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State, based upon the proportions of total capacities required by it, of the operation, maintenance, and replacement costs of the San Luis unit.

(e) if a nonreimbursable allocation to the preservation and propagation of fish and wildlife has been made as provided in section 2 of the Act of August 14, 1946 (60 Stat. 1080, 17 U. S. C. 662), the features to which such allocation is attributable, whether constructed by the United States or the State, shall be operated and maintained in such wise as to retain the basis upon which such allocation is premised. Upon failure of the State so to operate and maintain those features so constructed, the amount allocated thereto shall become a reimbursable cost to be repaid by the State. SEC. 5. The United States, acting through the Secretary, may contract with the State to store or transfer water through facilities of the Central Valley project for ultimate delivery by the State, provided that only the excess capacity of the Central Valley project beyond other requirements existing at the time shall be so used and obligated, and the State shall pay to the United States a service charge or an appropriate share of the construction, operation, maintenance and replacement costs of the facilities so used. The Secretary is also authorized to contract with the State to store or transfer water through facilities of the State for ultimate delivery by the United States, and the United States shall pay to the State a service charge or an appropriate share of the construction, operation, maintenance and replacement costs of facilities so used.

SEC. 6. The Secretary is authorized to construct, operate, and maintain and to participate with the State in the construction, operation, and maintenance of the San Luis interceptor drain to the delta, as described in said San Luis report of December 17, 1956, and, in accordance with sections 4 and 9 of this Act, to permit the use thereof by the State. In constructing, operating, and maintaining a drainage system for the San Luis unit, the Secretary is authorized to permit the use thereof by other parties under contracts conforming generally to the provisions of the Federal reclamation laws with respect to irrigation repayment or service contracts and is further authorized to construct, operate, and maintain and to participate with others in the construction, operation, and maintenance of drainage facilities to serve the general area of which the lands to be served by the San Luis unit are a part. Except for facilities to be used by the State as provided hereinabove, no such construction or participation in construction which involves the expenditure of Federal funds shall be undertaken by the Secretary, however, until a contract or contracts conforming generally to the provisions of the Federal reclamation laws and providing, among other things, for the advance or repayment to the United States of its expenditures therefor shall have been entered into. The Secretary is also authorized to permit the use of the irrigation facilities of the San Luis unit, including its facilities for supplying pumping energy, under contracts entered into pursuant to section 1 of the Act of February 21, 1911 (36 Stat. 925, 43 U. S. C. 523).

SEC. 7. The Secretary is authorized in connection with the San Luis unit and the State San Luis works to construct minimum basic public recreational facilities and to arrange for the operation and maintenance of the same by the State or an appropriate local agency or organization. The cost of such facilities shall be nonreturnable and nonreimbursable under the Federal reclamation laws.

SEC. 8. The Secretary is hereby authorized to construct under the provisions of the Federal reclamation laws such distribution systems as he deems necessary in connection with lands, described in section 1 of this Act, to be served by the works of the San Luis unit authorized to be constructed hereunder.

SEC. 9. Subject to the requirements for co-ordination of operations in accordance with the agreement entered into pursuant to sections 3 and 4 of this Act, operation and control of the works of the San Luis unit shall be by the United States and operation and control of the State San Luis works shall be by the State. The provisions of the Federal reclamation laws shall not be applicable to water deliveries or to the use of drainage facilities serving lands under contract with the State to receive a water supply or to dispose of drainage water. SEC. 10. There is hereby authorized to be appropriated for construction of the works of the San Luis unit authorized by this Act, other than distribution systems and drains, the sum of $275,000,000 plus, such additional amount if any, as may be required by reason of changes in costs of construction of the types involved in the San Luis unit as shown by engineering indexes. There are also authorized to be appropriated, in addition thereto, such amounts as are required (a) for construction of distribution systems and drains authorized to be constructed hereunder and (b) for operation and maintenance of the San Luis unit and (c) for payment to the State of the share of the United States of construc

tion, operation, and maintenance costs of the Feather River project including the State San Luis works, as provided in this Act.

Senator ANDERSON. In your bill did you contemplate using this site for both purposes?

Representative HAGEN. That is correct, sir.

Senator ANDERSON. Who would have charge of the works?

Representative HAGEN. Under the proposal I introduced, the State of California would have charge subject to certain contractual obligations to the Federal Government.

Senator ANDERSON. You said in your statement a moment ago that there was the belief out in your area that the State could proceed more expeditiously than the Federal Government. Would you explain what they have in mind?

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Representative HAGEN. I think the history of the reclamation has been-and, of course, you are much more familiar with it than I amthat appropriations come in small increments from year to year, and there is a certain element of uncertainty, whereas the Feather River project, which is already authorized, would be financed by revenue from bond issues or outright appropriations from the State treasury or some other combination of financing. But it would be a mass effort all at once, and they feel that they could, therefore, proceed more expeditiously.

As a matter of fact, I think that the Bureau of Reclamation has stated that they would not, if this San Luis project were authorized, ask for any money for it in advance of 1962 or 1963. That is to be the first increment of money.

Senator ANDERSON. I heard you say that they would finance this Feather River project, of which this seems to be a part, by revenue

bonds.

Then it would not be contemplated under that situation that the Federal Government would put up this $290 million; would it?

Representative HAGEN. The only Federal contribution would be for that ratable portion of the cost which was attributable to the water which would be delivered through the San Luis distribution system. All other waters, the waters that were a part of the Feather River project, so to speak, would not be in any way subsidized by the Federal Government.

Senator ANDERSON. Is the Feather River project an irrigation project?

Representative HAGEN. Basically. Basically it is an irrigation project.

Senator ANDERSON. Do we not have some power revenues that we are talking about with the Department of the Interior on?

Senator KUCHEL. Not that I know of, not on the Feather River project.

Representative HAGEN. The Feather River project, to a large degree, would supply water for domestic purposes, although there is one city that contemplates getting water out of the San Luis project.

Actually, as far as power revenue is concerned, the Feather River project would consume more power than would be produced from any drops of water that would occur as a result of the structures.

Senator ANDERSON. I do not wish to misquote you, but I jotted down a note here that you said before any authorizing legislation is passed

there are certain guaranties that must be answered as to the Feather River project. Senator Kuchel asked about that.

Have you any statement as to what those guaranties should be or might be?

Representative HAGEN. Basically, the people whom I am speaking for-and, specifically, they are the people from Kern County who see somewhat eye to eye with the people from Los Angeles-do not wish to confront a situation where the Federal Government could go ahead unilaterally and build a structure on this dam site which would not include advance arrangements for joint use.

Senator ANDERSON. Where does this Southern Pacific story of not having 160-acre limitation come into it? I know that Kern County farmers are interested in the 160-acre limitation.

If, in compliance with what you just said, the Government would put up the $290 million and take some sort of guaranties on it, but the State would control and operate the project, is that a way of getting around this 160-acre limitation?

Representative HAGEN. No, sir.

Senator ANDERSON. Would the 160-acre limitation be applicable in case the State owned control and ran it?

Representative HAGEN. No, sir.

The proposals other than mine would have the same effect on the 160-acre limitation as mine would. In other words, the 160-acre limitation would only apply to those federally developed waters which were delivered into the San Luis service area.

In other words, the water which was pumped through the current Tracy pumps would be delivered through the Delta-Mendota Canal and then released the top San Luis Reservoir service area. As far as acreage limitations are concerned, these various proposals are identical.

Senator ANDERSON. In that event they would all require the 160acre limitation on the 496,000 acres or whatever it is.

Representative HAGAN. That is correct.

Senator ANDERSON. That is not part of the controversy ? Representative HAGEN. That is not part of the controversy. Senator ANDERSON. The controversy then is over the joint use? Representative HAGEN. That is correct.

Senator ANDERSON. Of this location?

Representative HAGEN. Yes.

Senator ANDERSON. And the problem is that, if the Government goes ahead unilaterally and authorizes and then constructs the San Luis project without making arrangements for joint use, the people in the Feather River project down in Kern County would be unhappy? Representative HAGEN. That is correct.

Senator KUCHEL. Let me interrupt, if I may, because we have to refine this down more than that.

This bill before us, introduced by Senators Knowland and Kuchel, authorizes the Secretary to enter into an agreement with the State of California, and it provides that he shall not commence construction of the project until those agreements are arrived at. What we have to do is pinpoint the specific areas in which there is disagreement. But I respectfully suggest that this bill overcomes any allegation that joint use would not be contemplated or cannot come into being.

Senator ANDERSON. I think there are going to be some people from Kern County to testify, and I imagine they will testify whether this will completely wipe out their objections.

Senator KUCHEL. Do you not agree with that?

Representative HAGEN. It was my understanding initially that if the agreement had not been reached by a certain time, then the Federal Government could go ahead on its own and build whatever kind of project they wanted on this site.

Senator KUCHEL. That now is one of the specific problems. Then all we have is a question of the date before us.

Senator ANDERSON. However, the bill includes the date.

Senator KUCHEL. Now it does, yes, sir.

Representative HAGEN. So that, under the original proposal at least, there could be a situation where the Federal Government could go ahead without an agreement.

Senator KUCHEL. If we pinpoint this problem now down to a date, then we have to have some very frank testimony around here as to what the State legislature may be able to do. Apparently it is going to do nothing this year. The question is what it is going to do next year.

If we can pinpoint this question to a date problem, then I think reasonable men may be able to eliminate that particular problem. Representative HAGEN. Yes.

Senator ANDERSON. Why is not the State legislature doing something this year? What hope do you have of them doing anything next year?

Senator KUCHEL. I decline to be an expert in that field.

Senator ANDERSON. I see he has carefully put it over to the Member of the House. You can just decline as thoroughly as Senator Kuchel did, if you like.

Was this matter presented to the legislature? I will put it that way. Has there been before the legislature any proposal that it try to work out some sort of an agreement?

Representative HAGEN. There has.

Senator ANDERSON. How did it fare?

Representative HAGEN. The problem now in the State of California is this:

The water-rich areas are up north, and the water-deficient areas are in the central part of the State and farther south. Insofar as the Feather River project is concerned, the more southern areas-we will say Los Angeles County-do not wish to go ahead and guarantee an investment without some assurance that the water is going to be there at the end of the construction period.

We have a county-of-origin law in California which causes all the problem. It, in effect, says that the area of origin at some later date can come in and, if they can demonstrate that they can use the water beneficially that has been going someplace else, they can get it back. Senator ANDERSON. You mean you do not have the doctrine of prior appropriation of water.

Representative HAGEN. We have that doctrine, but we also have the county-of-origin law and that is a matter of dispute in the legislature. Senator ANDERSON. Do I understand that if you went ahead and passed this project and later on the county of origin came in and claimed the water, that the people under it might not get the water?

Representative HAGEN. That is a possibility. That would be involved in the Federal project, too.

Senator ANDERSON. Do you not really think the first thing we ought to do is not ask the Congress to act, but try to get the State of California to act to clear up some of its confusing legislation?

Representative HAGEN. I try to be reasonable in this and represent my constituents.

Senator ANDERSON. I do not blame you.

Representative HAGEN. We bear no ill will toward any other part of the State of California, but there are certainly a great many imponderables involved.

Senator ANDERSON. You would not blame the people of Los Angeles who want to know what they are going to get when they put up their money. By the same token, the Federal Government wants to know the same thing.

Senator KUCHEL. I completely agree with Congressman Hagen in his comment with respect to the application of the acreage limitation. The Feather River plan, a State plan, would be side by side with the Federal Central Valley project. The concept is two projects, one under State law, one under Federal law, and I agree with what he said.

Going on, though, in addition to the question of a date here, you suggest that the problem of State ownership would be one under which a Federal guaranty should be forthcoming. Could you indicate, just fairly briefly, Congressman Hagen, why the question of State ownership is important to the people you represent? What is important about that guaranty?

Representative HAGEN. I think perhaps some of the following witnesses can answer that question better than I, except I think it involves this aspect: They feel that this project, as a State-constructed project, would proceed more rapidly and with more mass financing at the outset; and also they feel that under State ownership more suitable arrangements for operation during the course of construction, exchanges of water supply and so forth, could be worked out than under the situation where the Federal Government initially undertakes the construction.

Senator ANDERSON. Do you feel that the State of California wants to let the contract for this rather than have the Federal Government let a contract for this $290 million worth of work?

Representative HAGEN. I think that would be a minor consideration, Senator.

Senator ANDERSON. I am just trying to find those things that are causing trouble.

Representative HAGEN. That would be just a suspicion on my part, but I think probably they feel the State would build it a little cheaper because you do not have all these layers or authority you have to go through to get decisions. That is just a suspicion on my part.

Senator ANDERSON. We will be glad to have testimony on that.

I do not know that the State could have built Shasta Dam at lower cost than the Bureau of Reclamation, but, if that is their feeling, I can understand it. There are certain things that are being done that do seem to be done a little more expeditiously if the State does them. Representative HAGEN. I am not saying that is the State position. It may possibly be. It is just a suspicion on my part.

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