Mr. ASPINALL. We have with us this morning Assistant Secretary of the Interior Fred Aandahl, Commissioner of Reclamation Mr. Dexheimer, and their staff. We are glad to have you gentlemen here and, as is our custom, we shall hear from the Department and the Bureau first.

Governor Aandahl is a former member of this committee, one who gained the respect and affection of all of those with whom he served. We are glad to have you here and, if you will, please take the witness chair and call your departmental and Bureau representatives as you

see fit.

Mr. AANDAHL. May I suggest, Mr. Chairman, that I have three of the departmental people with me at the witness chair. Mr. ASPINALL. That will be fine.

STATEMENT OF FRED G. AANDAHL, ASSISTANT SECRETARY OF INTERIOR; ACCOMPANIED BY W. A. DEXHEIMER, COMMISSIONER OF RECLAMATION, DEPARTMENT OF INTERIOR; ELMER BENNETT, LEGISLATIVE COUNSEL, DEPARTMENT OF INTERIOR; AND T. R. WITMER, OFFICE OF THE SOLICITOR, DEPARTMENT OF THE INTERIOR

Mr. AANDAHL. I would like to start out by stating that the Department of Interior and the Bureau of Reclamation, as one of its agencies, is in support of the type of legislation that the committee has before it this morning.

Mr. ASPINALL. Do you have a report with you this morning?
Mr. AANDAHL, No, we do not.

Mr. ASPINALL. Can you advise the committee when it may expect a report?

Mr. AANDAHL, The request for the report came to our office some few days ago and we are in the process of drafting that report. After it has been drafted and cleared in the Department of Interior, as you know, it is submitted to the Bureau of the Budget before it is sent up here, and that takes some little time. We will do it as quickly as possible.

Mr. ASPINALL. We have a report from last year on this legislation. Is it your understanding your report will be similar to the report filed last year?

Mr. AANPAR. At the moment, we do not have in mind any changes from that report.

Me Aspixart. Will you please favor the committee with a copy of your report as you send it to the budget, and then a copy of the report when it comes back from the Budget?

V. PEXROMs. For last year?

Mr Aservar No. for this year.

Me Pexeries. Los sa

Mr. Asriv This committee does not follow the policy that it is naYsy to have the Burowa of the Badget reports included. So all the Penwriment has to do is to state you do not yet have it. We would like to bave the mpore as of that time Are you in position to grant that :*

Mr APAR. Uniow they * *8 #pent nood for having the report eszjy, we do not GÃO 10 sudma te mitten it has cleared the Bureau

of the Budget, because the reports are sometimes modified in consultation with the Bureau of the Budget. If the committee insists on an advance copy, why, of course, we will comply with that request. Mr. ASPINALL. The committee insists. And, Mr. Secretary, if the report is not forthcoming, this legislation is likely to be reported from this committee without a report.

The Secretary will proceed.

Mr. AANDAHL. Referring to the report that we submitted to the committee last year, I want to call attention to the fact that one of the basic objectives that the executive department had in mind, both the Department of Interior and the Bureau of the Budget, was to encourage as large amounts of responsibility at the local level, at the non-Federal level, both in the financing and in the construction work that is done by the local group, as possible.

With that in mind, our report of a year ago recommended that commercial power be financed by the local interests. It also did not have a 25-percent limitation on the local support as is placed in the 2 bills that were first before the committee. I have not had an opportunity to check the third bill that reference was made to this morning. We would like to hold as closely as possible to those recommendations that were made a year ago in the two respects that I have just called attention to.

With that very brief statement, if the committee does not have further questions that they would care to ask me at this time, I would like to ask the Commissioner of Reclamation to proceed with a discussion of the relationship of the proposals in the bill to his agency. Mr. ASPINALL. Mr. Secretary, is it possible for you to give a little more definite description of what you mean by "responsibility and control as much as possible by the local authorities"?

Mr. AANDAHL. The specific thing that we suggested in our report last year was that the local interests finance the commercial power, and also that they supply the land or the right-of-way that would be needed for the facilities that were to be constructed, and that they take what steps might be necessary to secure the water rights that would be needed for the project unless it were a part of a larger project where the water rights had already been set up. If the local agency were in a position to finance more than 25 percent, we would like to encourage that that be done.

I might say that in some instances the right-of-way and the commercial power involved in the project might exceed the 25 percent limitation that is in the present proposed bills.

Mr. ASPINALL. That is the next question. When you speak of the 25 percent, do you include the total cost of the power installation within that 25 percent or is that in addition to the 25 percent?

Mr. AANDAHL. The 25 percent, as it appears in 104 and 384, I understand to mean the total loan that is to be made by the Federal Government for the construction of the project.

Mr. ASPINALL. Wherever there is a power installation, the cost of the power installation would come out of the 25 percent?

Mr. AANDAHL. It would be a part of the 25 percent if it were financed by the Federal Government.

Mr. ASPINALL. How much local responsibility do you think should be given to the construction and operation of the other facilities which have to do with irrigation?

Mr. AANDAHL. I would say that local responsibility should exist to the maximum degree that it can be carried by the local entity. The Department of Interior, through the Bureau of Reclamation, in making the loan would want to be reasonably assured that the project is feasible economically and would want to be reasonably assured that the engineering is satisfactory, so the project would be successful when it is completed.

Mr. ASPINALL. Let me ask the question this other way. How much responsibility would be retained in the Federal Government?

Mr. AANDAHL. The responsibility retained in the Federal Government should be just sufficient to know before the loan is made that the project is feasible and that the engineering is dependable.

Mr. ASPINALL. And how much after the project is constructed? Mr. AANDAHL. I believe I would like to ask the Commissioner of Reclamation to make a statement, or that he express his opinion, on that. I am not too sure just how far we should go in that stage. Mr. ASPINALL. Mr. Dexheimer?

Mr. DEXHEIMER. Mr. Chairman, I think, after the project is constructed it should be entirely turned over to the local people, if there is anything to turn over, for operation and maintenance, with perhaps a once-a-year check by someone to be sure that they were adequately operating and maintaining and that the collections were being made in such a way as to assure the return of the Federal investment. To be limited to that.

Mr. ASPINALL. Do you think it possible under all circumstances to follow that procedure and at the same time protect the taxpayers in their investment?

Mr. DEXHEIMER. That is generally the procedure we follow on reclamation projects at the present time where the water users are operating, which is over 85 percent of our projects-just a very cursory inspection.

Mr. ASPINALL. If a considerable length of time is allowed to elapse between the time of final construction and the time of turning over the project to the local organization, is that the fault of the Bureau?

Mr. AANDAHL. In some cases it is. In other cases we turn them over even before they are completed. The reason for delay is because the water users are not properly organized or financed or willing to take over the operation.

Mr. ASPINALL. Mr. Engle, do you have any questions of the Secretary at this time?

The CHAIRMAN. I have none.

Mr. ASPINALL. Mr. Miller?

Dr. MILLER. I would like to ask the Secretary or the Commissioner their feelings on perhaps enlarging the scope of the bill so as to include maybe the 48 States and the Territory of Hawaii or the State of Hawaii, when it comes in?

Mr. AANDAHL. As I recall, the recommendation that we sent up a year ago was general in its language, with the understanding or the intention that the law would apply to any area that was specifically approved by the Congress. It was intended to be a general law in that respect.

Dr. MILLER. I say that because I notices in yesterday's Congressional Record on page A-728, an article Irrigation Brightens Dixie's Future inserted by Senator Thurmond. A portion says:

Every section of the country can use irrigation sometime during the year. Farmers in the rainfall belt think they can do without it, but once every 4 or 5 years they're hit by drought-and they clamor for help. Right now, truck gardeners are putting on a big drive for irrigation on the Maryland peninsula, where it seems to rain all the time.

That is by Stanley Frank, I believe.

Mr. AANDAHL. I might further remark that while the language of the bill we recommended a year ago was general and broad in its application areawide, it had the further provision that each project would be affirmatively approved by Congress before it became subject to the act.

Dr. MILLER. Let me ask further: Some question was raised in the Senate here yesterday. As I read the hearings, "The term 'project' shall mean any undertaking or feature or unit of an undertaking of an estimated cost of not to exceed $5 million."

Is it your understanding that that might go to each feature of an irrigation project? Or does that mean the entire amount that any project might go to would be $5 million?

Mr. AANDAHL. It is our understanding that there is some difference in the meaning of the language as used in 104 and as used in 384, and we have given it some consideration.

May I suggest that Mr. Witmer respond specifically to that question?

Dr. MILLER. Very well.

Mr. WITMER. Dr. Miller, my understanding of the language in your bill is that a loan may be made on any whole project or any part of the project, provided that that loan or the amount involved in the undertaking is not more than $5 million.

Dr. MILLER. Is it your understanding that $5 million might be loaned upon several parts of that project?

Mr. WITMER. It is; yes, sir.

Dr. MILLER. It was not my intent to do that. I think this language was finally inserted over in the Senate and that is the part that disturbed me little bit in the conference that went on last year in the closing days. I think it ought to be limited, perhaps, to 5 or maybe 10 million dollars.

The other thing I would like to ask: I noticed the Secretary said they would review, perhaps, the engineering features that the local people might present. How extensive a review would that be? Would it mean that you would go out with your own engineers and make a survey and sometimes a resurvey and all the things that go in with a present reclamation project?

Mr. AANDAHL. My thinking is not too clear on what might be required. This will be a new experience for Reclamation and for the Department of the Interior. My general objective would be to have. the procedure set up in such a way that there would be a minimum of that kind of thing, and it would just be a matter of being reasonably assured that the information as presented was satisfactory and that the project would be successful when it was completed.

Dr. MILLER. I think that is necessary, but I wondered how far in coming to a reasonable understanding or satisfaction that the project is feasible you would go with your engineering, because on some of our projects the engineering costs have been so high it has taken some of them out of the feasibility class. I would be concerned if the Department, after the local people had made a survey by competent en

gineering, was going to insist that they also go in and go through the same routine that they presently have on reclamation projects. It seems to me these people, when they borrow the money, are pledging themselves to pay it back. They are making their own bed and they have to sleep in it. If they made any mistake, it would be their mistake and not the Reclamation Bureau's.

I can see where they are putting up 25 percent or more of the cost, they are not going to be making mistakes, because, after all, this is their baby, they own title to the works. The Reclamation Bureau would not own title to it. It will all be in the hands of the district itself and they must work out their own salvation.

Mr. DAWSON. Will the gentleman yield?

Dr. MILLER. Yes.

Mr. DAWSON. Is it not a fact that Uncle Sam is going to have an interest in that, too? If the project does not pay out after we advance 75 percent of the money, we should be greatly concerned whether the project is going to be feasible in the first place.

Dr. MILLER. I think they should. I am wondering if they could not take the findings of a competent engineering firm without going in and making a complete survey like they do now on reclamation projects?

Mr. DAWSON. Does the gentleman consider the Bureau of Reclamation as a competent firm in making investigations?

Dr. MILLER. There are other competent firms, too, that can make the engineering findings, I think, much cheaper than Government bureaus.

The CHAIRMAN. Will the gentleman yield?

Dr. MILLER. Yes, sir.

The CHAIRMAN. The philosophy of this legislation is that the Secretary shall make the determination as to whether or not the advancement of money is a reasonable risk for the Federal Government to take. Now that requires a good deal less than the sort of engineering that goes into a project presented for authorization to Congress. It is our thinking in this legislation that the basic engineering will be done by the local people and the program submitted to the Federal agency for the purpose of review to determine whether or not there is a reasonable risk involved in the Federal Government financing 75 percent of this project with non-interest-bearing money.

Now it is to be supposed that the Bureau of Reclamation, or whichever agency in the Department is directed to handle this program, will make some analysis, and that there will be some administrative expense in connection with it. The probabilities are after the local agency goes out and does the engineering, the basic cost of it, and gets the thing all put together, it is a much simpler job so far as the Federal Government is concerned, to determine just whether this project is feasible or not. That is the reason that we believe that this type of project will move along a lot faster.

We are not talking about big projects, we are talking about small ones; and the local people carry the brunt of putting up engineering costs, getting all the surveys, getting everything together. They merely present it to the Bureau of Reclamation or the Department of Interior in the same manner that a man would present his plan for the utilization of a loan on a farm. He has to tell the banker what he is going to do with it and what the probabilities are, from what he