That concludes the hearing on this bill. We will now take up H.R. 1696 and it will be inserted in the record at this point. (H.R. 1696 follows:)

[H.R. 1696, 88th Cong., 1st sess.]

AN ACT Defining the interest of local public agencies in water reservoirs constructed by the Government which have been financed partially by such agencies

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, cognizant that many States and local interests have in the past contributed to the Government, or have contracted to pay to the Government over a specified period of years, money equivalent to the cost of providing for them water storage space at Government-owned dams and reservoirs, constructed by the Corps of Engineers of the United States Army, and that such practices will continue, and, that no law defines the duration of their interest in such storage space, and realizing that such States and local interests assume the obligation of paying substantially their portion of the cost of providing such facilities, their right to use may be continued during the existence of the facility as hereinafter provided.

SEC. 2. That this Act be applicable to all dams and reservoirs heretofore or hereafter constructed by the United States Government (acting through the Corps of Engineers of the United States Army) wherein either a part of the construction cost thereof shall have been contributed or may be contributed by States or local interests (hereinafter called "local interests") or local interests have acquired or may acquire rights to utilize certain storage space thereof by making payments during the period of such use as specified in the agreement with the Government and wherein the amount of money paid, exclusive of interest, is equivalent to the cost of providing that part of such dam and reservoir which is allocated to such use, whether such share of cost shall have been determined by the "incremental cost" method or by the "separable costs-remaining benefits" method or by any other method. Included among the dams and reservoirs affected by this Act are those constructed by the Corps of Engineers of the Department of the Army, but nothing in this Act shall be construed to affect or modify section 8 of the Flood Control Act of 1944.

SEC. 3. The right thus acquired by any such local interest is hereby declared to be available to the local interest so long as the space designated for that purpose may be physically available, taking into account such equitable reallocation of reservoir storage capacities among the purposes served by the project as may be necessary due to sedimentation, and not limited to the term of years which may be prescribed in any lease agreement or other agreement with the Government, but the enjoyment of such right will remain subject to performance of its obligations prescribed in such lease agreement or agreement executed in reference thereto. Such obligations will include continued payment of annual operation and maintenance costs allocated to water supply. In addition, local interests shall bear the costs allocated to the water supply of any necessary reconstruction, rehabilitation, or replacement of project features which may be required to continue satisfactory operation of the project. Any affected local interest may utilize such facility so long as it is operated by the Government. In the event that the Government concludes that it can no longer usefully and economically maintain and operate such facility, the responsible department or agency of the Government is authorized to negotiate a contract with the affected local interest under which the local interest may continue to operate such part of the facility as is necessary for utilization of the storage space allocated to it, under terms which will protect the public interest and provided that the Government is effectively absolved from all liability in connection with such operation.

SEC. 4. Upon application of any affected local interest its existing lease or agreement with the Government will be revised to evidence the conversion of its rights to the use of the storage as prescribed in this Act.

Passed the House of Representatives August 5, 1963.
Attest:

RALPH R. ROBERTS, Clerk.

H.R. 1696.-DEFINING THE INTEREST OF LOCAL PUBLIC AGENCIES IN WATER RESERVOIRS CONSTRUCTED BY THE GOVERNMENT WHICH HAVE BEEN FINANCED PARTIALLY BY SUCH AGENCIES

The purpose of H.R. 1696 is to make the rights for storage space acquired by States or local interests in reservoirs constructed by the Corps of Engineers available to such agencies as long as the space designated for their purpose may be physically available. The provision would be applicable to all dams and reservoirs which have been or will hereafter be constructed by the Corps of Engineers of the U.S. Army in which local interests have contributed or will hereafter contribute to the Government, or have contracted or will hereafter contract to pay the Government over a specified period of years, money equivalent to the cost of providing space to be used for the storage of water. Under present conditions the customary practice is to make these contracts applicable over a 50-year period. It includes further provisions that the interest of the local interests would be made subject to their fulfillment of the conditions under which they had executed their contractual agreements.

The existing statutory authority under which storage for water supply has been provided to local communities does not define specifically the rights of local interests after payment of the allocated cost of the water storage has been completed. In the negotiation of past contracts, in many cases local interests have felt very strongly that their rights should be defined, not only for 50 years, which is the maximum payment period of the contracts, but for the physical life of the projects as well.

The bill permits consideration to the effects on the terms of the lease of reservoir sedimentation and other physical and legal aspects which might require a review of these terms after the original lease had reached its conclusion. For example, reservoirs constructed by the Corps of Engineers are designed to have sufficient silt storage space for a 50-year accumulation. After the storage space reserved for siltation is filled, the collection of silt will encroach on the live storage capacity allocated to flood control, navigation, hydroelectric powers, water supply, and any other purpose for which storage was to be provided in the reservoir. At such time as the storage capacity is reduced by the accumulation of sediment, adjustments should be made in the storage capacities for all other purposes.

The Department of the Army believes it desirable to clarify these local rights, and provide uniform treatment of all local interests obtaining storage in Corps of Engineer reservoirs, including those for which the renewal clause was not provided in the original contracts or instruments. H.R. 1696 would also permit continued assessment of annual operation and maintenance costs beyond the payout period, provide for sharing by local interests of any reconstruction or rehabilitation costs necessary to continue project operation, and in the event that the Government concludes that it can no longer usefully and economically maintain and operate the facility, to negotiate a contract with the affected local interest for continued operation of such part of the facility as is necessary for utilization of the storage space allocated to it, under terms which will protect the public interest and absolve the Government from all liability in connection with such operation.

This legislation would apply to all contracts for use of water storage space contracted for by any local agencies in reservoirs constructed by the Corps of Engineers. Although in many cases these agencies are of a State or local public nature, in some cases they are private water companies serving public needs or private concerns having major water requirements.

Section 8 of the Flood Control Act of 1944, which applies to storage utilized for irrigation purposes in reservoirs constructed by the Corps of Engineers, would not be affected or modified by the provisions of H.R. 1696.

Enactment of H.R. 1696 would result in no additional cost to the Federal Government.

The Department of the Army and the Bureau of the Budget favor enactment of H.R. 1696.

Senator METCALF. We will now call on our very able and distinguished colleague, Senator Yarborough of Texas.

And, Senator Yarborough, I want you to know that you have no need to introduce this distinguished witness to me, Congressman Poage, as I served in the House with him, and I know how busy he is, and it is a great pleasure to be able to welcome him here today.

STATEMENT OF HON. RALPH W. YARBOROUGH, U.S. SENATOR FROM THE STATE OF TEXAS

Senator YARBOROUGH. Before the Senator from New York leaves the room, if I may, I would like to say this.

Not being a member of this committee, of course, I could not comment, but I heard the eloquent statement by the distinguished senior Senator from New York, and I felt, as a point of honor, I must rise to the defense of my State when he says that New York furnishes more sailors, soldiers, and Marines, and maybe he did not say "than any other State," but I understood him to say "State."

But I wanted to say that Texas does, too. But we have a great love for his State and a great appreciation for the great Empire State in the Union.

I want to remind him that I supported his bill for the World's Fair in New York all the way through, and it was a pleasure to follow him here, and I appreciate the kindness of the committee, and Senator Javits' willingness, to allow this witness to be heard at this time.

I would like to introduce Congressman Poage at this time. I do not know whether it might be wise to tell this, but I feel that I must. He was telling me of his dilemma in being delayed. He blames it on our transportation. One of our Senate cars had broken down.

Senator METCALF. Have we not taken care of that yet?

Senator YARBOROUGH. Our elevators are jammed up in the building, too, and he could not get expedited transportation to the com

mittee.

So, Mr. Chairman, it is a great privilege for me to introduce to this committee and, as you say, he really needs no introduction-the second ranking Member of the House on the important Committee on Agriculture, and a man who served prior to coming here in the State Legislature of Texas, one of the people with the distinction of having the combined service of serving in the two greatest legislatures.

He is an honor to his district and his State. I knew him when he was a few years younger, when I was assistant attorney general in Texas, and he was a member of the Texas Legislature.

And, through that acquaintance of more than 30 years, my appreciation for his legislative ability has increased year by year.

He is one of the very top men, I think, in the Congress here, and our State is proud to have him represent us.

This is his bill, this bill to provide for local rights on federally constructed reservoirs.

I favor it very strongly.

The last line in the statement I am going to put first. While it is not opposed by the Government, the Department of the Army testified they favored it, there is a strong sentence that I want to add first, and that is that it will not cost the Federal Government anything.

Congressman Poage.

STATEMENT OF HON. W. R. POAGE, A REPRESENTATIVE IN CONGRESS FROM THE 11TH CONGRESSIONAL DISTRICT OF THE STATE OF TEXAS

Mr. POAGE. Thank you.

Senator METCALF. Congressman Poage, we are delighted to have you with us, and you may proceed in your own way.

Mr. POAGE. Thank you so much, Mr. Chairman.

I appreciate the efforts of all of my friends to cover up for my timing here.

I do very much appreciate what the committee has done. I do not want to take but a few moments of your time, but I do feel that the bill that we have is of considerable importance, not simply to the State of Texas, but to the United States.

This is not a local measure. This is a general bill that applies to every structure in the United States exactly the same.

It does have serious implications in the State of Texas, and I think in the States that each of you gentlemen represent. You will recall that a good many years ago, when we began building dams as flood control structures, very few people realized that there was anything involved or could be involved other than simply retarding the waters and holding the water to prevent floods.

But it very quickly developed that it was highly desirable to use these dams to serve local purposes as well as to serve the general purposes of the Nation in preventing floods.

To the extent that we served purely local purposes, it was felt, and I think correctly, that the local people should bear the costs.

So we adopted the policy, and I think it was a sound policy, of allowing local public agencies to bear a share of the costs of these flood control structures to serve local purposes, such as the storage of water for municipal purposes.

That is one purpose that involves many areas more than any other purpose.

For instance, if a dam was going to cost $40 million and the local people put up $10 million they would be entitled to store water to the extent of one-fourth of the cost of that structure.

They would get their share of the storage, but there was no basic law controlling that program.

The Engineers, and I offer no criticism of their practice, but they sought to establish something that would be equitable and they established the policy of granting local rights for a period of 50 years, because the costs of the dams were calculated on a basis that would them out in 50 years.

pay

So they said that the dam would be paid out in 50 years and that the local agency would have nothing left at the end of the 50 years. The result has been that in a good many places some local agency, and that is generally a city although not necessarily a city-it can be a reclamation district. It can be a drainage district. It can be any one of the public agencies, but generally a city would invest local money in additional construction to serve these local purposes.

They would receive the right to use the structure for 50 years. The structure may be usable for 200 years but, under existing practice, there

is no requirement that the local agency shall have any rights whatsoever after the 50 years have expired.

The Reclamation Bureau first recognized the inequity of such a procedure. They, too, had followed the same policy that the Engineers had and, again, I offer no criticism there.

They generally pay out in 50 years. They were set up on the 50year basis, too.

And they provided that there should be local rights for 50 years, but they recognized the inequity of this, and it has been corrected as to reclamation dams, and where the Bureau of Reclamation builds a dam and the local agencies put up a part of the money they get the rights in perpetuity.

This is not so in the flood control dams, and it is solely to correct that which we think has developed as an inequity.

I mean, it has become apparent that it is an inequity when nobody realized that it was in the beginning, and that is why this bill is introduced.

This bill was introduced 3 years ago. It passed the House last year. It came to the Senate but it did not come until September and you did not act on it.

We have passed it again this year. The Corps of Engineers have collaborated in the consideration of this bill.

In fact, they have rewritten it and much of the language is that of the Corps of Engineers, which, I think is perfectly proper.

I think that the Public Works Committee of the House did well to have the bill completely rewritten from the time that it was originally introduced so that, as far as I know, it now meets with the approval of all of the agencies of Government.

I know of no agency that finds any fault with the wording or the purpose of the legislation at this time, but we do feel it is quite

important.

We do feel that its passage will encourage one of the things that we think is extremely important from the standpoint of efficient use of the structures.

We think that if we can use them for several purposes that is certainly much better than to use them only for one.

We think that if we can find that this will do good to a locality, closely associated with it as well as being far down the stream, that that is much to be desired.

We find that there is a reluctance on the part of the local agencies to put up their money, to issue bonds, and that is what it means in almost every case, the issuance of bonds by some local taxing agency, and they are reluctant to issue those bonds, and they tell their people, "We only have a leasehold right here for 50 years."

You gentlemen know the difficulties of passing those local bond issues. To do it you need to be able to go to the people and say, "When we put up one-fourth of this cost we are going to have one-fourth of the use of this structure for as long as the structure exists."

You can readily see what it does and how it discourages the local action which we think is highly desirable to have.

It adds to the usability. It adds to the development of the country, and it adds nothing to the cost of the United States of America.