Denver, Colorado Remarks in a Panel Discussion and a Question- and-Answer Session on Western Water Policy.

THE PRESIDENT. Let me say first of all that I am very glad to be back in Colorado, in Denver. This is one of the more important meetings that I will have a chance to attend this year.

WESTERN WATER POLICY

I realize that in the Rocky Mountain States, indeed throughout the West, that water is the lifeblood of the people who live here. And I am especially grateful that the members of the Colorado congressional delegation came in with me on Air Force One today. And we have, I think, 10 Western Governors who joined this group to listen to the discussion with the panelists and with the audience, and later they'll be meeting with me privately to pursue additional items that concern water and other matters that relate directly to Governors and their responsibilities.

We have times that are changing, that require, in my opinion as President of our country, the evolution of a national water policy. Up until about a month in the future, we will .be accumulating advice and questions, proposals, criticisms from public officials and from private water users that will come to the Secretary of Interior, Cecil Andrus, on my right.

In February this analysis will 'be presented to me, and I will make a decision then as to what portions of the national water policy are ready for final form and which elements of that policy proposal option will be needing additional study by me and others. I will not make a decision on any of the controversial items without first discussing these matters thoroughly with the Members of Congress, with the Governors involved, and with the local and private users of water, not only in the West but throughout the country.

I want to make clear from the very beginning that there absolutely will be no Federal preemption of State or private prerogatives in the use or management of water. This is not the purpose of the policy at all.

But as you well know, I have a responsibility as President, working with the Congress, to make sure that we have an effective program in carrying out the responsibilities, the legal responsibilities, of the Federal Government. We must make sure that Federal water programs are effective, that they meet the needs of the American people. We have got to be sure also that we don't waste money in some Federal programs and projects that are not needed or are of a very low priority and at the same time rob projects that are needed in other parts of the country.

It's a very important concept to me to have the direct input of people like those on the panel today--Governors, mayors, farmers, those who develop energy sources, those who are interested. in environmental quality and the preservation of wildlife--to work together. It's also very important for people in Colorado to understand the problems of people in California and Utah as well as Arizona and Oregon and the northeastern part of our country. And as we evolve a national energy policy, a national water policy, we'll be sure that the two are tied together, because this is an encroaching demand for water that wasn't present in your region in years gone by.

We've seen a rapidly rising demand on the part of urban areas, as contrasted with longstanding use of water in the rural areas. We've seen increasing conflicts develop between States as water supplies that were formerly adequate now become inadequate.

We've got an increasing problem in international matters, particularly between the United States and Mexico. And we've got an increasing demand for water supplies by energy producers, coal, shale, also electric power producers, on the one hand, compared to longstanding users in agriculture and other needs of water.

We have not adequately addressed conservation matters. And in the past when water has been assumed to be of unlimited quantity, conservation was not an ever-present consideration in our minds. Now conservation has got to be addressed, not only by me as President and others in Washington but by the average family here in Denver and other parts where it hasn't been an ever-present consideration in the past.

Just a couple of other points very quickly and we'll start around the panel, after Governor Lamm makes a brief statement. There are some questions that have not yet been assessed.

The question of Indian rights to water--no one knows what future years might bring in court decisions interpreting longstanding ancient treaty rights between the Indians and the white population. And no one has adequately explored yet the responsibilities of the Federal Government in lands under Federal Government control. So, I believe that this year's work with an open, free, unbiased, and, hopefully, complete discussion of the water problem will make sure that in the future our needs are met.

But I can assure you again that I'm here as a student to learn as best I can from you the facts about your special needs, to answer your questions when I know the answer, to get help from Cecil Andrus and others when I don't know the answers. And then I'll go back to Washington with a much clearer concept of how to carry out my responsibilities to you.

Again, let me thank you for letting me be here. I'd like to ask Governor Dick Lamm now to make a few remarks and then we'll call on the panel to discuss the different questions that must be addressed today about this crucial question of water in the West.

Governor Lamm.

PANEL DISCUSSION COLORADO'S WATER SYSTEM

GOVERNOR LAMM. Mr. President, we want you to know first and foremost that we're pleased by your visit. We're honored by your visit. We are not unaware of the political and personal courage that it comes in the West to come here to talk about water, which is truly our most sensitive subject.

We further appreciate the whole forum which you have given us, the idea of coming and listening rather than making a speech--of listening to our citizens. That is very much appreciated, and we very much honor you and respect you as our President.

There are four brief points that I have been asked to make, and I will make them briefly, but they are in my mind and the minds of a great many other people in this State, sort of the heart of Colorado's water system. First of all, it's important to understand that Colorado and the West is a semiarid State. For the first 50 years, when mapping in this area was called the Great American Desert, that water in fact revolves--everything revolves around water. I remember a very poignant scene that I know is poignant to you, too, from "Gone With the Wind," where Scarlett O'Hara's father is standing there and says land--that land is everything worth fighting for, land is worth dying for, land is the only thing. And you remember it well. I think that basically that same picture is a great part of our heritage here in the West, except--except that it isn't land, it's water, because we literally have hundreds and millions of acres of land that, in fact, only can bloom and grow and produce and be made productive if it has water. So, water in fact, as John Gunther said, "Touch water in the West and you touch everything."

Point number two is the way we get our water, and it's extremely important to understand that because our water doesn't come evenly over the year, but in fact it comes--about 80 to 90 percent of it comes, of our usable water, comes through snow. It accumulates in our mountains, and in one fast 60-day period it runs off. And what we don't store we don't use. And that is extremely central to remembering the problems of the West, that basically no great rivers, major rivers, flow into Colorado. Only one flows in at all, and all the rest flow out. We are the mother of rivers. Some 16 States get their water in whole or in part from Colorado. But we have to store our water if we're going to use it. Without it, cities and crops both die.

In Colorado, for instance, of our 20 major cities, every one of them relies on water storage--every one of them. Not that some of them might not have some direct stream flow rights, but without that water storage, those cities would dry up and people would have to leave.

A great part of our agricultural commodities, two-thirds of our agricultural production related to irrigated agriculture, water that is stored at some point in that 60-day period and then is allowed to be used in the other part. So, our ability to produce crops and allow our civilization to continue in this area is directly related to this storage and irrigation of water.

Point number three, Mr. President, is we've historically had a good Federal-State partnership, that the Federal Government has been very helpful to the West and for which we are appreciative.

In the Reclamation Act, in grazing and a number of other of these areas, it is very important to understand that the West, however, hasn't necessarily been just an endless beneficiary. In Colorado, for instance, during the last 70 years, we have built--70 reclamation projects have been completed, costing $248 million.

In 1975 alone, in one year alone, those reclamation projects were related to $331 million worth of crops. So, in one short year there was gross production from those crops far exceeding the investment made from the very beginning and all of those reclamation projects. Eighty-four percent of the total Federal investment is reimbursable to the Federal Treasury in these reclamation projects, and again it is not only part of our lifeblood but it is also something that has been part of a longstanding Federal-State partnership.

The last point, Mr. President, is how vulnerable we are to Federal policy. Our water--there is 94 percent of all of the lands that you are the landlord of, the Federal Government--94 percent of all Federal lands are in the 16 Western States. So, a mistake in a Federal policy in some other doesn't have near the ramifications in much of the country as it does here because of how closely we're tied.

Thirty-six percent of our State is owned by the Federal Government. The water policy, the Federal policy, grazing policy-all of these things again go right to the very heart of Colorado and our economy. Our social and economic planning is done on into the future relating to projections and policies as set down in the past, and much of them--most of them revolve around water.

In summary, Mr. President, again, the overriding thing is we're honored to have you here, and we're pleased that you've come to listen. We've disagreed with some of your water policies in the past, but we want to work with you in a partnership, and we're happy you're here.

THE PRESIDENT. We're going to move our discussion along as rapidly as possible, and I'd like to call on any panel members now who want to discuss the first item on the agenda, which is the competition that is evolving--already exists between States for water or between regions for water.

Mr. el-Ashry.

COLORADO RIVER BASIN

MOHAMED EL-ASHRY. To me, Mr. President, talking about water in an important region of the West is talking about the Colorado River Basin, one example of the tremendous competition that's taking place between the States.

It started in 1922 when the Basin was divided artificially into an Upper Basin and a Lower Basin, and using a very high flow assumption at that time for the river--it happened to be a wet year at the time--the water of the river was apportioned among the seven States or among at least the Upper Basin and the Lower Basin.

From that point on, water planning in the Colorado River Basin became focused upon competition on which State develops its water first.

As a result, those who were in a position to develop--southern California in particular--not only developed on their apportioned water but developed also on borrowed water, water that does not belong to them. And without learning from past history, central Arizona right now is developing on borrowed water, water that does not belong to Arizona. And in the very near future, both States will be asked to relinquish the water that they have used that does not belong to them. This resulted in the fact that the Upper Basin States became very nervous about what's going to happen when they are ready to develop their water. Are they, in fact, going to lose what they were guaranteed in the compact that they will have and legitimately so?

However, it does not justify really the push that's being made by the Upper Basin States to develop every drop of water in the Upper Basin at any cost, by building all the storage projects that they can get their hands on, so that they can have the water that they are entitled to although the need for the use for this water does not exist at the present time.

One major aspect of the water planning in that basin has been based on full development of the available supply without any concern for the water quality implications of developing these supplies. As a result, salinity has reached dangerous proportions, threatening productive agriculture in the Lower Basin, costing over $50 million per year in damages to water users in the Lower Basin and requiring hundreds of millions of dollars in Federal expenditures to control it. Instead of considering efficiency and conservation of water use, it has been often assumed that additional water supply is the only means to further local and regional development, and it is the lack of consideration of alternatives in considering water management in this basin where the available supply is not adequate to meet all the demands that are placed upon it.

As a matter of fact, if all demands that are being projected at the present time go on line--water-related development plans go on line as projected by 1990, it is expected that the demands will exceed the available supply. So, something is needed to be done. And the major reason for the problem is that there was tremendous lack of basinwide planning; the planning became focused on local, regional, or State level--not on a basinwide planning.

An inescapable fact, also, Mr. President, is that there is not enough water in the basin to meet all the demands that are placed upon it, and the solution has got to be in the form of reordering these demands that are placed on the water supply, but again the reordering has to be done on a basinwide basis. The Upper Basin should not really suffer just because they have not developed in time and somebody else locked up all the water in some other things.

So, it has got to be a fair and equitable means of reordering the future needs for water use in the basin. And I'll stop at this moment. Thank you.

THE PRESIDENT. I might point out that Mr. el-Ashry is a geologist and a hydrologist. He's also the staff scientist for the Environmental Defense Fund. In the future there's no doubt in my mind that the competition among the States and between the United States and Mexico is going to be even much more intense than it has been in the past or present. And this is going to require that Congress look with a great deal of attention at the relative priority of new construction projects and that everyone concentrate on a self-imposed conservation effort so that we use every drop of water to a maximum degree and don't waste it as has been the case in the past.

Perhaps one other panelist would like to comment on the competition aspect. Mr. Carlos Lucero.

INTERSTATE COMPACTS

MR. LUCERO. Mr. President, water rights in Colorado are popular. It seems to me the discussion of interstate rights to water really has to be based at a recognition that the water rights of Coloradans have been hardly fought for and have been settled either through litigation at the Supreme Court level through equitable apportionment or by interstate compact.

Now, it seems to me that we have--and it's Colorado's position that we do--that these interstate compacts finally and forever settle the question of what the relative right of the States are to the water, that where Colorado can benefit from the Federal Government's assistance is in developing programs either for salvaging water or for managing water so that we can have the maximum ability to meet our compact obligations.

In the San Luis Valley where I'm from, for example, we have a valley the size of Connecticut. The series of rivers run into the valley. The Conejos River, the Trinchera, the La Jara all join to form the Rio Grande, which flows into New Mexico and Texas, and, as you wisely recognized, creates obligations to the Republic of Mexico as well.

In that area we have had shortfalls close to a million acre-feet of water in our delivery obligations under the compact. At the present time, we have an obligation of in excess of 700,000 acre-feet. How can the Federal Government help Colorado to meet its obligations in a manner consistent with your policies of environmental soundness, economic feasibility, nonstructural approaches?

It seems to me that the Closed Basin Project there is a logical place to look. That project would take water from parts of the valley that are in the Closed Basin, so- called, and pump those waters into the Rio Grande River. That water would then permit Colorado to receive credit on its interstate compact obligation to the two lower States, Texas and New Mexico, and, of course, make water available to the Republic of Mexico as well.

One last point on that, Mr. President, is that when we start talking about further competition between States, that's very disturbing to us, because we feel that we've already settled some of those matters. But when we start talking about coal slurry pipelines, for example, what we are talking about there is we have already had equitable division of the waters. When we take fresh water from Colorado, mix it with coal, and send it to the Gulf of Mexico--to Houston, for example--it seems to me like it's a little bit more of a division. And it's Colorado's position that any water that's going to be taken from the State, Colorado would have to receive credit on its interstate compacts for that water.

THE PRESIDENT. I might point out that Mr. Lucero is the president of the Colorado Bar Association and a recognized legal expert on the water question. We are not only going to have competition, as you know, between States but within States as well.

I've seen some projections that have been evolved for Denver that show a doubling in population between now and the year 2000. We have a lot of water in Georgia, an average rainfall of anywhere from 45 to 70 inches. But all of our homes, so far as I know, have water meters on them. [Laughter]

MR. LUCERO. We're starting that, Mr. President.

THE PRESIDENT. I think in the future that the competition between farmers and urban dwellers and--between farmers and urban dwellers and the energy--either coal miners or energy producers, is going to be just as intense or perhaps more so than between States. But this applies all over the Nation. It doesn't only apply to the West.

I think we might have some comment now on an extension of what Mr. Lucero has said, and that is what elements do you panelists see as being important to be included in a national water policy to make sure that these kinds of problems can be addressed in a fair way with a minimum of intrusion by the Federal Government, but a recognition of the rights of different people.

I think Mr. Fischer had his hand up first, and then I'll get Mr. Wright.

NATIONAL WATER POLICY

MR. FISCHER. Thank you, Mr. President. First of all, thank you for coming. We appreciate it.

I'd like to, by way of preliminary comment, state that we very much appreciate the opportunity for improved communication with the White House. The communication, we hope, will not stop today. With your concurrence, I would like to continue dialog, especially on the Colorado River, with Jack Watson's office on your staff. We would like to comment-and appreciate very much your comment on not preempting by the Federal Government's actions the Colorado water priority system, the appropriations system or that of all the West. And by way of competition and certainly by way of improved relationships with each other, we would like to assume that your policy will permeate the departments both directly and indirectly. We would like to comment that in the problem area, one of our problems is that the Federal Government, and especially the agencies of Interior--with respect, Mr. Secretary--have been very reluctant to quantify and adjudicate their claims in the Western States courts and particularly in Colorado where we believe we have three precedent-setting United States Supreme Court decisions, Mr. President, that require that. We hope that we will not continue to find the aggressive reluctance on the part of Federal agencies for quantification and adjudication.

As you know, the Colorado River is the most controversial, one of the most controlled, and certainly the most litigated river in the world. It is the subject of two compacts, one international treaty. It's presently very tenuously balanced.

The people of the State of Colorado look forward to the opportunity to use that water. We are in the process of addressing the water quality and salinity issues. We believe that salinity is from several sources: loading, by man-made activities, natural, and the out-basin diversion of increasing amounts of very high quality water to the detriment of the basin itself. We would hope that these things could be addressed.

In the areas of competition certainly we are going to have competition between energy and agriculture. But there is no requirement, we don't believe, to assume that agriculture, Mr. President, has to take the shortage. It does not.

There is under Colorado's compact apportion share of the river, the Colorado River where I am from, enough water for present and future agriculture projects, irrigation, reasonable energy use, but Mr. President, it will take storage. That storage can be economically and environmentally sound. We believe it can be. I would like to talk to the staff about that. But we believe, Mr. President, that the energy industry should supply and pay for its own storage. Thank you.

THE PRESIDENT. I might point out that Rolly Fischer is the secretary of engineering of the Colorado Water Conservation District and an acknowledged expert on Western Slope water.

The Federal Government has some very clear responsibilities that we hope to outline. One is, of course, as I've already mentioned, the congressional responsibility to set priorities on which major construction projects are financed first. Secondly, to make sure that the environmental laws of our Nation are carried out. That not only applies to water quality but also to air quality, the life of marine animals and fish, and also, of course, to guarantee the safety of dam projects and so forth. So, the Federal Government has a very clear responsibility in some ways.

I'd like to call now on Mr. Ken Wright.

INTERSTATE COMPACTS

MR. WRIGHT. Thank you, Mr. President.

I would like to comment further on the point made by Carlos Lucero regarding the Rio Grande compact and the competition for water between regions as it affects the policy. The valley that he referred to, the San Luis Valley, sits on roughly perhaps one billion acre-feet of water in ground water storage. And in our administration of the Rio Grande compact within Colorado, there are water shortages, in spite of this huge underground water reservoir. And within the basin you could say there are two regions-the Conejos River Basin and the Rio Grande River Basin. There is tremendous competition between those two basins within the San Luis Basin. And there just isn't enough water. And we see, in effect, the water chaos in the San Luis Valley. The people with the earliest water rights on the Conejos, we see as being the shortest in water supply.

THE PRESIDENT. Shortest on water supply?

MR. WRIGHT. Shortage--yes, because of the interstate commitment to New Mexico and Texas. And what it's gotten down to is that we don't know how to resolve this particular dispute within the State courts for a number of reasons. But we felt that one of the solutions would be a nonstructural, integrated water management investigation and plan to show us the way to solve this problem.

We feel there are good opportunities for economic benefits from this water, for fair distribution of the benefits to the people in the southern part of the valley, and also for environmental enhancement. We think it's a good opportunity for the Geological Survey and the Bureau of Reclamation to help us here in Colorado on a nonstructural, integrated water management plan.

THE PRESIDENT. What about agricultural water problems? Does anybody want to comment on that? Mary, did you want to say something else? Ms. Taylor.

CONSERVATION

Ms. TAYLOR. I did want to say something on water policy--Mary Taylor, president of the Colorado Open Space Council, which is a statewide environmental coordinating council composed of conservation, recreational, and service organizations.

There are two or three points I would like to make regarding Federal water policy. The first thing we would like for you to know is that you have very broad grass roots support for your efforts to reform, to reevaluate Federal water policy. There are a great many citizens in Colorado who support you in that. Not everyone believes that water storage--large Federal water storage projects are the way to go.

There is a very vocal and a very well-funded water development lobby that would like you to think so, but this is simply not so. We feel that there is a great need for a Federal water policy with conservation as its cornerstone, as you have proposed. We feel that conservation--the primary reason for conservation should be to protect in-stream environmental uses which now seem to be ignored or they certainly are not the primary concern.

We feel that the Federal water policy should be very comprehensive, including water supply and water quality. They are interrelated, and they should be integrated. The water policy we feel there should be overall coordination with other Federal policies.

In Colorado, for instance, there is the Bureau of Land Management, the Bureau of Reclamation, Forest Service, five districts of the Corps of Engineers, the Environmental Protection Agency, the HUD flood insurance program, and others--all dealing with water resources.

THE PRESIDENT. Department of Energy now.

Ms. TAYLOR. Yes.

A Federal water policy should also have a sunset provision, we feel, or continued review and evaluation of all water programs according to objective criteria.

And lastly, the role of the Federal Government, we feel, should be to provide strong incentives to the States to do a comprehensive water quality, water resource planning. And we do feel that the Federal Government has an important role to play. We in the West know a great deal about our water. We know what our water problems are. We understand them.

But we really, up until now, have done very little about them. And we feel that there is a role for the Federal Government to provide the incentives for us to get on the right track.

THE PRESIDENT. As a farmer, I've gone as far as I can without getting into agriculture. [Laughter] I would like to call on Mr. John Fetcher, who is a rancher, who is a member of the Colorado Water Conservation Board, a former county commissioner, a member of the Farm Bureau and the Cattlemens Association, and he's been involved in a ski area development as well. So, he has a broad range of background, just to comment if he will. He didn't know I was going to call on him on how the discussions so far relate to agriculture.

COLORADO AGRICULTURE

JOHN FETCHER. I'm ready, Mr. President.

THE PRESIDENT. I figured you might be. [Laughter]

MR. FETCHER. But I didn't realize I was a county commissioner. So, your information there isn't quite correct.

But I am a cattleman. And we have an irrigated ranch in northwest Colorado where we run about 300 cows and we have to raise about 600 tons of hay to keep those cows fed during the wintertime. So, obviously we depend on water for our hay crop.

By the way, here is a picture. I'd like to say a little bit about what has been probably put to you that agriculture tends to waste water and over-irrigate. Perhaps you have read this report which was written by the Comptroller of the United States. And I am not exactly sure what the Comptroller knows about irrigated agriculture. [Laughter]

THE PRESIDENT. I see you were ready, Mr. Fetcher. [Laughter]

MR. FETCHER. Well, there are statements in this report that say that if you don't use the water, you're going to lose it. This statement made in this report is to the effect that this tends to make us irrigators waste it--you know, we're afraid of losing it. Well, this isn't quite the way the law says. The law says you are to use the water beneficially and as efficiently as possible. But it doesn't say you are going to lose it. And I don't know of any cases of my fellow ranchers who have lost any water because they didn't use their full quota of water.

Now, on the subject of waste, we know that when we over-irrigate--and I am talking primarily about flood irrigation, not sprinkler irrigation--that the grasses that grow as a result of over-irrigation are the bad grasses, the grasses the cattle don't eat. Heck, we know that. And there's implications in this report that we don't know it.

So, I think the question of waste is truthfully exaggerated. Furthermore, every bit of water that we put on the land that isn't used by the plants goes back to the stream in return flow and is used by the next fellow.

Now, I'll say one more thing, because I know everybody wants a crack. I'll admit that this year on our ranch we tended to over-irrigate during May and June because we were really fearful that we wouldn't have any water because of the drought. And this is actually what happened: We ran out of water on our ranch on some of the tributaries of the main river in July, and we had a hard time making our hay crop. In fact, our hay crop was down about 150 tons.

Now, the reason that we tended to overirrigate during that period is because we didn't have any storage. And if we had had storage, we would have apportioned the water that Governor Dick spoke about over the growing season rather than trying to get it all at the beginning.

THE PRESIDENT. Very good.

I would like to call now on Mr. Elton Miller, who is an irrigated farmer on the South Platte River, and he's a member of the Farmers Union and also a member of the Colorado State Agricultural Commission.

Mr. Miller.

MR. MILLER. Thank you, Mr. President.

I would like to relate the importance of water to Colorado agriculture. It's very important. Colorado's base has been built around agriculture over the last hundred years. Agriculture has either been first or second in production and industry in Colorado. So, it's important. We want to keep the agriculture base in Colorado.

Only 4 percent of Colorado's land is irrigated, yet it produces two-thirds of the value of the crops that we sell each year. So, that gives you some idea.

With our short rainfall we can't produce the crops that we are producing with this water. And we think that our valleys that are irrigated are as fertile as any place in the United States. I would just like to remind you, Mr. President, in 1974 Colorado ranked 15th in the country in agriculture sales, just ahead of 16th place Georgia. [Laughter] I'm sure you knew that.

But the water is vital to us, and I think some of our concerns in agriculture--and I would like to thank you for the statement you made. I think it eases a lot of our minds on the opening about our water rights. My own water right dates back to 1864, a direct flow water right. And when you talk about changing this, it really worries us farmers.

THE PRESIDENT I understand.

MR. MILLER. So, we do appreciate your opening remarks on that. I think it's important-we are going to have some energy development. We're going to have some growth in from the energy development, also probably some growth here in the front range. It's important that we develop some more sources of water. If we don't, that water is going to come from agriculture, because we cannot compete in the free marketplace for water with the energy companies and urban development.

So, as that is inevitably coming, we need some water storage. We have years when we have water running out of Colorado and we need some storage for that, because otherwise our irrigated agriculture, I am afraid, is going to have to pay the price. Thank you.

THE PRESIDENT. Thank you, Mr. Miller. One thing that I know will relieve your mind--and I hope that's one of the results of my visit out here--is that this water policy will not be developed in secret. It's going to be thoroughly and openly debated, and you and others will have a complete knowledge of what we are doing. We are not going to spring anything on anyone. I have already met with every Member of Congress from the Rocky Mountain and Western States, both in the House in one meeting and also in the Senate. And this is just a series of discussions we will have. The Governors will all be in Washington for their annual meeting in February. I am not going to firm up any aspects of the water policy without consulting with the Governors, during your winter meeting, Governors.

I would like to call on Mr. Alvey and then shift and let one part of our energy industry respond right after Mr. Alvey.

Mr. Bill Alvey.

MR. ALVEY. Thank you, Mr. President. I would like to touch on farm prices. I know that's a touchy subject right now.

I want to thank you for signing the farm bill. It wasn't exactly what the farmers wanted. And they still want more, and you can't blame them. But it is a step up the hill.

THE PRESIDENT. Yes, sir.

MR. ALVEY. As I say, I am not going to criticize you about that. However, when you were campaigning in Wisconsin, you said the farmer should have cost of production plus a reasonable profit. Now, we are getting close to the cost of production. But I'm still looking for that reasonable profit. [Laughter]

THE PRESIDENT. Mr. Alvey, let me say I know you are my friend, but I very specifically said in Wisconsin that I thought we ought to have a farm bill that would guarantee the cost of production, but not guarantee the farmers necessarily a profit.

MR. ALVEY. The news media misquoted you, then.

THE PRESIDENT. Well, that's the first time the news media have ever done that, then. [Laughter]

MR. ALVEY. Anyway, I was your delegate from Colorado and probably the only farmer outside of Georgia that was a delegate to the national convention.

THE PRESIDENT. Yes, sir. [Laughter]

MR. ALVEY. But anyway, we are going to leave that. But I did want to bring that out.

THE PRESIDENT. I think we have a good farm bill, by the way, and as you say, it's a step in the right direction.

MR. ALVEY. Yes, but I think with the help of our western Congressmen, Senators and Representatives alike, that maybe in the next few months we can get over that hill so the farmers can--because they are getting in a bind, and we just can't go on with the farm economy slipping. Its impact on even the city of Denver will be felt sooner or later. But what I wanted to bring out as, of course, a farmer in eastern Colorado, which is mostly pump irrigation where there is any irrigation--and, believe me, there is a lot of acres under irrigation there--but we have had some squabbles along the State line about whether Colorado should take all the water before it slips across the line, because it does flow southeast into Kansas.

But what I am wanting to mention more specifically, and I want to thank Governor Lamm for his wonderful effort on this, is weather modification. Now, Governor Lamm has instigated $960,000 for weather modification in Colorado. As I say, you can have all the dams in the world, but if you don't have any rain or snow, you're not going to have any irrigation water. And I am not criticizing you on that point. [Laughter]

I know that some of the dams were dropped off. I believe that you should go ahead and in light of the fact, in order to keep peace in the family, all over the country, go ahead, when these dams or reservoirs or flood protection dams that are in the process of being formulated-you should go ahead and put them on and finish them up, because the cost is getting higher all the time.

But in the future, I think we should look deeper into this and all the aspects of safety as well as economic feasibility for any more projects. So, in other words, we should declare a moratorium of a few years on any new projects.

This weather modification point I am trying to bring out, you say--I know you have 40 to 70 inches of rainfall in Georgia. You lose a lot of it. But we get moisture here. And if we could just figure out some way to wring it out of the clouds and increase our moisture content by 3 or 4 inches in the West, it would really make a great deal of difference.

THE PRESIDENT. I understand.

MR. ALVEY. Another thing: They are worried about the neutron bomb. But I believe that a nation that controls the weather in the future won't need any neutron bombs.

THE PRESIDENT. Thank you, Mr. Alvey. That's a great statement.

I think we have had the question of energy production and commercial use of water raised several times. And I would like to call on Ralph Atkins to comment on this. He's raised his hand earlier. He is the director of the water operations of Colorado Fuel & Iron, which is a steel company, as you know, and he also is the president of the Colorado Water Congress.

Ralph Atkins.

POLLUTION CONTROL

MR. ATKINS. Thank you, Mr. President.

I would like to start with a comment in regard to the matter of water use versus waste that has been referred to earlier and move now to the Arkansas River, which is in the southeastern part of the State of Colorado, with which I am most familiar.

The Arkansas River, many years in the spring and in the fall, goes dry at Pueblo. The only water that is in that river east of Pueblo is the return flow from the CF&I Steel Corporation and from the city of Pueblo. At the present time, we return from the steel plant 85 percent of the water which we divert originally from the river. That water meets the 1977 best practical technology standards and also meets the drinking water supply standard.

As that water flows east from Pueblo, it is used and reused, and what may be thought by some to be waste is the next downstream irrigator's sole supply that he has for his crops. Salinity has been mentioned here, but let me say to you on the Arkansas River we have a viable agricultural economy which is irrigating with water that is four to five times in salinity what we are supposed to deliver to the Republic 'of New Mexico at the border.

Now, in connection with this matter of use and return flow, we have some serious concerns dealing with the Water Pollution Control Act Amendments of 1972, better known as Public Law 92-500, which calls for best practical technology level July of this year. It calls for the best available technology in 1983, and then, in Section 1, of course, it calls for zero in 1985.

We support the 1977 best practicable technology level. But at that point then I think we need to bring into play the Section 208 of that law, which is the areawide waste management planning section, which will cover a major part areawide of the State of Colorado, because the greater part of it is rural, and go in that direction first before we push too hard for the 1983 best available technology.

And I say that for this reason: I said earlier that we return 85 percent of the water that we use in that plant to the river for use east of Pueblo. If we at this point in time, while we are meeting the standards now--if we have to go to the best available technology level, we are going to have to destroy a volume of water equal to 10 percent of what will be brought into the Arkansas River Basin by means of the Franklin Arkansas Project.

We think that that destruction and what it will do to the economy east of Pueblo, plus what it's going to require in energy use to get that destruction, puts us into an economically unsound area. And we believe that we should move into the 208 area at this point and bring it to fruition with the planning which is one of the best things in that bill, because it allows local participation to set the needs.

And in that connection, I would like to mention, I understand the conference committee on 3199 has made a recommendation, whether it will clear or not, that the funding for that section should be extended at least 2 years in order to allow orderly and continuing planning under that 208 section, because, as you recall, that's a 2-year program, and what many areas are doing in order to get the funding and get in, they are rushing it. We are getting hurried planning, and I'm afraid we are not going to get good enough planning for what we want in the future.

THE PRESIDENT. Thank you very much, Mr. Atkins.

I mentioned earlier the special concern about Indian rights. We have with us today Leonard Burch, who is the tribal chairman of the Southern Utes, and I would like to call on him. And I would like to ask him and the other panelists, since most of the items have been covered, to be as brief as you can, because at about 2:30 I would like to go to the audience for questions. So, please keep your statements as brief as you can, the other panelists.

Mr. Burch.

INDIAN TRIBAL RIGHTS

MR. BURCH. Thank you, Mr. President. As representative of the Indians that call Colorado their home, we would like to welcome you to our State. I hope this is not your last visit. We would like for you to come back and see us.

On the national Indian water policy, there was a meeting in Washington on October 12, and the two national organizations-the National Tribal Chairmen's Association and the National Congress of American Indians--are working together with Assistant Secretary Forrest Gerard in coming up with a national Indian water policy.

So, I am certainly glad that you brought this up in your opening remarks, Mr. President, about the concern that is the concern of all the Indians across the country, of the water issues that face them. Each one of these issues that do face the Indian tribes across the country is very unique in certain ways. So, I am glad that you have mentioned it and that Secretary Andrus, in working with the national organization and the consultation with the Indian leaders that you mentioned is most encouraging to me and I am glad to hear that from from you, Mr. President.

We hope that during this time that we can come up with a very good, meaningful water policy that will be endorsed by all the tribes across the country in working hand in hand with your administration and your staff, Mr. President.

I would like to mention about the Indian water rights. It is also a very important and different concern to us as Indians. We love our land. It is our mother earth. And we want to keep it as the Great Spirit has put us there, because we talk about environmental issues--we have talked about a lot of these other concerns that we have got--but the Indian loves his land. His water means quite a bit to him. So, therefore, he, the Indian, will follow steps to be taken to protect his water rights. And this is what the two Ute tribes in the State of Colorado have gone that route. Some of the court decisions that have been made was not too interesting, but it concerns us.

Now moving on, we like to work with your administration in perhaps coming up with a national policy, how this can be worked out rather than going to the courts, because we feel that Indian rights belong to the Indian people. It's not a national right, but it belongs to the Indian, and that he should be given the right to use that water in some way.

Mr. President, I would like to thank you on behalf of this Ute Mountain Tribe for the Dolores Project that is now tinder construction.

That has gone into construction. This has taken us quite a long time in working with the non-Indian neighbors that we have in southwest Colorado, on the congressional delegation, the former Governors and our present Governor Lamm in working together--this is what we have come up with. And we certainly appreciate your help and your concern that the Dolores Project will be a benefit to the tribe.

Lastly, Mr. President, I would like to comment on another project that we are working on and have been working on for many years.

I have, as a spokesman and leader for my tribe, been the last 11 years going back to Washington and testifying' before the committees of Congress in support of this particular project. It will mean quite a bit to my people, the Southern Utes and the Ute mountain people in the Four Corners area. We are very interested in this project. We have worked with our non-Indian neighbors, planned with them, and that's the Animus LaPlata Project. I hope, Mr. President, that you could give that a priority so that this project, meaningful to the Indian tribes in the State of Colorado--we would appreciate it very much. Again, Mr. President, thank you for this time in listening to me.

THE PRESIDENT. Thank you, Mr. Burch. On that last project, as you know, we did support that project.

I would like to go now to Mr. Ray Wells, who is from one of the major suburban areas and ask him to comment specifically on the need of growing communities in the use of water. Ray.

Again let me remind everybody to be as brief as you can, because I do want to go to the audience.

Ray.

WATER TREATMENT FACILITIES

MR. WELLS. Yes, sir. Thank you, Mr. President. As I am sure you are aware, the Denver metro area is rapidly becoming the transportation and energy center for Western United States.

Mr. President, if we are to meet that destiny, we must have a supply of water, because that involves people, and people need the water. Whether it's a matter of the foothills treatment facility, a matter of high-mountain storage, the water must be made available to meet that, as I see it, a charge.

As you are probably aware, this summer the drought has severely limited the growth of housing and other important industries to accommodate those people.

I am also interested, Mr. President--I can't help but comment when in over 20 years of trying to deal with urban problems, I become a little pessimistic when the Federal Government says, "We'd like to help."

THE PRESIDENT. You could turn all your Federal funds back in. We could distribute them somewhere else. [Laughter]

MR. WELLS. Well, that sort of is the answer today, when we encounter the States rights question, that withdrawal of funds always seems to be the way around it.

THE PRESIDENT. Well, we want to be helpful.

MR. WELLS. Yes, sir. [Laughter] That's like when the auditor walks in to the manager and he says, "I am glad to see you," and the auditor says, "I am just here to help." [Laughter] As a member of the State Water Quality Commission, Mr. President, I am also interested particularly in the Clean Water Act, which is the other end of the water cycle, as I see it.

I am particularly interested in increased funding for that act. I have some agreement with my peers across the table. However, I believe in the accomplishment of those goals as set forth and, in particular, the recycling and reuse of water, Mr. President.

If somehow we could reach some type of funding which would encourage recycling, reuse, and, especially, land treatment of our waste water, I think it would be of particular benefit to the urban areas of this country.

THE PRESIDENT. Thank you very much, Mr. Wells.

I would like to call now on Ms. Beverly Haddon, who is the vice president for marketing operations of United Banks, Incorporated.

WATER POLICY PRIORITIES

Ms. HADDON. Thank you, Mr. President.

Actually, I won't take up too much time, because most of the points have been made. And as you know, in the banking industry we are a service industry, and we attempt to support all of the people that you have been talking to today. So, we are very interested in all of the industries, in two of the key industries, agriculture; we think it has been very important to this State, and we hope to protect that in the future.

We also think that an orderly approach to the development of energy can take place, and I guess our most important concern would be what the final priorities are and how you do approach those. We need the input back from you so that we, too, can plan. I might be interested, if you have a moment, what your sense of those priorities are today, in terms of those industries.

You've referred to the most important projects first. In terms of the tradeoffs which are tough decisions on energy and agriculture, do you have a sense of those priorities?

THE PRESIDENT. Well, I think it's obvious that the priorities have already been established basically for our country. Obviously, drinking water for human beings would come first, then agricultural production for food. I think obviously after that, quality of life, the beautification of our lands, the production of energy.

I don't think that we need to establish exclusive priorities for any of those needs. I think we do have adequate water supplies throughout our country to meet our needs if they are husbanded well, not wasted, and if we can work in harmony.

But one thing that happens--and I have already noticed in the brief time I have been in the White House--is that when people see the threat of a future shortage, they tend to increase their wastefulness to be sure they get their share of water that might be even scarcer in the future that's not scarce today..And I know that this is the case not only in water but in many other areas.

I think a thorough and open debate and the expression of a multifaceted approach to the single question of water as we have had here today will make sure that we can kind of relax to some degree, at least as we learn about one another and grow to trust one another and see the special needs that each of us has.

And I don't think there's any doubt that I and the Congress and my successors in the White House in years to come will have to establish priorities in the allocation of scarce financing for major water projects. But I don't think that we need to be concerned at this point that we don't have adequate water to meet our needs.

We don't know what the energy situation might be in the future. I think that here is the greatest unknown quantity that has recently come on the scene that bothers me and everyone else. But when I say priorities, that doesn't mean that we are going to deprive urban dwellers in order to keep farms in operation or deprive farm operations in order to control floods. I think they all can be harmonized within a common effort.

Let me call on Joe Sullivan now, who is a dry land farmer producing both wheat and grains. He is a past president of the Colorado Association of Wheat Growers. He serves on the State Mine Land Reclamation Board. And he is particularly familiar with the energy impacts on agricultural land.

So, Joe Sullivan, for a brief remark, please, Joe.

POPULATION GROWTH

MR. SULLIVAN. Thank you, Mr. President.

Many of the remarks that I wish to address have already been addressed, so I will bypass them. But I think that it is important that we consider the population expansion that western Colorado is seeing and will probably see accelerate in the next few years.

And I live in Rio Blanco County in western Colorado where much of the oil shale and the coal development is taking place. I believe that there is water available, that this can be done without detriment to agriculture, but I think that we need to plan now for storage facilities in order to do this.

I would like to point out also that in western Colorado, that as far as agriculture is concerned, that much of the land that is used for agriculture is used for livestock production. And the livestock production is dependent upon our irrigated valleys for hay to maintain them.

So, rather than just the loss that we may have in a valley, we affect several thousands of acres if we are not able to produce the hay that is necessary to maintain our livestock herds.

Thank you.

THE PRESIDENT. Very good. I think that you have put your finger on one of the impending conflicts between energy production and agricultural production that we need to address. And I think to the degree that we can analyze it together, it will remove the fear of the future that does exist in some parts of our country.

I would like to call on Betty Salazar now. She is the director of the United Way Agency in Denver and head of the Latin American Research Center.

UTILIZATION OF MINORITIES

MS. SALAZAR. Thank you, Mr. President.

I guess my primary concern would be as these Federal permits are issued and so forth, that there be a real consideration and an assertive effort in terms of utilizing inner or core city persons to work in those projects and also a concerted effort in terms of utilization of minority contractors.

And as a social service representative, certainly these are the people we work with. And we would hope that as the policies develop, there would be consideration for utilizing those persons.

THE PRESIDENT. Thank you very much, Betty.

In the local public works bill that the Congress passed, which encompasses about $4 billion of improvements for communities like you represent, 10 percent of the contracting must be to minority enterprises. This is the first time the Congress has done this. I think it's a good move. But you made a very excellent point.

I believe that as we see the evolution in the future of both agriculture and energy production and other things, that we can have a very heavy improvement in employment opportunities that don't exist at this time.

Bob Botel has a very interesting experience in making sure that we do use water efficiently. He's a member of the International Brotherhood of Electrical Workers and a foreman at the Honeywell plant. And I would like to ask him to make a brief comment.

WATER STORAGE

MR. BOTEL. Thank you, Mr. President. I think it needs to be pointed out that labor is interested in storage, because storage of our water is the only way we can grow economically in the State.

And I think also that another point that we should bring out--you have been talking about water reuse in harmony. I think the city of Northglen has a program where water sharing is a feasible thing, and it's something that the urban dweller and the agricultural farmer have agreed on. I think it's a program that will work, and I think it adds to the soil vital minerals and nutrients that the soil needs from an organic basis.

THE PRESIDENT. This project is one that's of great interest to me. Northglen does use their supply of water, but they have worked out an arrangement with surrounding farmers to supply the waste waters to enrich the soil to produce more crops. I think this might be a vista of what we will see on a broad basis in the future.

The last panelist is Jonni Jones, and I would like to call on her now. She is an associate professor of urban planning at the University of Colorado, and she is in the Graduate School of Design.

URBAN PLANNING

Ms. JONES. Thank you, Mr. President. I don't know how you can talk about growth in a short period of time; there are so many issues involved. But I will try to make two quick points.

I think people who live in the cities are concerned about growth--where it happens, how it happens, and at whose expense.

One of the things Denverites are concerned about is that as development occurs around the city, the inner city, that they not be asked to subsidize it.

The other point I would like to make is that people are concerned about growth. They want it managed. They want to be involved with the planning of it. And I think our Governor has made a very good step in developing the Planning and Coordinating Council. We have not been planning and managing growth well so far.

Many of us are in fear of the problems of cities in the East being repeated here and the sprawl of Los Angeles happening here. And I think that we can avoid those mistakes with the kinds of talent and energy and commitment here in Denver. And I hope that we do and not repeat the past.

The third point I would like to make is that though we want managed growth, controlled growth, it doesn't mean that many of us are antigrowth. Growth is very important for minorities particularly. With economic development and growth, minorities can participate as entrepreneurs as well as workmen. The economy in its expansion hopefully will take those on the bottom rung of the economy along with them.

One of the things that concerns the minority community, however, is that there are not enough minorities on policymaking level commissions or boards so that the minority input is made on energy planning.

The other concern is that most of the energy development will occur on the Western Slope. It is expected that about 14,000 new jobs will be created in production and construction. But most of the minorities live here in Denver on the Eastern Slope.

The other point is that if these minorities are going to participate in the economy and going to benefit from those jobs, some sort of program will have to be developed to get them over on the Western Slope. Many of them perceive that, perhaps, it is an unknown territory and even hostile. A lot of the companies there are not familiar with affirmative action programs. We don't know whether or not they will take the initiative. So, a program has to be developed along those lines.

I guess people in the cities are concerned about a whole range of issues. But I think not only minorities but everyone here in Colorado wants to maintain our lifestyle, see our economy grow and keep Denver the way it is. Thank you.

THE PRESIDENT. Thank you very much. I think the audience would agree with me that the panel has done an extraordinarily good job in bringing a multifaceted approach. It shows how many different voices there are, when you start talking about energy, that want to be heard. I would like to call now on any member of the audience who would like to ask a question. We have about 15 minutes left for that, and then I have a meeting with the Governors to pursue some of these matters.

Can you just identify yourself before you ask a question?

QUESTIONS

FARM PRICES

Q. Mr. President, my name is John Stulb, and I farm and ranch in Lamar, Colorado. Today we have talked about the relationship between water and agriculture. And of prime concern to agriculture, not only here in Colorado but across this Nation, is our present price situation. The agriculture producers of this country at this time are receiving a comparative value for their product at an all-time low, never before exceeded except in the Great Depression.

The farm bill that you have just signed into law provides some aid, but it is not enough. It limits the family farmer to less than 70 percent on his products, as compared to those products that he is having to buy to produce and to live in this country. We cannot go on working for 70 cents or less on the dollar when the products and services we have to purchase are costing us a dollar on the dollar.

I ask you, surely you do not feel that the American family farmer is a subparity citizen?

THE PRESIDENT. The answer to your question is no. [Laughter] As you may or may not know, I am a farmer myself. And I believe that the Congress has placed on my desk and I have signed a farm bill that's very far-reaching in its benefits to agriculture.

In spite of the fact that two-thirds of all the counties in this Nation are designated officially as disaster areas, we have had the highest production of corn in history. We have had the highest production of soybeans in history. And throughout the world there is a fairly good growing season, which means that the demand for our exports is not as great as it has been in the past.

In spite of that, in this last year which ended the end of September, we had the greatest exports also in the history of our country--$24 billion. We expect to pay out to farmers in this new fiscal year that began the 1st of October three times as much as we did during this past fiscal year just completed.

This farm bill will cost the taxpayers about $6 1/2 billion, and I think it's money well spent.

Of course, much of that which is charged against the Federal Treasury because of longstanding bookkeeping principles are not payments, but they are loans. But I believe that within the framework of the Federal budget restrictions that the agriculture bill that has just been signed is the best that we can expect. And I believe that it is adequate.

The farmers in many areas have made a bumper crop. The price is presently low. But based on information that has been received from the land grant colleges and other sources, with the exception of land depreciation, we have tried to meet the average cost of production in our target price base. And as you well know, there are some areas that have much higher cost of production than does the average, and those areas do suffer. I certainly realize that. We hope to continue our increase in agricultural exports in the years ahead.

The last point I would like to say is that in addition to the President having a background in agriculture, we have a dirt farmer who is Secretary of Agriculture. And the new bill does give the Secretary a great deal of flexibility. And I believe that his own background, a man who went to Florida as a migrant worker in his young age, came back to the northernmost parts of Minnesota, borrowed some money, started a small operation, now farms about 600 acres--his background, I think, is close enough to your own so that as he administers this bill, he can take full advantages of all the potential that exists in it to make you and the other American farmers have a prosperous and an enjoyable life. So, it's not everything you would have wanted. There are budget constraints that keep us from having a perfect bill, but I believe that as Mr. Alvey said, it's a great step in the right direction.

Thank you very much, sir.

FOREIGN AID

Q. Mr. President, my name is Dave Sanders. I am from Boulder, and I have a question about the direction of foreign aid. Given the example of South Africa, your administration has moved away from backing the developed group there, which is the whites, to moving behind the underdeveloped group, which is the blacks.

What I would like to know is if this is some kind of an across-the-board policy change, that we are going to start giving foreign aid more directly to those people who are in need of it?

THE PRESIDENT. Yes. As you know, the Congress has just completed its action on the foreign aid bill, and I believe the emphasis has been more and more toward getting the foreign aid directly into the hands of those who need it and not into the hands of those in poor countries who don't need it.

As I said several times in the campaign, I don't think it's right to tax the poor people in our rich country and give the money to the rich people in the poor countries. And this is something that we have tried to do this year.

We also have the prospect--since I just had a question on agriculture--to increase substantially the benefits from Public Law 480, which will take our great food and feed grain reserves of which we are very proud and use them as an integral part and a growing part of our foreign aid program. But I hope that we can measure up to what you have just described, that we are now trying to make sure that the aid programs of all kinds are more efficiently administered and do get the money and the aid and the food in the hands of those who need them most. Thank you very much, Mr. Sanders.

OIL AND GAS PRICES

Q. Mr. President, my name is Max Ellison, and I am from Salt Lake City. I am just completing a 2-year term as the president of the Rocky Mountain Oil and Gas Association, which covers an eight-State area. Now, I am also a farm boy, as you are, and as a farm boy I realize the importance of having adequate supplies of oil and natural gas.

All of this discussion about water and so on will be moot unless we have the energy to run our farms and our factories. My question is this, and it relates to a campaign letter which you wrote last year to Governor Boren. And in that letter you pointed out that it was necessary and important for us to have adequate supplies of oil and gas in order to have full employment and so on in this country and to have a growing economy.

And in there you outlined three steps which you said were necessary for us to increase domestic supplies, and the first one that I would like to read is this. You said, "I will work with the Congress, as the Ford administration has been unable to do, to deregulate new natural gas. The decontrol of producers' prices for new natural gas would provide an incentive for new exploration and would help our Nation's oil and gas operators attract needed, capital."

Now, we agree 100 percent with justification, and we believe that it's critical that oil and natural gas prices be decontrolled.

Now, I have two related questions for you. The first is, why did you change your position on deregulation of natural gas prices and also proposed that regulation be extended to the intrastate market? And related to that is, where is the fairness in an energy program which includes price controls by which the value of a product, oil or natural gas, is taken from the owner of that product and distributed to other people through taxation?

THE PRESIDENT. I will be glad to answer your question. As I also said in my speech to the Congress in April--it's the only speech that I have made to the Congress since I was President--our goal is to deregulate new natural gas. We proposed to the Congress an adequate step, in my opinion, a first step, toward that ultimate goal. And that is to increase the value of natural gas, the market price, to $1.75.

Of course, the oil and gas industry want immediate deregulation, and they want to define new natural gas to include gas that already has been discovered, that has not yet been produced. There is a limit to how much we can take out of the pockets of consumers and give to the oil and gas companies.

I want to be sure, as President, that there are adequate incentives to explore for and to discover new sources of natural gas. And I believe that the proposal that we made to the Congress is very liberal and provides adequate incentives and would ensure that the capital required would be there.

As you know, we have had a rapid increase in exploration in the natural gas field and the oil field in recent years. There is an 8-month waiting list now for new drilling rigs. And I think if we quadruple again the price of oil and natural gas, there would be no substantial increase in the rate of exploration or production.

So, I believe that the package that we put together is adequate. It does take a major step toward deregulation. But I think that the oil and gas companies have shown that they are not only satisfied with this, but they want to define old gas as new gas, and in the acquisition of immediate complete deregulation, it would just be too expensive for the rest of the country and I think would result in very little increase in production itself.

I know that the oil and gas companies disagree substantially with the rate of moving toward deregulation, but I think the proposal we made is compatible with my statement during the campaign and is certainly adequate.

Q. May I give you this copy of a talk which I presented here in Denver about a month ago?

THE PRESIDENT. I would very much like to have it.

Q. May I just make one other comment, Mr. President?

THE PRESIDENT. Certainly.

Q. I also own a mineral interest in two oil wells out in Duchesne County, Utah. That oil is being sold for $10 a barrel because of price controls. Some of our neighbors are .selling their oil, or being forced to sell their oil, for $5 a barrel.

Now, the value of oil is about $15 per barrel in this country. Now, that means that under price control, every month about one-third of the value of my oil is being taken from me and given to someone else. I am a landowner. Now, I just cannot understand how in this country that type of thing can continue. I consider that confiscation of my property.

In other words, I get about $500 a month income from those two wells. If the true value was given to me as a landowner, I would be getting $750 a month. In other words, I feel like someone is stealing $250 a month from me, and I speak not just for myself but for the owners of oil and gas production throughout this country. And that's part of the problem with this energy program and part of the reason why unless adequate profits are given to the oil and gas industry, any energy program which is developed will be a failure.

THE PRESIDENT. Mr. Ellison, can I ask you a question?

Q. Certainly.

THE PRESIDENT. What was the price of that oil when it was first discovered on your place?

Q. That oil was discovered in about 1973, so it started out at about $9 a barrel. It's now about $10.

THE PRESIDENT. That was a very good price in 1973. [Laughter]

I am not trying to put you on the spot, Mr. Ellison, because I understand your point of view. The thing is, I believe and I think everybody here believes very strongly in the free enterprise system. But the oil and gas industry don't function within a free enterprise system.

The price that you say is the proper or fair price for oil is a price that has arbitrarily been set in a secret meeting of OPEC nations and not set in a free and open market condition in our country.

We have provided, proposed to the Congress that newly discovered oil would be at the full world market price, which means that oil discovered in our country, under the proposal we made to the Congress, would be the highest price for oil in the entire world.

But I don't think that we can afford to go back to oil that has been under production for several or many years that was originally profitable at a $2- or $3-a barrel price, raise the price to $14 or $15 just because the OPEC nations have imposed that price on the rest of the world arbitrarily, and let the consumers pay that exorbitant profit to the oil companies in the process. It just doesn't seem fair to me.

I want to say that I don't want to use my position as President to win an argument with Mr. Ellison. This is one of the most difficult and controversial issues and the most important that has ever come before our country's Government, and that is to evolve an energy policy that's fair to the consumers, that's fair to the producers, and also provides adequate incentive for future discovery of new oil and gas.

There are not any easy solutions to it, and I am very grateful that these different points of view do come out freely, and I particularly appreciate Mr. Ellison being so forceful in his expounding of the viewpoint of those who do produce oil and gas.

I have another meeting with the Governors and this will be the last question that I can take.

I understand that you are president of the Chamber of Commerce in Denver.

FEDERAL BUDGET

Q. Yes, Mr. President. My name is Rex Jennings. I live in Denver, I am president and general manager of the Denver Chamber of Commerce. More importantly, perhaps, I am a former peanut farmer

THE PRESIDENT. I can see why you changed jobs.

Q.---and a Southern Baptist. And the way I figure it, that almost makes you and me kinfolks. [Laughter]

I want to make two quick points and one quick question. Number one, I have great admiration for your commitment to reduce unemployment in this country. I have great admiration for your commitment to balance the Federal budget during your first term in office. I think you and I would agree that in order to reduce unemployment, we must create new jobs. And that's particularly important to the low-income, the minorities, and the youth of this Nation.

In order to create new jobs in the private sector, American business and industry must have access to capital. As long as the Federal Government is incurring an increasing deficit, going to the money market itself for 50, 60, 70 billion dollars a year, it reduces the amount of money available for private industry to borrow for plant and equipment to create new jobs to, in essence, provide full employment and reduce unemployment.

My question to you is, after having been in office now for 9 months, do you still feel strongly that you will be able to balance the budget before the end of your first term?

THE PRESIDENT. If we can have a reasonable level of economic prosperity in our country, the answer is yes. Of course, I can't control, as you know, and no one else can control, the worldwide trends and shortages, inflation, and absence of export. But with reasonable growth, 5, 6 percent GNP growth per year, the answer is yes.

Q. Thanks for being here, sir.

THE PRESIDENT. I want to close this out now very quickly. I would like to ask Dick Lamm to give a very brief closing statement. He said he only needs one minute. I would like to ask Cecil Andrus, the Secretary of Interior, to make a brief statement. And then I would like to ask the Governors, if they will, to meet with me privately after this meeting adjourns.

Dick Lamm.

GOVERNOR LAMM. Mr. President, very briefly, in your office I noticed a plaque that says, very appropriately, "O Lord, Thy sea is so vast and my boat is so small." I think when you think of that occasionally, if you could think that in the West we look at that and we say, "O Lord, our land is so vast, but our water is so little." It really is.

Second, Mr. President, Colorado, as you can see, does speak with many voices, as does every area. I think it's important for you to know a couple of things, however. Number one is that with regards to the water projects that our State legislature, which is a representative body-sometimes I argue with them, but nevertheless, it is our elective representatives-they voted 97 to 3 in favor of actually going ahead with those water projects that were on your "hit list."

But thirdly, most important, I think it is important that you do understand that not only in terms of the reclamation projects that we do need, that we do recognize the wisdom of much of what you say.

The West is running out of the amount of water that we can supply, that we are going to have to start learning better water conservation, we are going to have to better manage what we have, and that we definitely have a common cause.

We are very honored that you came here so we can listen and learn together. Thank you.

THE PRESIDENT. Almost all of the responsibilities that have been brought out here today fall directly under the Secretary of Interior, Cecil Andrus. As you know, he is a former Governor of Idaho. He's a westerner. He understands, I think, many of the problems that you have described. But he, like myself, is eager to learn more. He has been out here several times since we have been in office, works closely with many of those who have already spoken today. And I would like to call on Cecil to make a brief statement as we close out our meeting.

SECRETARY ANDRUS. Thank you very much, Mr. President.

Ladies and gentlemen, I think it was much more beneficial to all of us that any time that I might have spent at the microphone was used by the panel members that you see here and members of the audience to have the opportunity to express their opinion to the President of the United States.

Now, we might disagree with one another, but where else in the world other than in America, and in Denver, Colorado, do you have this opportunity? 1 think we are very fortunate and we have to understand that. That is probably the strength from which we will speak on all things, even when we differ. So, I would-yes, I recognize the water situation that has been pointed out here. I remind you that I was Governor of the State of Idaho.

But let me also say that when the President gave us some of the charges that he has given us, he took the tough road. It had been a lot more politically beneficial to him to have ignored the future problems of water, because the people that Mary was describing and that other people are describing, some of them haven't even been born yet. They don't have a very strong constituency in the Congress yet, and the President could have ignored it. But the beneficiaries will be all America if we'll work together in this regard.

There is nothing secret about water policy. It affects all of our lives. The President said it's the lifeblood of America, and it particularly is in the West. So, we'll continue to work with you in the Department of Interior. We'll come forth with our proposals the best we can, submit them to the President in February. Then he'll make the difficult call as to what we have to do to see that all people have the balance that you touched upon.

Every person at this table indicated that we need this, and we can, if we'll balance it. But we must work together to balance it.

The closing footnote I would like to make is to the question the president of your Chamber of Commerce asked. He said, can you balance the budget? Well, if the President treats all members of the Cabinet as he treats me, when I submit my budget, I'm telling you that he'll balance that budget. [Laughter]

So, I thank you very much for being here, and we are going to listen. And the decision will be his, as all the difficult ones are. But it will be made before the American public, and I think that is the important thing.

THE PRESIDENT. Thank you again, everybody. I appreciate it.