Letter Responding to Request for Views on S. 1658

Letter: From G. d'Andelot Belin, General Counsel, The General Counsel of the Treasury, to The Director, Bureau of the Budget, Mar 23, 1964, page 1THE GENERAL COUNSEL OF THE TREASURY WASHINGTON MAR 23 1964 Sir: Reference is made to your request for the views of this Department on a proposed report of the Department of the Interior on S. 1658, "To authorize, construct, operate, and maintain the Central Arizona project, Arizona-New Mexico, and for other purposes". The proposed report of the Department of the Interior recommends a substitute for S. 1658 entitled "Pacific Southwest Water Plan Act". The substitute takes a regional approach to the water supply problems of the Pacific Southwest and includes, among others, the Central Arizona project. It would appear for the reasons given by the Department of the Interior that a regional approach to the development of the water resources of the Pacific Southwest is preferable to an individual project approach. Also, the establishment of the proposed revolving "Pacific Southwest Development Fund" is sound in principle, would provide needed flexibility in financing, accounting and budgeting, and has precedent in the operation of the Reclamation fund and the Colorado River Dam fund. As to costs, it has been estimated that the cost of the Central Arizona project will be in excess of $1 billion and that the cost of the entire Pacific Southwest Water Plan will be over$3 billion. These costs should be considered in relation to their impact on the President's budget program. Apart from the foregoing considerations, the Department is particularly concerned with the provisions in both S. 1658 and the Interior Department substitute which would provide: (1) a subsidy interest rate formula to be used in determining charges to the beneficiaries of the Federal investment in commercial power and municipal and industrial water supply projects; and (2) interest free irrigation loans. The Department has no independent knowledge as to the need for the substantial subsidies and the consequent reallocation of resources which would result from the proposed legislation. However, the Department strongly believes, as did the President's Committee on Federal Credit Programs, that an intelligent choice among alternatives requires thatEpson Perfection 4870 Photo, 400 dpi, 8 bit, 1,558,640 byte

Letter Responding to Request for Views on S. 1658

Letter: From G. d'Andelot Belin, General Counsel, The General Counsel of the Treasury, to The Director, Bureau of the Budget, Mar 23, 1964, page 3-3- self-supporting, when in fact the costs to Government and the subsidy to private power and water users would be substantial. Should it be determined that an interest-rate subsidy is essential for certain projects, such a subsidy could be provided by charging a rate below, but related to, a rate which would reflect the Treasury's borrowing costs. Such a procedure would at least assure more adequate recognition of true project costs and provide a basis for more meaningful cost-benefit analysis. The Department is also strongly opposed to the provisions of section 2 of the Interior Department substitute under which repayments to Treasury would be subordinated to operation, maintenance, replacement, and emergency costs. Under such provisions, there would be no assurance that even the principal amount of the Federal investment would be repaid. Finally, it should be noted that both S. 1658 and the Interior Department draft bill would authorize the Secretary of the Interior to allocate costs to area redevelopment as a project purpose on a non-reimbursable basis. The Treasury Department recommends that any such preferential treatment to redevelopment areas be in accord with the Government's overall area redevelopment program as provided in Public Law 87-27. In view of considerations previously expressed, the Department desires to submit a report to the Senate Committee on Interior and Insular Affairs on S. 1658, copies of which are enclosed. Is there any objection to the submission of the proposed report? Sincerely yours, G. d'Andelot Belin General Counsel The Director Bureau of the BudgetEpson Perfection 4870 Photo, 400 dpi, 8 bit, 1,547,501 byte

Letter Responding to Request for Views on S. 1658

Letter: From G. d'Andelot Belin, General Counsel, The General Counsel of the Treasury, to The Director, Bureau of the Budget, Mar 23, 196