Y4 8113: /I 30

MANSON UNIT, CHELAN DIVISION, WASHINGTON '/1414

GOVERNMENT A11600 703069 

HEARING

BEFORE THE

SUBCOMMITTEE ON

IRRIGATION AND RECLAMATION

OF THE

COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS

-UNITED STATES SENATE

EIGHTY-EIGHTH CONGRESS

SECOND SESSION

ON

S. 2533

A BILL TO AUTHORIZE THE SECRETARY OF THE INTERIOR TO

CONSTRUCT, OPERATE, AND MAINTAIN THE MANSON UNIT,

ClihLAN DIVISION, CHIEF JOSEPH DAM PROJECT, WASHINGTON, AND FOR OTHER PURPOSES

MARCH 17, 1964

Printed for the use of the

Committee on Interior and Insular Affairs

U.S. GOVERNMENT PRINTING OFFICE

30-351 WASHINGTON : 1964
k 4 r

.44I4 *

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

HENRY M. JACKSON, Washington, Chairman

CLINTON P. ANDERSON, New Mexico

ALAN BIBLE, Nevada

FRANK CHURCH, Idaho

ERNEST GRUENING, Alaska

FRANK E. MOSS, Utah

QUENTIN N. BURDICK, North Dakota

CARL HAYDEN, Arizona

GEORGE McGOVERN, South Dakota

GAYLORD NELSON, Wisconsin

HERBERT S. WALTERS, Tennessee

JERRY T. VERKLER, Staff Director

STEWART FRENCH, Chief Counsel

ROY M. WHITACRE, Professional Staff Member

THOMAS H. KUCHEL, California

GORDON ALLOTT, Colorado

LEN B. JORDAN, Idaho

MILWARD L. SIMPSON, Wyoming

E. L. MECHEM, New Mexico

PETER H. DOMINICK, Colorado

SUBCOMMITTEE ON IRRIGATION AND RECLAMATION

FRANK E. MOSS, Utah, Chairman

CLINTON P. ANDERSON, New Mexico THOMAS H. KUCHEL, California

HENRY M. JACKSON, Washington GORDON ALLOTT, Colorado

FRANK CHURCH, Idaho LEN B. JORDAN, Idaho

QUENTIN N. BURDICK, North Dakota

CARL HAYDEN, Arizona

II
CONTENTS

Page

S. 2533 1

Departmental reports:

Bureau of the Budget 2

Interior 3

STATEMENTS

Additional statement supplied by the Bureau of Reclamation 18

Palmer, W. I., Acting Assistant Commissioner, Bureau of Reclamation;

accompanied by H. T. Nelson, regional director, Boise; and J. Karl Lee,

Assistant Chief, Division of Project Development 6

COMMUNICATIONS

Bumgarner, president, board of directors, Lake Chelan Reclamation

District: Letter to Senator Henry M. Jackson, chairman, Interior and

Insular Affairs Committee, dated March 9, 1964 19

Uhlhorn, C. F., secretary-manager, Lake Chelan Reclamation District:

Letter to Senator Henry M. Jackson, chairman, Interior and Insular

Affairs Committee, dated March 10, 1964 20

ADDITIONAL INFORMATION

Financial summary 14

III

MANSON UNIT, CHELAN DIVISION, WASHINGTON

TUESDAY, REARM 17, 1964

U.S. SENATE,

SUBCOMMITTEE ON IRRIGATION AND RECLAMATION

OF THE COMMITrEE ON INTERIOR AND INSULAR AFFAIRS,

Washington, D.C.

The subcommittee met, pursuant to notice, at 9:30 a.m., in room

3110, New Senate Office Building, Senator Henry M. Jackson presiding.

Present: Senators Jackson, Burdick, and Jordan.

Also present: Jerry T. Verkler, staff director Stewart French, chief

'counsel; Roy M. Whitacre, professional staff member; Richard Andrews, minority counsel, and Robert Bendt, professional staff member.

Senator JACKSON. The committee will come to order. The Irrigation and Reclamation Subcommittee has before it this morning two

bills which have been approved by the Secretary of the Interior and

the Bureau of the Budget.

The first measure, S. 2533, authorizes the Secretary of the Interior

to construct, operate, and maintain the Manson unit, Chelan division,

Chief Joseph Dam project, Washington, and for other purposes.

S. 2533 and the Department report relating to S. 2533 will be included in the record at this point.

(S.2533 and the report referred to is as follows:)

[8. 2533, 88th Cong., 2d sess.]

A BILL To authorize the Secretary of the Interior to construct, operate, and maintain

the Manson unit, Chelan division, Chief Joseph Dam project, Washington, and for other

purposes

Be it enacted by the Senate and House of Representatives of the United States

19f America in Congress assembled, That for the purposes of supplying irrigation

water for approximately five thousand eight hundred acres of land, undertaking

the rehabilitation and betterment of works serving a major portion of these

lands, conservation and development of fish and wildlife resources, area redevelopment, and enhancement of recreation opportunities, the Secretary of the

Interior is authorized to construct, operate, and maintain the Manson unit,

Chelan division, Chief Joseph Dam project, Washington, in accordance with

the Federal reclamation laws (Act of June 17, 1902, 32 Stat. 388, and Acts

amendatory thereof or supplementary thereto). The principal works of the

unit shall consist of dams and related works for enlargement of Antilon Lake

storage, related canals, conduits, and distribution systems, and works incidental

to the rehabilitation of the existing irrigation system.

SEC. 2. Irrigation repayment contracts shall provide for repayment of the

'obligation assumed thereunder with respect to any contract unit over a period

of not more than fifty years exclusive of any development period authorized

by law. Construction costs allocated to irrigation beyond the ability of the

irrigators to repay, and operation, maintenance, and replacement costs during

the development period which the Secretary finds it proper to fund because they

are beyond the ability of the irrigators to repay within the repayment and

development periods shall be returned to the Reclamation Fund within such

periods from revenues derived by the Secretary from the disposition of power
V.

2 MANSON UNIT, CHELAN DIVISION, WASHINGTON

marketed through the Bonneville Power Administration. Power and energy

required for irrigation water pumping for the Manson unit Shall be made

available by the Secretary from the Federal Columbia River power system at

charges determined by the Secretary.

SEC. 3. The Secretary is authorized, as a part of the Manson unit, to construct, operate, and maintain or otherwise provide for basic public outdoor

recreation facilities, to acquire or Otherwise to include within the unit area

such adjacent lands or interests therein as are necessary for present or future

public recreation use, to assign water and reservoir capacity to recreation and

to provide for public use and enjoyment of unit lands, facilities, and water areas

in a manner coordinated with the other project purposes. The Secretary

may transfer jurisdiction over unit lands and facilities thereon within or

adjacent to the Wenatchee National Forest to the Secretary of Agriculture for

recreation and other national forest system purposes. Upon transfer such

lands shall become national forest lands: Provided, That the lands and waters

within the flow lines of the reservoir or otherwise needed or used for the

operation of the unit for other purposes shall continue to be administered

by the Secretary of the Interior to the extent he determines to be necessary for

such operation. The costs of the undertakings described in this section, including costs of investigation, planning, Federal operation and maintenance, and

an appropriate share of joint costs of the unit. shall be nonreimbursable.

SEC. 4. The Secretary is authorized, if the Manson unit is located in whole

or in part in an eligible area as defined in the Public Works Acceleration Act

(76 Stat. 541), to recognize redevelopment as a function of the unit, to evaluate

the benefits of the unit in relieving persistent unemployment or underemployment, and to allocate costs to the redevelopment function as appropriate, which

costs shall be nonreimbursable.

SEC. 5. Costs of means and measures to prevent loss of and damage to

fish and wildlife resources shall be considered as project costs and allocated

as may be appropriate among other project functions.

SEC. 6. There are hereby authorized to be appropriated for construction of

the new works involved in the Manson unit, $12,400,000 (October 1959 prices),

plus or minus such amounts, if any, as may be required by reason of changes in

the cost of construction work of the types involved therein as shown by

engineering cost indexes and, in addition thereto, such sums as may be required

to operate and maintain said unit.

EXECUTIVE OFFICE OF THE PRESIDENT,

BIIREAIT OF THE BUDGET,

Washington, D.C., March 16, 1964.

Hon. HENRY M. JACKSON,

Chairman, Committee on Interior and Insular Affairs,

U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request of February 24,

1964, for the views of the Bureau of the Budget on S. 2533, a bill to authorize

the Secretary of the Interior to construct, operate, and maintain the Manson

unit, Chelan division, Chief Joseph Dam project, Washington, and for other

purposes.

The purpose of the bill is clearly stated in its title.

The Department of the Interior, in a report being submitted to your committee,

recommends enactment of the bill with certain perfecting amendments. Accordingly, the Bureau of the Budget would have no objection to enactment of

S. 2533, if amended as proposed by the Secretary of the Interior.

Sincerely yours,

PHILLIP S. HUGHES,

Assistant Director for Legislative Reference.
MANSON UNIT, CHELAN DIVISION, WASHINGTON

U.S. DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY,

Washington, D.C., March 16, 1964.

Hon. HENRY M. JACKSON,

Chairman, Committee on Interior and Insular Affairs,

U.S. Senate, Washington, D.C.

DEAR SENATOR JACKSON: This responds to your request for the views of this

Department on S. 2533, a bill to authorize the Secretary of the Interior to construdt, operate, and maintain the Manson unit, Chelan division, Chief Joseph

Dam project, Washington, and for other purposes.

We recommend enactment of the bill with two technical amendments set

out below.

The Manson unit, Chelan division, Chief Joseph Dam project, is located in

Chelan County in central Washington. By climate, topography, and soils the

area is especially well suited to the production of apples under sprinkler irrigation. The lands in the unit area that are now irrigated are devoted almost

exclusively to apple production, and they have a successful history of such use

running back over more than 50 years. The existing irrigation system is a

composite of several privately financed developments which have been enlarged

and improved over the years. The capacity of these facilities for water collection, storage, and delivery is no longer adequate. Also, they are aging; consequently, failures are frequent, and maintenance is difficult and expensive.

To accomplish necessary overhaul, rehabilitation, and enlargement is beyond

the financial capacity of the Chelan County Reclamation District.

The Bureau of Reclamation plan of development for the unit area would

embrace the following activities: rehabilitation and enlargement of the 20-mile

system for collection of water from the watersheds of seven creeks in the mountain region adjacent to the unit; enlargement of the storage reservoir, Antilon

Lake, from 2,500 to 9,000 acre-feet by construction of one dam and enlargement of another; and rehabilitation and extension of the distribution system

to continue service to 3,965 acres now irrigated, and to bring a full supply of

irrigation water to an additional 1,525 acres of irrigable lands now receiving a

partial supply, or being dry farmed. An additional 280 acres of land with established water rights, some in Indian trust status, and some which would not be

considered irrigable under reclamation standards, will conqnue to receive their

water entitlements. A total of 5,770 acres will be served With irrigation water

through the unit.

Through expansion of irrigated acreage the basis will be laid to develop 78 new

irrigated farms on lands that are excellent for apple orchards. We expect that

new farm units would be developed for apple production. Rehabilitation of the

existing system will permit uninterrupted service to continue on an economical

basis to the existing farm units in the area, thus materially contributing to the

economic stability of the county, which has been designated a rural redevelopment area under the Area Redevelopment Act. The economic merits of this unit

are indicated by the extremely high benefit-cost ratio of 6.6 to 1.

Because Chelan County is a rural redevelopment area, the benefits which

would accrue to area redevelopment for construction of the project have been

evaluated in the planning, and costs have been allocated to that function on a

nonreimbursable basis in accordance with provisions of the Area Redevelopment

Act and the executive directive contained in Senate Document 97, 87th Congress.

Precedent for the application of these procedures to a water resource development may be found in the Rivers and Harbors Act of 1962 (76 Stat. 1173), authorizing the Rend Lake Reservoir, Ill., and Noyo Harbor, Calif., developments in

which costs were allocated to area redevelopment on a nonreturnable basis.

Section 4 of the bill treats of these matters consistently with the unit feasibility

report, with the exception of a reference to the Public Works Acceleration Act.
4 MANSON UNIT, CHELAN DIVISION, WASHINGTON

Since the criteria of the Area Redevelopment Act and not the Public Works

Acceleration Act were used in establishing eligibility of the area for including

area redevelopment as a project purpose, the appropriate reference in the bill

would be to the Area Redevelopment Act. To accomplish this the words "an

eligible area as defined in the Public Works Acceleration Act (76 Stat. 541)"

should be deleted from lines 23 and 24, on page 3, and the words "a redevelopment area as defined in the Area Redevelopment Act (75 Stat. 47)" substituted.

Construction of the unit is expected to cost $12,363,000. This cost is allocated

among the purposes of the unit as follows:

Irrigation $10, 503, 000

Area Redevelopment 1, 739, 000

Recreation and fish and wildlife enhancement 121,000

Total 12, 363, 000

Of these costs, the allocations to area redevelopment and recreation and fish

and wildlife enhancement would be nonreimbursable. Costs of mitigation of

project-occasioned damage to fish and wildlife resources have been treated as a

project cost and distributed among other project functions in accordance with

principles of the Administration's proposed Federal Water Project Recreation

Act, which was transmitted to the Congress on November 2, 1963. Section 5 of

the bill authorizes this.

Of the $10,503,000 allocated to irrigation, which would be reimbursable without interest, the water users would repay $6,483,800. The balance of $4,019,200,

which is beyond their ability to repay, would be returned to the Reclamation fund

from revenues derived from power marketed through the Bonneville Power

Administration.

Because orchards are slow to come into production the farmers whose lands

are not now in orchards will require a 10-year development period for their

farms before they begin to repay irrigation construction costs. In fact, their

revenues will be so low that they will not have the financial capacity to bear the

entire costs of operation and maintenance during the development period. For

that reason it is proposed to fund some $67,000, of operation and maintenance

costs during the development period as an irrigation cost item for repayment

during the ensuing 50-year repayment period. This practice has been followed

in other similar situations, such as on the Greater Wenatchee division of the

Chief Joseph Dam project (act of May 5, 1958 (72 Stat. 104) ). Landowners

whose lands are already in orchards will be permitted a 3-year development to adjust their operations to the new project conditions.

Section 2 of the bill provides for funding these operations and maintenance

costs as well as establishing a 50-year repayment period, providing for financial

assistance from power revenues and reserving irrigation pumping power. However, the section does this in terms that are not entirely clear.

To provide for the funding of irrigation operation, maintenance and replacement costs during the development period which are beyond the ability of the

irrigators to repay during that period, the second sentence of section 2 should

be deleted and the following substituted:

"Construction costs allocated to irrigation beyond the ability of the irrigators to repay during the repayment period shall be returned to the reclamation

fund from revenues derived by the Secretary from the disposition of power

marketed through the Bonneville Power Administration. The term 'construction costs' as used herein shall include any irrigation operation, maintenance,

and replacement costs during the development period which the Secretary finds

it proper to fund because they are beyond the ability of the irrigators to pay

during that period."

Certain of the lands needed for the unit are national forests lands which, although administered by the Wenatchee National Forest, are within the proclaimed boundaries of the Okanogan National Forest. To make applicable the

requirement of the administration's proposed Federal Water Project Recreation

Act that water resource project lands within the exterior boundaries of a national forest shall be administered by the Secretary of Agriculture for recreation and other national forest system purposes, and to insure that acquired lands

within the boundaries of the Okanogan National Forest shall be transferred

to the Secretary of Agriculture and become national forests lands, the sentence

beginning at line 8, page 3, and the words "Upon such transfer such lands shall
MANSON UNIT, CHELAN DIVISION, WASHINGTON 5

become national forests lands" in lines 12 and 13, page 3, should be deleted and

the following substituted:

"The Secretary shall transfer lands acquired for the unit within exterior

national forest boundaries to the Secretary of Agriculture for administration

as national forest, and jurisdiction of national forests lands within the unit

shall remain with the Secretary of Agriculture for recreation and other national forest system purposes: Provided, That the lands and waters within the

flow lines of any reservoir or otherwise needed or used for the operation of the

project for other purposes shall continue to be administered by the Secretary of

the Interior to the extent he determines to be necessary for such operation."

Enclosed are the statements concerning estimated personnel and other requirements as required by Public Law 801, 84th Congress.

The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint out the administration's program.

Sincerely yours,

KENNETH HOLUM,

Assistant Secretary of the Interior.

Enclosure.

CHELAN DIVISION, CHIEF JOSEPH DAM PROJECT, WASHINGTON

Estimated additional man-years of civilian employment and expenditures for the

first 5 years of proposed new or expanded programs, as required by Public Law

801, 84th Congress

1st year 2d year 3d year 4th year 5th year

Estimated additional man-years of civilian

employment:

Administrative services: Clerical None 3 3 3 3

Substantive (program): Engineering

aids and technicians None 5 6 6 5

Total estimated additional man-years None 7.5 9.0 9.0 6.2

Total estimated man-years of civilian

employment None 29.3 42.8 45.0 30.8

Estimated expenditures:

Personal services (9 $194, 750 $294, 644 $309, 830 $214, 374

All other $584, 250 $2, 650, 356 $4, 877, 170 $1,779, 626

Total estimated expenditures $136, 000 $779, 000 $2, 945, 000 $5, 187, 000 $1, 994,000

I General Investigation expenses.

Senator JACKSON. The Manson unit contains 5,770 irrigable acres

of rolling hillsides and terraces along the north shore of Lake Chelan.

The unit lands are devoted almost exclusively to apple orchards which

have had a profitable history of production since private irrigation

systems began serving the area in 1908. The area is served by a patchwork collection and distribution system consisting mainly of woodstave pipes and flumes that have been in use for as long as 35 years.

These would be rehabilitated and enlarged under the plan, with the

entire collection system being replaced by buried mortar-lined and

coated steel pipe.

The storage system would be enlarged by increasing the capacity

of the Antilon Reservoir from 2,500 acre-feet to 9,000 acre-feet by

constructing a new dam at the upper end of the reservoir and by enlarging the Antilon Lake Dam at the lower end of the reservoir.

The benefit-cost ratio is an unusually high one, 6.6 to 1.

In view of the fact that the Senate convenes at 11 o'clock this

morning, I would suggest that the witnesses file their statements for

the record and summarize the pertinent matter. The report of the

Department has been included in the record pertaining to S. 2533.

30-351-64---2
6 MANSON UNIT, CHELAN DIVISION, WASHINGTON

We will proceed with S. 2533. Mr. W. I. Palmer, Acting Assistant Commissioner, Bureau of Reclamation is here—if you will come

forward—and Mr. Nelson and Mr. Lee and any others you wish to

have from the Department. We are glad to have you this morning.

As far as any statements you wish to present, if you would just

file them and then go ahead in your own way to summarize and hit

the high points of the project we can save some time. We do not want

to omit anything, but we do wish to complete, if we can, the hearing

on both projects by 11 o'clock. It is not mandatory, but it is our

hope. Will you proceed, then, Mr. Palmer?

STATEMENT OF W. I. PALMER, ACTING ASSISTANT COMMISSIONER,

BUREAU OF RECLAMATION; ACCOMPANIED BY H. T. NELSON,

REGIONAL DIRECTOR AT BOISE; AND J. KARL LEE, ASSISTANT

CHIEF, DIVISION OF PROJECT DEVELOPMENT

Mr. PALMER. Thank you, Mr. Chairman, consonant with your wish I

will file a statement for the record and will attempt to summarize.

First of all let me tell you it is a pleasure to be here in support of this

project, which we consider to be a very, very good one. Two weeks

ago today we were here on the Whitestone Coulee unit of the project

which also is a very excellent proposal.

Senator JACKSON. All of this is part of the Chief Joseph project?

Mr. PALMER. All of this is part of the Chief Joseph project. Now,

because of this reason I do not think a prolonged hearing on this is

particularly necessary because the facts surrounding this project are

well known to the committee.

This project has been before the committee specifically in the authorization of the Foster Creek division, which was on July 27, 1954; again

on May 5, 1958, on the Greater Wenatchee division; 1962 on the roville-Tonasket unit, and lastly 2 weeks ago today on the Whitestone

Coulee. So we think the committee is already fairly well acquainted

with the project.

Now, there are a number of things that we think are worthy of

noting. One is that this unit does not involve the production of any

crop surpluses. It is essentially an apple economy and the crops that

will be grown are readily marketed through established facilities.

Secondly, this project has no problem of acreage limitation. All

of the lands are eligible to receive water. As a matter of fact, the average size of the farm unit is about 20 acres. And actually it aids in the

question of surplus crop production because about 700 acres of wheat

now produced under dry-farm culture will be withdrawn from that

use and converted to irrigated apple land. And, as Senator Jackson

pointed out, this is an unusually good project in terms of benefit-cost

ratio, the ratio being 6.6 to 1.

It is also an unusually good project in that the percentage of total

project cost being repaid directly by the irrigators—the repayment

amounts to $6,483,000 calls for very high repayments on the part

of the water users. Class 1 land is being required to pay $36 an acre,

class 2 $23 an acre or a weighted average of $32 an acre.

There are three items that should be identified for the committee, the

first one being that because this is apple land and it requires the input

of large amounts of money to get an apple orchard into full production,
MANSON UNIT, CHELAN DIVISION, WASHINGTON 7

we are recommending a total of $67,000 of operation and maintenance

cost in excess of the water users' ability to pay during the early years

to be funded as construction costs. Now, this is not a new suggestion.

This is frequently done in situations of this kind.

Secondly, this project, consonant with the Area Redevelopment Act

of 1961 and Senate Document 97, proposes an allocation of $1,739,000

to area redevelopment.

And the last point that I think would be of some interest to the committee is that Indian trust lands are involved and will be served by

the project.

Now, I think the committee would also like to know that the irrigation district is organized. The new lands have been petitioned in. The

water users have evidenced a willingness to pay. We recommend the

project to the committee as being a fine example of meritorious and

well-justified reclamation development.

I have Mr. Harold Nelson, our regional director from Boise here

and if the committee desires he would be glad to step to the map and

describe the project.

Senator JACKSON. Fine. Why don't you do that, Mr. Nelson, and

go through it step by step. Explain the existing project and what

this will do.

Mr. NELSON. Mr. Chairman and members of the committee, my

name is Harold Nelson, regional director at Boise, Idaho. Essentially, this project involves the rehabilitation of an old system that has

been in use since 1908 and, secondly, the expansion of the system to

give us a larger operating base. The collection system involves 20

miles of a combination of wood stave pipelines and open canal to tap

some seven creeks about 20 miles along the shores of Lake Chelan. It

is very rugged country. It is proposed to replace this 20-mile collection system with the very latest design in steel, concrete-coated and

wrapped pipe, and also replace two siphons on Poison and Mitchell

Creeks with very high heads, up to 700 feet of head, with the very

latest design of pretensioned concrete pipe, sized from 45 to about 33

inches in diameter and the sizes of the collection system range from

about 20 inches at the uppermost point at an elevation of about 4,300

feet, down to about 45 inches where the collection system enters a

tunnel into an existing small reservoir called Antilon Reservoir. That

would be enlarged, because of the ability to collect more water, from

2,500 to 9,000 acre-feet, by the construction of two earth dikes.

Then, on the lower end of Antilon Lake the existing distribution

system, which now consists of partly open canal and partly wood-stave

pipe, very badly deteriorated, will be replaced by asbestos and concrete and steel pipe in the form of three different systems which will go

down through about 50 miles of pipelines to be replaced to serve the

new lands. The west high lateral would be serving largely existing

areas, and they also receive some water from the existing Wapato

Lake, and that system will be rehabilitated also.

I wish to point out that this project before you for authorization

just contemplates the replacement of the large size pipe beyond the

ability of the district to handle, and the district itself will replace

some 25 or 30 miles of smaller size pipe. The question may be asked

why is this system being used instead of pumping out of the lake.
8 MANSON UNIT, CHELAN DIVISION, WASHINGTON

That would involve a pumping lift of about 1,200 feet and the annual

operation and maintenance and cost would be beyond their ability to

handle.

The annual assessment this year for this district runs about $40 an

acre just to stay in business, which is the highest we know of. I believe that completes my summary of the project plan.

Senator JACKSON. As I understand it the Manson unit contains

currently 5,770 acres.

Mr. NELSON. Yes, sir.

Senator JACKSON. Would there be any additional acreage brought

in?

Mr. NELSON. The 1,440 acres that you see in the yellow area here

[indicating], represents new lands that are available for development.

This will have the advantage of giving this district a larger base upon

which to spread their fixed charges.

Senator JACKSON. So the 5,770 acres includes the 1,400-odd acres.

Mr. NELSON. Yes, sir.

Senator JACKSON. Increase of new land.

Mr. NELSON. Yes, sir.

Senator JACKSON. New land that would be available for irrigation.

Any questions, Senator Jordan?

Senator JORDAN. Is the present irrigation system that serves the

area paid for, Mr. Palmer or Mr. Nelson?

Mr. NELSON. Yes, the district has had a very rough financial history. In the thirties they had to float about $300,000 worth of bonds.

They have succeeded in making their bond payment except that they

have not been able to keep up with the replacement of some of these

high head siphons. I believe there are pictures that illustrate the

rough terrain in which they have to operate, and it is getting to the

point now where their annual costs are just about all they can stand

and if they have a major failure they are going to be in serious trouble.

Senator JORDAN. But there will not be any holdover debt assumed

by this?

Mr. NELSON. No, sir.

Senator JACKSON. What is the cost per acre now?

Mr. NELSON. The cost?

Senator JACKSON. The operating cost.

Mr. NELSON. The assessment?

Senator JACKSON. Yes.

Mr. NELSON. It is $40 an acre this year.

Senator JACKSON. Which is the highest in the State?

Mr. NELSON. Yes, sir.

Senator JACKSON. What will it be when rehabilitated and expanded?

Mr. NELSON. Class 1 land, $36.23 class 2 land, $23. The weighted

average is $32, of which about $9 will go for operating and maintenance cost rather than the $40 now being collected. I might say that

the $40 figure is a good indicator of how difficult it is for these fellows

to operate because the system is run down and it is a high-cost system.

It would be replaced with a system that would be much easier and

much more susceptible to reasonable operation and maintenance costs,

and hence the reduction in total cost.

Senator JACKSON. The $10 per acre now is all for operation and

maintenance, it has nothing to do with-
MANSON TJNIT, CHELAN DIVISION, WASHINGTON 9

Mr. NELSON. Yes, sir.

Senator JACKSON (continuing). Has nothing to do with amortization?

Mr. NELSON. Plus what is put in for capital and replacement as they

go along.

Senator JACKSON. They have been charged to operation and maintenance?

Mr. NELSON. That is correct, sir.

Senator JACKSON. Rather than to long-term debt or amortization?

Mr. PALMER. That is correct, sir.

Senator JACKSON. Senator Jordan, did you have any further questions?

Senator JORDAN. Thank you, Mr. Chairman. Mr. Palmer, I believe you said that some $67,000 of operation and maintenance would

be funded. I did not understand for how long a time operation and

maintenance would be funded.

Mr. PALMER. Well, this goes in as a construction charge and then

would be paid back as part of the annual payments against construction account.

Senator JORDAN. A single charge of $67,000?

Mr. PALMER. Well, no, sir. This is an estimate of how much it

would amount to over the development period.

Senator JORDAN. Yes.

Mr. PALMER. Before they would become fully paying.

Mr. NELSON. The first 10 years.

Mr. PALMER. I might add, this is largely associated with the yellow

lands or the new lands as shown on the map.

Senator JORDAN. The new lands that will be seeded to small trees.

Mr. PALMER. That is right.

Senator JORDAN. Until they get into bearing.

Mr. PALMER. That is right, sir.

Senator JORDAN. Then it will not be an annual charge; it will be a

total charge?

Mr. PALMER. An estimated total of $67,000. It is a relatively minor

amount but we wanted to make the record clear that we were proposing

a funding of part of the operation and maintenance.

Senator JORDAN. And you have done this before, have you, on other

projects?

Mr. PALMER. That is correct.

Senator JORDAN. Yes.

Mr. PALMER. Now, the $67,000 will be accumulated on the basis of

annual assessments but it is just the deficit between what the water

users can pay and what we estimate the bill will be, and it will be

picked up as a construction cost item.

Now, Senator Jackson you inquired a moment ago as to the breakdown of the acreage. There are 3,965 acres now being farmed in the

area now under irrigation. The new lands now dry-farmed will be

1,405 acres, and there are 120 acres there that 

Senator JACKSON. Would you repeat those figures again?

Mr. PALMER. There are 3,965 acres of new land.

Senator JACKSON. That is new land?

Mr. PALMER. That is old land, excuse me, sir.

Senator JACKSON. Yes.

Mr. PALMER. Old land.
10 MANSON UNIT, CHELAN DIVISION, WASHINGTON

Senator JACKSON. That is mostly or all orchards?

Mr. PALMER. Virtually all orchard.

Senator JACKSON. Yes.

Mr. PALMER. There are 1,405 acres of dry lands not now irrigated,

lands to be irrigated.

Senator JACKSON. Yes.

Mr. PALMER. And 120 acres now with inadequate water supply.

Senator JACKSON. That would be supplemental.

Mr. PALMER. Supplemental. Which makes 5,490 acres as the lands

that would figure into the repayment equation. Additionally there

are 95 acres of class 6 land which would continue to get water .even

though by our rating it is nonirrigable, but lands with established

water rights and maybe crop-growing and they would be allowed to

continue to farm but would not pay on the construction installment.

They would pay operation and maintenance charges. And there are

185 acres of Indian trust lands.

Senator JACKSON. How many acres?

Mr. PALMER. Indian trust lands total 185 acres. That totals 280

acres that will receive water against the payment of operation and

maintenance charges for a total of 5,770 acres.

Senator JACKSON. The Indian trust land is all leased out, isn't it?

Mr. PALMER. It is largely leased.

Mr. NELSON. Some of the lands, when they straighten out the title,

they will attempt to sell so it will go into production, and if they do

there is capacity in the system, and they will pay the same as the other

lands.

Senator JACKSON. What is the present situation now?

Mr. NELSON. That and—originally the entire project area was

Indian land on an individual ownership basis. In order for the first

company to function back in the early 1900's they made an agreement that they would convey water for a flat charge of $2 an acre

for the right to cross certain of the Indian lands and that right has

been respected up to this time except for the fact that very few of

the lands have availed themselves of that opportunity, and the assessment has not been paid. The lands have not taken water, so they are

generally lying idle except for the figure that Mr. Palmer quoted

that is being irrigated. But it is expected that they will all be converted to a higher use and come under the project. But they will

receive water under that original agreement as long as they wish to

retain their present status.

Senator JACKSON. Senator Burdick?

Senator BURDICK. Yes. Mr. Palmer, I would say that this project

has one of the highest cost-benefit ratios that I have seen in a long

time.

Mr. PALMER. That is correct, Senator. We consider it to be a very

good project also from the other aspects under consideration, such as

percentage of repayment and the fact that it produces no crops that

are now considered in surplus, and actually will contribute by removing dry-farm wheat land and putting it into apples 

Senator BURDICK. There is no surplus of apples?
MANSON UNIT, CHELAN DIVISION, WASHINGTON 11

Mr. PALMER. We have not heard of any. When I go down to the

store and see what I have to pay for western Delicious apples, I don't

think there is a surplus.

Senator BURDICK. The apple crop is not price-supported, is it?

Senator JACKSON. No, it is not a price-supported crop, but the apple

farmers are having some problems on price. Maybe what you are

paying for them in the store would not show that, but to the producers

there is a problem.

Senator BURDICK. Well, the irrigation features are paid apparently

60 percent by irrigators or water users and about 40 percent by power

revenues, right?

Mr. PALMER. That is correct.

Senator BURDICK. And the $121,000 for wildlife enhancement falls

within the formula of legislation now pending in the House as being

nonreimbursable ?

Mr. PALMER. Yes; MR. 9032.

Senator BURDICK. Now, will you explain this one item of $1,739,000

for area redevelopment?

Mr. PALMER. Yes, I would be glad to, Senator. This is consonant

with the Area Redevelopment Act of 1961, section 24, I believe

'

and

with Senate Document No. 97. Now, Senate Document No. 97 prescribes the rules that would be used in measuring the merits of the

project, the benefits-to-cost calculation. I would like to have Mr.

Lee explain for the committee the items that went into this allocation.

Senator BURDICK. This I remember is not reimbursable.

Mr. PALMER. This would be nonreimbursable under the provisions

of Senate Document No. 97 and the Area Redevelopment Act.

Mr. LEE. Well, the people in the region made an analysis of the

present unemployment in skilled, semiskilled and common labor that

is normally employed on construction of a project of this type. With

this as a basis they then made an analysis of the employment opportunities that would be afforded by this project to put such people to

work in connection with this particular development, and they estimated that a certain amount of labor would find employment in construction. They also estimated that a certain amount of labor would

find employment in operation and maintenance, and they used this

latter figure for 20 years. Then on the basis of the increased employment of people who are now unemployed in this area in construction and in operation and maintenance for 20 years they developed an

annual average equivalent increase in income to people who would be

otherwise unemployed in the area.

This was used in the analysis. This approach was used in the absence of specific advice from the Department of Commerce on their

recommendations for procedures to be used. Since that time the

Department of Commerce has completed the development of such

procedures in a preliminary manner. A report setting forth recommended procedures for computing ARA benefits has now been printed

and we have copies of it. By comparing our procedure and their

procedure we find we have come up with a very conservative evaluation of the benefit that would accrue to unemployed labor in that area.

The Department of Commerce has so advised us in its comments upon

this analysis.

Senator BURDICK. I would ask one of you gentlemen if this is one

of the projects which has been integrated with the ARA program?
12 MANSON UNIT, CHELAN DIVISION, WASHINGTON

Mr. PALMER. I think the first one we brought to this body was the

Whitestone Coulee unit, which is located in the same county and has

the same unemployment problem.

Senator JACKSON. Well, it is an adjoining county.

Mr. PALMER. Yes not the same county.

Senator JACKSON. Okanogan County.

Mr. PALMER. Yes.

Senator JACKSON. But both countries are in the same category all

the way from the Canadian line to Wenatchee.

Mr. PALMER. The Whitestone Coulee unit was the first one considered by this committee. Also, the Nebraska Mid-State project contained an allocation to area redevelopment. Now, Senator, I anticipated that you might be wondering why Garrison did not. The reason it did not, I was going to volunteer, is that by the time we got the

new map we were already through with the Senate side of the hearings

and pretty well through with the House side, and so we never reran

the allocation but there would be some area redevelopment available to Garrison if the Congress develops legislation.

Senator BURDICK. Off the record.

(Discussion off the record.)

Mr. PALMER. We all agree it is an excellent project.

Senator BURDICK. That is all. Thank you.

Senator JACKSON. Do you make provision in the award of the contract that they are to use local labor in keeping with the problem of

unemployment in the area?

Mr. PALMER. The construction contract is being let on a competitive

bid basis. We try to get the best possible price. Now, the common

labor in all probability will be drawn from the local area, and this is

why all common labor and some skilled labor has been computed in

this estimate. We assume that the contractor will bring with him his

supervisory people.

Senator JACKSON. I understand that, but I was thinking of the

building-trades men, the craftsmen and the common laborers.

Mr. NELSON. Most contractors, Senator, and in fact I think virtually

all of them do use union labor and they will have to go under their

labor-management contracts to the local hiring hall. So that will automatically result in skilled construction workers being drawn from

the nearest union hall, which would be the local area.

Mr. LEE. There are two other ways, Senator Jackson, in which area

redevelopment is given preference in our operations. The first one is

through the Buy American Act. If we are receiving bids from a

foreign manufacturer and if we have an alternative bid from an American manufacturer and he is located within a distressed area, then the

American manufacturer is given a certain number of points preference

in considering the competition between the two bidders.

It is also a requirement when we put out bids for supplies. If there

are bidders on supplies that come from depressed areas they also will

be given preference in the decision on the contract. Now, we have

considered—actually we have not gone so far yet, I just checked this

the other day—requiring in an area of this type that the contractor

actually employ unemployed labor in the area. We have thought some

about this, to some extent. I don't believe we have to do it, though,

because as long as he is employing labor from the general area he
1

_MANSON UNIT, CHELAN DIVISION, WASHINGTON 13

tends to make other positions available just by displacement of people

from other positions.

'Senator JACKSON. Well, I just wanted to ask this question to clarify

-the record in case anything develops later as to the employment of local

people. Sometimes they bring in, from outside of the area concerned,

,certain skilled laborers that are not available locally. That is understandable. But there are times when we receive complaints about contractors who will bring in union labor in each instance but from an

'area outside of the section that should be benefited.

Senator BURDICK. But, Mr. Chairman, isn't the whole thrust of the

ARA approach to provide employment for the local people?

Senator JACKSON. That is right.

Mr. LEE. In this respect this project complies.

Senator JACKSON. I hope the Bureau will watch it closely, consistent with, of course, getting the lowest possible bid.

Mr. LEE. As you well know, over the years there have been many

heavy construction projects in the Pacific Northwest and there is a vast

reservoir of skilled labor there skilled and semiskilled, for this type

,of work, and that labor would be available that is now unemployed

-for this construction.

Senator BURDICK. No more questions.

Senator JACKSON. Senator Jordan?

Senator JORDAN. Thank you, Mr. Chairman. This number of acres,

this figure—is it 5,770?

Mr. PALMER. That is the total acreage of the unit service areas.

Senator JORDAN. I was trying to arrive at a cost per acre that the

users will pay back and it seems to me if I am looking at the right

figures here, that it will be in the neighborhood of $1,150 an acre. Is

that approximately corredt ?

Mr. NELSON. That is correct.

Senator JORDAN. Is that high for orchard land or is average or

is it low ?

Mr. NELSON. I believe that that is average for orchard land. The

lands when developed will be worth from $2,500 to $4,000 an acre,

and we want to remember that the landowner must put in a substantial

investment of his own.

'Senator JORDAN. Yes. That is right.

• Mr. NELSON. And in this case he must supply his own sprinkler

'system, and after—I should have mentioned earlier that the water

would be available at sprinkler pressure, 25 pounds at all the turn-

'outs, so that with the amount of water available to them, they just

about have to use sprinklers. And that is about an average investment, I would say, yes, sir.

Senator JORDAN. Because of the unusually high cost-to-benefit ratio,

I would be interested in seeing how that was developed. Will that be

available to us, how you have computed that?

Mr. NELSON. Yes, sir.

Mr. PALMER. We will be glad to supply that.

Mr. NELSON. I might point one thing out, that that large benefit

is not available so much to the orchardist as it is to the other segments of the economy. Apples, for instance, require a great deal of

processing, they require a great deal of packing, they require a great

deal of marketing. They require refrigeration, they require storage
14 MANSON UNIT, CHELAN DIVISION, WASHINGTON

and transportation, and so on, so that the orchardist is not the beneficiary of the bulk of that benefit ratio.

Senator JORDAN. Because I have but little knowledge of this type

of industry, I would like to see how you developed that—I do not

mean at this time, but for the record.

Senator JACKSON. You will provide a breakdown for the record,

then?

Mr. PALMER. Yes. Mr. Chairman, actually it is printed on page 52

of the report that is available to this committee on the Chief Joseph

Dam project, the Chelan Division Report.

Senator JACKSON. All right. We will include at this point in the

record the breakdown from the Bureau report, starting on page 52 and

running through 

Mr. PALMER. Well, Mr. Chairman, it would be page 51 through 54.

Senator JACKSON. Those pages 51 through 54 will be included at

this point in the record.

Senator JORDAN. Thank you.

(The material referred to is as follows:)

FINANCIAL SUMMARY

The Manson unit has economic justification. Benefits accruing from development would exceed associated costs by a ratio of 7.15 to 1 over a 100-year

period of analysis. Water users can repay approximately 50 percent of all

reimbursable costs over a 50-year repayment period.

UNIT FORMULATION

The project plan was formulated to provide the optimum scale of development conSistent with the physical resources, needs, and desires of the irrigation district.

Two plans of development have been studied. Both plans would serve the

same area with the only differences being the source of water and method of

getting the water to the area. The plan considered most desirable from an

economic standpoint provides for the rehabilitation and enlargement of the

present collection system. The other plan, less desirable from an economic

standpoint, provides for abandoning the present collection system and pumping

all water directly from Lake Chelan. This alternative plan is discussed in part

VIII of this report.

ECONOMIC JUSTIFICATION

Economic justification is based on a comparison of benefits to associated costs.

Benefits anticipated from project development will result primarily from irrigation, with an additional benefit from recreation. No benefits will result from

flood control or fish and wildlife enhancement as a result of project development.

BENEFITS

Benefits from construction of the Manson unit in accordance with the suggested plan of development are estimated at $2,981,000 annually. The derivation of these estimates is explained below.

Irrigation benefits

Irrigation benefits are defined as the increase in value of production and

service resulting from water made available through unit development. These

benefits are of three kindis--direct, indirect, and public.

The increase in agricultural production and saving in farm costs resulting

from unit development (less alternative earnings) have been designated as

direct benefits.

Processing and marketing of the increased agricultural production. the

increased business activity from greater purchase of good g and services, together
MANSON UNIT, CHELAN DIVISION, WASHINGTON 15

with improvement in community facilities through greater tax support and

the development of new farming opportunities, account for the indirect and

public benefits.

The increased values were established through use of farm budgets for the

same representative farms used in deriving estimates of payment 'capacity.

Estimated unadjusted irrigation benefits at full development of the Manson

unit are as follow:

Direct benefits:

Increased net farm income $1,438, 448

Less alternative earnings on new farms 354,445

Total 1,084,003

Indirect benefits:

Benefits from increased marketing 1,009,061

Benefits from increased local Sales 586,802

Total 1,595,863

Public benefits:

Improved community facilities 103,318

New farming opportunities 354,445

Total 457,763

Total irrigation benefits 3,137,629

'Summary of irrigation benefits.-133stixaated net irrigation benefits at full

development of the Manson unit, adjusted to allow for an average 5-year development period, amount to $2,968,200 annually for a 100-year period of analysis.

Recreation benefits

The National Park Service has estimated that annual recreational benefits of

$12,800 will result from project development. Development would consist of

picnic tables, camping area, boat docks, access road, and acquiring 50 acres of

land to assure full recreation development at the reservoir.

Fish and wildlife benefits

No enhancement of the fish and wildlife resource of the area will result from

the project as planned. Fish screens on the Antilon Reservoir outlet are provided by the project to protect the existing fishery resource.

Flood control benefits

No flood control benefits would result from development of the project as

planned.

Total annual benefits

Annual net benefits anticipated from development of the Manson unit are

summarized in the following tabulation for a 100-year period of analysis:

Kind of benefit

Direct benefits:

Irrigation $1,025,500w

Recreation 12,800

Subtotal 1,038,300

Indirect benefits: Irrigation 1,942,700

Unit total 2,981,000

FEDERAL PROJECT COSTS ASSOCIATED WITH BENEFITS

Annual Federal project costs associated with the benefits are estimated at

$417,100 over the estimated 100-year useful life of the reconstructed facilities

for the Manson unit. Project construction costs were converted to annual equivalent sums based upon an interest rate of 26/s percent. The derivation of

Federal project costs based on a 100-year period of analysis is shown in table it
16 MANSON UNIT, CHELAN DIVISION, WASHINGTON

BENEFIT-COST RATIOS

The ratio of benefits to costs for the direct and total benefits is shown in the

following tabulation for a 100-year period of analysis:

Direct benefits $1, 038, 300

Annual costs $417, 100

Ratio 2. 49 to 1

Total benefits $2, 981,000

-Annual costs $417, 100

Ratio 7. 15 to 1

TABLE 11.—Summary of Federal project costs, Chief Joseph Dam project, Washington, Chelan division, Manson unit

Federal investment costs:

Total unit cost 1 $12,384,000

Less funded operating costs 88,000

Less investigation costs 202,000

Plus interest during construction 2 511,400

Net Federal investment 12,605,400

-Annual equivalent Federal investment 3 352,200

Annual operating costs 4 64,900

Total annual equivalent costs 417,100

I Includes $86,000 for fish screens and $48,000 for basic recreational facilities.

2 Calculated at 2% percent interest.

3 Based on $11,504, 400 for the full period of analysis, $48,000 for 25 years, life of the recreation facilities,

• and $1,053,000 construction cost discounted for 10-year delay in construction.

See table 12 and plans and estimates part for schedule of annual operating costs.

Senator JACKSON. If there are no further questions I will direct that

the prepared statement be printed at this point.

(The statement referred to follows:)

PREPARED STATEMENT OF W. I. PALMER, ACTING ASSISTANT COMMISSIONER,

FOR THE BUREAU OF RECLAMATION

Mr. Chairman, we are pleased to present for your consideration today our

plan of development for the Manson unit, Chelan Division, Chief Joseph Dam

project, Washington, which was described in detail in our feasibility report. On

February 17, 1964, Assistant Secretary Holum sent the Department's feasibility

report to the Congress, and it has been ordered printed as House Document No.

232, 88th Congress.

This committee and the Congress are well aware of the general background of

the Chief Joseph Dam project, as it has been discussed in hearings in connection

with four previous authorizations: Foster Creek Division, Greater Wenatchee

Division, Oroville-Tonasket unit, and, most recently on March 3, 1964, in connection with S. 2447, Whitestone Coulee unit.

This is an unusually meritorious proposal, being designed to improve and

enlarge an existing irrigation water collection and distribution system of the

Lake Chelan Reclamation District which was built many years ago by the local

people and now needs rehabilitation and modernizing to an extent beyond their

'financial capabilities. Irrigation in this area dates back to 1908 when the first

irrigation district was formed.

The Manson unit lands are situated on the north shore of Lake Chelan in north

central Washington, comprising an 11-mile by 4-mile area of terraces and rolling

hillsides. The area is ideally suited to apple production by topography, soils,

climate, and other factors. The presently irrigated lands encompass 3,965 acres,

almost exclusively devoted to this crop, which is now the mainstay of the local

•economy.

Improvements in the district's system and extensions to the water collection

system have been made from time to time, more or less on an emergency or

patchwork basis. Accordingly, some portions of the system are in good condition

and still have years of useful life expectancy, and other portions are antiquated,

poorly designed and inadequate in capacity. Our plan is designed to use as much
MANSON UNIT, CHELAN DIVISION, WASHINGTON 17

as possible of the existing facilities and to put the entire system in such condition

as to insure long trouble-free operation under an adequate operation, maintenance, and replacement program.

Under the plan of development an additional 1,405 acres of presently dry lands

and 120 acres with only a partial water supply, would be devoted to irrigated

apple orchards. Certain Indian-owned lands and class 6 lands with an existing

water right would continue to receive their water entitlement, although they

would not be subject to construction cost assessments.

There are no lands on the Manson unit which would be affected by the acreage

limitation provisions of reclamation law.

The existing facilities consist of a gravity-flow collection system which diverts

water from seven mountain streams into a small regulating reservoir—the

Antilon Reservoir. The water is released as required into a closed-pipe distribution system which provides water under adequate gravity pressure to permit

sprinklers to be used. When the gravity water supply is inadequate to meet the

requirements, water is pumped from Lake Chelan and Wapato Lake to supplement the supply.

We propose to use the same plan of service, but to replace the existing canals,

pipes, siphons, and flumes, as required, by mortar-lined and coated steel pipe of

adequate capacity. The existing Antilon Reservoir would be enlarged by constructing a small new earth dam on Antilon Creek and by raising the existing

Antilon Lake Dam, thereby increasing the active capacity from 2,500 acre-feet

to 9,000 acre-feet. The reservoir would have a surface area of 180 acres atnormal operating level. About 48 miles of the closed pipe distribution system

mains would be replaced and enlarged. No pumping will be required under

normal operating conditions.

The Antilon Reservoir would provide limited opportunities for fish and wildlife•

enhancement and recreation development. The plan of development includes

fish screens on the outlet of the Reservoir, the acquisition of land adjacent to -

the reservoir for access for fishermen and recreation use, minimum public use

recreation facilities and the transfer of such lands and facilities to the ForestService for operation as part of the Wenatchee National Forest. These plans

have been closely coordinated with the interested agencies of the State and

Federal Governments and with the Lake Chelan Reclamation District. As the.

lands are now in district or public ownership, their acquisition for these purposes will be without cost to the unit.

Based on criteria set forth in the Area Redevelopment Act of 1961, Chelan

County has been designed as a redevelopment area. Employment in the county

would be directly affected by the construction and operation of the unit, and itwould put to work many of the skilled and semiskilled workers on the unemployment rolls of the county, as well as many unskilled workers.

Annual benefits of the unit have been estimated with the assistance of the

agencies directly involved, as follows:

Irrigation $2,949, 400

Recreation 5, 585,

Fish and wildlife 3, 750

Area redevelopment 77,500

Total 8,036, 235.

Construction costs of the Manson unit have been estimated, at prices as of

October 1959, to be $12,296,000. Because the returns from new apple orchards

are slow to develop and the costs of establishing such orchards are high, it is

proposed that the portion of the operating costs which the water users establishing new orchards are unable to repay during the 10-year deveolpment period

($67,000) be funded and considered a part of the construction cost, making a.

total project cost of $12,363,000.

This total project cost is tentatively allocated as follows: irrigation, $10,503,-

000 ; recreation and fish and wildlife enhancement, $121,000; area redevelopment, $1,739,000. The irrigation cost is reimbursable without interest under.

reclamation law and the costs allocated to fish and wildlife enhancement are.

nonreimbursable under existing law. We recommend the other costs be nonreimbursable. The nonreimbursable allocation to recreation and fish and wildlife.
18 MANSON UNIT, CHELAN DIVISION, WASHINGTON

would be less than the limitation proposed under the administration's policy

As set forth in H.R. 9032, 88th Congress.

The Lake Chelan Reclamation District is a functioning water users organization now operating the facilities of the Manson unit. This district has taken

the necessary steps to adjust its boundaries and has indicated its willingness

to contract for repayment of construction costs in accordance with the plan

we have proposed. Our report has been reviewed by officials of the State of

Washington, and of the interested Federal agencies. We have received strong

,endorsement of the plan from the Governor of Washington and other reviewers.

The Bureau of the Budget advised that there was no objection to the submission of the report to the Congress.

The annual benefits exceed the annual equivalent costs in the ratio of 6.6 to

1, demonstrating the very favorable economic justification for the unit.

Over a repayment period of 50 years, the water users would be able to repay

$6,483,800 of the irrigation allocation. The remaining $4,019,200, would be returned from revenues derived by the Secretary of the Interior from the disposition of power marketed by the Bonneville Power Administration. All existing

obligations of the BPA will be repaid by the year 2022, 50 years after the last

major powerplant now authorized goes into production. Financial assistance

to the Manson unit will not be required until after that date, when more than

adequate revenues will be available for that purpose.

Investigations and preparation of the report on the Manson unit were done

under special authority of the Chief Joseph Dam Project Act (Public Law

577, 82d Cong.), which provided for financial assistance to be derived from

revenues of the Chief Joseph Joseph Dam powerplant. Previous developments

constructed under this program have been the Foster Creek and Greater

Wenatchee Divisions and the Oroville-Tonasket unit.

You will recall that Assistant Secretary Holum, in the course of hearings

on authorization of the Lower Teton Division and Whitestone Coulee unit,

,discused at some length the Bonneville Power Administration's financial situation and the availability of revenues in aid of irrigation. Under current accounting procedures for the Federal Columbia River power system, all financial assistance to irrigation is to be derived from pooled system revenues from

the coordinated power system, generally, similar to procedures which have

long been in use in the Central Valley and Missouri River Basin projects. The

bill, S. 2533, under consideration, provides for this form of financial assistance.

The minor amendments proposed in our legislative report are for purposes of

clarification and correction only. We earnestly recommend this committee's

favorable action on S. 2533. We will be pleased to provide any further information you may desire.

ADDITIONAL STATEMENT SUPPLIED BY THE BUREAU OF RECLAMATION

We feel it desirable to have on the record a statement as to the reasons for

the somewhat different benefit, cost allocation, and financial assistance data

which were presented in the proposed feasibility report, in the Secretary's final

feasibility report, and today, in our testimony and in the Department's report

on the bill.

These changes have been due to three major factors; first, the interest rates

which result from the prescribed formulas to be used for computation of benefits

'have changed each year that this project has been under study, being first 25/8

percent, then 27/s percent, and finally 3 percent; second, new methods and procedures to determine the monetary benefits, the allocation of costs, and the

reimbursability of costs allocated to recreation and fish and wildlife have been,

and still are being developed in the executive and legislative branches, and, third,

the passage of the Area Redevelopment Act and the designation of Chelan County

as a "redevelopment area" under criteria set forth in that act has caused an

important change in the economic and financial analyses.

The following tabulation and the footnotes demonstrate the effect of these

changes.
MANSON UNIT, CHELAN DIVISION, WASHINGTON 19

Summary of changes resulting from reanalyses, Chief Joseph Dam project,

Washington, Chelan division

Item

Feasibility

report,

July 1962 1

Reanalysis,

April 1963 2

Current

reanalysis,

January 1964 3

Cost allocation:

Construction costs:

Irrigation 4 $12, 113, 500 5 $10,420, 500 5 $10, 503,000

Recreation and fish and wildlife enhancement _____ 184, 500 120,800 121,000

Fish and wildlife (mitigation) 86,000 86,000 5 0

Area redevelopment 7 1, 735,700 7 1, 739,000

Total 12, 384, 000 12, 363, 000 12, 363, 000

Annual operating costs:

Irrigation 58, 900 50, 340 50, 830

Recreation and fish and wildlife enhancement 5, 600 3, 610 3, 610

Fish and wildlife (mitigation) 400 400 0

Area redevelopment.. 8, 440 8, 470

Total 8 64, 900 8 62, 790 8 62, 910

Benefits:

Irrigation 2, 968, 200 2, 955, 630 2, 949, 400

Recreation 12, 800 5, 585 5, 585

Fish and wildlife 3, 750 3, 750

Area redevelopment 75,000 77, 500

Total 2, 981,000 3, 039, 965 3, 036,235

Annual equivalent Federal costs $417, 100 $441, 090 $456, 910

Benefit-cost ratio_ 7.2 to 1 6.9 to 1 6.6 to 1

Repayment:

Total reimbursable costs $12, 113, 500 $10, 420, 500 $10, 503, 000

Repaid by water users 6, 069, 340 6, 501, 900 6, 483, 810

Financial assistance required 6,044, 160 3, 918, 600 4. 019. 190

Percent repayment by water users 50 62 62

1 Based on 2 8-percent interest rate.

2 Based on 2%-percent interest rate.

3 Based on 3-percent interest rate.

Includes $88,000 funded operating costs.

Includes $67,000 funded operating costs.

6 Fish and wildlife mitigation costs allocated to other functions as proposed in H.R. 9032.

7 Costs allocated to area redevelopment nonreimbursable.

Annual equivalent over 100-year period of analysis.

Senator JACKSON. The Chair has received two letters for inclusion

in the record. One is from Mr. Ray H. Bumgarner, president of the

board of directors of the Lake Chelan Reclamation District. The

other is from C. F. Uhlhorn, secretary-manager of the Lake Chelan

Reclamation District. Without objection they will be included in the

hearing record at this point.

(The letters are as follows:)

LAKE CHELAN RECLAMATION DISTRICT,

Manson,, Wash., March 9, 1964.

Senator HENRY M. JACKSON,

Chairman, Interior and Insular Affairs Committee,

Senate Office Building, Washington, D.C.

DEAR MR. CHAIRMAN: I am very interested in S. 2533, the measure to authorize

construction of the Chelan Division of Chief Joseph Dam project.

The project would rehabilitate the present system and adds some 1,500 acres.

Our area produces apples of the highest quality and the greatest quantity

per acre. The survival of the fruit industry in our area depends upon the

supply of water through irrigation. With a large portion of our present water
20 MANSON UNIT, CHELAN DIVISION, WASHINGTON

system in dire need of repair, we have hardly been able to hold our own. Thereis no reserve for an emergency or to rehabilitate our system, yet we are paying

the highest cost per acre in the State. So, as you can see, something must be

done for the survival of our district.

Yours truly,

RAY H. RUMGARNER,

President, Board of Directors.

LAKE CHELAN RECLAMATION DISTRICT,

Manson, Wash., March 10, 1964.

Reference S. 2533.

Senator HENRY M. JACKSON,

Chairman, Interior and Insular Affairs Committee,

Senate Office Building, Washington, D.C.

DEAR Mn. CHAIRMAN: I have worked with the Lake Chelan Reclamation District for the past 7 years. During the past 5 years I have been the district's

secretary and manager.

In this position I am possibly best qualified to know all the angles relating

to the district's problems. By "all the angles" is meant the condition of the

physical plant, the administrative problems at hand and the financial aspects

of coping with these.

Because of this knowledge it is my firm conviction that the interests of and

for the good of the district in the long pull ahead, the Manson unit, Chelan

Division of the Chief Joseph Dam project will be best served through the passage

of the proposed project report.

Very sincerely yours,

C. F. UHLHORN, Secretary-Manager.

Senator JACKSON. If there is no further business concerning S. 2533

we will turn to other business.

(Whereupon the subcommittee proceeded to discussion of other

matters.)