I don't know how seriously it was considered, but I understand that the United States Fish and Wildlife Service would not agree to let them make a survey across there or put a ditch through there because of the tendency it would have to disturb the water level of their lakes.

I appreciate the fact, having irrigated farms, that these Ainsworth people need water and want water. We feel there are alternate plans, however, which could be worked out. Maybe all the plans wouldn't be right, but perhaps something could be arrived at if this thing were studied out in the area, taking into consideration the damage it would do to the ranchers.

There has been a dam proposed at Meadville on the Niobrara River north of Ainsworth. Whether or not it would be feasible that is not for us to say, but by the water-flow indication of the Geological Survey gaging stations, the one below the Merritt Dam on the Snake River, it indictaes from the years of 1948 to 1954, a 7-year average, they had an average of 182,000 acre-feet of water.

On the Niobrara River, at the gaging station at Sparks, which would be above the Meadville Dam site, they have an average flow of 612,310 acre-feet per year, 3 times the water on the Niobrara that there is at the Snake.

I heard some testimony yesterday, I believe, or some comment, that there were 1 million acre-feet of the Niobrara water which went out of Nebraska every year.

From the economic standpoint I can see no reason why they couldn't consolidate some of these projects and use the Niobrara water, the Snake water, and all the tributary creeks between the mouth of the Snake River and the Meadville Dam.

We would respectfully ask this committee to try to hold additional studies and investigations in the area, give our people a chance to tell their story a little more fully.

We know a lot more about it than we did 8 years ago when we started this thing.

We know our own country and we know the problems.

I think that is all I have.

Mr. ASPINALL. Thank you very much, Mr. McGinley.

You will remain at the table while we hear from Mr. Heth.

Mr. MILLER. I notice you have a statement 19 pages long.

Did you want to summarize it or put it in the record as it is? I believe you wanted to file some sort of memorandum.

Mr. HETH. As I sat here now I thought it might be better to summarize it than read it entirely. There might be parts of it on specific points which I might well read.

Mr. MILLER. The committee has the statement before it. It is a very fine statement but it would take quite some time to read all the details you have.

Mr. ASPINALL. Our rules provide, Mr. Heth, that a statement may be offered ahead of time and then the witness shall testify to the statement.

We do not always stay within those rules, but if you are in a position to ask that the statement be filed and you make a summary and verbal report that will be appreciated by the committee.

Mr. HETH. That is perfectly agreeable with me, Mr. Aspinall. It is ignorance on my part as to your rules, and any time I get off the beam I trust you will put me back.

Mr. ASPINALL. You need not apologize. The statement will be made part of the record and Mr. Heth may proceed to give his testimony referring to the statement as he sees fit.

Mr. HETH. Thank you.

Mr. ASPINALL. I hear no objection and it will be so ordered. (The prepared statement of Mr. Lynn Heth is as follows:)

STATEMENT OF LYNN E. HETH, ATTORNEY, CHERRY COUNTY, NEBR., CONSERVATION ASSOCIATION

Mr. Chairman and members of the committee, as I endeavor to prepare this statement, I am overwhelmed with the enormity of the task of trying to overcome a report of the Bureau of Reclamation that has been 7 or 8 years in the making at a cost of more than $600,000. As far as we know at this time, our association represents the only organized opposition to this project-I say “organized opposition, for I know that there is much individual opposition to the project. Our people are not poor in the generally accepted meaning of the term and yet they do not have the kind of money that it would take to attack a report of the Bureau of Reclamation in the manner that would show it for what it is.

A letter recently received by the president of this association from a member of this committtee contained the following statement: "I believe that I should caution you that the committee will be interested in facts, not theory or emotional outbursts."

We will give you facts and trust we may be able to restrain our emotions. We would like to call your attention to some parts of the report now under consideration which we assume should be referred to as the definite plan report and prior reports sumbitted on the same project. In the present report, paragraph 53 on page 12, it is stated that the weighted average annual payment capacity of all classes of irrigable land in this project is computed at $8.35 per acre and that the annual expenses are $2.30 per acre, leaving repayment ability of $6.05 per acre. According to the report of June 1953, the repayment capacity was $6.50 per acre, the expense $2.25 per acre, and the repayment capacity $4.25 per acre (see report of the hearing of this committee at Ainsworth, Nebr., on October 9, 1953, shown on page 101 of the hearing before this committee on H. R. 8520). We are advised that no such repayment capacity is used in any contract; for instance, on the Bostwick project in Nebraska the contract of repayment calls for $2.12 per acre and on the Frenchman-Cambridge project it is set up at $1.60 per acre.

The report of June 1953, on page 84 thereof, it is stated that the project at that time contemplated irrigation of 44,800 acres of land, classified as 12,350 acres of class 1 land and 32,450 acres of class 2 land. In the present definite plan report it is contemplated to irrigate 33,960 acres, classified (par. 28, p. 6) as 12,635 acres class 1 land, 10,652 acres class 2 land, 9,253 acres class 3 land, and 1,420 of class 4h land.

The following are comparative figures of construction costs under the two reports, to wit:

Under the report of June 1953, when it was contemplated to irrigate 44,800 acres, it was claimed there was a supply of water of 111,700 acre-feet and that 112,600 acre-feet were needed, being some 900 acre-feet short. That would amount to 2.5 acre-feet of water at the source to each acre of irrigated land. Under the present report, they claim a need of 96,000 acre-feet for 33,960 acres of land, or 2.83 acre-feet of water for each acre of land, and according to table 11, page 54, will have a shortage of 300 acre-feet.

Isn't it time that someone began to question the accuracy of this report? It seems to us that there are enough discrepancies apparent on the face of this report that some independent investigation should be made concerning the data set out in the report.

Also, a member of this committee has written one of our people as follows: "If the project is not feasible and will not pay back over a period of years, without interest, all of the funds advanced, then it is not likely to be approved." Now, what does the Bureau of Reclamation say about repayment? We refer you to paragraph 54, page 13, of the Definite Plan Report, as follows: "54. Repayment would retire $7,997,000 of construction costs if 100 percent of payment capacity is utilized, and $6,513,000 if 85 percent of payment capacity is used. Inasmuch as these returns will not retire the entire cost of construction allocated to irrigation, assistance would be required from the Missouri River Basin project to make up the deficiency. The required assistance would be $17,436,100 if 100 percent of payment capacity is negotiated and $18,920,100 if 85 percent of payment capacity is negotiated."

If this irrigation project will not pay for itself, then how can the Missouri River Basin project have any surplus money when two-thirds or more of the cost of construction of those projects totaling upward of $4 billion is allocated to irrigation?

Let us consider this project from an investment point of view and for that purpose let us take the figures as given in the definite-plan report of the Bureau of Reclamation, notwithstanding the fact that a congressional committee report has shown that in the matter of costs the Bureau of Reclamation has been from 90 to 200 percent on the short side of the estimates of projects as against the ultimate costs.

The present report shows a total of 33,960 acres to be irrigated and an estimated cost of $25,934,000. This means a cost of $763.66 per acre to deliver water to the district.

So far as this project is concerned, we find the classification and percentage of total of classification of the land as follows:

The best project for comparison, and the only other project in the Niobrara Basin, is the Mirage Flats irrigation project which has been in operation about 10 years. The 1939 Reclamation Bureau report shows the irrigable area in that district to consist of 862 percent class 1 land and 131⁄2 percent class 2 land, with no class 3 or 4 land. That is quite a contrast with the 37 percent class 1 land in this project.

We have good evidence of what the Mirage Flats land is worth. Perhaps some of you will remember a year ago when this project was for hearing before this committee that Mr. Carl Horn, a banker and landowner in the vicinity of the Mirage Flats project, appeared and testified on April 26, 1954. In answer to questions by Congressman Pillion, of New York, Mr. Horn testified that the irrigated land of that project was selling for $150 to $225 per acre (p. 41 of the report of the hearing). That is the selling price of the land at almost the end of the development period on a project where 86% percent of the land is class 1 as compared to this project with only 37 percent of class 1 land. It seems fair to us to assume that the Ainsworth land would not average up with the Mirage Flats land.

Is it good business for this Nation to invest a minimum of $763.66 per acre in land to be worth less than $200 per acre after that investment is made?

Certainly the farmers in the district are going to pay back something. The amount suggested in the definite-plan report is $6.05 per acre for 40 years (prior report said only $4.25 per acre), starting after a 10-year waiting or development period. The total repayment in 40 years under the present estimate would be $242 per acre.

It is no secret that the Federal Government would borrow all of the money for this project. Bond interest at 2% percent figures $190.91 interest on the $763.66 invested in the land for the 10-year period before payment starts. That interest alone is almost as much as the farmer will repay under the present estimate and would be more than he would repay under the prior estimate. If you follow the contract payment plan used on other projects, then the repayments would not even keep up with the accruing interest.

Of course, that $242 being repaid by the farmer would be drawing interest on the unmatured balance over the 40-year period of time and such interest would amount to $112 per acre. Deducting the amount the farmer would repay would leave a Federal subsidy-a portion not paid by the landowners-and the interest on that amount for 40 years would be $521.66.

What do we have now at the end of 40 years? Interest during the 10 years $190.91; interest on the part repaid by the farmer $112; interest on the subsidy $521.66, or a total of $824.57 per acre which the Federal Government will have invested in interest, with $521.66 still owed to the bondholders (all of us) for each acre. That totals $1,346.23 per acre. That is the amount we taxpayers would have invested in each acre of this land which would be on the present market worth no more than $200 per acre. The law provides that land in a project of this kind be in quarter section units. At the end of 50 years the investment by the Federal Government will be $215,396.80 for 160 acres and the investment by the landowners will be $38,720 without considering the original cost of the land or its preparation for irrigation. That is a total of $254,116.80 for a quarter section that isn't worth $32,000 by today's market.

The reading of the figures at this rate does not quite give the picture so we have set out a tabulated computation as follows:

Cost per acre of project----

To be paid by landowners ($6.05 per acre × 40 years== $242).

$763.66

242.00

Federal subsidy in original cost__‒‒‒

521.66

Interest during 10-year waiting period (21⁄2 percent > $763.66×10 years).

190.91

Interest on unpaid portion of $242 (1⁄2 × $242.00=$112×21⁄2 percent
X40 years)--

112.00

Interest on original cost Federal subsidy ($521.66×21⁄2 percent×40 years).

521.66

824.57

521.66

1, 346. 23

Total interest paid by United States.. Original cost subsidy..

Total Federal investment per acre--

160 acres X$1,346.23_

Landowners' investment (160 acres ×$242).

Total investment per 160 acres at the end of 50-year period.

215, 396. 80 38,720.00

254, 116. 80

Perhaps we should now consider some sort of balance sheet for the State of Nebraska if this project is developed. First, there would be a gain in the value of some 33,960 acres of land in the Ainsworth area. A few of the landowners would prosper; others would fail and lose all they now have.

Second, the huge Federal expenditure in development would help business people in Ainsworth and there would be some continuing profits from the project from the increased farm units.

In the liability column, the immediate damage would be done in Cherry County, Nebraska. Incidentally, I have read some recent extended remarks of our Congressman Miller in the Congressional Record wherein he boasts that his district in Nebraska has more cattle than any other of the 435 congressional districts. In that connection our county of Cherry has more cattle than any other county in the entire United States and it is also first in the production of hay.

The proposed canal would be 53 miles long. This would be the longest canal in Nebraska-the longest stretch between the source of the water and the place or places where the water is used. It is unique in that respect and especially so in view of the relatively small acreage to be irrigated. Every square foot taken by the dam, the reservoir, the canal and the laterals, would be land that is now in use agriculturally. We believe there is no irrigation project in the United States where there is a canal of 53 miles or more that was built through land that was used so fully and so effectively.

According to the report of the Bureau, more than 10,000 acres of land would be taken out of production to be used in the reservoir, the dam, the canal, the laterals and access roads. They will destroy 30 percent as much land as they plan to benefit.

The above statements are all facts based on the record. The next statement may be called theory, but as a practical matter, we know that seepage is great in the sandhill area. This has been proven in the area of the Keystone Dam and the Sutherland Reservoir near North Platte in Nebraska where huge sums have been paid by the owners of those projects to lower landowners for seepage. The Bureau contends that lining the canal with concrete will stop seepage. Many people in the sandhill area have endeavored to devise ways of building a basement for a home to prevent seepage, even to constructing a copper vat in which the basement was built but when the water level rises above the floor of the basement they invariably have seepage. So, there is no reason to believe that any 4 inches of concrete is going to prevent seepage from the canal.

At the time of year when the canal will be full of water, it will flood valuable hay meadows that should be dried up sufficiently at that time of year to cut the hay. At the same time it will act as a drain on those same meadows at the time of year when the water should be held on them in April and May because the ditch will have no water in it except such as it drains from the area. If this seepage and drainage extends only a half mile on each side of the ditch-and we are advised that it will extend up to 5 and 6 miles-then this means damage to as much land from seepage as is to be benefited by irrigation.

Then untold inconvenience and cost will result from pastures and hay meadows being cut up by the canal. The agricultural operation in the sandhills area is based on grass and water-the two facts of life in the cattle business. Ours is the only part of the country where the land has been managed so well that it is in better shape today than when the settlers first came. The meadows are better and the grass grows now where the hills were once bare dune sand. We believe the loss would be greater than the gain and that the project is not good.

In connection with the economic aspects of this project, I believe the members of this committee have each received a copy of the paper prepared along that line by Kris Kristjanson of the department of agricultural economics of the University of Nebraska. I will not read it at this time, but would like to introduce a copy of it as a part of the record.

Hereinbefore I have quoted from a letter that "if the project is not feasible and will not pay back over a period of years, without interest, all of the funds advanced then it is not likely to be approved." As a matter of fact that has appeared in two such letters.

Throughout the several reports, the project has been set up by the Bureau of Reclamation on a 50-year basis, 10 years for development and 40 years for payment. Yet, as hereinbefore quoted from the definite plan report, it is stated that the project will pay no more than $7,997,000 if 100 percent of payment capacity is used and $6,513,000 if 85 percent is used. That is based on a payment ability expressed in the report of $6.05 per acre. If the repayment contract is set up as the Bostwick or Cambridge-Frenchman contracts at about $2 per acre, then the repayments would be no more than about $2,500,000 and it would take 400 years to pay off the initial principal investment in the project. Or on the basis of the definite plan report it would take about 120 years. During all of the repayment period we taxpayers would be paying interest on the money borrowed to build the project and the payments on the project will probably not be sufficient to take care of the interest.

We now approach another of the liabilities of this project-seepage. This question was so ably covered at the hearing before this committee on April 26, 1954, when this committee was considering H. R. 8520 of the 83d Congress-as shown on pages 71-81 of the report of the hearing, by Dr. A. L. Lugn, professor of geology at the University of Nebraska-that I invite your attention to the statement he made at that time. I would particularly invite your atention to the introduction of Dr. Lugn, appearing on pages 64 and 65 of the report, giving you his reputation and qualifications. At that time Mr. Miller, of this committee, remarked that Dr. Lugn was one of the outstanding geologists of the United States.

I would further invite your attention to the exchange of questions and answers made by the same Dr. A. L. Lugn before some of the members of this committee at a hearing at the city of Ainsworth on October 9, 1953, concerning this project, which exchange of questions and answers appears on pages 121 to 124 of the same report above referred to.

I well remember at another hearing when Dr. Lugn was asked if there was any similar project or construction from which the ability of Merritt Reservoir to hold water could be judged. His reply was that there was an almost identical situation existing in connection with the Sutherland Reservoir-that project is