To finance this sort of development and to stand the loss if a well does not produce, requires a considerable capital investment. Consequently, the San Luis area now is an area in which large ownerships are almost an economic necessity.

Judged in accordance with reclamation law, there are about 325,000 acres of excess land in the service area grouped in 130 separate ownerships. The owners are fully aware of the ramifications of reclamation law in regard to their excess lands. Our understanding is that most of these owners, with the notable exception of the Southern Pacific Co., are willing to sign recordable contracts in compliance with reclamation law.

We expect, therefore, that in response to these recordable contracts and the opportunity to buy adequate water at a reasonable price, the pattern of ownership will change if San Luis unit is authorized. Ultimately, under project conditions, the west side of the San Joaquin Valley should resemble very closely the present pattern of development on the east side of the valley.

The crop pattern in the project service area also will change. As of 1950, the date of our latest complete crop survey, there were about 400,000 acres developed for irrigation in the San Luis area. About one-third of this was fallowed each year, not for soil replenishment, but simply because the existing water supply was expensive to develop, and therefore limited in quantity. Of the remaining acreage actually irrigated, about 73,000 acres were devoted to long-staple cotton, 162,000 acres to irrigated grain and hay, and about 38,000 acres to field and truck crops, forage, and deciduous fruits and grapes.

We anticipate that under project conditions of a full water supply at reasonable cost, the acreage of long-staple cotton will increase by about 60,000 acres, the truck crop acreage by 72,000 acres, the field crop acreage by 98,000 acres, the deciduous fruit and nut acreage by 22,000 acres, and forage crops acreage by 130,000 acres. Grain would disappear completely except as a second crop on land devoted primarily to truck or field crops.

It is important to note that more than 85 percent of the land in the service area is class 1 or 2 and that the area has a frost-free growing period of from 250 to over 300 days annually. These conditions make it an extremely versatile agricultural area capable of producing a wide variety of crops when adequate water is available. Should some particular crop encounter market difficulties in the future, it will be easy for the farmers to replace it with a more profitable crop. This versatility is the best possible assurance that the San Luis area will not aggravate problems of crop surpluses.

When the investigation started, the first question to be answered was the source of water supply. The best source would be the Sacramento-San Joaquin Delta providing that an economical method could be found to lift the water from sea level in the Delta, transport the water southward and store it for us in the summer irrigation season. Fortunately, the Delta-Mendota Canal of the Central Valley project had been constructed from the Delta to the San Luis area. This canal and the Tracy pumping plant, which lifts water from the Delta into it, are designed to supply water to northern San Joaquin Valley lands. Sixty-seven miles from the Tracy pumping plant, the DeltaMendota Canal passes within 211⁄2 miles of the San Luis Reservoir site, a point close to the head of the San Luis service area. The pumps

and canal are used to their capacity only during the peak of the irrigation season in summer. In winter and early spring months the canal transports relatively little water, while during the same months millions of acre-feet annually waste to the sea through the Sacramento-San Joaquin Delta. If San Luis Reservoir existed, this surplus water could be lifted and transported by the almost idle pumps and canal to San Luis Creek. Here a new set of pumps could lift it into San Luis Reservoir to await the start of irrigation. When needed to sustain growing crops, the water could be released from San Luis Reservoir into the proposed San Luis Canal. In this manner, the Delta-Mendota Canal could be used to supply the San Luis area with about 1,250,000 acre-feet of water annually. This would approximately double the annual amount of water transported for beneficial use by the Delta-Mendota Canal.

It is this plan of service which is provided for in H. R. 6035 and H. R. 7295. The Tracy pumping plant and the Delta-Mendota Canal, of course, are existing works. Beyond San Luis Creek new works would be required, including the San Luis pumping plants, San Luis Reservoir and Forebay, the 104-mile San Luis Canal, the Pleasant Valley pumping plant and canal, transmission facilities to the project pumping plants, a series of small relift pumps, and miscellaneous structures for operation and maintenance.

Since the regional director issued his feasibility report in May 1955, discussions with the Pacific Gas & Electric Co. have resulted in the possibility of an offpeak energy exchange which is not provided for in the existing contract. Studies based on such an offpeak energy exchange indicate that it would be an economical means of providing the electrical energy for operating the San Luis pumps. This will require an increase in the main San Luis pumping plant and the provision of a low-head pumping plant and a forebay between the Delta-Mendota Canal and the San Luis Reservoir. We now recommend this modification of the works shown in the regional director's report of May 1955.

A price of $7.50 per acre-foot for water delivered at canalside would be sufficient to repay 76 percent of the interest-free cost of the portion of the new San Luis works allocated to irrigation. The remainder of the cost of the new irrigation works would come from the earned surplus of the other Central Valley project features. This earned surplus would be reduced further because a large amount of electrical energy would be diverted from.commercial sale and put to use for project pumping on San Luis.

Dr. MILLER. May I ask a question?

Mr. ASPINALL. Yes.

Dr. MILLER. The price of water delivered at canalside is $7.50. Is that the same as in the interim report?

Mr. BELLPORT. Yes.

If we assume that the Pacific Gas & Electric Co. will build the Trinity plants, then the Central Valley project, including San Luis unit, can meet the reimbursable portions of project costs by the year 2017 with an earned surplus of $207,124,000. If we assume that the Federal Government will build the Trinity plants, then the Central Valley project, including San Luis unit, can meet the reimbursable portions of project costs by the year 2017 with an earned surplus of $67,195,000.

Dr. MILLER. Have those figures been changed?

Mr. HEAD. Yes; it is different than the payout studies contained in our San Luis report which accompanied the Secretary's June 28, 1957, report.

Those studies did not include the plan that we now have with regard to offpeak pumping.

Dr. MILLER. How much difference in the final figures in the original statement and the one we find today?

You might supply it for the record if permissible, Mr. Chairman. Mr. HEAD. I can give that figure.

Dr. MILLER. Very well.

Mr. HEAD. In our payout studies contained in our 1955 report, the earned surplus at the end of the 50-year period which compares with 67 million was $98,774,000.

Dr. MILLER. That is under the Federal Government's plan?
Mr. HEAD. Yes.

Dr. MILLER. What is it under the other plan?

Mr. HEAD. At the time of this analysis, there was no offer by the company on which we could make such an analysis.

Dr. MILLER. I think that is all.

Mr. BELLPORT. Aside from the major features discussed above, the water users might elect to contract for distribution systems with the United States. Repayment for the distribution systems in this event would amount to 40 equal annual installments of about $4,750,000 per year. The total costs, although relatively high as compared to those of many other projects, are well within the ability of the farmers to repay.

The integration of San Luis with the Feather River project would require some changes in the physical works proposed above. Bureau and State of California engineers have explored these changes together and have reached a general understanding of how the physical aspects of integration could be accomplished. These joint studies have convinced me that the integration proposal in H. R. 6035 and H. R. 7295 is thoroughly workable. Further joint work would have to be done, however, before the exact details of an integrated system could be modified.

For an integrated project, San Luis Canal would have a greater capacity throughout its entire length than for a separate Federal project serving San Luis only. There is a possibility the canal might have to be at a higher elevation, too, although at the moment we think not. The schedule for constructing San Luis Dam and Reservoir to ultimate capacity also might be different for an integrated project than for a separate Federal project. Minor modifications of San Luis forebay and the San Luis pumping plants also would be required in order to accomplish integration.

We have not discussed possible financial arrangements under integration with the State. However, in its comments on our San Luis report, the State offered several possible arrangements for joint financing of an integrated project. These made it clear that State officials are perfectly willing for their government to assume an appreciable and equitable share of the financial burden. I feel confident, therefore, that a standard allocation procedure can be used to apportion costs between the two governments once we have decided on exactly what should be built and when.

In summary it may be noted that provision of irrigation water to the San Luis unit by means of the Central Valley project and Feather River facilities is another step forward in the application of the principles upon which California water planning is based and of which the original Central Valley project represents the first application.

(Attachments to Mr. Bellport's statement follow :)