In reply to a statement made by Congressman Kersten on page A1318 of the Congressional Record concerning these charges, Gen. J. J. Seybold, president of the Panama Canal Company wrote. "All this, I assure you, is not the case. The Panama Canal Company is operating in direct response to the laws of Congress, directive policies of associated policymaking bodies of the Congress, and administrative offices to which this corporation reports. Employment costs are charged directly to the activity for which the employee works. The labor costs of tropical differential, leave, and repatriation are assumed by the individual when he obtains services from the canal. There is no authority in the organic act created by the Congress to charge tolls exclusively with the tropical differential, employment costs and other costs of employees, foreign benefits, or the cost of recently authorized employee benefits as listed by Mr. Munro. Each activity must support its share of these costs as they are costs generated by that activity, an interpretation which is clearly the desire and will of Congress and which has been approved by the associated inspection and audit control groups of the Congress and Bureau of the Budget. If the effects of this policy to distribute the costs throughout to all activities in contrast to direct charges to the canal exclusively were not clearly anticipated by the Congress, and if it desired to further investigate the application of the tropical differential and associated employment costs, this office will be pleased to furnish any information and data desired." This will be found on page A2478 of the Congressional Record.

I would like to refer you to the hearings on H. R. 8677, 81st Congress before the House Committee on Merchant Marine and Fisheries. Mr. Harold Seidman, of the Bureau of the Budget stated on page 44: "The Governor has utilized his delegated authority to institute a general reorganization designed to modernize the existing administrative structure of the Panama Canal so that it may meet more efficiently present day operating conditions and the complexities that have developed in the conduct of the canal's business. This reorganization will become effective on July 1, 1950.”

Later, on page 45, he states: "The operation of the canal is certainly no less of a business operation than those activities which the Congress has already authorized the President to transfer to the Corporation. It is revenue producing, expected to be self-sustaining, and requires considerable operating flexibility."

The exercise of this flexibility has not been granted the Panama Canal Co. as brought out in the rent hearings by the change of policy before and after the change of administration about July 1 of this year.

On page 46 of the hearings Mr. Seidman states:

"The Congress will, of course, have an opportunity to examine tolls policy in connection with its review of the business-type budget to be submitted annually by the Company."

In discussing this statement with Congressman Shelley on pages 49 and 50: "Mr. SHELLEY. Can you elucidate on that a little more; it is more of a possible review of it?

"Mr. SEIDMAN. No; it is a going review. That, we believe, is one of the advantages of the new arrangement-that the Panama Canal Company will come in with a business-type budget which is more informative and will pertain to a business operation more than the present budget. It is not merely a question of a request for appropriations, or how must they spent last year. It is an excellent statement of financial condition-income and expense, capital expenditures, as distinguished from operating expenses, and so forth.

"Congress, in going over that, would be able to determine are the rates high enough to cover the cost of operation? That would be indicated in the budget statement which would be practically a balance sheet; or, on the other hand, you might say 'Your revenues are far exceeding your cost of operations and you should consider changing your policy with respect to rates.'

“Also, of course, the Congress may act upon how much should be paid in dividends by the corporation.

"Mr. SHELLEY. It is in the review by Congress we are to determine the budget submitted, which will be in advance of the levying of the tolls."

We believe that this statement by the Bureau of the Budget invites the Appropriation Committee to review the Budget of the Panama Canal Company in its entirely and not limit it to rates for tolls.

We recommend to this committee concurrence in this suggestion and that the report on this bill contain the desires of the committee on this vital point. I wish to express my personal appreciation for the opportunity of appearing before this committee.

THE MIDDLE RIO GRANDE VALLEY FLOOD CONTROL

WITNESSES

HON. ANTONIO M. FERNANDEZ, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW MEXICO

JOHN PATRICK MURPHY, EXECUTIVE SECRETARY, MIDDLE RIO GRANDE FLOOD CONTROL ASSOCIATION

HUBERT BALL, CHIEF ENGINEER, THE MIDDLE RIO GRANDE CONSERVANCY DISTRICT

Mr. HAND. The committee is very happy to have with us this morning Congressman Fernandez and a local group who will tesify on the Rio Grande Floodway. I will be happy to hear from Congressman Fernandez.

Mr. FERNANDEZ. Mr. Chairman, Mr. John P. Murphy, who is the Executive Secretary of the Middle Rio Grande Flood Control Association, is here with Mr. Ball, the Chief Engineer of the Middle Rio Grande Conservancy District. I will not take the time of the committee to make any statement, but I will ask that Mr. Murphy be heard and following him, Mr. Ball.

Mr. HAND. We are glad to hear from you, Mr. Murphy.

Mr. MURPHY. My name is John Patrick Murphy and I am executive secretary of the Middle Rio Grande Flood Control Association. I have been authorized by the board of directors of this association to appear on their behalf and present the material we have prepared.

First, with reference to the Middle Rio Grande Flood Control Association. This association is made up a voluntary group of farmers, business and professional men, housewives, school teachers, and other persons who have united in this manner to support this approved comprehensive plan. Our membership numbers over 2,000.

Second, it should be noted that all affected interests of this project, are united in their endorsement and support of the comprehensive plan as worked out by the Corps of Army Engineers and the Bureau of Reclamation. Thus, it is a joint undertaking by the two Federal agencies and has the complete approval of Texas, Colorado and New Mexico, all of which are affected States.

This project was authorized for appropriations back in 1948. The Middle Rio Grande Valley as referred to in this project extends from the Colorado-New Mexico State line to the Elephant Butte Reservoir in southern New Mexico. It is the oldest continuously farmed area in the United States.

Population (the greatest resource in the valley) is estimated to be 350,000, based on the 1950 Bureau of the Census figures. In 1940 Albuquerque's population was 35,449 and today it is estimated at 150,000 by the Bureau of Business Research, University of New Mexico.

Valuation placed on the property in the flood-plain area is $500 million. It is impossible to get insurance against flood damage in this valley.

Land area aggregates 347,500 acres.

The entire State of New Mexico, including the Governor and the Interstate Streams Commission, are vitally concerned in the progress of this urgently needed project. They are cooperating and giving

their best efforts to assist in bringing about an early alleviation of the constant threat of floods, and relief from the deterioration of the irrigation facilities in the middle valley, and, while perhaps 85 percent of the project is necessary flood-control construction, the part dealing with irrigation and reclamation is also very essential, and the two go hand in hand.

Indians: There are 6,000 Indians in the valley living in 9 pueblos: Santo Domingo, Isleta, San Felipe, San Juan, Sandia, Cochiti, Santa Clara, Santa Ana, and San Ildefonso.

Agriculture is the principal economy of these 6,000 Indians, who are now being seriously threatened, along with their valley neighbors. These Indians would directly benefit and be assured of a continuance of their long-established livelihood, with the proposed program of control of the floodwaters of the Rio Grande, and detention of the large quantities of silt now being transported by its water, and the rehabilitation of their drainage canals and irrigation systems.

National defense: New Mexico is one of the most vital areas in the national defense program, and we have recorded the official testimony rendered before the Senate Subcommittee on Public Works by Carroll L. Tyler, Manager, Atomic Energy Commission, Los Alamos, N. Mex.: Col. S. V. Hasbrouck, Armed Forces special weapons project; Col. C. F. Dreyer, Headquarters, United States Air Force. These true statements are printed in our dramatized brief, which you have before you.

We stressed the national-defense angle of our project, because, extremely important defense establishments have been located in the valley, at and near Albuquerque. Some of these installations include: Los Alamos Atomic Laboratories, Sandia Atomic Laboratories, Sandia Armed Forces special weapons project, Kirtland Air Force Base, Ordnance Research Division, Ordnance Research Division Experimental Range, Wingate Ordnance Depot, and Alamogordo guidedmissiles project.

An exhaustive study by the most highly qualified engineers in our Government have positively stated that a flood in the middle Rio Grande is inevitable if the present rapidly worsening conditions are allowed to continue. The riverbed at Albuquerque has risen approximately 30 inches since 1935, and it continues to rise between 3 to 4 inches annually. If a maximum flood of record (1884), or even the flood of 1920 or 1929, were repeated with the present levees, the floodwaters would come rushing down into densely populated areas around Albuquerque with little warning. Loss of life and property damage would be heavy. And, if the river were to get out of its channel above Albuquerque it would unquestionably make inoperative, in whole or in part, all of the utilities such as telephone and telegraph, water supply, sewage disposal, power and light plants, the railroads and highways, and very possibly the highway and railroad bridges, or at least their approaches. This would create a very chaotic situation in Albuquerque, at Kirtland Field, at Sandia Base Atomic Laboratories, and at Los Alamos Atomic Laboratory.

It is impossible to predict when a flood of this nature might occur, so we think it should be considered in the light of its effect on national defense, because a flood could very easily occur at a time of national emergency when it would be imperative for the security of the country

that Sandia Base, Kirtland Field, and Los Alamos be capable of complete and uninterrupted operation. That these installations would be adversely affected is certain for they depend for their utilities, communications, railroad service, fuel supplies, et cetera, on facilities which are located in the valley.

During the early part of the present century, several unsuccessful efforts were made to secure a program of flood control for the area. The urgency of the situation finally led to the formation of the Middle Rio Grande conservancy district in 1925. During the next 11 years the district spent in excess of $15 million for construction of various remedial works and improvements.

Despite this construction program, the economic stability of the Middle Rio Grande Valley is again being threatened by a combination of problems with which the local people can no longer cope. But now, we of New Mexico feel that at last we have a plan which we are confident will go a long way toward solving the basic problems of the basin.

The people are ready and anxious to fully assume their responsibility in furnishing the rights-of-way, lands, easements, moving of utilities, et cetera. It is estimated this will cost some $75,000, plus the maintenance of the works after completion which is figured at $50,000 annually.

It is public information that the Army engineers could readily use $2 million in the 1954 fiscal year on this programed flood-control work around Albuquerque. However, the first figure submitted to the Congress by the Bureau of the Budget was cut to $890,000. The revised figure was again cut to $500,000 We hope this committee will approve at least $1 million for this unit of the project.

It is also important that sufficient planning funds be included for continuation of planning Abiquiu Dam. This will be built as an interim alternate for Chamita Dam. This is a recent modification of the original plan.

You are all sadly aware, we are sure, of the fact that almost without ception flood control in the United States has come after disastrous floods, rather than before. May I respectfully point out that it is possible, depending, of course, upon the vagaries of the weather, to save the Middle Rio Grande Valley from another disastrous flood by the prompt construction of the flood-control features of the comprehensive plan. I think everyone will agree that this is not only desirable, but it is actually imperative, in view of the importance of the valley to national defense.

On behalf of the Middle Rio Grande Flood Control Association, I join with the other witnesses in pleading for adequate appropriations, with which to expedite the completion of our project for flood control and reclamation, so as to assure the people in our valley the protection they must have, for the continued preservation of their lives, their homes, and of the enterprises from which they derive their livelihood.

Let's profit by our past disastrous experience, and do this meritorious job before the flood and not after the flood.

We are grateful for the opportunity to appear here today and plead our cause. We thank you.

Mr. HAND. Mr. Murphy, the committee is happy to have had your statement.

Mr. FERNANDEZ. Mr. Ball, the chief engineer of the Middle Rio Grande conservancy district.

Mr. HAND. Mr. Ball, we are glad to hear from you.

Mr. BALL. Mr. Chairman and members of the committee, the Middle Rio Grande conservancy district takes in quite an area along the Rio Grande in this central part of the State of New Mexico. Our district is 155 miles long. We carry on irrigation, drainage, and flood control, but at this hearing I am going to confine my remarks strictly to the floodway and to that portion known as the Albuquerque unit which is being considered by the committee.

The Albuquerque unit is approximately 30 miles of levees around the town of Albuquerque and across the river from Albuquerque, which is a highly developed area with a large number of people living and farming adjacent to the city.

The most critical portion of the valley is right where Albuquerque is situated. Of course, that is because Albuquerque has, in the first place, the most property value, and the most people live there and the most damage would result.

However, the river flows generally north and south, but immediately north of Albuquerque it makes a bend of about 22 to 3 miles almost due west, and then it turns and goes south in a mild curve again down past the city of Albuquerque, which makes 5 or 6 miles right north of the town a very critical area, because originally the river went straight south through the town of Albuquerque, and natural conditions, or meanderings of the river, throw it back to the west, and the river has been inclined to try to go back through the town of Albuquerque for the past several years.

The district has spent just about all the money that we can afford to spend for construction along the entire 155 miles, and we have concentrated our efforts, of course, in those places where the most damage would result. But it has reached the point now where the irrigation, drainage, and flood control has taken about all the money we can raise for operation and maintenance of what we have. So we just do not have the funds to rebuild the levees and put them up in the shape they should be.

The riverbed has risen 211⁄2 to 3 feet in that area since the levees were originally constructed. They had a height of 8 feet effective in about 1930, and they have decreased now, the effective height, to where it is 5 to 51% feet.

Mr. HAND. Let me interrupt you there. What was the primary cause of the raising of the height of the water?

Mr. BALL. Sedimentation of the river bed, Mr. Congressman. The Rio Grande is probably the No. 1 problem river in the world today from sedimentation and aggradation of the river bed. It is really a serious situation.

The Army engineers have made a number of studies and they have come up with a plan to build a tie-back levee in the narrow part of the valley about 8 miles north of Albuquerque. They tie into the foothills. They come across the valley over to the main levee system, and then rebuild the levee on south down the river around the town.

Now, that tie-back levee will be constructed with funds that are now available. The Congress appropriated $350,000 and that will start the tie-back levee and take us over to the main levee system.