more than 15 percent of the total project costs must be offset by recreation benefits in order to establish economic justification. Where functions other than recreation provide benefits equal to at least 85 percent of project costs, and recreation benefits will be equal to or more than the remaining 15 percent, we designate "recreation" as a project purpose and take the full recreation benefits into account in determining the overall economic justification of the project. When recreation is designated as a project purpose, we allocate the separable cost of basic recreation facilities and a fair share of joint project costs to this function. The allocation of joint costs to recreation reflects the service rendered to this function by project lands, waters, and facilities which serve several or all project purposes. The cost of basic recreation facilities for access to and use of the recreation resources provided by Federal projects is assigned to the Federal Government. Joint project costs allocated to recreation also are assigned to the Federal Government if they do not exceed 15 percent of total project costs. Joint costs allocated to recreation in excess of this limit are assigned to local interests or are shared between the Federal Government and local interests on the basis of the incidence of the recreation benefits, ranging from local to national in significance. The first 15-percent rule provides a reasonable check on project formulation to insure against overemphasis on recreation in project planning. The second 15-percent rate sets a reasonable limit on the amount of joint project costs allocated to recreation which will be borne by the Federal Government. Mr. CANNON. Fifteen percent is a maximum? General CASSIDY. That is the maximum; yes, sir. Mr. CANNON. In all of these projects, perhaps not so much in the reclamation projects as in other projects, you find the local interest in recreation one of the dominant interests of the locality in asking for projects. General CASSIDY. This is correct, sir. Recreation has become a big business in the last few years. It is an industry in itself. So we have a tremendous expansion in boat users and all of the things that are required for people to use water, from skindiving equipment, boats, outboard motors, fishing tackle, water skis, and on through the rest of it. This has now become a tremendous industry in the United States, so that there is an intense interest in any locality in which a reservoir is proposed, in the recreational features to be gained from that reservoir. Mr. CANNON. While our constitutional limitations permit us to expend tax funds for flood control, for navigation and improvement of commerce, there is no provision under which Government funds could be used exclusively for recreation. General CASSIDY. Under the 1944 act we provide recreational areas. and facilities in accordance with that act, so that the general public is able to use a facility which is provided for another purpose. Mr. CANNON. But while you may expend funds for recreational purposes, and may include in your benefit-cost ratio a percentage up to 15 percent for recreation, there is no authorization for such recreational facilities alone and exclusively. The funds can be expended and can only be included where flood control or navigation is involved. General CASSIDY. We have submitted our report to the committee. While we discussed the planning and layout of our report with the Bureau of Reclamation, the two reports were not coordinated in their writing. Each agency is submitting its own ideas on the subject. We have not given our report to the Bureau and we have not seen the Bureau's report, so that as far as the two agencies applying the same practices to their developments is concerned, that is not being done. One of the problems is the fact that we operate under different laws and different interpretations of those laws. Mr. CANNON. How wide a difference did you find, first, in the legislative authorization; and, secondly, in the purport; and, thirdly, in the projected effect? General CASSIDY. The reservoirs of the Bureau of Reclamation are located in the West. Some of them are quite remote from centers of population. They do not have the demand for recreation placed on them that is faced by the Corps of Engineers, where many of our reservoirs are fairly close to main centers of population. Another factor that enters into it is that the road networks which permit people to get to reservoirs are generally of lesser extent for Bureau of Reclamation reservoirs than for the Corps of Engineers reservoirs. So that we have a greater use of our reservoirs in general than that facing the Bureau of Reclamation. The net result of this is that we have gone into recreation because of demand on a greater scale than the Bureau of Reclamation. In addition, because the 1944 act states that access to the reservoir will be provided without charge, we have been very careful in providing such access not to charge or to permit the counties to charge for such access. I believe that the Bureau of Reclamation has a somewhat different slant on that, but again they have different laws under which they operate. As far as the standards are concerned, the things that are provided for recreation, the access roads, launching ramps, parking areas, sanitary facilities, water supply-there we are quite similar in our practices. EMPHASIS PLACED ON RECREATIONAL BENEFITS Mr. CANNON. What percentage of the projects for 1961 and the projects of 1962 required recreation in order to make them feasible on a benefit-cost ratio plan? General CASSIDY. None in construction, sir. Mr. CANNON. In no instance was recreation essential to feasibility? General CASSIDY. No, sir. Mr. CANNON. There are none in which that is true, in the budget. before us? General CASSIDY. That is correct, sir. Mr. CANNON. Tell us how benefits from recreation are taken into account? General CASSIDY. One of our objectives in developing water resource projects is to protect existing recreation resources, preserve and make available for use the recreation resources they create, and enhance their recreation potential when this is sound from the viewpoints of engineering and economics. In keeping with this objective we evalulate the full recreation potential of our projects. However, to avoid overemphasis on recreation we do not recommend projects where more than 15 percent of the total project costs must be offset by recreation benefits in order to establish economic justification. Where functions other than recreation provide benefits equal to at least 85 percent of project costs, and recreation benefits will be equal to or more than the remaining 15 percent, we designate "recreation" as a project purpose and take the full recreation benefits into account in determining the overall economic justification of the project. When recreation is designated as a project purpose, we allocate the separable cost of basic recreation facilities and a fair share of joint project costs to this function. The allocation of joint costs to recreation reflects the service rendered to this function by project lands, waters, and facilities which serve several or all project purposes. The cost of basic recreation facilities for access to and use of the recreation resources provided by Federal projects is assigned to the Federal Government. Joint project costs allocated to recreation also are assigned to the Federal Government if they do not exceed 15 percent of total project costs. Joint costs allocated to recreation in excess of this limit are assigned to local interests or are shared between the Federal Government and local interests on the basis of the incidence of the recreation benefits, ranging from local to national in significance. The first 15-percent rule provides a reasonable check on project formulation to insure against overemphasis on recreation in project planning. The second 15-percent rate sets a reasonable limit on the amount of joint project costs allocated to recreation which will be borne by the Federal Government. Mr. CANNON. Fifteen percent is a maximum? General CASSIDY. That is the maximum; yes, sir. Mr. CANNON. In all of these projects, perhaps not so much in the reclamation projects as in other projects, you find the local interest in recreation one of the dominant interests of the locality in asking for projects. General CASSIDY. This is correct, sir. Recreation has become a big business in the last few years. It is an industry in itself. So we have a tremendous expansion in boat users and all of the things that are required for people to use water, from skindiving equipment, boats, outboard motors, fishing tackle, water skis, and on through the rest of it. This has now become a tremendous industry in the United States, so that there is an intense interest in any locality in which a reservoir is proposed, in the recreational features to be gained from that reservoir. Mr. CANNON. While our constitutional limitations permit us to expend tax funds for flood control, for navigation and improvement of commerce, there is no provision under which Government funds could be used exclusively for recreation. General CASSIDY. Under the 1944 act we provide recreational areas. and facilities in accordance with that act, so that the general public is able to use a facility which is provided for another purpose. Mr. CANNON. But while you may expend funds for recreational purposes, and may include in your benefit-cost ratio a percentage up to 15 percent for recreation, there is no authorization for such recreational facilities alone and exclusively. The funds can be expended and can only be included where flood control or navigation is involved. General CASSIDY. This is correct, sir. Mr. EVINS. Will the chairman yield? Mr. CANNON. Yes. The gentleman from Tennessee. INCOME FROM LEASING ARRANGEMENTS Mr. EVINS. I think it would be interesting, General Cassidy, if you could supply for the record the amount of income received by the Corps of Engineers over the Nation from the operation of leases on your reservoirs, showing all income coming into the Government. Could you give us a round figure as to how much comes into the Treasury by way of leases which the Corps of Engineers operates! General CASSIDY. I can supply that for the record, sir. I do not have it at hand. Mr. EVINS. Is it a rather substantial income, General Cassidy? General CASSIDY. I could not say offhand, sir. It should be fairly large. Mr. EVINS. I know that by your 1944 act there is also provision that where you make lands available to States and municipalities, that they shall pay you for the timber over and above that required for roadways for their own use. Do you have any income from that source? General CASSIDY. Where timber is harvested, or where we lease lands to the local people, we do get a return on that, but where we lease lands to public bodies for recreation, that lease is nominal. It is usually a dollar a year. Mr. EVINS. I imagine that most of the States would be reluctant to pay unless you insist upon payment. I want you to supply for the record all income in this area, to show the committee the total amount of income. General CASSIDY. Very well, sir. Mr. EVINS. Thank you. General CASSIDY. I might add one thing, sir, which is that of our income, 75 percent goes back to the State for use in the county or counties in which the reservoir is located. Mr. CANNON. Have you any projects in which the Government derives income from the recreational features, in this budget? General CASSIDY. On all of our projects we have concessionaires providing services to the people, such as selling gasoline, soft drinks, food, providing some service for the parking of boats, and so forth. In this type of concession there is a return to the Government. Mr. CANNON. About what is the amount and what is the percentage of the return on the investment? General CASSIDY. I would have to supply that for the record, sir, but we require a percentage of the gross to be returned to the Federal Government. Mr. CANNON. Is that a part of practically all of your projects in which recreation is a factor in its feasibility? General CASSIDY. On practically every project we put in we must have concessionaires to provide that type of service. The Federal Government does not provide that. It is provided by concession. Mr. CANNON. And that is under your control? General CASSIDY. Yes, sir. Mr. CANNON. And the income from such concessions is paid into the Treasury? General CASSIDY. Yes, sir. (The data requested is as follows:) Earned revenue from the leases of civil works lands in fiscal year 1960 amounted to $1,989,541. Seventy-five percent of these funds are returned to States under the provision of section 206 of the Flood Control Act of 1954. These funds are used for roads, schools, and other public purposes by the counties in which the lands are located. PUMPED STORAGE POWER GENERATING FACILITIES Mr. CANNON. We will ask you, General Cassidy, to insert your report in the record on pumped storage power generating facilities, and also your instructions to the field offices on this subject. General CASSIDY. You would like to have that inserted in the record? Mr. CANNON. We would like to have that in the record, General. General CASSIDY. Very well, sir. (The report referred to is as follows:) |