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Senator Watkins. It is really part of the plan?

Mr. BANKS. The Feather River project needs storage at the San Luis site. We believe an integrated project can be worked out there.

Senator WATKINS. What is the estimated cost of the San Luis project?

Mr. BANKS. I believe the Bureau's estimate of the unit they wish to build is about $229 million, as I remember the figure, Senator.

Senator WATKINS. Is that the complete project or is that only the initial phase ?

Mr. Banks. That is the phase which the Bureau has recommended be built there. As far as the Feather River project is concerned, we need an additional million acre-feet or about double the size that is proposed to be built by the Bureau of Reclamation. We have proposed in our report on the Bureau report that provision be made for later enlargement of the reservoir capacity by the State.

Senator MALONE. Raising the dam?
Mr. Banks. Yes. It can be done.

Senator MALONE. Then it will be built on a foundation that will later be raised ?

Mr. BANKS. Yes.
Senator MALONE. That is where the additional cost lies.

Mr. BANKS. The additional cost we believe, on the basis of our preliminary studies of design and constructing the initial unit, so that it can be later enlarged, will not be great. In any event, if there is any additional cost, we we anticipate that the State would bear that additional cost.

Senator MALONE. That is, the State would bear the additional cost due to the enlargement of the foundations in initial stages of construction so that the dam might later be raised?

Mr. BANKS. It is our thought, Senator, in preparing our comments and views on the San Luis unit report that the State would not expect the Federal Government to put into the San Luis unit any greater amount than they would have had there been no Feather River project.

Any additional cost over and above that amount necessary in the initial unit the State would contribute.

Senator MALONE. I am not questioning whether or not the Federal Government should do this. There is never very much difference in cost of raising a dam to its ultimate height if you spend the money to install a foundation so it can be raised.

Pardon the reference to the Colorado River, but for many years they had talked about a low dam on the Colorado River in place of the high dam where Hoover Dam is now located. I got into it in 1927 as State engineer. I well remember my argument to the House committee and privately to the chairman that "'I have no objection to a low dam if you will build it so we can later raise it.” But they found when they went into it that the cost was all in the foundation. Therefore, it did not make any difference whether you can build a high dam or a low dam. The chairman went for the high dam.

I think your attorney friend will remember the incident. We have always supported here the projects in California and I intend to continue to do that when they pay out just like we expect you fellows to do it for us and these other States when they will repay

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I want to call attention to that because that is where the cost is in the foundation.

Mr. Banks. It is possible, Senator, that further studies may show that the State might want to go in actively with the Federal Government at this time and build San Luis to its ultimate capacity. We will not need that capacity for about 15 years, possibly, but it will be a matter of economic balance whether it is better to spend the money now and absorb the interest charges thereon, or spend it later.

We have not been able yet to complete those studies.

Senator MALONE. There is some disadvantage to having engineers around you. They understand those things.

Mr. Banks. I am sure all members of this committee understand.

Senator BARRETT. This would take in any contribution you might get from the Federal Government as well as your own?

Mr. BANKS. The billion and a half is the overall cost of the Feather River project. Any contribution by the Federal Government in the construction of San Luis and provision of interest-free money in the interest of irrigation would decrease this. This is the total cost without regard to anything else.

Senator BARRETT. Do you know if you could take advantage of the proposed Small Projects Act to get a loan for any part of the distribution system or any other part of the project?

Mr. Banks. The State does not anticipate at this time getting into the distribution aspects of the water development. Our objective is to build the master works and the master conduits. The various local agencies will take the water from the canal site and major aqueducts and distribute it. Senator BARRETT. If they come within the purview of the Small Projects Act, they could qualify.

Mr. Banks. That is right.

Senator WATKINS. Some of those would come under the Distribution Act we passed.

Senator MALONE. Has Los Angeles built its own aqueduct from the Colorado River?

Mr. BANKS. Yes.

Senator MALONE. Just like Nevada is building its own pumping system from Lake Mead to Las Vegas.

Mr. Banks. Yes. We do not anticipate as far as the State is concerned to go into either the wholesale or retail business of water. We are more in the line of a manufacturer, comparing it to industrial processes. An organization such as the metropolitan water district or some of the larger water conservation districts might act in the capacity of a wholesaler, delivering it finally to cities.

Senator MALONE. I think that precedent was set at Hoover Dam. They sold the falling water instead of selling electricity. The mu. nicipalities and States and companies bought the falling water and put in their own generators and it has worked very well.

Mr. BANKS. Yes.

Senator WATKINS. It is rather far afield of the main question have before us, but since you talked about the plans for California, I wonder if California is really complementing the efforts of the Federal Government to desalt ocean water?

Mr. BANKS. Since the Congress provided funds for the current study by the Department of Interior, we have more or less dropped out

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of that field, feeling that it was being very adequately covered by the Interior studies.

Senator WATKINS. Were you doing it before that? Mr. BANKS. We did provide some funds to the University of California, both at Berkeley and Los Angeles, for some work on that. They did some work on solar distillation and waste heat. We have not done anything in that field for the last 3 or 4 years, feeling that Interior is doing an excellent job and there is not much use in attempting to duplicate what they are doing.

They are covering, I believe, about all of the presently conceivable methods of demineralizing brackish and saline waters.

Senator WATKINS. You might be getting into that in a big way since not too many States in the Union, at least in the arid West, have an ocean available to them.

Mr. BANKS. We are keeping a very close watch on the progress of those studies. My own personal opinion is that within 25 to 30 years that will become a significant factor in the supply of fresh water.

Senator WATKINS. I feel the same way about it. I think if we would put the same amount of time and energy into the study of that as we do into splitting the atom we probably could solve a lot of the causes of war, particularly in the Near East. We have an area there where you have literally millions of acres of fertile soil with all kinds of water around, not many feet lower in elevation, and if we could learn to take the salt out of the water on an economic basis, we could solve a lot of problems there.

Senator MALONE. They have plenty of sunshine in Arabia.

Senator WATKINS. Yes. Not only that, but they have fuel to run pumps to pump the water there.

Mr. BANKS. Certainly reclaimed sea water, when it becomes economically competitive with other supplies, will be of considerable interest to our coastal metropolitan areas. We do not at this time anticipate that it will be the total result.

We feel as far as the interior values are concerned there will still be need for vast quantities of water which cannot be economically supplied from sea water. But we do feel it is quite possible within 25 years that in such areas as the bay area and Los Angeles, particularly for the coastal strips, demineralized sea water may become a significant factor.

Senator WATKINS. The Imperial Valley might possibly get some water.

Mr. BANKS. It should be clear then, that if the existing water supplies of California are to be properly developed and used, it will be necessary to have coordinated operation among the various projects, now in existence, and to be constructed and operated in the future. This will require close cooperation among local, State, and Federal interests. This requirement of cooperation has recently been well defined in the Report by the Presidential Advisory Committee on Water Resources Policy. To best achieve the required united effort, a flexible, comprehensive pattern of development should be established for all to follow. The California water plan will provide such a pattern—the effect of some recent decisions of the Supreme Court.

As stated before, we are convinced that the proper and necessary development and use of California's water resources depends on adequate State laws and intelligent, comprehensive State planning. We

are convinced, also, that the present California laws are, in general

, substantially satisfactory and that our State water planning has now progressed to an advanced stage.

The question may now be raised: How will the activities of Federal in agencies and their licensees in California affect State water law and State water planning ?

Some recent decisions of the Supreme Court have indicated that they Court's answer to this question may be that the Federal Government and those acting under it may act without complying with State water law and State water planning. I am convinced that this result has all never been desired by the States or intended by the Congress.

Obviously, I cannot at this time even attempt to outline the history of State and Federal relationships in the development and control of water resources. It should be pointed out, however, that the Congress of the United States has repeatedly given recognition over the years to the requirement of cooperation between the States and the Federal and Government in the development of water resources and to the further requirement that the fundamental interest of the States in their water resources should be respected by Federal agencies. Illustrative of it this intent of the Congress are, for example, the acts of July 26,

1866, July 1870, and March 3, 1877; section of the Reclamation Act of the 1902; section 1 of the Flood Control Act of 1944; and sections 9 (b) di and 27 of the Federal Power Act.

In spite of this repeatedly expressed intention of the Congress to protect the interests of the States, inroads on those interests continue ia to be made by Federal administrative actions and judicial determina

all tions.

The best illustration to me of the seriousness of the present situation may be found in recent cases of the Supreme Court involving the Federal Power Act. Under the provisions of the act the Federal Power Commission has licensing jurisdiction if the proposed hydroelectric project will: (1) Be located across, along, or in any stream or body of water over which Congress has jurisdiction under its authority to regulate commerce; (2) be located upon any part of the public lands and reservations of the United States (except national parks and monuments); or (3) utilize surplus water from a Government dam. If the Commission has jurisdiction on one or more of these grounds, a Federal license must be obtained. However, the act does not provide that a Federal license is all that is required to permit the construction and operation of the proposed development. In fact, it seems to me that two sections of the act clearly provide that State water law relating to the development shall be fully respected. The two sections are short and I quote them in full.

Sec. 9 (b) Satisfactory evidence that the applicant has complied with the requirements of the laws of the State or States within which the proposed projects is to be located with respect to bed and banks and to the appropriation, diversion, and use of water for power purposes and with respect to the right to engage in the business of developing, transmitting, and distributing power, and in any other business necessary to effect the purposes of a license under this act.

SEC. 27. That nothing herein contained shall be construed as affecting or intending to affect or in any way to interfere with the laws of the respective States relating to the control, appropriation, use, or distribution of water used! in irrigation or for municipal or other uses, or any vested right acquired therein.

The Supreme Court of the United States has, I believe, by construction deprived these sections in major part of their original mean

ng. In the case of First Iowa Hydroelectric Cooperative v. Federal Power Commission ((1946), 328 Ů. S. 152), the licensing jurisdiction f the Federal Power Commission was involved because a navigable tream was concerned. The proposed plant of the applicant could tot be built under Iowa law. The Federal Power Commission, acting nder its 26-year-old interpretation of section 9 (b) and section 27 of he Federal Power Act, said that it could not issue a license for the onstruction and operation of a plant which would violate State law. Che applicant appealed and the Supreme Court ultimately ordered he issuance of the Federal license. In the view of the court, section

(b) did not require compliance with State law and section 27 has eference only to the protection of property rights.”

The result of the Iowa Cooperative case was followed in the case of State of Washington, Department of Game v. Federal Power Comnission ((1953), 207 F. 2d 391), where the laws of the State of Washngton prohibited the type of dam proposed by the applicant to the Federal Power Commission. In spite of this, the Federal Power Comnission granted the license, and the Court of Appeals upheld the iction, stating:

We conclude that the State laws cannot prevent the Federal Power Comnission from issuing a license or bar the licensee from acting under the license o build a dam on a navigable stream.

In but one recent case has the Supreme Court of the United States given any effect at all to the saving language of section 27. This case is Federal Power Commission v. Niagara Mohawk Power Corporation ((1945), 347 U. S. 239), where it was decided that “proprieary water rights for power purposes as well as for, ** * other proprietary uses," vested under State law, have not been superseded or cendered valueless by the Federal Power Act.

It appears, then, that under these decisions of the Federal courts the Federal Power Commission may license, and hydroelectric plants inay be built, even though they do not comply with State law, except that private vested rights to the use of water may not be taken withcut the payment of compensation.

One other case should be mentioned briefly, partly because it belongs in the line of cases just discussed and partly because its repercussions will be felt beyond the limits of the Federal Power Act. This is the Pelton Dam case, Federal Power Commission v. Oregon ((1955), 75 S. Ct. 832). The result reached by the Supreme Court was to permit the licensing and construction by a Federal Power Commission licensee of a hydroelectric plant in violation of Oregon law. Again the Court refused to give any effect to sections 9 (b) and 27 of the Federal Power Act.

What is unique about the case, however, is that the stream involved was conceded to be nonnavigable. The sole basis of Federal licensing jurisdiction was the fact that the project would be built on Federal "reserved" lands—land in an Indian reservation and public land subject to a Federal power site withdrawal. The State of Oregon contended that under th Desert Land Act of 1877, if not before, the several States were given the right to control the use of water in nonnavigable streams. The circuit court of appeals, relying on the 1877 act and the case of California-Oregon Power Company v. Beaver Portland Cement Company ((1934), 295 U. S. 142), agreed with the State. On appeal, however, the Supreme Court in the Pelton Dam case

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