Senator ANDERSON. I do not say it is accurate. I said you can check it later on. I understand there are 22 acre-feet, and if you divide 212 into $56 you come out with $14. Just take a fourth of it. Is that right $14 per acre-foot as against $3.50 per acre-foot? Would the Southern Pacific take sort of a dim view of that, do you think?

Mr. AANDAHL. The payment per acre-foot without interest is listed here as $7.50, and when you take it with interest it builds up to about the $14 that you have there.

Mr. BENNETT. I think we are substantially together. I had a little trouble understanding you there. On the basis of the year period and an unsubsidized amount-in other words, full allotment of the cost of irrigation-it come out at about $15 per acre-foot.

Senator ANDERSON. All I see is that any time you go into a business transaction you try to figure out what your possibilities of profit and loss are, and if I owned Southern Pacific land and wanted to keep it intact and I can understand why they would want to keep it intactI would look a long time at a $14-per-acre-foot-per-year charge. I think that is quite a little bit. You have to make this, then, be competitive with other land, and, if you can buy water for $3.50 per acre in one area and you have to pay $14 in another, you are going to think about it for a while; are you not?

Mr. AANDAHL. I just don't know what the position of the Southern Pacific is going to be.

Senator ANDERSON. Is somebody going to testify for the Southern Pacific?

Mr. LINEWEAVER. No, sir. No one is listed, but we will ask for a statement.

Senator ANDERSON. I would say, Senator Kuchel, that we better have some testimony from the Southern Pacific in here, some men who are responsible to speak for it.

Senator KUCHEL. I agree with that, Mr. Chairman, completely. May I, first of all, ask would it be permissible for me to ask the Department if it might file a copy of the letter from the Southern Pacific with the committee?

Mr. BENNETT. Yes; we can do that.

(The letter referred to was subsequently submitted and appears on p. 32.)

Senator ANDERSON. I was going to say, Senator, that, in the absence of testimony by the Southern Pacific, if we report the bill out I think we would have to report it out with the regular provisions which the Secretary has indicated that the Department prefers and which most members do prefer.

Perhaps the Southern Pacific wants to keep its land intact, like the Santa Fe Railroad does. I don't believe the Santa Fe Railroad ever sells anything, or, at least, very rarely. I would like to have the Southern Pacific comment, to find out if they would be willing to pay what looks to be $14 per acre-foot per year, or $56 an acre per year. I will not guarantee my figures.

Mr. BENNETT. It comes out at $56.50 per acre. quite accurate.

Senator ANDERSON. Thank you; $56.50.
Mr. BENNETT. Yes, sir.

Your figures are

Senator KUCHEL. Mr. Secretary, you stated, in answer to a question from Senator Anderson, that the Department would look with favor on an alternative recommendation under which the reservoir would be financed by the State of California. I wrote down what I thought were your words at that time.

When you made that statement, did you have in mind the recommendations which had been previously made by the Kern County Farm Bureau and others?

Mr. AAHNDAHL. Yes; I did have.

Senator KUCHEL. While the Department, as you have said, has not come up with a specific recommendation on the specific proposal, nevertheless, as a principle, you state that the Department could favor a proposal under which a reservoir would be financed by California? Mr. AANDAHL. Yes, sir.

Senator KUCHEL. Going on from that, do I assume that that includes a provision by which the Bureau of Reclamation would have storage capacity in such a reservoir to furnish water to an enlarged Central Valley project area?

Mr. AANDAHL. That is correct. If the Bureau were going to participate in the distribution system for the San Luis unit, we would have to have definite assurances of the availability of water for that irrigation project from the San Luis Reservoir if it were built by the State.

Senator KUCHEL. If it were to be built by the State and you sought such definite assurances from the State, does that mean that you would contemplate recommending to the Congress legislation under which a part of the cost of the reservoir would be borne by the Federal Government?

Mr. AANDAHL. It could be worked out in combination, or it could be financed entirely by the State.

Senator KUCHEL. In other words, when you make the point, as you did just a few moments ago, that you would look with favor on a reservoir being financed by the State of California, do I understand now that you mean you look with favor on the State going ahead and building this reservoir as an alternative to the bill that Senator Knowland and I introduced here?

Mr. AANDAHL. My statement is that a partnership arrangement between the State and the Federal Government in which the State picks up an additional amount of responsibility, both financial and management, is welcome as far as we in the Department of the Interior are concerned.

Senator ANDERSON. However, you do not carry that so far as to suggest that California might pick up the whole tab, do you?

Mr. AANDAHL. If the State of California wants to proceed with the project we will be entirely happy.

Senator ANDERSON. I think that is a perfectly safe statement.

Mr. AANDAHL. We think that this is a good project. We are recommending it for Federal construction, but we certainly want to cooperate with the State to any degree that it wishes to become a participant.

Senator ANDERSON. As I understand it, Senator, the State is going to testify and that question will be quickly cleared up.

Senator KUCHEL. Yes, sir.

Senator ANDERSON. We do recognize that in these large projects the use of interest-free money is very important to their economic outlook, and the State of California would probably recognize that as well. The burden of the State of California, if we built this, would probably be much higher because it would have to pay a substantial sum of money if you tried to issue $200 million or $300 million worth of bonds.

Mr. AANDAHL. We recognize that, and, in fairness to the State of California as compared to the reclamation area, we are willing to participate to the extent that the State wants us to.

Senator ANDERSON. One further question on that line.

I can understand how you would separate the power phases from the rest of the dam if you were trying to figure out something California could take over, but you know of no partnership concept that you would say on the main structure of the dam the Federal Government may take off and California might take off? There is no provision to do that, is there?

Mr. AANDAHL. In the San Luis project the question of power is not involved.

Senator ANDERSON. Perhaps I said it badly.

Mr. AANDAHL. I think I should be a little hesitant about commenting on the other project unless we have all of the factors before us.

Senator ANDERSON. I sort of understood from your answer to Senator Kuchel a minute ago that you would be glad to have California pick up any part of the tab that it wanted to.

Mr. AANDAHL. On the San Luis project.

Senator ANDERSON. Yes. Would you indicate what parts of that are divisable so they could pick it up?

Mr. AANDAHL. I would say almost any part of it is divisible. There is the pumping plant. There are the canals. There is the storage reservoir. There is the distribution system.

Senator ANDERSON. Could you break any one of those off if they wanted to?

Mr. AANDAHL. Yes.

Senator ANDERSON. Do you have any provision in the Federal reclamation law which says you can build the dam and they can take charge of the distribution system?

I guess we do have that.

Mr. AANDAHL. I think the law is broad enough that we could do that.

Senator KUCHEL. Mr. Chairman, just in one sentence, I think the Secretary will agree with me on this:

The Senate bill and the companion bill by Representatives in the House envisions a reservoir of capacity to permit the Bureau to enlarge it for the State's purposes. But, secondly and equally important, to permit the State of California to utilize capacity in that reservoir sufficient to take water down into the southern extremities of California under its State water plan and, more particularly, the Feather River project. Is not that the basis on which we are all trying to work here?

Mr. AANDAHL. That is correct.

Senator KUCHEL. With respect to the question that Senator Anderson asked you, section 2 of our bill authorizes the Secretary to enter into agreements with the State of California relative to "coordinated operation and joint use of the facilities."

Does the Department look on that language as an intention by the Congress to permit a partnership between the State government and the Federal Government under which the Federal Government will utilize its capacity in the reservoir for purposes of the farms in the San Luis area, on the one hand, and permit the State of California operation and use of the reservoir with respect to its State plan? Mr. AANDAHL. That is correct.

Senator KUCHEL. If the recommendations of the Kern County group and some of my constituents in southern California were along the lines of a reservoir to be financed by the State of California, but financed, however, on some type of so-called partnership agreement, would the Department's position be the same with respect to its right to use and to operate that portion of the dam and its storage necessary to service the Central Valley area?

Mr. AANDAHL. The answer generally is "Yes." I think, if the State built the dam and created the reservoir, the operation would be vested in the State right from the beginning, but we would want assurances that the amount of water needed for distribution in the San Luis irrigation project, which I presume you imply would be built by the Bureau of Reclamation, would be available as needed for that purpose.

Senator KUCHEL. And if you were unable to obtain those assurances what position would the Department take?

Mr. AANDAHL. The Department, without those assurances, would not be able to be a participant in the project.

Senator KUCHEL. Or to recommend any participation by the Congress.

Senator ANDERSON. That is a very important statement, and I was just hopeful that when Mr. Banks testifies I may not be heresomeone will ask the question as to what guaranties the State of California can give to construct these works if the water is going to be available. You can hardly ask the Federal Government to put a lot of money into a project unless it has some assurances of the availability of water. I think that is a very important statement.

Senator KUCHEL. To go on, Mr. Chairman, does the Department attach any importance to where title to the real property lies on which the San Luis Reservoir would be constructed?

Mr. AANDAHL. I know the Department would attach importance to it if it were fully a Federal reservoir. I am not too sure what the situation would be under a combination arrangement. I just haven't thought that through.

Senator KUCHEL. Let me put it this way: Under any agreed-upon plan between the State and Federal Governments under which a project such as this would be jointly constructed and jointly operated, if title to the real property were not in the Federal Government, would that be a factor that would preclude the Department from recommending the joint project?

Mr. AANDAHL. I would not be sure. I would just have to check that. I think that would need an analysis by our legal department.

Senator ANDERSON. I think so. I think you better find out if the Federal Government can spend this money on privately owned land. Senator KUCHEL. I am not talking about privately owned lands. The only alternative that I am assuming at all would be if the State acquired title to the property.

Senator ANDERSON. We cannot assume that because it has not acquired title. This land is owned by individuals. Unless the Federal Government takes title to the land, it is not going to put any money on it, I do not believe.

Mr. AANDAHL. It was my understanding that the Senator was saying that the State of California would get title to that land. Senator KUCHEL. Exactly.

Senator ANDERSON. Then you are going to mention whether or not, if the State had title to the land, the Federal Government would be in favor of putting money into a project where it had no title? Mr. AANDAHL. On a dollar-participating basis.

Senator ANDERSON. I think it only fair to say, Mr. Secretary, that I believe you will find the Department of Justice has been requiring the Federal Government to have title. This would require complete reversal of Department of Justice policy.

Mr. AANDAHL. Mr. Bennett just reminded me that on the distribution system loan bill the Department of Justice has taken that position.

Senator ANDERSON. It has taken the position that the Government must have title or it will not participate, even though on the small project bill we worked very closely with the State and let them do a great deal of the work. When you start to build the structure, the Department of Justice requires that the Federal Government have title.

Mr. AANDAHL. Yes, sir.

Senator ANDERSON. I presume that they would take pretty much the same position now.

Mr. AANDAHL. I think that would be the case, but I did not want to be too firm until we had explored it a little further.

(Secretary Aandahl submitted the following statement which was prepared by the Office of the Solicitor :)

It goes without saying that the Department of the Interior does not have authority to provide or expend money for the construction of any reclamation project or features thereof until such project or feature has been authorized. Consistently, there would be no legal prohibition to making advance payments or expenditures by the Bureau of Reclamation from appropriated funds for the construction or erection of irrigation facilities to be constructed and owned by the State or subdivision thereof and to be used jointly by the Federal Government and the State or a subdivision thereof, if such advance payments or expenditures are expressly authorized by the legislation authorizing the San Luis development.

Senator KUCHEL. What I am trying to do, Senator, is to elicit as much help now from the Department as a background against testimony that unquestionably we will have later on today. I think that one of the problems here is measuring the divergent views, if it is at all possible, with respect to operation of the project once it is built, and assuming it is built on a joint basis, and the Secretary has testified that as far as the Department is concerned, he would feel that any joint construction must result as far as the Federal Government