about two and one-fourth times the original estimate. The Corps of Engineers has pointed out that the greater part of this increase could be attributed to inflation. The task group restudied this matter, and agreed to this conclusion, but still found that the cost had otherwise been increased about 25 percent, enough, for many projects, to upset the original finding of economic justification. I am glad to be able to report that this matter related to projects in the early part of the program, and that in recent years authorization estimates appear to have been liberal.

Method of appraisal of benefits

The task group studies showed a quite unsatisfactory situation, particularly where appraised benefits rested on estimated damages to the agricultural lands. Here the methods employed appeared quite generally to produce stated benefits that seemed unrealistically high. It was reported to the task group that for the same flood plain, such benefits had been separately appraised by the Corps of Engineers and the Soil Conservation Service, with variations between the 2 of as much as 100 percent in either direction, but on the average the estimates of Soil Conservation Service were on the order of 4 times as high as those of the corps.

One expert reached the conclusion that the estimates of both agencies were generally inflated to such a degree that economic valuations had become virtually meaningless.

The task group also found instances of apparent blind spots where the agency, applying its own formula, continued to apply it after benefits already had been fully credited to other projects. An examination of one group of 26 reservoirs indicated that 20 of these could not have been reported as economically justified if such benefits had not been applied; but they were so reported and were authorized by Congress.

From such instances, it might be indicated that Congress should provide for an independent appraisal of benefits by particularly qualified groups, and might well also have an independent review of the findings prior to authorization.

Factual data available to the group indicated several other cases of what appeared to be unsatisfactory procedure. These covered such matters as failure to consider lower cost alternative solutions of flood problems, unsatisfactory scheduling of project construction, and, in some instances, overexpensive project design.

Another matter that would seem to justify considerable concern is the development within the Department of Agriculture of a large new engineering organization to handle the design and construction of so-called upstream reservoirs, many of which are of considerable size. There has been much controversy in the past with regard to the overlapping and resulting inefficiency in the work of the Bureau of Reclamation and the Corps of Engineers, both handling large dams. There would seem to be a serious question whether Congress should provide for three large engineering organizations in the same general field.

Time does not permit mention of many other matters that came before the group, and I regret very much that we are not permitted now to discuss this subject in terms of conclusions and recommendations. I am hoping, however,

that the factual data and the comments I have been able to offer will give some background for a further study of the report when it is available.

STATEMENT OF LESLIE A. MILLER, CHAIRMAN OF THE TASK GROUP ON RECLAMATION AND WATER SUPPLY, HOOVER COMMISSION, TO AMERICAN SOCIETY OF CIVIL ENGINEERS, ST. LOUIS, MO., JUNE 15, 1955

Mr. Chairman, members of the society, it would be less than consistent for me to take any particular time before such a group as this to belabor the point that we have in this country a limited supply of water in an average normal year. Your committees have from time to time pointed this up and you know far better than the average audience that with a steadily growing population and with increased industrial demands it is imperative that we give immediate and constructive attention to conserving the supply and using it, in all aspects, to the utmost advantage.

At the outset of its work, our Task Group on Reclamation and Water Supply was struck with the necessity to examine carefully the multiplicity of Federal agencies engaged in water development and administration in one direction and another. We were required to consider the relationships involved and the wide

variations in policies, rules, and regulations. We recognized, as has, for example, the Engineers Joint Council, that there does not exist any overall Federal water policy.

We have the Corps of Engineers developing water for navigation, flood control, power production, and irrigation. The Bureau of Reclamation develops for irrigation, flood control, and power production. The Department of Agriculture develops for flood control, power production (REA), soil conservation, and irrigation. Added to these we have the Forest Service, the National Parks, the Indian Service, the State Department, the Federal Power Commission, and other agencies involved in water development in varying phases. But over all these activities there is no guiding national policy.

With this in mind some of the members of our group made certain findings I desire to read to you for your consideration. We suggested:

1. That the Congress provide a uniform policy in which all beneficiaries of all water resource developments be assessed a portion of the cost. Thus, in irrigation development the farmer or water user should not be required to be the sole bearer of the burden of repayment of the cost of project. Nonagricultural areas, urban and suburban, should be required to pay an amount equitable with that paid by the farmer. In addition, the State should bear some portion of the project cost.

2. That the Congress recognize, as the primary measure of the economic worth of a project, the degree to which all classes of beneficiaries are willing to pay the costs, replacing thereby the present cost-benefit analysis procedures. 3. That the Federal contribution to the economic cost (the cost including interest) of a project should not exceed the sum of the local and State contributions. Repayment periods should not exceed 50 years after a development period, the length of which should be dependent on local conditions, but not exceed 10 years.

4. That returns from power or municipal water revenues, over and above cost, should be used to subsidize all forms of water resources development, irrigation, flood control, drainage, recreation, or others, but that the interest on both the investment in power or municipal water supply, and the subsidized portion of the cost of other resource developments, should be returned to the Treasury, together with the principal, within a 50-year period.

In carrying out these general suggestions, the following objectives should be adopted:

1. Reclamation by drainage and flood control, or by the recharging of ground waters, as well as by irrigation, should be provided for in any proposed new water policy.

2. A national water policy should recognize the rights and laws of the separate States concerning appropriation, use, control, and development of waters within their boundaries.

3. Sovereign States have interests, rights, and obligations which must be protected and fulfilled, so that such States and local agencies thereof should be offered the opportunity to participate in such programs and projects as are contemplated. Where interstate streams are involved, States should be encouraged and, as a prerequisite to Federal participation, be required to create interstate compacts for the purpose of dealing with water resources development. 4. Water resources should be developed in a manner not to conflict with beneficial consumptive use of water for domestic, municipal, stock water, irrigation, mining, or industrial use, and the Federal Government should assert no sovereign right with respect to one use of water over another.

5. Where the Federal Government participates in a program for the development of a major river basin, it should consider itself an agency cooperating with the States and the local agencies thereof, and that the work to be undertaken is for the benefit of such State, States, or local agencies.

6. The Federal Government should provide reimbursable loans to encourage States and local agencies as well as interstate agencies to plan, build, or acquire water resource projects.

7. In order that the Federal Government may strengthen its position to assume these duties, the following provisions of Federal water policy should be established:

(a) That only Congress be empowered to examine, define, and authorize Federal projects.

(b) Provide uniform standards by which costs, benefits, and economic justifications and related matter can be honestly submitted to the Congress, and by which subsidies, if any, may be precisely determined and made known.

(c) Avoid duplication and competition among Federal agencies engaged in water resource development.

(d) Amend the power preference law to insure the administration of Federal power projects to provide fair, equitable, and nondiscriminatory treatment of all consumers and distributors of power, public and private.

(e) The proceedings of all Federal and State agencies having to do with the assembly and evaluation of such basic information as topographic mapping, precipitation, stream flow, runoff, ground water percolation, pollution, and all other information needed in planning such water resource projects should be properly coordinated.

(f) In the field of water pollution, the Federal Government should be limited to the administration of currently existing laws, to research and to investigations, except when through inaction by a State it can be shown that water pollution adversely affects interstate waters, in which case it should be authorized to take action to alleviate pollution abatement.

(g) To avoid abuses of the past, classification of such items as navigation, flood control, fish and wildlife protection as wholly in the national interest and therefore as nonreimbursable, should be discontinued, and provision made for those benefited to absorb an equitable share of the cost of such project.

(h) States, their local agencies, or interstate agencies should be exempted from the licensing provision of the Federal Power Act.

(i) Provisions of section 1 of the Flood Control Act of 1944, that investigations shall be conducted so as to give affected States information developed and an opportunity for consultation regarding plans and proposals and to cooperate in investigations as well as that reports must be submitted to affected States for comments, should be revised to apply to all Federal agencies authorized to plan or construct water resource projects, including the Department of Agriculture, in the prosecution of water management programs for soil and water conservation and upstream flood control.

(j) The Federal Government should not undertake to supply municipal, industrial, or domestic water except where such an undertaking is an incidental part of a multiple-purpose development having to do with flood control, navigation, and/or reclamation. In no case should there be a subsidy to such an undertaking. The total cost of municipal, industrial, or domestic water supply should be returned to the Treasury of the United States in not to exceed 50 years, including interest from the beginning of construction at rates which the Federal Government is then paying on long-term borrowed money. Annual returns to the Treasury should be adequate to repay all financial costs, operation, maintenance, replacements, etc., and may in addition include sufficient funds for the partial repayment of costs properly allocable to reclamation or other features. Contracts for repayment of domestic or industrial water facilities should be made only with States or agencies of States.

(k) The contribution of the Federal Government to the economic cost of a reclamation project should in no case exceed the local and State contributions. This, in most cases, is represented by the interest on the money advanced for construction of the project. The cost allocable to reclamation, exclusive of interest during construction, should be repaid, without interest, to the Treasury of the United States within a period of 50 years after the end of a development period. Such payments should be made annually, but need not necessarily be in equal amounts. The total obligation could be paid at any time, on the basis of the present worth of the deferred payments with interest computed at the long-term loan rate currently being paid by the Federal Government.

(7) All Federal investments allocable to navigation, flood control, or for fish and wildlife protection estabished as reimubursable should be repaid to the Treasury of the United States within 50 years of completion of the project. Such payments should be made annually but need not necessarily be in equal amounts. The total obligation could be paid at any time, on the basis of the present worth of the deferred payments, with interest computed at the long-term loan rate currently being paid by the Federal Government. (m) Upon proposals acceptable to Congress, the States, local agencies, or interstate agencies should be authorized to purchase and acquire water resource projects under construction or completed. Each proposal should carry complete information concerning the project sought in order that the Congress can determine if the proposed acquisition by local agencies, a State

or a group of States, is proper and in the public interest. All such acquisitions should be authorized by an act of Congress.

(n) In order to facilitate (k), (l) and (m) above, upon proper authorization, loans should be made available for local agencies, States, or properly created interstate agencies.

The task group recognized that the present division of responsibility for water resource development among a number of governmental agencies leads to overlapping of authority with jurisdictional disputes and water resource developments in which each agency has carefully hacked out a niche for itself in the project plan.

Water resource development is a compromise of conflicting interests. Thus conflict can be expected in all phases of water resource development, and if there is to be a reasonable distribution of strength among conflicting interests, each should be associated with its own agency and pressure group. In this manner, conflicts are in the open and can be recognized.

The task group considers it is important, with multiple-agency responsibilities, that no beneficiary of water-resource development be given any undue advantage with respect to another. The adoption of the policy suggestions herein submitted would accomplish this purpose. But it is essential that the public be protected against collusion among agencies and beneficiaries. This could be done through the establishment of a board of coordination and review.

BOARD OF COORDINATION AND REVIEW

The general responsibilities of the Board of Coordination and Review would be as follows:

1. Be responsible for the coordination of planning water resource development by Federal agencies and by State, interstate, and local agencies participating in works having partial Federal responsibility.

2. Encourage negotiation of interstate compacts under which planning for the development of water resources in river basins would be initiated and directed. The appointment of Federal representatives on compact commissions should be made from among persons recommended by the Board.

3. Encourage coordination of the work of Federal and State agencies in the collection and dissemination of basic hydrologic data.

4. Evaluate the adequacy of data supporting projects proposed for construction by Federal agencies and by Federal-State agencies when Federal funds are involved.

5. Evaluate the feasibility of water development proposals where Federal funds are involved and evaluate such proposals with respect to their State, regional, and national implications.

6. Be responsible for application of uniform formulae for cost-benefit ratios, cost allocations, and reimbursable and nonreimbursable divisions of costs.

7. Where Federal funds are involved, provide for such field surveys and research as required to effect adequate evaluation of projects, utilizing local and State agencies where available and appropriate Federal agencies whenever required.

8. Where Federal funds are involved, recommend to the Congress an allocation of participation in planning and financing of projects consistent with the respective responsibilities of local, State, interstate, and Federal agencies.

9. Recommend to the Congress the appropriate Federal agencies to undertake the design, construction, and operation and maintenance of projects of major Federal responsibility.

10. Periodically review authorized projects and inform the President and the Congress as to progress, compliance with approved plans, cost, and performance. 11. Periodically review authorized projects and, where construction has not been started, recommend to the President and the Congress those projects which should be deauthorized.

As will be developed by other speakers on the panel, there was, perhaps naturally, some difference of opinion in the overall task force as to how a new policy would be coordinated and administered. A majority favored strengthening and expanding the present interagency committee with a water resources board which would act to do all necessary coordinating and to establish in the Bureau of the Budget a new board of review for water projects. The printed reports of the task groups and the task force will reveal all the detailed arguments in support of the several recommendations and these will be available to you in due time. What the Commission will do with the recommendations we have no means of knowing, of course, at the present time.

You probably would expect me, all the circumstances being what they are, to give some attention to a specific project or two in the present picture of reclamation and power production. You well know that the Bureau of Reclamation, by its own promotion and without benefit of established fundamental law, has developed into an agency primarily concerned with the production of electric power rather than the irrigation of arid lands. Inasmuch as most of the really good irrigation projects available for development have been constructed or are under way, the Bureau has adopted a policy of building huge power projects the earnings of which can be utilized to subsidize the marginal irrigation possibilities which remain.

Consider a pending proposal, that of the Colorado River storage project. Here it is the program to build 4 to 6 large dams for power generation and to supply irrigation water to 300,000 acres of new land and supplementary water to 470,000 acres now in private ownership and cultivation. The hydropower costs would be the highest in the Nation.

The average irrigation construction cost would be approximately $1,000 per acre and the Bureau of Reclamation unit reports set out that the lands are restricted by reasons of elevation, climate, soil conditions, etc., to the raising chiefly of forage crops for livestock operations. Such lands in that part of the country could not be built up, regardless of the amount of water available, to a value of more than $150 per acre in the market. The water used would be required to pay less than 15 percent of the construction costs and power would pay the balance, without interest.

Operating on an unbalanced budget, the Federal Treasury would have to borrow the money to build this project. It would have to pay 22 percent interest on the funds. At simple compounded rates, which is the method used by the Treasury and the Bureau in figuring such matters, the taxpayers of the country would be called upon to pay interest amounting to $3,000 per acre on this project. If we should consider that the land would be worth at sale $150 per acre and place this as the direct benefit, and then for the sake of liberality grant that the indirect benefit would be an equal amount, thus fixing a value of the land in the overall general economy of $300 per acre, it will be seen that the average subsidy would amount to $2,700 per acre in interest alone.

Now I would like to direct your attention briefly to another project, this in construction, the Oahe, on the Missouri River in South Dakota. This was originally conceived by the Bureau of Reclamation as an irrigation project to provide water for 750,000 acres of land in the northeastern part of that State. In the 1944 agreement with the Corps of Engineers it was taken over by the Corps in the name of flood control. The cost was estimated originally at $50 million. The corps discarded the plans of the Bureau, moved the location of the dam on the river several miles and came up with an estimated cost of $75 million. The last figure I saw placed the cost at over $300 million.

From the beginning the feasibility of this project was challenged by numerous informed citizens of South Dakota. The protests were ignored and the dam placed under construction. So insistent were some of these people, however, that last fall the Secretary of the Interior appointed a special panel of three engineers not in Government employ to study all aspects of the project. That committee has reported but its findings have not been made public for reasons not apparent to the uninformed. I can reveal, however, that the report states 250,000 acres of the lands proposed to be irrigated are not feasible for irrigation and accordingly should be thrown out of the project. On most of the balance of the land it is recommended that drainage works be installed simultaneously with irrigation construction. Members of the panel differed in their views as to how far apart the drains would have to be placed, one contending they would have to be built in lines 200 feet apart and the others voicing beliefs that perhaps they could suffice if built 400 or 500 feet apart. In any case, you gentlemen will recognize that if these drainage works were installed along with the irrigation features, the construction costs would unquestionably be very, very greatly increased, perhaps doubled, or more.

There will be available to you for your study in the printed report of our task group a tabulation giving complete information as to estimated and actual costs, estimated and actual acreages irrigated, and a whole host of other figures having to do with the whole reclamation program since its inception in 1902. I hope you will make wide use of this, as it reveals some amazing information.

In conclusion, with your indulgence, I wish to discuss 2 or 3 points raised in a recent statement circulated by the Commissioner of Reclamation and rather