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agencies. We do the construction. We have nothing to do with the sale of the power and the repayment of the irrigation in these multiplepurpose projects.

Senator ELLENDER. General, are you sufficiently informed as to the method used by Interior and the method used by you so as to indicate to this committee whether or not your method will create a greater return to the Government than Interior's method ?

General CHORPENING. Generally, the method that we have favored in the past, and which we still favor and recommend as the proper method to use, is one that generally would make greater charge for hydropower than had been the case in some instances. I am not saying that

Senator ELLENDER. It is a fact though, is it not?
General CHORPENING. It is a fact generally, yes.

Senator ELLENDER. As to flood control, are you more liberal in your rules than Reclamation, or how does that work out?

General CHOPENING. Obviously if we propose that a larger portion of the costs should be charged to hydropower, there is less to charge to other purposes. Some other people may consider that more should be charged to flood control than we feel is proper and less to power. We feel that we have to be completely fair in allocation to all purposes.

Senator ELLENDER. All in all you are here to tell us that the yardstick that is used by the Corps of Engineers inures to the greater benefit of the Government than the plan of the Reclamation?

General CHORPENING. That has generally been true.

DIRECTIVE ON COST-ALLOCATION SYSTEM

Senator Cordon. General, with respect to this philosophy of cost allocation which you have just been discussing, I would like to ask you if that is the plan that was studied over a period of years and which was set out in a directive of the Bureau of the Budget under Mr. Frederick J. Lawton, I believe dated December 31, 1952?

General CHORPENING. The circular A-47, yes, that is correct.

Senator CORDON. Was that cost-allocation system substantially in accord with the recommendations of a subcommittee of the Committee on Water Resources which made a report on the subject matter, I think in the year 1950?

General CHORPENING. Actually the Benefit-Cost Subcommittee of the Federal Inter-Agency River Basin Committee did make that recommendation and the provisions of circular letter A-47 were essentially in agreement with that recommendation and essentially in agreement with what has been the position of the Corps of Engineers.

Senator CORDON. What was the committee that you mentioned, the Federal Inter-Agency River Basin Committee? That was the committee composed of whom? Do you know?

General CHORPENING. I think there were two different agencies or groups involved. One was the President's Water Policy Resources Council, I think it was, and the other was this committee of the Federal Inter-Agency River Basin Committee on benefits and costs, as I recall it.

RECOVERY BY GOVERNMENT

Senator ELLENDER. In the course of giving advice on the construction of this project you mean to tell this committee that you are not able to tell us now how much of this expenditure will not be recovered by the Government, that is, that is chargeable to flood control?

General CHORPENING. That is correct.

Senator ELLENDER. Is that due to the fact that this is a project that is being built by you and Reclamation? Is that the reason for not being able to give us those figures ?

Colonel WHIPPLE. That is correct, sir. Necessarily when we are responsible for a cost allocation, which we make at this stage of the construction, we have our own ways of making those cost allocations. If the Bureau of Reclamation is doing it, they have methods that are slightly different and neither one of us, I do not believe, at this stage of the game has made a complete allocation, but in the end they will be the responsible agency because they are going to administer the project after its completion.

Senator ELLENDER. Do you not think it might be a better idea for us to do all that before we start building a dam like that? Can you say “Yes” or “No”?

Colonel WHIPPLE. It would be preferable to know those things in advance; this is correct, sir.

Senator ELLENDER. Any project that you have the entire construction of, you are able to give us those figures; are you not?

Colonel WHIPPLE. I have those figures for all of the other multiplepurpose projects.

Senator ELLENDER. But you do not do it here because it is going to be administered by the Interior Department and the burden is on them to bring that out?

Colonel WHIPPLE. Yes.
Senator ELLENDER. Do they consult you about it?
Colonel WHIPPLE. No, sir; they have not consulted us.

Senator ELLENDER. You say that they use a certain yardstick that may be different from yours? Can you point out a few of the salient differences ?

Colonel WHIPPLE. I think that would be difficult, sir.

COST ALLOCATION PHILOSOPHY

General CHORPENING. Could I say something on this matter of cost allocation now? There have been differing philosophies as to the proper method of cost allocation. The Corps of Engineers for quite some time has proposed a scheme of cost allocations which we describe, and it is very complicated, as the separable costs-remaining benefits method, which we think is sound. At this time, in fact for the last 6 weeks or 2 months, the Chief of Engineers and members of his staff have been conferring at great length with the Secretary of the Interior and the Secretary's staff as well as with the Federal Power Commission in an effort to get together on principles of cost allocation that would be, if not the same, essentially the same, so that we may have the same ground rules to follow. Those conferences are getting along quite well. We hope we may be able to resolve them in the near future. There is a somewhat different problem involved between the two agencies. We do the construction. We have nothing to do with the sale of the power and the repayment of the irrigation in these multiplepurpose projects.

Senator ELLENDER. General, are you sufficiently informed as to the method used by Interior and the method used by you so as to indicate to this committee whether or not your method will create a greater return to the Government than Interior's method ?

General CHORPENING. Generally, the method that we have favored in the past, and which we still favor and recommend as the proper method to use, is one that generally would make greater charge for hydropower than had been the case in some instances. I am not saying that

Senator ELLENDER. It is a fact though, is it not?
General CHORPENING. It is a fact generally, yes.

Senator ELLENDER. As to flood control, are you more liberal in your rules than Reclamation, or how does that work out?

General CHOPENING. Obviously if we propose that a larger portion of the costs should be charged to hydropower, there is less to charge to other purposes. Some other people may consider that more should be charged to flood control than we feel is proper and less to power. We feel that we have to be completely fair in allocation to all purposes.

Senator ELLENDER. All in all you are here to tell us that the yardstick that is used by the Corps of Engineers inures to the greater benefit of the Government than the plan of the Reclamation?

General CHORPENING. That has generally been true.

DIRECTIVE ON COST-ALLOCATION SYSTEM

Senator CORDON. General, with respect to this philosophy of cost allocation which you have just been discussing, I would like to ask you if that is the plan that was studied over a period of years and which was set out in a directive of the Bureau of the Budget under Mr. Frederick J. Lawton, I believe dated December 31, 1952!

General CHORPENING. The circular A-47, yes, that is correct.

Senator Cordon. Was that cost-allocation system substantially in accord with the recommendations of a subcommittee of the Committee on Water Resources which made a report on the subject matter, I think in the year 1950?

General CHORPENING. Actually the Benefit-Cost Subcommittee of the Federal Inter-Agency River Basin Committee did make that recommendation and the provisions of circular letter A-47 were Pentially in agreement with that recommendation and essentially in agrement with what has been the position of the Corps of Engineers.

Senator CORDON. What was the committee that you mentioned, the Federal Inter-Agency River Basin Committee! That was the committee composed of whom? Do you know?

General C'HORPENING. I think there were two different agencies or grupe involved. One was the President's Water Policy Resources Council, I think it was, and the other was this committee of the Frjeral Inter-Agency River Basin Committee on benefits and costs, as Imall it.

FEDERAL INTER-AGENCY RIVER BASIN COMMITTEE

Senator CORDON. Who set up that Federal Inter-agency_River Basin Committee? I would like to know something about it. Do you know?

General CHORPENING. The Water Policy Committee, as I recall it, was a group set up, I think, by presidential directive to study the matter. The other, the Federal Inter-agency River Basin Committee is an informal group which now consists of seven of the agencies of Government involved directly or indirectly with water resources, and members of their staffs were on this subcommittee that considered benefits and costs.

Senator CORDON. Do you refer now to this group of people, the subcommittee people membership during 1949 and 1950, consisting of Reginald C. Price, special assistant to Assistant Secretary, Department of Interior.

George L. Beard, Chief, Planning and Development Division, Civil Works, Office of the Chief of Engineers, Department of the Army.

Victor Roterus, Assistant Chief, Area Development Division, Office of Domestic Commerce, Department of Commerce.

Frank L. Weaver, Chief, Division of River Basins, Bureau of Power, Federal Power Commission.

Ernest H. Wiecking, Office of the Secretary, Department of Agriculture. Is that the

group

that
you

refer to? General CHORPENING. That is correct. That is the Subcommittee on Benefits and Costs of the Federal Interagency River Basin Committee.

Senator CORDON. We have subcommittee staff setup and reading from the “Report to the Federal Interagency River Basin Committee, Proposed Practices for Economic Analysis of River Basin Projects,” prepared by the Subcommittee on Benefits and Costs, dated May 1950, the subcomimttee staff during 1949 and 1950 is listed as follows:

Nathaniel A. Back, Office of the Secretary, Department of Agriculture.

Max R. Bloom, Area Development Division, Office of Domestic Comemrce, Department of Commerce.

Joseph R. Brennan, Planning and Development Division, Civil Works, Office of the Chief of Engineers, Department of the Army.

Albert R. Johnson, Branch of Project Planning, Bureau of Reclamation, Department of the Interior.

Mark M. Regan, Division of Land Economics, Bureau of Agricultural Economics, Department of Agriculture.

Kenneth L. Roberts, Division of River Basins, Bureau of Power, Federal Power Cominission.

George H. Walter, Division of Land Economics, Bureau of Agricultural Economics, Department of Agriculture.

Ira A. Watson, Branch of Project Planning, Bureau of Reclamation, Department of the Interior.

Eugene W. Weber, special assistant on civil works, Office of the Chief of Engineers, Department of the Army.

William M. White, Office of River Basin Study, Fish and Wildlife Service, Department of the Interior.

That is the group that is listed as a subcommittee staff during 1949 and 1950. I think those are the people who recommended a basis for cost allocation back in 1950.

General CHORPENING. That is correct, sir.

Senator CORDON. That recommendation, as implemented in the order or the directive of the Director of the Bureau of Budget on December 31, 1953, is essentially the basis now used by the Corps of Engineers as to cost allocations? General CHORPENING. That is correct, sir.

Senator ELLENDER. Mr. Chairman, may I pursue a little further this question of cost and benefit. A moment ago you stated that $1,630,000 was for flood control, $1,600,000 for irrigation, that is, benefits, $440,000 to provide municipalities with fresh water, $530,000 to prevent the encroachment of water salinity, and $200,000 for power. Are there any other items?

POWER BENEFITS

Colonel WHIPPLE. The overall benefits to the project as a whole, including the portion built by the Bureau of Reclamation, includes a total power benefit in the neighborhood of $3 million annually.

Senator ELLENDER. In addition to the $200,000 that you have just included ?

Colonel WHIPPLE. Including the $200,000. The $200,000 is put in there merely to compensate for the cost of the power intake works that are constructed by the corps and, in order to show them balancing their annual costs, is listed as a benefit.

Senator ELLENDER. What is the relationship between these yearly amounts that you just indicated to the cost of the project?

Is there any way by which one could take these cost benefits that you have just indicated and figure out the amount of the project that will be chargeable, let us say, to the Federal Government for irrigation or for power?

Colonel WHIPPLE. Yes, there is. The benefit-to-cost ratio is 1.6 for these benefits that have just been listed, so that generally speaking approximately two-thirds of the benefits must be collected on the average in annual costs in order for the project to be self-reimbursing. Senator ELLENDER. You mean as to power or irrigation?

Colonel WHIPPLE. No, sir; I was talking about the ones we have listed for the Corps of Engineers project of flood control, irrigation, and so on.

Senator ELLENDER. You do not expect to collect anything out of flood control? That is a burden that is borne by the Federal Government.

Colonel WHIPPLE. Yes, that is correct.

Senator ELLENDER. You indicated a while ago that the municipalities are not going to furnish anything, so that the $440,000, plus the $530,000 to prevent the salinity encroachment, is another item that you can charge to the Federal Government ?

REIMBURSABLE PROJECT FUNCTIONS

Colonel WHIPPLE. My point is that of the project functions that are determined to be reimbursable, you do not have to recoup all of the benefits, but approximately two-thirds of the benefits in this case.

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