would, to a considerable extent, have to be justified by other benefits which may be associated with it. The report sets forth certain indirect benefits which the Department believes will accrue from the project, but makes no provision for recapturing the costs of these benefits. For this reason, we believe it would be appropriate for this project that a conservancy district be required to be established to provide for justifiable payments by those to whom these indirect benefits of the project would accrue. This would be especially true since the average increase in net annual income of $12 per acre will permit the water users to pay only about $11 per acre toward the $31 per acre cost. Even if these benefits were confirmed through such repayments the project would show a marginal economic justification of only 1.06. In addition the Bureau of the Budget believes that, under present conditions, a reasonable repayment period for Federal irrigation projects should be the useful economic life but not longer than 50 years following completion of construction, exclusive, where applicable, of a development period not exceeding 10 years. Accordingly, you are advised that while there would be no objection to the submission of your report to the Congress subject to the above comments, authorization of the proposed project would be without objection only if provision is made to repay all reimbursable costs within a period of not to exceed 50 years. No commitment, however, can be made at this time as to when any estimate of appropriation would be submitted for construction of the project, if authorized by the Congress, since this would be governed by the President's budgetary objectives as determined by the then prevailing fiscal situation. It is requested that a copy of this letter be included with your report when it is submitted to the Congress. Sincerely yours, ROWLAND HUGHES, Director. REPORT OF THE ACTING SECRETARY OF THE INTERIOR TO THE PRESIDENT DEPARTMENT OF THE INTERIOR, Through: Bureau of the Budget. The PRESIDENT, The White House. OFFICE OF THE SECRETARY, Washington 25, D. C., June 3, 1954. MY DEAR MR. PRESIDENT: My report on the Talent division, Rogue River Basin project, Oregon, is transmitted herewith pursuant to the provisions of section 9 (a) of the Reclamation Project Act of 1939 (53 Stat. 1187). area. The Talent division would provide water badly needed to supplement the supplies for existing irrigation in the general vicinity of the city of Ashland, Oreg., and to develop new irrigated lands in the same In addition it would provide hydroelectric power, flood control, and incidental fish and wildlife and recreation benefits. Based on January 1953 prices it is estimated to cost $19,894,000 and it is economically justified with estimated benefits exceeding estimated costs in the ratio of 1.3 to 1. For the past several years local interests have been strongly in favor of its authorization and construction. I recommend that the Talent division be authorized as set forth in the report. The report has been transmitted to officials of the States of California and Oregon and to the Secretary of the Army for their views and recommendations as required by the provisions of section 1 (c) of the Flood Control Act of 1944 (58 Stat. 887). It was sent also to the State of Oregon for the comments of the head of the agency exercising administration over the wildlife resources of the State, as required by the provision of the act of August 14, 1946 (60 Stat. 1080); and to the Departments of Agriculture, Commerce, Labor, and Health, Education, and Welfare, and the Federal Power Commission, in accordance with interagency agreements. All reviewing agencies have submitted comments and copies of the comments are enclosed with the report. I shall appreciate having advice concerning the relationship of the Talent division, Rogue River Basin project, Oregon, to your program before I transmit the report to the Congress for its consideration and appropriate action in accordance with the provisions of the Reclamation Project Act of 1939. Sincerely yours, RALPH A. TUDOR, Acting Secretary of the Interior. REPORT OF THE COMMISSIONER OF RECLAMATION DEPARTMENT OF THE INTERIOR, BUREAU OF RECLAMATION, Washington 25, D. C., June 3, 1954. The SECRETARY OF THE INTERIOR. SIR: This is my report on the Talent division, Rogue River Basin project, Oregon. It is based on and includes the proposed report on this project which you approved and adopted on April 1, 1954. Copies of your proposed report were transmitted to the States of California and Oregon and to the Secretary of the Army in accordance with provisions of section 1 (c) of the Flood Control Act of 1944 (58 Stat. 887) and to the State of Oregon for comments of the head of the agency exercising administration over the wildlife resources of that State in accordance with provisions of the act of August 14, 1946 (60 Stat. 1080). Copies of the report were sent also to the agencies represented on the Federal Interagency River Basin Committee for their comments. Comments have been received from all States and agencies to which the report was sent and copies are attached. In view of the generally favorable nature of the comments received it does not appear that revision of your proposed report, as a result of the review of the various agencies, is necessary. In particular, the State of Oregon indicated that it had followed the surveys and investigations of the Talent division since their initiation and recommended that the report be approved. Certain comments of the Department of Agriculture, while factually correct and seemingly adverse, are irrelevant when considered within the context of reclamation law and policy. That Department observed that the payments made by water users during the first 48 years of the repayment period amount to a return of about nine-tenths of 1 percent on the Federal investment and that the present value at 21⁄2 percent interest of all repayments toward the irrigation investment by irrigators and from power revenues is equal to about 37 percent of the project costs allocated to irrigation. The Congress, in the enactment of basic reclamation law and in the authorization of individual reclamation projects has firmly established many times over that the repayment of the irrigation costs of Federal projects is to be on an interest-free basis. In the light of these congressional actions the observations of the Department of Agriculture would be appropriately stated thusly: "The payments made by the water users during the first 48 years of the repayment period amount to a return of about 44 percent of the irrigation investment and their payments during the rest of the 70-year period combined with financial assistance from power revenue fully return the remaining irrigation investment." This is entirely consistent with reclamation policy as expressed in the laws. The Department of Agriculture also states that the allowance of 30 percent for farm losses and waste used in estimating farm delivery requirements appears low. The 30 percent allowance is, to a certain extent, a judgment factor. Based upon our experience and upon losses sustained by existing irrigation operations in the area, this allowance appears adequate and no additional special costs are needed for this item. Since your approval and adoption of the report on the Talent division as your proposed report on April 1, 1954, agreement has been reached by the Departments of the Army and Interior and the Federal Power Commission on methods of cost allocation for multiple-purpose water resource development projects. Application of the separable costs-remaining benefits method, which is the preferred method set forth in the agreement, to the Talent division would result in the following allocations: Under this method of allocation the power generated would have to be sold at an average rate of 4.76 mills per kilowatt-hour to amortize the power investment plus interest during construction in 50 years at 22 percent interest rather than at 4.5 mills per kilowatt-hour as shown in the report. It is anticipated that power can be sold at the average 4.76 mill rate and the power costs returned with interest within 50 years. Payout of the irrigation investment through payments by the irrigators and assistance from power revenues after amortization of power costs would still be accomplished within 70 years. It is expected that a supplemental report will be completed shortly covering a proposal to increase the power capacity of the Talent division from 10,000 to 16,000 kilowatts. Should the enlarged plant prove more feasible than the plan contained in the present report, the repayment aspects of the Talent division would, of course, be more favorable. In the interim I recommend that the plan presented in your proposed report be revised to incorporate the new cost allocations and repayment computations. Accordingly, I recommend that you approve and adopt the report which you approved on April 1, 1954, as modified by this letter, as your report on the Talent division, Rogue River Basin project, Oregon, and that you transmit it, together with the attached comments, to the President and, subsequently, to the Congress in accordance with the provisions of the Reclamation Project Act of 1939. Respectfully, W. A. DEXHEIMER, Commissioner. Approved and adopted: June 3, 1954. RALPH A.TUDOR, Acting Secretary of the Interior. PROPOSED REPORT OF THE COMMISSIONER OF RECLAMATION DEPARTMENT OF THE INTERIOR, BUREAU OF RECLAMATION, Washington 25, D. C., March 17, 1954. The SECRETARY OF THE INTERIOR. SIR: This is my proposed report on the Talent division, Rogue River Basin project, Oregon. It is based on and includes the accompanying report of the regional director, Boise, Idaho. The Talent division is located in Jackson County of southwestern Oregon. Project lands lie along the Bear Creek, a tributary to the Rogue River, in the general vicinity of the city of Ashland and the towns of Talent and Phoenix. This multipurpose development is primarily for irrigation but also produces hydroelectric power, flood control, and incidental fish and wildlife, and recreation benefits. There is substantial need in the project area for supplemental water for presently irrigated lands and the development of new irrigated lands from the water supply that the proposed development would make available. This is a locality with a large percentage of small farms with off-farm income playing an important role in the economy. A full water supply would furnish additional income to farmers on the small tracts and would provide for optimum use of the available water resource which, as a result of population increase, is important to the economy of the region. Lands developed along Bear Creek for agricultural, industrial, commercial, and residential purposes are subject to flooding almost every winter. This flood damage would be substantially reduced as a result of enlarging the existing Emigrant Reservoir as part of the proposed plan. Hydroelectric power and energy that would be made available would provide a modest but valuable addition to help serve the anticipated power requirements of the area. The inhabitants have recognized the value of this development to their general welfare and there is concerted local agreement for early construction. The construction of this division would be economically justified in that the estimated annual benefits exceed the estimated annual costs by the ratio of 1.3 to 1. The plan provides for an adequate water supply for 17,890 acres of irrigable land of which 9,250 would receive a supplemental supply and 8,640 would be newly irrigated lands and receive a full supply. In addition, the plan would develop 10,000 kilowatts of nominal prime power by integration of the proposed division powerplant with the Columbia River power system. Studies are now under way to increase this capacity to 16,000 kilowatts and a supplemental report on this will be made available in the near future. The division plan is primarily an extension to the works of the Talent Irrigation District. Existing facilities of this district would be |