up every 2 or 3 years. From observation of the area to the south, this plan has effectively restored and retarded erosion which existed there for a distance of 10 miles prior to adoption of that project. It is those techniques which we learned, and applied at Santa Barbara that will be recommended for inclusion in this project.

We have a considerable amount of information on this particular portion of the California coast, with respect to the volume of material that is eroded, the volume of material that must be replaced, and provided if it is interrupted as it was in the case of Port Hueneme. Mr. NEAL. Based upon your experience at Santa Barbara, do you feel that this project would be a successful one?

Colonel ALLEN. Yes; we do.

Mr. MACK. If this were solely a beach-erosion project, and did not involve rivers and harbors, then the local interests would have to contribute two-thirds of the cost. In this case, however, the local interest is the Government of the United States, since 80 percent of the area is owned by the Navy, or the United States Government. Colonel ALLEN. That is correct, sir.

Mr. BRAMBLETT. Mr. Chairman, may I add one word?
Mr. ANGELL. Yes, sir.

Mr. BRAMBLETT. I really feel, myself, and I feel that the people in the community feel that the No. 1 problem is beach erosion, as has been brought out here. The harbor development is a secondary development which is necessary from the standpoint of economics of the community, and from the loss of the harbor. However, I want, also, to call your attention, Mr. Chairman, to the fact that the county, the city of Oxnard and Port Hueneme, and the entire area has contributed already thousands of dollars in an effort to hold this water back.

What Mr. Thompson had in mind there was that the water was coming in there, and covered up blocks and blocks of the city of Hueneme, and caused the Red Cross situation to develop, but they have brought in trucks on their own, if I remember correctly, by the county district and the high-school area, and the city, to try and build down past where the Navy put in their walls. I do want to emphasize the fact that the No. 1 problem is the question of beach erosion.

Mr. ANGELL. Thank you very much, Mr. Bramblett and Mr. Thompson, and if there are no further witnesses, we will close the hearings on the project, and that concludes the hearings for this morning.

(Thereupon, at 11:20 a. m. the committee adjourned.)

RIVERS AND HARBORS OMNIBUS BILL

MONDAY, MAY 24, 1954

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON RIVERS AND HARBORS
OF THE COMMITTEE ON PUBLIC WORKS,

Washington, D. C.

The subcommittee met at 11 a. m., in the committee room, 1304 House Office Building, Hon. Homer D. Angell (subcommittee chairman) presiding.

Mr. ANGELL. The Subcommittee on Rivers and Harbors of the Committee on Public Works will now proceed to the consideration of the restudy of the McGee Bend Reservoir, Tex., pursuant to the request of the Chief of Engineers for committee consideration of suggested modifications.

Is Congressman Brooks present?

If not, Colonel Whipple, the committee would be glad to hear from you on this project.

RESTUDY OF THE MCGEE BEND RESERVOIR, Tex.

STATEMENT OF COL. WILLIAM WHIPPLE, OFFICE OF THE CHIEF OF ENGINEERS, DEPARTMENT OF THE ARMY-Resumed

Colonel WHIPPLE. Sir, the McGee Bend project was authorized by the River and Harbor Act of 1945 based on a report of 1939 which was Senate Document No. 98 in the 76th Congress. It is one of a system of four reservoirs designed to provide multiple-purpose benefits for the Neches-Angelina system in eastern Texas, and was designed for flood control, hydroelectric power, and water conservation, the water conservation aspect being industrial, domestic, and rice irrigation for the lower part of the valley.

If I may show you on the map the Neches-Angelina system, the Neches and Angelina are substantially equal tributaries of the lower Neches River. It has a 36-foot depth up to Beaumont, Tex. The river above Beaumont flattens out and is subject to floods. For rice irrigation water is extremely valuable in that area and farther east.

The system of reservoirs designed at that time was to include two large storage reservoirs, McGee Bend and Rockland, and two dams below that designated as dam A and dam B.

Since that time there have been substantial changes in the setup of that project. The first thing that happened was during the war there was immediate need of water supply for industrial purposes, and as a result of studies and analyses in that area it was decided to proceed at once with dam B on the lower Neches, to build it not as a

power-providing dam but to raise it to provide 90,000 acre-feet of storage. That was done. Construction was not actually started until after the war, in 1947, and in 1951 that dam was completed and is now operated mainly for the purpose of water conservation with approximately 90,000 acre-feet of storage.

The original setup of these four dams was to consider a $5 million local contribution on account of these water-conservation benefits. This was done on the basic proportion of the water-conservation benefits to the benefits for multiple-purpose projects, and of this $5 million it was subsequently agreed by the Lower Neches Valley Authority that $2 million would be made available for dam B and an additional $3 million for the construction of the McGee Bend project, making a total of $5 million for the two reservoris, with the proviso that the McGee Bend project have sufficient water-conservation storage to provide the benefits that had been originally provided with the entire system of four dams insofar as water conservation was concerned.

Of our original plan of four projects, the Rockland Dam is still considered authorized and can be built, but as far as water conservation, which was the original reason for the local contribution, it is now considered that the McGee Bend Reservoir with this large storage and the storage provided in dam B, which was not originally planned, can provide all the water-conservation benefits of the original four dams. It was agreed by the Lower Neches Valley Authority that the local contribution of $5 million would be applicable to the 2 dams rather than 4. That was accepted by the Department of the Army and dam B has actually been constructed at a cost of approximately $8 million, of which 25 percent or $2 million was contributed by local interests.

Planning funds have been available for construction of McGee Bend for several years. The project is fully authorized and has been considered economically feasible and planing is well advanced. The progress of the planning has shown that a somewhat larger amount of flood control and a somewhat larger installation of power can be provided within the reservoir area originally planned. However, the reservoir now planned is almost exactly the same size as they originally planned and the changes in the engineering are not very great and are well within the scope of the original authorization.

The problem that has arisen that resulted in this matter being referred to the committee is a question regarding the economics of including power and, furthermore, matters that that brings up regarding the amount of local contribution.

In December 1952 the Bureau of the Budget issued a new circular, Circular No. 847, which redesigned the standards of economic feasibility that would be applied to power projects. Under Circular No. 847, the economic feasibility of including power in this project has been examined and, according to those standards, the inclusion of that power would not be justified.

Since that time, however, further study has been given to the matter. of power economics by the Corps of Engineers, the Department of the Interior, and the Federal Power Commission, and very recently additional standards of feasibility have been worked out and included in a report of these three agencies dated March 12, 1954, testimony regarding which has been previously given.

As a result of the questions which were raised regarding the economic feasibility of including power in this project, study has been given as to alternate projects without the inclusion of power, and a project which is referred to as the modified project has been evolved which would provide the majority of the water-conservation benefits without the inclusion of hydroelectric power at this site.

The letter which was forwarded to the committee by the Chief of Engineers, and which has also been sent to the Senate committee, outlines the problems involved.

The modified project for flood control and water conservation would have 667,000 acre-feet of storage provided for water conservation, and this would provide an additional 650,000 acre-feet of assured water supply available for industrial and municipal purposes and rice crops in that area. This will meet all the water conservation benefits which were originally planned in the four reservoirs and will provide also for the flood control that is potentially available in this site. It will not include power.

This project can be built for $28 million capital cost. This contrasts with $47 million, which is the cost of the project including power, and with a somewhat larger degree of water conservation storage.

The primary question which has to be considered is whether under this original authorization for a multiple-purpose project costing $47 million the project should be built in accordance with the original authorization or built as a modified project for $28 million, which would provide most of the water conservation benefits.

Mr. ANGELL. Is the committee to understand from that statement that the Corps of Engineers is recommending the second project which would cost approximately half of what the original project would cost?

Colonel WHIPPLE. I might say it certainly indicates that the power is marginal and its inclusion is questionable. We have not made a formal recommendation in that respect. The reason we have not is that the economics of the power project is not one as to which the policy of the Government is clear-cut and firm. We are not sure what the policy of the committee is, fully, in that respect.

So

If you take merely the additional cost which the inclusion of power would add to this project and contrast it with the value of the power, you would come to the conclusion that the power was justified. whether the power is justified depends on the policy of the Government and the interpretation which the committee places on the facts. Mr. ANGELL. If the power is eliminated, what would the project cost?

Colonel WHIPPLE. The capital cost would be about $28 million. Mr. ANGELL. And with the power it would cost how much? Colonel WHIPPLE. $47 million.

If I might summarize, the really key figure in this is the annual cost of power and the annual value of the power. The additional project cost of including the power is $762,000 annually. The power is actually worth $908,000 annually. The question is whether consideration should be given, and how much consideration should be given, by the committee to questions of taxes foregone by the development of this power by the Federal Government because the value of

the power of $908,000 is the cost of producing that power by private 'sources which pay substantial taxes.

Mr. ANGELL. Is there any desire by private capital to produce that power?

Colonel WHIPPLE. I believe not. However, there is a desire on the part of people in that vicinity to have that power produced by the Federal Government.

L

* Mr.ANGELL. Is there a demand for the power in the area at the present time?

Colonel WHIPPLE. Yes, sir.

Mr. ANGELL. What would the cost be in comparison with other Federal projects?

Colonel WHIPPLE. This would be somewhat higher than other projects. This is relatively expensive power.'

Mr. ANGELL. Where is the power procured at the present time for that area!

Colonel WHIPPLE. Very largely from thermosteam plants using gas for fuel. This is part of an interconnected region which includes parts of Arkansas, Missouri, and Louisiana. At this end of the system [indicating on map] practically all the power is produced by thermosteam plants using gas for fuel.

Mr. ANGELL. Is any Federal power developed in that area?

Colonel WHIPPLE. There is some. There is no other hydro power in that particular basin. There is some farther north in the White River and some in the Brazos River. The Brazos River is the closest Federal project and it has relatively small production.

Mr. ANGELL. Any questions?

Mr. SCUDDER. I came in late, but it does not look like a very good project for the Federal Government to involve itself in. If you are going to try to add to a project some $19 million to develop $908,000 of power annually and the annual extra costs would run about $762,000, there could not be much justification for the power, could there, Colonel!

Colonel WHIPPLE. There is one mistake in the figures I gave. I should have said $24 million instead of $28 million.

Mr. SCUDDER. $24 million without the power?

Colonel WHIPPLE. Yes.

Mr. SCUDDER. That makes it worse, then. That would be $23 million to put into the project for the development of $908,000 of power annually. That does not sound much like a business deal for the Government to be involved in.

Colonel WHIPPLE. It is not a very good one. It is certainly not one of our better power projects.

Mr. ANGELL. The Army engineers are not recommending the inclusion of power?

Colonel WHIPPLE. The status is that the power is actually authorized. If we had a definite understanding as to the policy on power we would have made a more clear-cut recommendation. The ratio of benefits to cost depends on the interpretation that the committee places on the relevance of taxes as a part of the overall economics. As Mr. Scudder has pointed out, the relationship of the value of the power to the cost is slightly higher if we do not consider that the taxes are relevant.