million acre-feet, would have substantial effect upon lower-basin facilities and operations. Even the filling of the 2 reservoirs, Glen Canyon and Echo Park, now proposed for initial authorization with combined capacity of 32 million acre-feet, would have a material effect and would present serious problems.

Who is to have the final decision and control as to the operation of these holdover reservoirs, including storage and release of water? Article III (e) of the Colorado River compact provides that the States of the upper division shall not withhold water and the States of the lower division shall not require the delivery of water which cannot reasonably be applied to domestic and agricultural use. Glen Canyon Reservoir and certain other proposed upper-basin main-stream reservoirs will be so located physically that no water stored therein can ever be applied to domestic or agricultural uses in the upper basin. All of the water stored in such reservoirs will be required for domestic and agricultural use in the lower basin and Mexico. Furthermore, consideration must be given to the Government's obligations to maintain the contracted firm power output at Hoover Dam.

No discussion of such problems, including the inevitable reduction in power output at lower-basin plants and its economic effect from a national standpoint, is presented in the reports. Insofar as the original basic report or the 1953 supplement indicate, there is no evidence that the effects on operation of lower basin storage and power facilities. have been given due consideration in planning the schedules of constructing, filling, and operating the proposed upper basin storage and power facilities.

Of equal concern to the problems of quantity and fluctuation of flow into the lower basin at Lee Ferry is the problem of quality of water. This problem concerns water users throughout the basin, but especially those in the lower-basin States. Increased consumptive use of the waters of the Colorado River and its tributaries in the upper basin, particularly the relatively pure water of the headwater streams, will result in higher concentrations of mineral salts in the residual flow downstream.

The provisions in the Colorado River compact of water for the lower basin would be largely nullified if the supply were unsuited in quality for all beneficial purposes. Furthermore, article VIII of the compact provides:

Present perfected rights to the beneficial use of waters of the Colorado River system are unimpaired by this compact.

Certainly this means unimpaired in quality as well as quantity.

The reports are completely lacking of information that would provide answers to the questions concerning quality of water. It is California's position that before development proceeds on any additional large scale consumptive use projects in the upper basin, the entire problem of quality of water should be fully explored; that determination should be made as to the effects of increased upper basin uses up to full development, upon the quality of the flow at Lee Ferry; and that authorization of such additional projects, particularly transmountain diversion projects, in the upper basin should be deferred until satisfactory evidence is presented that such projects, in combination with existing projects and other projects contemplated under full development, would not have harmful effects on the quality of water remaining for use in the lower basin.

It is evident from the foregoing that there are a number of unknowns remaining to be determined as to water supply and use in the upper basin, and as to the amount of water that would be expected to be available to the lower basin passing Lee Ferry under conditions of ultimate development in the upper basin with full practicable utilization of the water supply apportioned to the upper basin under the Colorado River compact. This points up the need for a comprehensive system of gaging and sampling stations to measure both quantity and quality of water throughout the basin in order to determine the water supply available and the actual use of water. It is considered essential that more adequate measurements and records of water supply and use be obtained which will permit reliable studies to be made of the operation of existing and proposed developments in the upper basin and of the resulting available water supply, both as to quantity and quality, passing Lee Ferry for the lower basin. Criteria, policies, and procedures

The laws governing Federal reclamation development are embodied in the original Reclamation Project Act of 1902 and the Reclamation Project Act of 1939, as amended. Therein are set forth the criteria, policies, and procedures of general application which may be collectively designated as existing reclamation law. For the purposes of this review only certain features of the law will be referred to.

Existing reclamation law provides that the reimbursable construction costs of irrigation_reclamation projects shall be repaid within a period of 40 years, without interest, in 40 equal annual installments. In the case of a project for irrigation of new lands it permits a development period not to exceed 10 years, during which no repayment may be required.

Where a project includes facilities for municipal water supplies, the law provides that the reimbursable cost chargeable thereto shall be repaid in 40 years, with interest if deemed proper by the Secretary of the Interior.

Where a reclamation project includes hydroelectric power features, the law provides for reimbursable cost to be repaid with interest within a period of 40 to 50 years.

Present law permits nonreimbursable allocations of reclamation project costs for flood control, navigation, and fish and wildlife in the case of projects which include features to perform these purposes. The repayment program recommended by the Secretary in the supplemental report constitutes a material departure from established criteria, policies, and procedures of general application in existing reclamation law.

It appears to be similar to that authorized by the Congress specifically for the Collbran project, Colorado (Public Law 445, 82d Cong., approved July 3, 1952). The special repayment provisions in that act are set forth as exceptions to existing reclamation law. It was stated at recent hearings before the House Interior and Insular Affairs Committee that at the time the committee passed upon the Collbran project bill, approval of the repayment formula therein was specifically for that project alone and was not to be considered as establishing a precedent for other reclamation projects.

The proposed repayment program, if adopted, would involve the postponement of the repayment of the costs allocated to irrigation

on the storage units and on a major portion of the irrigation costs of the participating projects, for a period of about 50 years. These irrigation costs for which repayment would be deferred would comprise, according to the report, a minimum of about $268 million, plus an unknown amount for the Navaho project.

Studies of the original reports on the participating projects indicate that about 85 percent of the irrigation costs would be repaid without interest by power revenues. Considering the time value of money, the postponement for about 50 years of repayment of a large part of the construction cost of the proposed development would obviously require a subsidy from the Federal Treasury that would have to be paid out of Federal taxes. The interest charges on the funds borrowed by the Federal Government to defray the irrigation costs of the project would never be repaid from project revenues and would have to be paid out of taxes even if the capital investments were eventually repaid.

It is recognized that the provision, under existing law, of interestfree money for irrigation-reclamation projects involves a substantial subsidy from the Federal Treasury which must be borne out of taxes, comprising the cost of interest on funds advanced, which in a period of 40 years would aggregate an amount almost equal to the original capital investment even though the principal be fully repaid in equal annual installments during the 40-year period.

It would appear that the Secretary's proposal in the report under review, for repayment would in effect extend the development period, during which no repayment would be made on a major portion of the investment, to about 50 years for both new land and old lands receiving a supplemental water supply. Such a postponement in repayment obviously would greatly multiply the amount of the Federal subsidy involved.

Owing to the lack of detailed information on the revised costs, no exact figure for the amount of the subsidy that would be involved in the proposed repayment program can be given. However, it could be readily calculated if detailed information on costs were available. In any case, the accumulated debt or total subsidy would amount to several times the original investment. Whether this would be in the national interest is for the Executive and the Congress to determine. However, it is believed that a report should be made as to the true cost of the Federal subsidy involved under the proposed repayment program, so that the Executive and the Congress will be fully informed before making a decision with respect thereto.

Under the proposed program and method of financing, it appears that justification of the initially proposed participating irrigation projects and future decisions to build additional participating irrigation projects would depend not so much upon the merits of the individual projects as upon the availability of revenues, 50 or more years in the future, from power projects generally unrelated thereto physically. None of the participating projects recommended for initial construction would be in themselves financially sound according to information in the basic storage project report and the reports of 1950 and 1951 on the individual participating projects.

On the average the water users would be able to pay only about 15 percent of the irrigation investment on the 12 participating projects. The balance of the cost would have to be subsidized-the capital in

vestment by power revenue and the interest charges in even greater amount for an indefinite period by the Federal Treasury through taxes. To the extent that high power rates could and would be maintained • for the next 75 to 100 years or more to subsidize additional participating irrigation projects, authorization of the overall plan of upper basin development as proposed in the report, with such program and procedure would constitute an advance appropriation of funds for the construction of future projects of unknown engineering and financial feasibility.

The Colorado River storage project appears to be basically a hydroelectric power project. The only showing of economic justification in the report is based solely on power revenues. Considered in this light, the financial feasibility of the storage project appears open to question for several reasons. Repayment of the reimbursable construction costs within the periods and at the power rates proposed would depend entirely upon: (1) Allocation of a large portion of the construction cost to irrigation on an interest-free basis; (2) postponement of the starting of repayment of the irrigation allocation for about 50 years; and (3) subsidization of the more costly units with surplus power revenues earned by the less costly units.

No clear and adequate justification is shown in support of the allocation of a large part of the cost of the storage project to irrigation. Justification for the allocation to irrigation of several hundred million dollars (over $98 million for the initial two units) depends upon the future authorization of projects for consumptive use of water in the upper basin. Only minor use could be made of the regulatory reservoirs of the storage project directly for water consuming projects. Future irrigation projects as a rule would require individual storage facilities.

The one reason given for the proposed allocation to irrigation on the storage project is that the storage units would provide holdover capacity so that the upper basin can proceed with the development and use of water without violating the Colorado River compact. Information in the basic report shows that at the present and anticipated future rate of upper basin development, Glen Canyon alone would suffice for this purpose for 40 to 50 years hence. Furthermore, it appears that the additional consumptive use estimated for the participating reclamation projects proposed for initial authorization in the Secretary's report could be made even without Glen Canyon Reservoir.

However, the early construction of Glen Canyon Reservoir would be justified from other considerations and advantages. Based upon the cost analyses in the report, the Glen Canyon Reservoir and power development could be constructed and operated on a sound financial basis and therefore merits authorization at this time.

Analyses indicate that the cost of power from most of the other proposed units of the storage project, considered individually and on the basis of either the total cost or the power allocations alone, would be greater than the proposed selling price, and that, in fact, power revenues from the Glen Canyon unit would have to subsidize most, if not all, of the other storage units in addition to subsidizing participating irrigation projects. It appears questionable, therefore, whether certain of the storage units would be justified or needed, from

the standpoint of either the holdover storage requirements or the value of the power produced.

The original 1950 report indicates an intent to market the power output of the upper basin storage and power units in the upper basin States, with little regard to potential market and needs for electric power in the lower basin States. This question of power disposal is referred to in the supplemental report as a matter of policy to be determined.

There appears to be some question in the report as to the ability of the power market in the upper basin States to absorb all of the power output, even of the initial two storage and power units, for a number of years in the future. Glen Canyon power could be readily disposed of in the lower basin, where there is a great need for additional power. It is believed that the question of policy on disposal of power, particularly from Glen Canyon, merits the special consideration of the Executive and the Congress.

CONCLUDING COMMENTS

1. California agencies have established rights in and to the waters of the Colorado River system under the Colorado River compact and related documents. The State of California has the duty of protecting and preserving those rights. Obviously, construction and operation of the proposed Colorado River storage project and participating projects would have substantial effect upon the quantity and quality of the available water supply and the operation of facilities in the lower basin and in California. The State is concerned that such developments shall not impair the established rights of California and its agencies in and to Colorado River water.

2. There are at least 10 major questions of interpretation of the compact which would be involved in and affect the proposed storage project and related reclamation developments. With respect to several of these questions the report under review is based upon what California believes are erroneous interpretations of the compact. All of the questions are at issue in the pending case of Arizona v. California et al., in the United States Supreme Court. California's basic position is that this State is conforming to the Colorado River compact and must insist that the Bureau of Reclamation and the States of the upper basin do so in the planning and administration of the Colorado River storage project and participating projects.

3. Revised analyses should be made and reported upon, based upon proper interpretation of the Colorado River compact, as to the need for holdover storage and as to the probable effects of its construction, filling and operation upon the quantity and pattern of flow into the lower basin at Lee Ferry and upon the operation of lowerbasin facilities.

4. Before development proceeds on any additional large scale consumptive-use projects in the upper basin, a determination should be made as to the effects of increased upper basin uses up to full development, upon the quality of the flow at Lee Ferry; and authorization of such additional projects, particularly transmountain diversion projects, in the upper basin should be deferred until satisfactory evidence is presented that such projects, in combination with existing projects and other projects contemplated under full development, would not