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APPENDIX IV

Department Of State, Washington, September 11,1959. Hon. Thomas E. Morgan, Chairman, Committee on Foreign Affairs, House of Representatives.

Dear Mr. Chairman: By your letter of July 6, 1059, you requested the Department's comments on H.R. 8080, a bill to authorize the conclusion of an agreement for the joint construction by the United States and Mexico of a major international storage dam on the Rio Grande in accordance with the provisions of the treaty of February 3, 1944, with Mexico, and for other purposes.

In the treaty of 1944 the Governments of the United States and Mexico agreed "to construct jointly, through their respective Sections of the Commission * * *: The dams required for the conservation, storage and regxdation of the greatest quantity of the annual flow of the river in a way to ensure the continuance of existing uses and the development of the greatest number of feasible projects, within the limits imposed by the water allotments specified" in the treaty. The treaty contemplated that one or more storage dams would be required upstream from the Falcon Dam which was completed in 1953.

The two sections of the Commission have conducted extensive surveys and studies to determine the most favorable site on the Kio Grande for a second major international storage dam, to determine the reservoir capacities required to provide, in conjunction with the Falcon Dam and Reservoir, optimum feasible conservation, regulation and flood control; and to determine the most appropriate general design of dam to serve these purposes from the standpoint of operational characteristics and economy of construction. The Commission found that of the many sites investigated, the Diablo site, located approximately 1 mile below the confluence with the Devils River and 12 miles upstream from Del Rio, Tex., was the most suitable for the second international dam. The Commission found that for optimum feasible control and regulation of water at the Diablo site, there would be required a total reservoir capacity for the United States and Mexico of 5,000,000 acre-feet. This would consist of floodcontrol capacity, including superstorage, of 2.110,000 acre-feet in which each country would have an undivided interest; 3 million acre-feet conservation storage capacity of which 1,686,000 acre-feet would l>e the U.S. share; and 550,000 acre-feet silt retention storage of which 309.000 acre-feet would be the U.S. share. The Commission found that a dam at the Diablo site to provide such total storage capacity would be entirely feasible from an engineering standpoint, and that the most appropriate general type of dam at this site would consist of a gated concrete overflow section in the river channel flanked by earth embankments.

There is urgent need from the viewpoint of the United States for a major international storage project on the Rio Grande upstream from Falcon Dam to protect lives and safeguard property in this country from floods, and to conserve for beneficial uses the optimum feasible quantities of waters of the Rio Grande. According to the feasibility report of September 1958 to which H.R. 8080 refers, the annual primary benefits from the project to the United States compared with annual costs would be 1.96 :1 for a 50-year life of the project and 2.48:1 for a 100-year life.

That these figures were conservatively estimated was demonstrated in the very month in which the report was issued. A flood among the largest in volume of record on the Rio Grande began to enter Falcon Reservoir about the middle of September 1958. It became necessary to make flood releases at Falcon Dam far exceeding the downstream channel capacity of the river. The total value of flood damages in the United States and of losses of waters to this country in 1958, both of which the Diablo project would have prevented, amounted to approximately $42,500,000. This figure corresponds to almost 90 percent of the U.S. share of the total cost of the Diablo project, which share

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is estimated at $49 million. These heavy losses, incurred in a single year, further emphasize the urgent need and justification for the project.

In view of the undertaking of the two Governments in the treaty of 1944 with respect to construction of major international storage dams on the Rio Grande, and in view also of the high ratio of benefits to costs of the project to the United States, the Department believes that legislation should be enacted as soon as possible authorizing conclusion of an agreement with the Government of Mexico for the joint construction of this project. H.R. 8080 would accomplish this purpose.

The Department recommends that the committee amend H.R. 8080 in certain respects largely for the sake of clarity.

In the second proviso of the second paragraph of section 2 it is suggested that the phrase "That if such power privilege is leased" be amended to read "That if it is proposed to lease such power privilege * * *" It is also suggested that "United States" be inserted before "Commissioner, International Boundary and Water Commission" and that "United States and Mexico" be inserted immediately thereafter, in order to conform to the titles established by treaty.

The first sentence of section 3 is intended, it is understood, to insure that, after the proposed dam is placed in operation, the amount of U.S. water that will be available for use below Falcon Dam will not be lass than the amount that would have been available without the proposed dam under present conditions of development, between the new dam site and Falcon Reservoir. This provision is in substantial accord with one of the conditions under which the Texas State Board of Water Engineers and Governor Daniel approved the feasibility report on the project. Compliance with such a requirement would be dependent upon the State of Texas, which controls the distribution of the U.S. share of waters of the Rio Grande below Fort Quitman and would control releases of U.S. waters impounded by the proposed dam for domestic, municipal, industrial and irrigation uses between that dam and the Gulf of Mexico. It is accordingly suggested that the first sentence of section 3 be modified to read as follows:

"sec. 3. If a dam is constructed pursuant to an agreement concluded under the authorization granted by Section 1 of this Act, its operation for conservation and release of United States waters shall be integrated with other United States water conservation activities on the Rio Grande below Fort Quitman, Texas, in such manner as to provide the maximum feasible amount of water for beneficial use in the United States, with the understandings that (a) releases of United States waters from said dam for domestic, municipal, industrial and irrigation uses in the United States shall be made pursuant to order by the appropriate authority or authorities of the State of Texas, and (b) the State of Texas having stipulated that the amount of water that will be available for use in the United States below Falcon Dam after the proposed dam is placed in operation will be not less than the amount available under existing conditions of development, it shall be the responsibility of the appropriate authority or authorities of said State to distribute available United States waters of the Rio Grande in such manner as will comply with said stipulation."

If the term "existing lawful users of the United States" is retained in section 3, it should be clarified that determination as to legality of existing uses is to be made pursuant to the laws of the State of Texas.

Since section 1 of the bill authorizes conclusion of an agreement for construction, operation, and maintenance of the dam and section 2 authorizes, subject to certain conditions, conclusion of an agreement for construction, operation, and maintenance of facilities for generating hydroelectric energy, "agreements" should be substituted for "agreement" in section 6.

With these modifications, the Department recommends enactment of H.R. 8080.

The Bureau of the Budget has stated that it would have no objection to the submission of this report, with the understanding that a copy of its letter to the Department of September 2. 1959, would accompany the report. A copy of that letter is enclosed. Sincerely yours,

Wilijam B. Macomber, Jr.,

Assistant Secretary (For the Acting Secretary of State). Executive Office Of The President,

Bureau Of The Budget, Washington, D.C., September 2,1959. The Honorable the Secretary Of State. (Attention: Mrs. E. M. Waskewich, 4188 New State Building.)

My Dear Mr. Secretary: This is in reply to Assistant Secretary Macomber's letter of August 4, 1959, transmitting copies of the report that the Department proposes to present to the chairman of the House Committee on Foreign Affairs on H.R. 8080, a bill to authorize the conclusion of an agreement for the joint construction by the United States and Mexico of a major international storage dam on the Rio Grande in accordance with the provisions of the treaty of February 3,1944, with Mexico, and for other purposes.

H.R. 8080, if enacted, would provide for the joint construction of the Diablo Dam and Reservoir on the Rio Grande River by the United States and Mexico. It is considered that the amendment to section 3 of the bill proposed in your report may raise certain legal questions with respect to Federal rights. We have requested the views of the Department of Justice on this matter and will advise you further when these views are received.

Subject to your consideration of the views expressed in our letter to the committee, a copy of which is enclosed for your information, and on the understanding that we may wish to supplement this letter when the views of Department of Justice are received, you are advised that the Bureau of the Budget would have no objection to the submission of your report to the committee.

It is requested that a copy of this letter accompany your report to the committee.

Sincerely yours,

Phillip S. Hughes, Assistant Director for Legislative Reference.

Executive Office Of The President,

Bureau Of The Budget, Washington, D.C., September 2,1959. Hon. Thomas E. Morgan, Chairman, Committee on Foreign Affairs, House of Representatives, Washington, D.C.

My Dear Mr. Chairman: Your committee now has under consideration H.R. 8080, a bill to authorize the conclusion of an agreement for the joint construction by the United States and Mexico of a major international storage dam on the Rio Grande in accordance with the provisions of the treaty of February 3, 1944, with Mexico, and for other purposes.

H.R. 8080, if enacted, would provide for the joint construction of the Diablo Dam and Reservoir on the Rio Grande River by the United States and Mexico. The President, in a statement issued jointly with the President of Mexico on February 20, 1959, expressed his agreement with the President of Mexico on the desirability of constructing the Diablo Dam and his hope that an agreement for construction could be concluded as rapidly as possible.

However, H.R. 8080 in its present form contains a number of flaws. Those flaws, together with amendments designed to remove them, are described in the attached analysis.

Accordingly, the Bureau of the Budget recommends that H.R. 8080 be enacted if amended as recommended in the attached analysis. Sincerely yours,

Phillip S. Hughes, Assistant Director for Legislative Reference. Analysis Of Amendments To H.R. 8080 Recommended By The Bureau Of The

Budget

1. Section 2 provides that if a power privilege is leased, a report shall be made to the Foreign Relations Committee of the U.S. Senate and the Foreign Affairs Committee of the House of Representatives and such agreements shall not become effective unless approved by these committees. However construed, the constitutional difficulties of this provision are inherent. Viewed as requiring a further legislative action, the section is open to the objection that it involves an unlawful delegation by the Congress to its committees of a legislative function which the Constitution contemplates the Congress itself, as an entity, should exercise.

If the approval or disapproval by the committees is considered as not legislative in nature, then there is involved what appears to be an unconstitutional infringement of the separation of powers prescribed in articles I and II of the Constitution. We do not believe that the Congress can validly delegate to one of its committees the power to prevent executive actions taken pursuant to law. To do so in this case would be to divide the responsibility for administering the program between the Secretary of State and the designated committees. Such a procedure would be a clear violation of the separation of powers within the Government and would destroy the lines of responsibility which the Constitution provides. Furthermore, the negotiation and execution of such a leasing contract is a purely executive function. Although the Congress may prescribe the standards and conditions under which executive officials may enter into contracts, it may not lodge in its committees or members the power to make such contracts, either directly or by giving them the power to approve or disapprove a contract which an executive officer proposes to make.

It is therefore recommended that section 2 be amended by deleting the language beginning with ": Provided further," at the top of page 3 to the end of the section and by substituting a period.

2. The bill does not require repayment of water supply and irrigation costs. The Bureau of the Budget considers that, as in the case of the Anzalduas diversion dam now under construction, operation of Diablo Dam and Reservoir for irrigation and water supply purposes in the United States should be prohibited unless local interests agree to appropriate repayment of costs allocated to these purposes. We would recommend, therefore, that section 3 of the bill be amended to include the following provision:

"Provided, That the dam shall not be operated for irrigation or water supply purposes unless suitable arrangements have been made with the prospective water users for repayment to the Government of such portions of the costs of the dam as shall have been allocated to such purposes by the Secretary of State."

3. Section 4 of H.R. 8080 would limit the costs allocated to power and water conservation to the incremental costs of including these purposes in the project. The Bureau of the Budget believes that allocations of costs to these purposes should be based on a method which assigns an equitable share of joint costs to all major purposes in accordance with established cost allocation procedures. We would recommend, therefore, that the first sentence of section 4 be deleted.

4. The second sentence of section 4 would permit the use of surplus power revenues to reduce any construction costs allocated to the conservation of water. We would recommend that the words "for irrigation" be added after the words "conservation of water" to make it clear that surplus power revenues will not be applied to reduce any costs allocated to domestic, municipal, and industrial water supply.

5. Section 5 of the bill would base the interest rate to be charged for water conservation and power on the average rate paid by the United States on its marketable long-term loans outstanding at the time the first appropriation for construction is made. The Bureau of the Budget believes that interest charges should be computed on the basis of the current average market yield on long-term marketable obligations of the Treasury at the end of the fiscal year preceding the fiscal year in which construction begins. This would bring the interest payments for power and water supply in line with the actual costs to the Treasury of the funds invested in the project. We would recommend therefore that the bill be amended by the substitution of the following language for the language of section 5:

''The interest rate applicable to the repayment of costs allocated to power and domestic, municipal, and industrial water supply shall be determined by the Secretary of the Treasury as of the time the first appropriation is made for initiating construction of the project. Such interest rate shall be determined by calculating the average yield to maturity on the basis of the daily closing market bid quotations during the month of June next preceding the fiscal year in which said appropriation is made, on all interest-bearing marketable public debt obligations of the United States having a maturity date of fifteen or more years from the first day of said month, and by adjusting such average annual yield to the nearest one-eighth of one per centum."

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