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<br />FRYINGP AN -ARKANSAS PROJECT
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<br />various purposes in the same manner as other damages, including
<br />relocations.
<br />Our review indicates that further study of various aspects of the
<br />project might be WlLI'ranted, If, however, you deem it advisable,
<br />particularly in the light of the committee's desire for an early hearing,
<br />there would be no objection to the transmittal of the report, together
<br />with a copy of this letter, for the consideration of the Congress,
<br />Sincerely yours,
<br />ROLAND HUGHES,
<br />Assistant Director.
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<br />SECRETARY McKAY'S REPORT TO THE PRESIDENT, THROUGH
<br />BUREAU OF THE BUDGET
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<br />DEPARTMENT OF THE INTERIOR,
<br />OFFICE OF THE SECRETARY,
<br />Washington, D. 0" April SO, 1955.
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<br />'eHE PRESIDENT,
<br />, THE WHITE HOUSE:
<br />(Through the Bureau of the Budget),
<br />My DEAR MR, PRESIDENT: On October 19, 1951, my predecessor
<br />in office submitted his report on the Fryingpan-Arkansas project,
<br />Colorado, a multiple-purpose project for partial development of the
<br />water resources of the upper Arkansas River Basin and involving
<br />transmountain diversion of water from the Roaring Fork River, a
<br />tributary of the Colorado. By letter of January 27, 1953, Budget
<br />Director Dodge called my attention to this report, among others,
<br />and asked that it be .reviewed to determine whether it conforms to
<br />the present program of the Department of the Interior, and whether
<br />any modification or revision should be made.
<br />The report, as previously submitted, recommended immediate
<br />authorization for the construction and operation of a system of reser-
<br />voirs, canals, tunnel, diversion dams, powerplants, and municipal
<br />water supply facilities for irrigation and municipal water supply,
<br />flood control, power, sediment control, stream pollution abatement,
<br />and preservation and propagation of fish and wildlife. .
<br />After review of the report and study of the data and information
<br />presently available, I have determined that no modification in the
<br />plan of development is required, However, the recommendations
<br />in the report are hereby modified to recommend, instead of the appli-
<br />cation of the so-called interest component as heretofore contemplated,
<br />the return of that part of the construction cost of the project which is
<br />allocated to irrigation and assigned to be repaid from net power and
<br />municipal water revenues subsequent to the repayment of the com-
<br />mercial power and municipal water investments-these latter in-
<br />vestments to bear interest, on the unamortized balances, at a rate
<br />equal to the average rate paid by the United States on its long-term
<br />loans outstanding at the date of authorization of the project. We
<br />do not favor the use of the so-called interest component as an aid in
<br />paying out the irrigation costs of this project.
<br />The repayments and economic analyses have been revised to re-
<br />flect the increased costs since the basic report was prepared, Sum-
<br />maries of these revised studies are enclosed, The repayment analysis
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