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Estimated additional man-years of civilian employment and expenditures for the first 5 years of proposed new or expanded programs

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MY DEAR MR. CHAIRMAN: This is in reply to your letter of April 22, 1957, requesting the comments of the Bureau of the Budget on S. 1887, a bill to authorize the Secretary of the Interior to construct the San Luis unit of the Central Valley project, Calif., to enter into an agreement with the State of California with respect to the construction and operation of such unit, and for other purposes.

The provisions of S. 1887 would authorize the Secretary of the Interior to construct the San Luis unit either as a part of the Federal Central Valley project or as a feature of the Feather River project of the State of California. The area to which irrigation service would be provided by the United States would be the same in either case, and we understand that the Federal invest ment would be approximately the same. However, under the terms of the bill, the unit, if integrated with the Feather River project, could be operated and maintained by the State of California and, after the reimbursable costs had been returned to the United States, title to the facilities could be conveyed to the State.

The Department of the Interior, in its proposed report on H. R. 6035, an identical bill, recommends enactment of that measure. The Department suggests that consideration be given to broadening the scope of the authority provided by section 4 to construct or cooperate in the construction of drainage facilities. The Bureau of the Budget would have no objection to such an amendment.

Section 5 would authorize nonreimbursable expenditures for the provision of minimum basic recreational facilities. The Bureau of the Budget believes that the costs of such facilities should be treated as part of the overall costs and allocated to the basic purposes of the project.

The Bureau of Budget believes that close Federal-State cooperation in the development of the San Luis unit is necessary for maximum utilization of the water resources of California.

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Accordingly, we suggest that the committee give consideration to amending the bill to require that, in the event the unit is constructed as a part of the Central Valley project, the basic designs make provision for possible future expansion.

Subject to the committee's consideration of the above comments, and the amendment suggested by the Department of the Interior in its proposed report on H. R. 6035, the Bureau of the Budget recommends enactment of S. 1887. Sincerely yours,

ROBERT E. MERRIAM,

Assistant Director.

Senator ANDERSON. On May 11, 12, and 14, 1956, the subcommittee held hearings on the San Luis portion of S. 178. At that hearing, a wealth of engineering, technical, and economic data was presented and has been printed.

These hearings will be incorporated in the record by reference. The subcommittee also has printed proofs of hearings held by the House Interior Committee on companion bills to authorize the San Luis unit. These will also be incorporated in the record by reference when printed copies are available.

In order to conserve the time of witnesses, as well as the members of the subcommittee, witnesses are requested to refer to previous testimony at one or the other, or both hearings, and avoid repetition wherever possible. Statements will be printed in full, as made available by witnesses, who may desire to brief their presentations.

The presently estimated cost of the San Luis unit is $290,430,000. This represents an increase of $61,300,000 from 1956 cost estimates. Mr. Secretary, I hope you have a chance to comment on the reduced prices that have been obtained on construction contracts in the last last few months and particularly some in the last few weeks, which were way down.

Approximately $29 million of the increase is due to rises in construction cost levels and the remaining $32 million is attributable to change in plans to provide for off-peak pumping facilities.

I come back to that $29 million increase in the cost of construction levels, and I hope the Bureau of Reclamation is prepared to testify that there is now a decrease in construction-cost levels because every recent contract has shown a decrease so far as I know.

If they have other information, this would be a good time to bring it forward.

Witnesses for the Department of the Interior and State of California will develop details of the physical and economic plan. Other witnesses will be heard who have filed requests or who may indicate a desire to make a presentation.

Several companion bills on the San Luis unit have been introduced in the House of Representatives. Sponsors of these measures have been invited to make statements if they desire.

Senator Knowland is at the White House this morning. We will hear from the Senator when he comes back. He is the cosponsor of it.

The junior Senator of California, Mr. Kuchel, a cosponsor, is a member of the Senate committee and is invited to make any statement that he desires. I am informed he is at a breakfast for Republican women.

Congressman Sisk, we will start off on the right foot this morning with you.

We are glad to have you come over here. You have been here several times, and we are always happy to have you.

STATEMENT OF HON. B. F. SISK, A REPRESENTATIVE IN CONGRESS FROM THE 12TH DISTRICT OF CALIFORNIA

Representative SISK. Thank you, Mr. Chairman.

I have just a short statement which I would like to submit for the record, Mr. Chairman.

I might preface this statement, Mr. Chairman, by saying that I, of course, am not going into any general discussion, but will simply try to indicate the extreme importance of this legislation for California, and, of course, particularly for the Central Valley area.

I appreciate this opportunity, Mr. Chairman, to express my views to the committee on the San Luis project, as set forth in S. 1887, which was introduced by your distinguished colleagues from California, Senators Knowland, and Kuchel, and in which the people of my district are deeply and primarily concerned.

I know you will understand its importance to them when I state simply: If we have this water we will keep 500,000 acres under intensive cultivation and we will gain fine people, homes, prosperous communities, and small businesses growing out of a stable agricultural economy. If we don't have this water at the earliest moment, we will lose 500,000 acres of land now producing crops valued at more than $50 million a year and have in place of it half a million acres of desert. The legislation before your committee was drafted jointly by authorized representatives of the State of California and the Department of the Interior. It represents a plan and program for joint development of San Luis these agencies say is practical, fair, and possible.

They both endorse it and these are the agencies charged with the responsibility of building and operating the works to extend the maximum benefit to the greatest number of people.

It may be that they will now find amendments clarifying and improving their original draft. If so, I certainly would favor such amendments.

This proposal, if enacted, will mark a milestone in reclamation progress. It will authorize and give sanction to the cooperation of the Federal Government with States and local agencies in joint development of the water resources of the West.

This is such a tremendous and costly job we cannot afford to turn down or refuse such cooperation. It may well be, if this authorization is passed, that other States and localities will move toward the same type of partnership program. This could ultimately result in increased development with lesser Federal costs.

I most urgently request your favorable report on this legislation which is of vital importance to the people of my district and State, and thus, to the people of the entire country, who have a stake in the welfare and advancement of every section.

Mr. Chairman, as I say, that is a very brief statement simply setting forth the importance in our area without going into the ramifications of the project, which I am sure will be developed by others. Senator ANDERSON. Thank you very much. Representative SISK. Thank you, Mr. Chairman.

Senator ANDERSON. Our next witness is Assistant Secretary of Interior, Secretary Aandahl.

Governor Aandahl has appeared before us many times and I know that you recognize you are in the hands of friends, this morning, Mr. Secretary.

STATEMENTS OF FRED G. AANDAHL, ASSISTANT SECRETARY OF THE INTERIOR (WATER AND POWER); AND NEWCOMB B. BENNETT, JR., CHIEF, DIVISION OF PROJECT DEVELOPMENT, BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR

Mr. AANDAHL. It is a pleasure to be here, Mr. Chairman. Senator ANDERSON. Mr. Secretary, you heard the statement I made a moment ago about this rising-cost question. You may not have covered that in your prepared statement, but I do wish you would give me a list of the recent bids on these construction projects, because, as you know, the bid we had on the Glen Canyon Dam was substantially down.

The bid on the access roads to the Navaho Dam is down 26 percent, and all these bids have been headed downward recently.

I just hope the trend continues, and I just wondered what figures you had that would either sustain or refute the impression that there was not 2 months ago a rise in construction costs.

You can cover that in your own way.

Mr. AANDAHL. I have not made reference to it in my prepared remarks. As soon as you raised the question I asked our people to start checking with the office, and we hope to have some information for you a little later.

(The information is as follows:)

CONSTRUCTION COSTS

Reclamation construction costs increased about 5 percent during 1957. This increase was principally due to increased costs of labor and construction materials and equipment. It is expected that the basic costs of construction will continue to increase as the result of built-in provisions of labor contracts negotiated during recent years, which guarantee annual increases in wages of about 6 percent. Recent increases in such construction materials as cement, steel, construction machinery and equipment are also to be fully reflected in construction costs.

There are no currently visible factors which would indicate that construction costs have been depressed by the recent softening of business conditions. If there is any reduction in bids received for construction work it is more likely due to the fact that many large contractors have acquired considerable quantities of construction equipment in anticipation of work under the expanded highway program and now are finding it necessary to seek other means of putting this equipment to work. We have recently experienced a greater degree of competition among contractors in bidding for our work and this, more than any other factor, has been responsible for somewhat lower bids on some jobs than would normally be expected.

As the present lull in the construction industry passes and the prospective amount of heavy construction work becomes available we expect that contract prices will continue to reflect further increases in labor costs and potential material prices.

Senator ANDERSON. Go right ahead.

Mr. AANDAHL. It is a pleasure to appear before your committee this morning to discuss the San Luis unit of the Central Valley project and the manner in which it fits into the overall California water plan

for development of the water and land resources of that State. I will not attempt a detailed description of the San Luis development in my testimony, as that information has been given to the committee in previous testimony.

On December 17, 1956, Secretary Seaton transmitted to the Congress for its information his report on the San Luis unit as an interim report, in advance of recommendations for legislative action.

He stated in that report that—

negotiations with the State of California concerning possible means of integrating the San Luis unit with the proposed Feather River project of the State are proceeding at the present time and their outcome will be instrumental in shaping the recommendations that this Department will make when authorizing legislation for the San Luis unit is considered by the Congress.

Following submission of this report to the Congress, numerous meetings were held with State, local, and congressional representatives concerning acceptable means of coordinating the proposed San Luis and Feather River developments.

These meetings disclosed that there are no major engineering obstacles to integration as the Bureau and State engineers are in close agreement as to the physical works required.

The question of how integration can best be accomplished then is one involving policy rather than engineering considerations.

These also have been fully discussed by interested parties and the draft of legislation before you was negotiated by Federal, State, and local interests in which responsible officials of the Department of the Interior participated. Accordingly, on June 28, 1957, this Department reported to you favorably on S. 1887.

The Central Valley project was first authorized by Congress to include Shasta and Keswick Dams and powerplants, the Delta CrossChannel, Contra Costa Canal, Delta-Mendota Canal and Friant Dam, Friant-Kern Canal, and Madera Canal.

The project was reauthorized in 1940 to include distribution systems from the main canals. In October 1949, Congress reauthorized the project to include the American River features, and in 1950 to add the Sacramento River Canals. In 1955 the Trinity River division of the project was reauthorized.

The next large area with a critical immediate need for additional supplemental water supplies lies on the west side of the San Joaquin Valley, part of which, the San Luis area, is proposed for development under legislation now before the committee.

In its relation to the Central Valley project the San Luis unit would be a further stage in the process of capturing winter waters in northern California, and, after meeting needs there, transferring the surplus to water-short areas to the south.

This is the purpose of the irrigation features of the Central Valley project as planned by State and Federal agencies over the last 35 years. It has been and is being planned and constructed in stages to meet the needs of various localities as these needs develop, and, at the same time, it is being designed to fit into plans for future use in other areas. The plans for the San Luis unit are an example of the way in which the existing project facilities can assist future expansion of the project

area.

In addition to possible changes in the plan to accommodate full integration with the Feather River project, the Bureau of Reclama

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