Senator KERR. Very well, sir. (The amendments referred to are as follows:) THE PRESIDENT OF THE SENATE, United States Senate. DEPARTMENT OF AGRICULTURE, DEAR MR. PRESIDENT: Enclosed for the consideration of the Congress is a draft of amendments to the Watershed Protection and Flood Prevention Act (Public Law 566, 83d Cong.) agreed to with the Bureau of the Budget as indicated in the enclosed letter of March 19, 1956. The Department of Agriculture recommends enactment of this legislation as a means to enable it under its established programs to more adequately meet the needs for the conservation of water resources and the expanding use of water and to accomplish, as an integral part of the agricultural services already familiar to farm people, the purposes sought by Title II of H. R. 5881 (currently in conference). The recommended draft bill would revise the definition of works of improvement as contained in section 2 (1) of the act to include in addition to flood prevention, "associated measures for the conservation, development, utilization, and disposal of water"; would provide that the Federal Government shall not bear, under the provisions of the act, that part of the construction cost for providing any capacity in structures for any puropse, except capacity for flood prevention, which is applicable to the production of direct identifiable benefits; would authorize the Secretary to make long-term loans in amounts not in excess of $5 million on any single plan for works of improvement to local organizations to finance the local share of the costs; and would make the act also applicable to Hawaii, Alaska, Puerto Rico, and the Virgin Islands. Since all proposals for projects under Public Law 566 must be initiated by local agencies and the required sharing of costs by such agencies will differ on different projects it is not possible at this time to foresee what effect the amendments would have on requests for assistance. The Bureau of the Budget advises that there is no objection to the submission of this proposed legilsation and explanatory letter to the Congress for its consideration. Sincerely yours, TRUE D. MORSE, Acting Secretary. EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D. C., March 19, 1956. The honorable the SECRETARY OF AGRICULTURE. MY DEAR MR. SECRETARY: This is in reply to Assistant Secretary Peterson's letter of February 24, 1956, and Mr. Wheeler's earlier letter of January 24, both on the subject of amendments to the Watershed Protection and Flood Prevention Act. It will also serve to confirm agreements subsequently reached informally among representatives of the Department of Agriculture, the Department of the Interior and the Department of Defense, the Public Works Coordinator, and the Bureau of the Budget as to revisions in the original draft proposal of the Department of Agriculture. There is attached a copy of the amendment in its final form. Copies of his letter and attachment are being sent to the organizations which participated in the discussion of the amendments. It is understood by all of the interested agencies that the close relationship between this draft bill and statutes with related purposes will necessitate the careful regulation of policy and operations under the different statutes. Only by such regulation will it be possible to assure consistency of policy in such matters as loans (including those where "excess" land is involved) and cost and benefit allocations, and to eliminate potential duplication of effort. You are advised that there is no objection to the presentation of the draft bill in its revised form to the Congress for its consideration. Sincerely yours, ROGER W. JONES, Assistant Director for Legislative Reference. A BILL To amend the Watershed Protection and Flood Prevention Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Watershed Protection and Flood Prevention Act (Act of August 4, 1954, 68 Stat. 666) is amended as follows: (a) That part of the definition of the term "Works of improvement" as contained in section 2 of the Act which reads "(1) flood prevention (including structural and land-treatment measures)" is amended to read: “(1) flood prevention and associated measures for the conservation, development, utilization, and disposal of water (including structural and land-treatment measures)." (b) The proviso in paragraph (2) of section 4 of the Act is amended to read: "Provided, That the Federal Government shall not bear, under the provisions of this Act, that part of the construction cost for providing any capacity in structures for any purpose (except flood prevention) which is applicable to the production of direct identifiable benefits." (c) The Act is further amended by inserting after section 7 the following two new sections and renumbering subsequent sections of the Act to conform : "SEC. 8. The Secretary is authorized to make loans to local organizations to finance the local share of costs of carrying out works of improvement provided for in this Act. Such loans shall be repaid in not more than fifty years from the date when the principal benefits of the works of improvement first become available, with interest at the average rate, as determined by the Secretary of the Treasury, payable by the Treasury upon its marketable public obligations outstanding at the beginning of the fiscal year in which the loan is made, which are neither due nor callable for redemption for 15 years from date of issue. Provided, That, with respect to any single plan for works of improvement, the amount of any loan shall not exceed $5,000,000. "SEC. 9. The provisions of this Act shall be applicable to Hawaii, Alaska, Puerto Rico, and the Virgin Islands." Mr. PETERSON. The first amendment relates to broadening the purposes of the act. The Secretary's proposal would revise the definition of "work of improvement" as contained in section 2 (1) of the Watershed Protection and Flood Prevention Act to include, in addition to flood prevention, "associated measures for the conservation, development, utilization, and disposal of water." This amendment would permit the inclusion of water storage in flood-detention structures for other purposes such as irrigation or municipal water supply. It would also permit storage and release of water in a structure to maintain the low flow of streams for stock water, for maintaining fish and wildelife and for abating pollution: This amendment would eliminate the restriction of the act to flood prevention and agricultural water management measures providing the other types of water management, such as municipal water supply or fish and wildlife improvement, were associated with flood prevention. This would permit the utilization of sites for small dams for multiple purposes. It is generaly conceded that all available dam sites should be utilized for all purposes which they might properly serve in order to achieve the maximum possible beneficial use of available water. Any arbitrary restriction in their use tends to defeat this objective. Local people who are required to initiate, construct, operate, and maintain watershed projects under the terms of Public Law 566 should not be precluded from including those non agricultural phases of water development and use which are physically practical and economically justified. This amendment would also delete the proviso clause now in the act which prevents the Department from sharing in the cost of storage for purposes other than flood prevention. 80696-56 The second proposed amendment specifically defines what the cost sharing should be for capacity in structures for purposes other than flood prevention. The amendment states That the Federal Government shall not bear, under the provisions of this Act, that part of the construction cost for providing any capacity in structures for any purpose (except flood prevention) which is applicable to the production of direct identifiable benefits. This amendment would leave unchanged the authority of the Secretary to determine what shall be considered an equitable sharing of construction costs for flood prevention capacity in consideration of anticipated benefits. This amendment provides, however, that the Secretary may not share in the cost of capacity for purposes other than flood prevention to a greater extent than would be determined by the ratio of indirect or community benefits to total benefits. Senator KERR. That leaves me in a state of slight confusion. Do you suppose you could explain it in other words that would accomplish the very worthy aim of eliminating that degree of confusion? Mr. PETERSON. I should be glad to try, Mr. Chairman. Senator KERR. Maybe I could ask you a question. Would the effect of this amendment be to prevent the Federal Government doing what has heretofore been suggested, and that is paying for the capacity of the structure allocable to municipal water supply and then receiving reimbursement from the affected community over a period of years? Mr. PETERSON. NO Senator KERR. Or would it permit that? Mr. PETERSON. I believe it would, Senator. The amendments such as the Secretary proposed have within them a loan provision. It was not contemplated at the time the amendments were proposed that a reimbursement procedure as you suggest would be included. But I think either method might be used to reimburse the Federal Government for advanced costs. Senator KERR. Are you in a position to say that if the bill contained such provision and corresponding otherwise to your amendment, that that particular provision would be acceptable? Mr. PETERSON. It would seem to me so. I think that the loaning provision and the proposal that you make are not incompatible one with the other. It would perhaps be well to explain here that in project evaluation studies made by all Federal agencies, benefits are divided into two general classes: (1) Those which are direct and can be identified with particular beneficiaries, and (2) other benefits which have been variously called indirect, secondary, or community benefits which occur within or outside of the project area to the public generally. For example, to make the case as simple as possible, if enough storage were provided in the floodwater detention structure to irrigate 100 acres of land, the direct benefits would be the increased net income resulting from irrigation of the crop grown on the land. The farmer would be the direct beneficiary. However, the crops grown on this land would have to be transported to some point of sale and prepared for introduction into marketing channels. The increased income resulting from transporting and processing is classed as an indirect benefit which accrues to various people usually not identifiable in advance. It has been generally considered sound public policy to use public funds to cover costs allocable to these indirect or community benefits. This principle applies in the justification under Federal reclamation law of interest-free loans for irrigation development. The Department does not favor the amendment in H. R. 8750 which would prohibit the Secretary from requiring that local organizations shall assume any part of the construction cost of structural measures applicable to flood prevention. We feel that this amendment in H. R. 8750 defeats the concept of cost sharing presently embodied in the act which provides that, "local organizations shall assume such proportionate share of the cost of any works of improvement involving Federal assistance as may be determined by the Secretary to be equitable in consideration of the anticipated benefits from such improvements." In other words, cost sharing should be determined as between the local sponsors of projects and the Federal Government on the basis of the ratio of direct identifiable local benefits to total benefits and local landowners or other benefited interests should participate in projects cost to the extent of their benefits with due regard to all the variable and peculiar circumstances as between the many small projects susceptible of development under the provisions of the act. As to projects developed thus far we have attempted to fully recognize the individual peculiarities of each. We believe that the success of this program depends on acceptance by local communities of responsibility for project initiation and for direct participation in project costs. People must first believe and be convinced in their own judgments that projects are of benefit to themselves and their communities. This is the basis on which the projects to date have been planned and proposed by local organizations. Many local organizations which have sought assistance under Public Law 566 have already found it difficult or impossible to obtain commercial loans at reasonable rates of interest for meeting the local share of project costs. Therefore, this Department has recommended an amendment to Public Law 566 to provide for Government loans at the long-term Federal borrowing rate to enable local organizations to carry their appropriate share of the project costs. The Secretary's recommendation differs slightly from the comparable amendment in H. R. 8750. It provides more specific criteria for determination by the Secretary of the Treasury of the applicable long-term interest rate. It also limits loans to not more than $5 million on any one project. Senator KERR. Would a provision with reference to this responsibility that the Federal Government might pay the costs and then have a contract for reimbursement be of sufficient substance to meet your suggestion in this regard? Mr. PETERSON. As I said earlier, Senator, it seems to me that the net result is comparable in either case. Senator KERR. All right. Mr. PETERSON. The Secretary's recommendation would extend the provisions of Public Law 566 to Hawaii, Alaska, Puerto Rico, and the Virgin Islands. It is the same provision contained in H. R. 8750. It is our understanding that the omission of the Territories was an oversight in drafting the original act. We believe it to be equitable and fair that the provisions of the act should be extended to the Territories. H. R. 8750 and other bills contain various amendments that are not included in the Secretary's recommendations. One amendment in H. R. 8750 would set up certain conditions under which a structure providing more than 5,000 acre-feet of total capacity may be included in a watershed plan. These conditions are (1) that the structure will be constructed by a local organization as an integral part of the watershed plan, (2) that the flood-prevention capacity of the structure will not exceed 5,000 acre-feet, and (3) that the construction cost of capacity in excess of 5,000 acre-feet will be borne entirely by the local organization. This amendment would permit the inclusion of flood-prevention storage at sites which local organizations wish to utilize for other purposes. For example, if a municipality wishes to build a municipal water supply reservoir, but at the same site up to 5,000 acre-feet of flood-prevention capacity could be incorporated in the structure to be built by the municipality, such a structure could be included in the plan. The Department could share in the cost of the flood-prevention storage but the municipality would be required to pay for the entire cost of all storage over 5,000 acre-feet. Senator KERR. Well, now, to pay for that by reimbursing the Federal Government who has already paid for it Mr. PETERSON. There are various arrangements under which that could be accomplished. That is the current one, I believe, Senator. Senator KERR. Yes. Mr. PETERSON. We have worked out several arrangements of this kind in the 11 watersheds authorized under the Flood Control Act of 1944 and in the pilot watershed program. This amendment is consistent with the position we have taken that these projects should provide for inclusion of features to provide for all beneficial use of water which are economically justified. Our experience thus far would indicate that this provision would find application only in a limited number of watershed projects. Another amendment in H. R. 8750 would strike out the terminal date of July 1, 1956, after which the Department of Agriculture could, in no event, contract for works of improvement. We are advised that this amendment would have little or no practical effect since the act would still prohibit the Secretary from contracting improvements whenever a local organization had legal authority to do so. Actually, this legal authority is inherent in the capacity of a local organization to carry out, operate, and maintain works of improvement, which is a prerequisite to making an application for assistance under the act. We believe that local contracting for structural works of improvement should be maintained as a matter of principle. We reiterate that these are local projects with Federal assistance rather than Federal public works. Hence, we oppose this amendment. Another amendment provides for exemption of projects involving a Federal contribution of less than $250,000 to the construction cost of structural works of improvement from review by other Federal agencies and transmission to the Congress. There is an interrelation between small and large water-resource projects that should not be overlooked when there is a practical and significant relationship. In view of the nature of growing demands for usable water supplies we believe it is desirable to provide for review by all agencies with water responsibilities. We want to eliminate all unnecessary administrative steps, but in view of increasing water-project developments, we believe a review procedure is important. |