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Show VI-58 UPDATING THE HOOVER DAM DOCUMENTS COLORADO RIVER STORAGE PROJECT o3 lory. It conies as a shock to me that there is now a proposal to divert cither revenues or energy for purposes completely alii'll to the expressed intention of the act. J cannot believe that such authority is vested in your office in view of the fact that the exercise of discretion must be predicated upon a legal proposition, and the Supreme Court lias said that an administrative official must have the bounds and limits of his actions established. ' ' The proposed criteria attempt to provide some reimbursement to the upper basin fund. The suggested return, however, is relatively minor and does not recognize that the diversion of energj* from the upper basin powerplants, whether firm or nonfirm, has exactly the same effect as the diversion of dollars from the basin fund. Neither does the suggested reimbursement to the basin fund recognize that the diversion of either upper basin revenues or energy creates a further substantial drain on the fund due to the added interest charges caused l>3* the postponement of the return to the U.S. Treasury of the capital investment in interest-bearing allocations. The proposed filling criteria provide a guarantee of energy to the Hoover power contractors but do not guarantee even partial reimbursement to the upper basin fund for the costs of making up Hoover power diminutions. I am assuming that }'ou have consulted your Solicitor and have been advised by him that the Secretary under the terms of the Boulder Canyon Project Act or Boulder Canyon Project Adjustment Act does not have the authority to adjust Hoover power rates or defer beyxmd 1987 the amortization of Hoover Dam costs for the purpose of meeting the Hoover firm power contract deficiencies that might be caused bjr the Colorado River storage project: and, further, that Congress has reserved unto itself the right to say how Hoover power revenues shall be used after 1987 making it impossible for the Secretary to do anything more about a guarantee to the upper basin at this time than to declare his intent in the "additional regulation No. 1" appended to the proposed criteria. If this assumption is correct, it is clearly evident that in order to implement the criteria, i.e., to carry out the intent to reimburse the upper basin fund, congressional legislation will be necessary. Mr. Dominy mentioned in his letter to you that suggestions have been made that the Colorado River development fund be used to pay for Hoover power diminutions during the reservoir filling period. The use of this fund was also discussed in the Goslin memo of April 12, 1961, to Under Secretary Can*. This proposal should be given serious consideration. The CRD fund was originally created by the Boulder Canyon Project Adjustment Act, section 2(d). It results from the transfer of $500,000 annually of Hoover power revenues to a special fund in the Treasury authorized to be appropriated by the Congress for project investigations and construction. For the years of operation ending in 1956 to 1987, inclusive, the CRD fund is earmarked for the investigation and construction of projects in and equitably distributed among the States of the upper division and the States of the lower division. Under present procedure it is necessary to request the Congress to appropriate money accrued in the CRD fund before that money can be used. If agreement among the seven basin States can be reached to change the use of the CRD fund and congressional authority therefor obtained, the following would be accomplished: (a) Authorization for the Secretary to look elsewhere (to Hoover revenues) rather than to the upper basin for a source of |