tions or contracts including the identity of the reservoir, the quantity of the requested withdrawal, and the identity of the applicant or purchaser with the name and address of the parent company if the applicant is a subsidiary).

5. Are public hearings required prior to approval or disapproval of an applicant's request? If hearings are required, what are the requirement or practices regarding notice of hearings and their location? What opportunities are there for the Indian Tribes, BIA and other concerned agencies to be heard concerning water marketing on the Missouri?

6. What is the role of the respective State during consideration of a water marketing contract and is an opportunity provided for State review and comment on applications? Do the States have a veto authority over a proposed marketing agreement?

7. Is entering into a water marketing contract contingent upon the intended purchaser's possession of a State water right? In each of the States involved, who establishes and administers rights to main stem Missouri River water?

8. How many acre-feet of water are contracted or under option at each reservoir on the main stem? For what purposes-agriculture, industrial, or other— has the water been reserved?

9. Is either Department aware of situations whereby municipal or industrial options for water are precluding other area uses such as irrigation? If so, where? 10. Has either Department formulated a policy of reserving available water on the main stem for future uses, thereby discouraging present demands or other potential uses?

11. What is the nature and status of pending litigation to adjudicate Indian water rights in the Missouri Basin? Please provide for the record a list of pending litigation involving Federal agencies.

12. Have you established procedures for evaluating and choosing among conflicting uses of Missouri Basin water? If so, what are they?

13. What priority do you assign to development of additional generating capacity at existing dams on the main stem of the Missouri? Do you foresee any reduction in hydropower potential, or any further delays in its development, because of industrial water sales?

14. In order to evaluate the potential demand for agricultural water in the Missouri River Basin, list projects (including potential demands) for which: a. Feasibility level studies are underway (with the projected study completion date);

b. Feasibility studies have been completed (identifying those projects found feasible);

c. Feasibility studies are proposed.

15. List also those projects which have been authorized and the respective stage of completion.

In accordance with the Committee rules, please provide 100 copies of your agency's testimony no later than June 24. They should be delivered to Russell Brown, professional staff member, in Room 3106 Dirksen Senate Office Building. I would appreciate your informing the Committee who will testify at the June 26 hearing.

With best wishes.
Sincerely,

FRANK CHURCH, Chairman, Subcommittee on Energy Research and Water Resources.

ANSWERS TO QUESTIONS ASKED BY SENATOR FRANK CHURCH, CHAIRMAN OF THE SUBCOMMITTEE ON ENERGY RESEARCH AND WATER RESOURCES OF THE SENATE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS IN HIS LETTER DATED JUNE 6, 1975, TO THE ACTING SECRETARY OF THE INTERIOR AND THE SECRETARY OF THE ARMY CONCERNING THE MEMORANDUM OF UNDERSTANDING BETWEEN THE RESPECTIVE SECRETARIES

1. Question. Who controls, and by what authority, the available supply of water in the Upper Missouri River Basin, including but not limited to, that in the coal fields of the Yellowstone River Subbasin?

Answer. Each of the States along the main stem of the Missouri River and the Federal Government have an interest in, and management responsibilities for, the available water supply from the river. The States have authority to grant permits

for the use of the natural flow taken from the river. The right of the Federal Government to control the use of water in its reservoirs is based upon the legislation authorizing the construction and operation of the reservoirs and upon Federal jurisdiction over navigable waterways.

Congressional authorization in 1944 of the Missouri River Basin Project, now identified as the Pick-Sloan Missouri Basin Program, placed certain Federal responsibilities over water uses on the Missouri River. That legislation clearly specified that the Corps of Engineers would be responsible for building the dams and for operating and regulating the reservoirs for flood control and navigation. The Bureau of Reclamation was designated to market the power generated at the mainstem reservoir hydroelectric generating stations. The Bureau also received authority to develop irrigation projects with the use of water from the mainstem reservoirs.

Power revenues are to be credited to a basin account which repays, with interest, the costs of the generating facilities; and surplus power revenues are to be used to repay the costs of irrigation which are beyond the water users' ability to repay. Therefore, regulation of the water for repayment of the reimbursable project costs, and regulation to serve the public interests for flood control, navigation, recreation, and other nonreimbursable functions are Federal responsibilities. The hydrology of the main stem of the Missouri River is well enough known to conclude there is not enough natural flow in the Missouri River to meet existing and prospective uses during a portion of some years. Thus, reliance must be placed on the regulated flows for the six mainstem Federal reservoirs to supplement natural flow so that long-term commitments for water use can be made. Even when natural flow is available, consideration must be given to authorized Federal functions, including navigation, flood control, power, and other purposes.

A cooperative program between the States and the Federal Government for marketing industrial water will permit an optimum use of the natural flow and regulated flow. A Federal-State cooperative water marketing program will mutually benefit the State and Federal interests involved and will enable each to exercise its respective rights and authorities without the need to quantify flows. The procedures for marketing that are described in this and other answers to your questions apply only to waters which it will be determined, after full consideration of Indian water rights, are available for marketing independent of those rights. No procedures have yet been established for satisfying Indian water rights out of the main stem of the Missouri River.

2. Question. The Memorandum of Understanding calls for the execution of contracts for the marketing of water from the six mainstem reservoirs of the Missouri River. With whom does an applicant for water in the mainstem reservoirs file his request? In turn, which Department, Interior or Army, is responsible for signing and administering the contract with the water purchaser? Who has the power and authority to deliver the water when a contract has been signed? What is the legal authority by which the Department and Corps enters into contracts for industrial sales on the Missouri?

Question. With whom does an applicant for water in the mainstem reservoirs file his request?

Answer. The Upper Missouri Region of the Bureau of Reclamation in Billings, Montana, will administer the Federal aspects of the water marketing program. All applications filed with the Corps of Engineers in Omaha, Nebraska, or directly with the two Departments have been referred to the Bureau of Reclamation. However, the Department has extended the first option to the States to contract directly with the applicant. If that option is elected, the State itself would administer the contract.

In either case the water user will be expected to make application to the appropriate State for necessary water permits.

Question. In turn, which Department, Interior or Army, is responsible for signing and administering the contract with the water purchaser?

Answer. In accordance with the Memorandum of Understanding, the proposed contract terms and conditions must be satisfactory to the Secretary of the Army and the Secretary of the Interior. The Secretary of the Interior, through the Bureau of Reclamation, would execute and administer the contracts, if the appropriate State declined the option to contract.

Question. Who has the power and the authority to deliver the water when a contract has been signed?

Answer. Once State approval had been acquired, the water would be delivered pursuant to the terms of the contract and applicable State laws including those relating to State water use. The diversion and conveyance of water by the contractor would be at the contractor's expense and at locations approved by the Corps of Engineers and the Bureau of Reclamation. The contract would include water use schedules so that the Corps of Engineers could accomplish regulation and reservoir releases for the contractor's diversions, taking into account the contemporary and long-term hydrologic conditions of the river system.

Question. What is the legal authority by which the Department and Corps enters into contracts for industrial sales on the Missouri?

Answer. The legal authority for the Bureau of Reclamation's execution of water service contracts for municipal and industrial uses, under the Pick-Sloan Missouri Basin Program, is provided by section 9(c) of the Flood Control Act of December 22, 1944 (58 Stat. 887). The water service contracts would be written pursuant to section 9 (c) of the Reclamation Project Act of 1939 (53 Stat. 1187), as part of the reference to Reclamation Law contained in the 1944 Flood Control Act which authorized the Corps of Engineers to construct the mainstem storage reservoirs on the Missouri River. The Secretaries of the Army and Interior were provided full discretionary authority for management of the water resources to protect the operational and financial integrity of the Pick-Sloan Missouri Basin Program.

3. Question. How much Missouri River water is available for commitment pursuant to the Memorandum of Understanding? How and by whom was this calculation made?

Answer. The Memorandum of Understanding limits temporary industrial water availability to a quantity within the amount destined for eventual agricultural use. Projected water uses within the Missouri River Basin were authorized in the 1944 Flood Control Act. Quantification of the expected uses, the resulting depletions, and effects on the authorized plan were reported in April 1951 by a Subcommittee on Adequacy of Flows in the Missouri River Basin pursuant to a resolution of the Missouri Basin Inter-agency Committee (MBIAC).

Membership of the MBIAC in April 1951 consisted of the Governors of Nebraska, Missouri, Montana, South Dakota, and North Dakota and regional administrators from the Department of Agriculture, the Federal Power Commission, the Corps of Engineers, the Department of Commerce, and the Department of the Interior. The committee's resolution stipulated that "such subcommittee shall consist of a representation from the U.S. Weather Bureau, the U.S. Geological Survey, the U.S. Public Health Service, the Federal Power Commission, the Bureau of Reclamation, the Department of Agriculture, and the Corps of Engineers; and that the State governments be represented on the subcommittee by two State engineers, one from the Upper Basin and one from the Lower Basin."

Anticipated total future depletions were projected beyond 1949, and historic streamflow conditions were modified to 1949 levels of development. At that time, the streamflow and projected program depletions were:

UPPER BASIN ABOVE SIOUX CITY, IOWA, ACRE-FEET ANNUALLY

Of the projected depletions, most were associated with the 3,648,952 acres of new land irrigation and 490,468 acres of land requiring supplemental irrigation supplies under Bureau of Reclamation plans.

The projections have been modified and scheduling altered in the Missouri River Basin Framework Plan published in 1971. This study was similarly sponsored by the Missouri River Basin Inter-Agency Committee but included all

10 Missouri Basin States and 10 Federal agencies. The objective, however, is unchanged and demonstrates that considerable water intended for ultimate irrigation use could be used for energy-related purposes.

Using the Framework Plan, Corps of Engineers operation studies, and Bureau of Reclamation Rate and Repayment Studies, the Bureau of Reclamation determined in what quantities and during what time frame waters allotted to future irrigation use could be committed to interim nonirrigation uses. Reclamation studies show that up to 2 million acre-foot of mainstem reservoir storage will not be utilized for agricultural purposes before the year 2023. Of this available supply, we are proposing that 1 million acre-feet annually could be considered as available initially for the interim industrial water marketing program. This determination has been a joint endeavor by the Departments of the Interior and the Army, and it has been discussed with officials of the Upper Missouri River Basin States.

The industrial water availability study is based on the assumption that flow levels in the stream will be maintained at a minimum of 6,000 cubic feet per second to ensure water availability in the channel at all times. This can be accomplished best if the natural flow is not assumed to be available for claims by one State in preference to another. To meet the demands for possible industrial water throughout the hydrological cycle, the natural flow would require augmentation by stored water during critical periods at specific locations. In order to avoid prolonged controversy over respective water rights and to avoid fragmentation of water rights to respective State claims, it was concluded that natural flows and storage can be most effectively marketed on a cooperative Federal-State basis as one account. The 10 Governors of the Missouri River Basin States were advised of this intention by letter, dated March 25, 1975, from Assistant Secretary Jack O. Horton, and a first-option offer was given for the interested States to purchase a supply of water from the federally regulated reservoirs.

4. Question. Have applications for contracts been filed pursuant to the Memorandum of Understanding with the appropriate Department? If so, how many are pending or have been agreed upon? (Please supply for the record a list of pending applications or contracts including the identity of the reservoir, the quantity of the requested withdrawal, and the identity of the applicant or purchaser with the name and address of the parent company if the applicant is a subsidiary).

Answer. The Bureau of Reclamation has received some applications pursuant to the Memorandum of Understanding. To date, no contracts have been executed. There are 12 expressions of interest to the Corps of Engineers and 10 requests have been received by the Bureau of Reclamation regional office in Billings, Montana. Most of the inquiries on availability of water predate the February 24, 1975, Memorandum of Understanding and, therefore, each request will need to be reviewed. The requests received by the respective offices are shown in the attached tabulations. The expressions of interest pertain to 1,007,000 acre-feet annually when adjusted for the apparent duplication of the Energy Transportation System, Inc., request for 75,000 acre-feet from Oahe Reservoir. Further duplication of requests will be sorted out in the contracting and marketing processes established in accordance with the Memorandum of Understanding. The water quantities requested by each contractor will be reviewed carefully from a water use-efficiency standpoint as it relates to the proposed industrial undertaking. They would also undergo thorough environmental analysis and close Federal-State discussion. The proposed contracts will carry anti-speculation provisions. As stated earlier, 2 million acre-feet annually are considered available for the industrial purposes, although we believe this amount could and should permit other uses if the demand would be forthcoming.

5. Question. Are public hearings required prior to approval or disapproval of an applicant's request? If hearings are required, what are the requirements or practices regarding notice of hearings and their location? What opportunities are there for the Indian tribes, BIA, and other concerned agencies to be heard concerning water marketing on the Missouri?

Answer. Public hearings are not specifically required as a preliminary to the negotiation of water service contracts. The approval process of the Department of the Interior, however, provides opportunity for participation by Indian interests and the Bureau of Indian Affairs. Public hearings are also an integral

part of the NEPA process and would also be held as a matter of course if requested by the appropriate State.

Paragraphs 3b and 4 of the Memorandum of Understanding assign to the Department of the Interior responsibilty for compliance with the Natonal Environment Policy Act of 1969 (NEPA). This will require environmental assessments and the preparation of environmental impact statements which would be filed with the Council on Environmental Quality for public review and comment.

Departmental regulations pursuant to NEPA provide for discretionary public hearings to solicit the views of interested parties. Notice of such hearings includes publication of the Federal Register at least 30 days before the hearing date.

In addition, and early on in the marketing program, the Department of the Interior will arrange to obtain the views of the Bureau of Indian Affairs and the Indian tribes in regarding to the water marketing opportunities. As a trustee of American Indian natural resources, the Department will give careful consideration to the Winters rights of the affected tribes during the implementation of this Memorandum of Understanding. (Winters v. United States, 207 U.S. 564 (1908))

6. Question. What is the role of the respective State during consideration of a water marketing contract and is an opportunity provided for State review and comment on applications? Do the States have a veto authority over a proposed marketing agreement?

Answer. As discussed in our response to questions 1, 2, and 3, the marketing arrangements call for joint effort and mutual involvement with the States throughout contract negotiations. The States would have the first right to contract for water from the mainstem reservoirs. The State could then subcontract with potential water users. If any State chooses not to contract for water, the desirability of the Federal Government contracting directly with potential water users will be reviewed with appropriate State officials, taking into account the State's decision not to participate in the marketing program. Given the State's inherent jurisdiction over State lands, State water uses, and rights-of-way, it would be both unlikely and undesirable for any application to proceed without State approval.

7. Question. Is entering into a water marketing contract contingent upon the intended purchaser's possession of a State water right? In each of the States involved, who establishes and administers rights to mainstem Missouri River water?

Answer. The right of the Federal Government to control water within its own reservoirs and on navigable rivers is based on the legislation which authorized construction and operation of the reservoirs or the control of navigable waterways. Dugan v. Rank, 372 U.S. 609, 623 (1963); Turner v. Kings River Conservation Dist., 360 F. 2d 184, 198 (9th Cir. 1966); United States v. Twin City Power Co., 350 U.S. 222, 224–225 (1955); Tacoma v. Taxpayers of Tacoma, 357 U.S. 320 (1958).

Our contracting principles will require that water users obtain from the Corps of Engineers the necessary permits or licenses to place diversion facilities on Federal property, and contractors will be expected to comply with all applicable State laws.

State water right laws in the Missouri River Basin indicate generally who may control waters. Waters which are captured within a reservoir, pursuant to a State water right, are normally controlled by the owner of the reservoir. The right of the Federal Government to control water within its own reservoirs may, therefore, be based on a State water right.

a. In Montana, a water right may be perfected by following the statutory procedures set out in MONT. REV. CODE 89-808-812 (1947); or by the construction of diversion or impoundment works, followed by the application of captured water to beneficial use. Bailey v. Tintinger, 45 Mont. 154, 122 P. 575 581 (1912). The statutory procedure has been followed on all Bureau of Reclamation projects except the Canyon Ferry Unit. On the Canyon Ferry Unit and on the Fort Peck Project of the Corps of Engineers, the alternate procedure recognized by Bailey was followed.

b. In North Dakota, the United States filed and had approved a water right application for 3,145,000 acre-feet of the waters of the Missouri, Souris, Sheyenne and James Rivers for use in connection with the Garrison Diversion Unit. The