Costs of the two initial units of the storage project have been allocated to power, irrigation, and recreation. The costs of the participating projects have been allocated primarily to irrigation.

Costs allocated to recreation represent only the added cost resulting from the inclusion of recreational facilities. The allocation of costs will be subject to further study in connection with preparation of definite plans. The costs as presently allocated on a preliminary basis are presented in table 1.

The reimbursable construction costs of each unit and participating project would be repaid within 50 years of the time that unit or project is completed, exclusive of authorized development periods.

Commercial power and municipal and industrial water supply in vestments would be repaid with interest at the going rate for longterm marketable securities. Interest-bearing and non-interest-bearing investments would be paid concurrently to the extent practicable. Repayment of the irrigation investment would be accomplished during a 50-year period with the irrigators paying up to their ability and the balance paid by the appliction of excess power revenues from the storage project during the same 50-year period.

Exceptions to this are the Paonia and Eden participating projects for which special legislative provision has already been made, and those cases involving Indian lands to which the provisions of appropriate acts (the Leavitt Act) would be made applicable by the terms of the bill.

The cost of the recreational planning and construction program of the National Park Service in the Dinosaur National Monument would be nonreimbursable.

At a 6-mill per kilowatt-hour average firm power rate, power revenues would be sufficient during 50 years of operation to repay the costs allocated to power at the Echo Park and Glen Canyon units and central Utah project, with 21⁄2 percent interest on the unpaid balance, and also to make substantial payments on irrigation costs. Thereafter, power revenues would be sufficient to complete repayment of the noninterest-bearing construction costs allocated to irrigation and assigned for repayment from power revenues. The actual selling price of power would be established at rates consistent with sound business principles and would take into account the irrigation costs to be repaid from power revenues.

A payout schedule was included in the supplemental report of the Secretary illustrating how repayment could be accomplished within a 50-year period assuming power revenues were applied first to the repayment of power costs.

The Department now proposes that in those instances where repayment of interest-bearing costs, such as power and non-interest-bearing costs, such as irrigation, are due concurrently, they will be repaid concurrently to the extent practicable.

One of the bills (H. R. 3383) provides for a repayment schedule quite different from that recommended by the Secretary of the Interior in that it would permit a period up to 100 years for the repayment of costs allocated to power and would require the repayment of costs allocated to irrigation in equal annual installments within a period not exceeding 50 years. This repayment procedure, if applied to the stor

age units and participating projects contained in the recommendation of the Secretary, could be accomplished by a 6-mill rate per kilowatthour for firm power. However, any substantial addition to the Secretary's recommended units and projects, such as suggested by H. R. 3383, would require an increase in sale price for firm electric energy in order not to exceed the 100-year power repayment period.

BENEFIT-COST ANALYSIS

A benefit-cost analysis has been made of each initial storage unit and each initial participating project to determine whether or not they are justified to the Nation as Federal developments. This analysis compares Federal project costs with tangible project benefits. It is used by the Bureau of Reclamation in addition to and apart from the repayment analysis.

The benefit-cost analysis covers the widespread local, regional and national benefits which are not included in the repayment analysis. Such benefits susceptible to monetary evaluation are known as tangible benefits and are used in the benefit-cost comparison. Other benefits for which no monetary value can be estimated are known as intangible and do not appear in this analysis.

There are three main types of tangible irrigation benefits used in the benefit-cost ratio: direct, indirect, and public.

Direct benefits are the increase in net farm income; indirect benefits, the increase in profits of businesses handling, processing and marketing farm products, and the increase in the supply of goods and services. Public irrigation benefits comprise the increase or improvement in settlement investment opportunities and in community facilities and services.

In general, benefits from power and municipal and industrial water are limited to the costs of providing such power and water from the most economical alternative sources.

Flood control, recreational, and fish and wildlife benefits are computed by the Corps of Engineers, the National Park Service, and the Fish and Wildlife Service, respectively.

The cost side of the benefit-cost comparison includes all Federal or project costs. These are construction costs, interest cost, and operation, maintenance, and replacement costs.

The recommended units of the storage project and the participating projects collectively and individually would have tangible benefits greater than costs.

LEGAL FRAMEWORK

In a plan of this magnitude the authorities and laws under which the various features would be constructed, administered and operated would normally present serious problems and certainly would raise grave questions of jurisdiction.

The plan before you is happily free of such complications. The storage project with its regulatory reservoirs is of interstate significance, and each of its units would be so treated. These would be constructed, operated, and maintained by the Bureau of Reclamation, and, as far as water is concerned, would be operated in conformance with the Mexican Water Treaty, the Colorado River and upper Colorado

River Basin compacts. The last document includes provisions to cover all the necessary aspects of such operation.

The participating projects are consumptive-use projects intrastate in character. In the proposed plan these projects would be constructed, operated, and maintained under reclamation law. Water rights would therefore be obtained and administered under the water code of the State in which the project would be built. The participating projects would in general be operated and maintained by water users' organizations after construction.

The plan includes the formation of appropriate districts, preferably of the water conservancy type and subject to Secretary approval, as contracting entities to represent project water users in project operation, repayment, and other matters.

ADDITIONAL UNITS AND PARTICIPATING PROJECTS IN THE BILLS

In addition to the two units of the storage project and eleven participating projects I have discussed, the bills before you include either one or more of the following: the Cross Mountain, Juniper, Curecanti, Flaming Gorge, and Navaho units of the storage project and the Gooseberry, San Juan-Chama, Navaho, Sublette, Savery-Pot Hook, Dolores, Fruitgrowers Dam Extension, Bostwick Park, Dallas Creek, East River, Fruitland Mesa, Grand Mesa, Ohio Creek, Tomichi Creek, Battlement Mesa, Bluestone, Eagle Divide, Parshall, Rabbit Ear, Troublesome, West Divide, and Woody Creek participating projects. The bills all provide that the Curecanti Dam shall be constructed to a height which will impound not less than 940,000 acre-feet of water or will create a reservoir of such greater capacity as can be obtained by a high waterline located at 7,520 feet above mean sea level. The additional units of the storage project excepting the Juniper unit and a further modified plan of the Curecanti unit were covered in the 1950 report on the Colorado River storage project and in the 1953 supplemental report of the Secretary.

The Juniper unit has been suggested as an alternate to the Cross Mountain unit. A summary statement of reconnaissance data on the Juniper unit is attached.

Analyses of the Curecanti unit for any size reservoir, when a dam and powerplant at the Curecanti site are considered alone, indicate that power from the site would be more expensive than power from alternative sources. Preliminary studies are now in progress of a modified plan of development for this unit, including additional downstream power drops dependent on storage regulation at the Curecanti Reservoir; a summary statement of reconnaissance data on this modified plan is attached. This statement shows that by adding power dams downstream and all considered as one unit, the cost of production of power would be less than the cost at alternative sources.

As I have previously stated, the Navaho Reservoir is treated as a feature of the potential Navaho participating project mentioned below rather than as a unit of the storage project.

Project reports have been prepared on the Gooseberry, San JuanChama, Fruitgrowers Dam Extension, Savery-Pot Hook and Navaho projects. These reports are yet to be circulated to other agencies,

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States and local interests for review in accordance with the 1944 Flood Control Act. Only reconnaissance data are available on the remainder of the additional participating projects listed in the bills. The present plan of development as covered in the report on the San Juan-Chama participating project is a modification of the plan presented for this project at the congressional hearings in 1954.

Brief summary statements on all of the additional participating projects are attached. A summary (table 2 (a)) is attached showing pertinent data for the additional units and participating projects in the bill.

Following this statement is a small map of the upper Colorado River Basin showing the location of the various units and participating projects. Also attached is table 1 showing the units and the participating projects recommended by the Secretary. All other participating projects and units are shown on table 2 (a) attached.

Following those tables are very short 1-page statements and 1-page summaries of data with maps of the first 11 participating projects, and they are about the same as submitted last year.

Similar statements, some based on detailed reports and others based on reconnaissance data, for all of the other projects mentioned in the bills also follow.

(The material referred to follows:)