Mr. ARMSTRONG. That is correct.

Mr. HALEY. Mr. Commissioner, is corn now in surplus in this country?

Mr. ARMSTRONG. Yes, to an extent, this is true.

Mr. HALEY. To what extent?

Mr. ARMSTRONG. About one-third of a year's supply.

Mr. HALEY. On page 3 of your statement you say, "would require the acquisition of approximately 13,550 acres of land."

Mr. ARMSTRONG. Yes.

Mr. HALEY. Could you give us the amount of the cost of that 13,000 acres of land?

Mr. ARMSTRONG. I will refer that to Mr. Mayne.

Mr. MAYNE. I have to do a little arithmetic.

Mr. ARMSTRONG. The dry land values vary from $100 to $200 an acre and on the irrigated lands from $300 to $450. So in the reservoir area it would be somewhere between a million and a half dollars to $2 million.

Of course, we make the detailed appraisals at the time the land is obtained.

Mr. HALEY. On the payment of interest on this money, on page 7 you say: "Based on a 100-year period of analysis at 314 percent interest."

What is the Federal borrowing money for now? Interest.

Mr. ARMSTRONG. The present cost of money is about 52 percent. Mr. HALEY. Over a 100-year period that would be quite a lot of taxpayers' money.

Mr. ARMSTRONG. The reimbursable cost of the project will be repaid in 50 years, not over 100 years, at the interest rate applicable at the start of construction. Costs allocated to irrigation are repaid without interest.

Mr. HALEY. You have had no opposition from the landowners that own this 13,450 acres, have you?

Mr. ARMSTRONG. There has been some opposition. There are one or two ranchers that would rather not have the project constructed. Mr. HALEY. That is all, Mr. Chairman.

Mr. JOHNSON. The gentleman from Idaho, Mr. McClure.

Mr. MCCLURE. Thank you, Mr. Chairman.

You indicate that 55 percent of the area now receives irrigation.
Mr. ARMSTRONG. Yes, sir.

Mr. McCLURE. How does that compare to the percentage that was irrigated when this project was first authorized?

Mr. ARMSTRONG. That is quite a bit higher. In 1958 it was about 32 percent.

Mr. McCLURE. What has been the source of the watering that has taken place in the increased irrigation since the original authorization?

Mr. ARMSTRONG. Primarily additional wells have been put down which have resulted in the overdraft of the ground water supply. Mr. McCLURE. I think your statement indicated that the water table has dropped 12 feet since 1967.

Mr. ARMSTRONG. Yes, in Valley County areas. The average decline for the period 1967-71 is 5.6 feet.

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Mr. McCLURE. That is the result of the overdraft?

Mr. ARMSTRONG. Yes, sir, and as I mentioned, most of the recharge of the ground water is the surface absorption of the rain that falls, though it takes about 8 acres to recharge the ground water for 1 acre of irrigated land.

Mr. McCLURE. Are there any presently irrigated acres that are losing their irrigation water because of the overdraft?

Mr. ARMSTRONG. There are some.

Mr. MAYNE. I am John F. Mayne. There are some, sir. It is an Ogallala formation from which we are pumping. This has specific capacity of only a few gallons, 6 or 7 gallons per foot of drawdown, so even though you may have 200 feet of this aquifer, you do not get much water out of it when you can only draw out maybe 40 or 50 percent.

Mr. MCCLURE. So there are lands that have been irrigated that are now cutting back.

Mr. ARMSTRONG. Beginning to drop out or cutting back on their application of fertilizer.

Mr. MCCLURE. It is indicated in this statement that you have revised this project to increase the conservation capacity. How was that done?

Mr. ARMSTRONG. We raised the dam and we are able to store more of the water making it available for the critical months of July and August.

Mr. McCLURE. The studies indicate that there is an adequate. runoff to fill this increased capacity?

Mr. ARMSTRONG. Yes. sir.

Mr. McCLURE. If this is the case, was there a particular reason why it was not designed that way in the first instance?

Mr. ARMSTRONG. Well, it was a matter of further analysis of the downstream effects and a better understanding of the overall effects of the project. In the revised plan we also have a diversion works which allows us to control more area. It picks up more area on the North Loup River and thus we can utilize that water also.

Mr. McCLURE. On page 4 of your statement I think you telescope some of your mathematics and as a result left out some figures because you indicate that the study by the University of Nebraska shows a total of $6.68 of economic activity for every dollar of increased production. A little earlier in that paragraph you showed the total benefits from irrigation to be $3,800,000 annually and then you show later in the paragraph an annual benefit of $36 million.

Mr. ARMSTRONG. Total additional business activity-Mr. Congressman, the total annual benefits would be $3,804,000. It is not however the total economic activity. The $36 million represents the total annual impact on the Nebraska economy.

Mr. McCLURE. Well, but again you have indicated that it isthe multiplier is $6.68 for each dollar of increased production and if you then multiply to get $36 million, that must mean that you have had somewhat more than $3,800,000 in the increased production. Mr. ARMSTRONG. Yes, sir. The $3.8 million represents a net return. The $6.68 factor is applied to the total increased production or gross figure.

Mr. McCLURE. And the gross return then would be something on the order of $6 million.

Mr. ARMSTRONG. Yes.

Mr. McCLURE. Thank you.

What is the effect of the 160-acre limit on this project?

Mr. ARMSTRONG. We do have some lands that are larger. They are relatively few in number. We do not anticipate any problem. Mr. MCCLURE. Do you have a tabulation of the size of ownership patterns in this area?

Mr. ARMSTRONG. Yes. They are generally smaller size. We do have a total of 48 owners who own 5,830 acres of excess irrigable land. So you see it is a little more than 100 acres for each and it presents no problem in complying with the 160-acre limitation law. Mr. McCLURE. Have they indicated there is no problem with compliance, these 48 owners?"

Mr. ARMSTRONG. That is my understanding.

Mr. McCLURE. Thank you, Mr. Chairman. I have no further questions.

Mr. JOHNSON. Any further questions of the Commissioner by any member of the staff?

Mr. CASEY. I have no questions, Mr. Chairman.

Mr. JOHNSON. We want to thank you, Mr. Commissioner, and your associates for coming here and giving us the benefit of your statement and for your responses to the questions.

Mr. ARMSTRONG. Thank you, Mr. Chairman.

Mr. JOHNSON. We have asked for additional information and charts and figures you use to justify repayment from the Missouri River Basin Fund.

Is the representative of the Governor with us, Mr. Glen Kreuscher? STATEMENT OF GLEN KREUSCHER, DIRECTOR OF AGRICULTURE, STATE OF NEBRASKA, REPRESENTING GOV. J. JAMES EXON

Mr. KREUSCHER. Mr. Chairman and members of the committee, I am Glen Kreuscher, director of agriculture in the State of Nebraska, and today representing Gov. J. James Exon in delivering his statement and making a few comments relative to the North Loup project.

Mr. JOHNSON. The Governor's statement will appear in the record and you may summarize it.

Mr. KREUSCHER. The Governor wishes to reaffirm his support made by previous administrations for this project. It has been a project for a long time in Nebraska we have looked at from very much a bipartisan standpoint and recognize its importance in succeeding administrations. And in the case of the North Loup project. I suspect that few projects are going to come before this committee that have more complete harmony of support than now exists in the State.

Only from the resources of soil and water can we sustain and improve our economy in Nebraska. And some of the most recent studies that we have had in three seminars at the University of Nebraska, with widespread representation from throughout the

State, we now feel it is possible to take our $2 billion income in the State and double it, jobs and economy, if we develop the State that has the greatest water potential of any State in the Nation. We have a total water potential there that is very interesting if we can get on to it and can start doing something about it. And within the Loup River Basin, this great importance of land and water development is well recognized. We have some of our best farmers in this area that can take advantage of it.

Practically the entire economy of the area depends on successful crop production, and what are we faced with now? We are faced with one out of three years of having trouble with drought and with the cost of producing food and fiber today this comes to being nearly disastrous if we have to face this in the future.

So it depends a lot upon who has water and how we have it and how we take care of it in producing our foods.

I am sure one of the first questions you would ask at that time is why are we so interested in future development? Records show that if we would have stopped in the 1940's in developing our water resources for food production, today America would be a hungry Nation. And when you see the amount of land that is going out for other uses, once in agriculture and our two coasts, and in our more populous areas of the United States, it puts an extra pressure on this part of the country where we can raise a multitude of crops. We have the farmers that know how to do it and are well located for transportation purposes.

I notice the figure of $6 and I think some 80 cents. It is nearer $7 that our studies at the University of Nebraska show for every one that comes into the economy when you take dry land and add water to it.

And another interesting study in the State of Nebraska is that the areas that have irrigation are holding their population. We are not having this problem of losing people and of having them moving out of an area where we have the irrigation or we have the use of the water. In cases we are either holding or improving the number of people that are living in that area.

I think that the need for this project has caused most people to put aside their differences and that the project as now proposed represents an equitable and reasonable settlement of differences and of support that I have described earlier. It should be pointed out that the project has met the economic tests from our viewpoints and more important, probably a very significant people test, and this is that the project has been endorsed as a principal part of Nebraska's statewide plan for developing our water resources, and finally, the legislature has, without a single objection, endorsed this project and joins Governor Exon in urging early authorization and funding of the North Loup Commission.

The reservoirs associated with this project will be a positive addition to the face of the State and we expect them to be heavily used to provide recreation for Nebraskans and visitors alike.

Mr. Chairman, Governor Exon urges the need for this project and wholehearted support for its authorization.

Are there any questions from the committee?

Mr. JOHNSON. We are very glad to have the statement of the Governor and very glad to have your comments as the director of agriculture for the State of Nebraska. You made it very clear to us yesterday and today what water development means to Nebraska. By having a major effect on the local and State economy naturally you pass on a few benefits to the Nation's economy as well.

I think you have been very forthright with your statements, and we are glad that the legislature has approved this without a dissenting vote. That gives us assurance that the local representatives in the State legislature approve the project, too, as well as others in the State.

Yesterday we discussed briefly the President's mandate to do something for rural America. Here again, I think, we find a project similar to the one yesterday that pretty much fits that mandate. By developing our natural resources in Nebraska, the water resources especially, we will carry out the President's wishes, would you not say, with regard to doing something for rural America?

Mr. KREUSCHER. I certainly believe this is the case.

Mr. JOHNSON. The gentleman from Florida, Mr. Haley.
Mr. HALEY. No questions.

Mr. JOHNSON. The gentleman from California, Mr. Hosmer.

Mr. HOSMER. It has been alleged that some birds which are indigenous to this particular area, catbirds, western meadowlark, brown_thrashers, and robins would be deprived of their breeding grounds, nesting grounds, courting grounds if this reservoir is to be put in and, therefore, the State and the Nation would be deprived of unique features.

What is your understanding of the facts in relation to this allegation?

Mr. KREUSCHER. Of course, I consider myself an environmentalist as much as an agriculturist and you will find most of our agriculturists are environmentalists. I do not have this fear. I look at it from the prospect of the increased food produced in this area and I am thinking of grain and cover and what it might be, gives you some added benefits that many of them that have overlooked that make it more conducive to wildlife to harbor in this area, and rather than fearing what it might do to wildlife, I look on it as a great advancement in this tremendous food supply, not having to worry about drought conditions.

Birds are just like people. When they get short of food it is hard on them, too. And on top of that, when you put the economic factors into it, then, of course, it just looks wholeheartedly to me. like a project you can support from the environmental standpoint. or from the agricultural or the general economy of both rural and

urban areas.

Mr. HOSMER. Thank you.

Mr. JOHNSON. The gentleman from Idaho, Mr. McClure.
Mr. McCLURE. I have no questions, Mr. Chairman.

Mr. JOHNSON. We want to thank you, Mr. Kreuscher, for your appearance here again today and your responses to the questions. Mr. KREUSCHER. Thanks to the committee.