. Saunders for the additional water supply needed after 1963 must be commenced at an early date if normal community growth is to continue without hindrance beyond the next 9 years.

The Denver Blue River unit consists of a water diversion in substantial amount from the Blue River at a point below the junction of its three main sources at Dillion. The water so diverted will be conveyed from the western to the eastern side of the Continental Divide through a 23-mile tunnel having its eastern portal near the town of Grant on the North Fork of the South Platte River. That is the tunnel that has been named Montezuma.

After leaving the tunnel at Grant, it will be transported in the natural stream bed of the North Fork of the South Platte River to its junction with the South Fork of that river and thence through existing facilities into the present Denver water system. Provision has been made for storage facilities at Dillon and at the Two Forks Reservoir site located on the South Platte River about 26 miles southwest of Denver.

The estimated cost of the completed project computed at 1953 prices is $75 million with storage capacities of 83,000 and 200,000 acre-feet provided at Dillon and Two Forks, respectively.

Both of these locations offer sites capable of substantial increases in storage capacity at favorable unit costs per acre-foot that can be developed, when needed, in the future.

Auxiliary facilities, omitted from the above estimates of cost, include the cost of constructing a powerplant near Insmont below the east portal of the tunnel, a second plant located near the head of the Two Forks Reservoir Basin, and a third plant to be built on the downstream side of the dam creating that reservoir.

Noninclusion of these possible future hydroelectric powerplants in the project at this time stems from the fact that, at least in the early stages of this project, it is certain that the return realized from their construction and operation would not be sufficient to economically justify the capital costs involved.