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Full text of "California water project, 1955-1961 : transcript, 1965"

University of California Berkeley 




Harvey 0. Banks 
CALIFORNIA WATER PROJECT, 1955 - 



An interview conducted 

by 
Gardner M. Brown, Jr. 



Edited by Gerald J. Giefer 



Statewide Water Resources Center, University of California 

in cooperation with the 
Regional Oral History Office, Bancroft Library, Berkeley 



Berkeley, 196? 



All uses of this manuscript are covered by an 
agreement between the Regents of the University 
of California and Harvey 0. Banks, dated 
15 August 1967. The manuscript is thereby made 
available for research purposes. All literary 
rights in the manuscript, including the right 
to publish, are reserved to the Bancroft Library 
of the University of California at Berkeley. No 
part of the manuscript may be quoted for publi 
cation without the written permission of the 
Director of The Bancroft Library of the Univer 
sity of California at Berkeley. 



PREFACE 

The following interview is one of a series on "The Oral 
History of California Water Resources Development" sponsored by 
the Water Resources Center of the University of California and 
conducted at the Los Angeles and Berkeley campuses of the Uni 
versity during 1965, 1966, and 1967. In setting up the project, 
the nature and scope of the work was described as follows: 

The basic purpose of this program will be to 
document historical developments in California s water 
resources by means of tape recorded interviews with men 
who have played a prominent role in this field. Much of 
the published material on California s water resources 
describes engineering and economic studies of specific 
water projects. Little, however, is devoted to the 
concepts, evolution of plans, and areas of authority 
exercised by various interested Federal, State and local 
agencies. 

For example, there is little reference material 
with regard to the transition of administration of the 
Central Valley Project from the State of California to 
the U.S. Bureau of Reclamation in the early 1930 s. 
Similarly, the negotiations leading to contracts for 
water between the State of California and the Metropol 
itan Water District of Southern California are not 
documented. Yet, both of these agreements had profound 
effects on water resources policy in California. Re 
corded interviews can piece together these important 
links in California s water resources history. The 
resulting material will provide a valuable fund of infor 
mation for researchers in the years to come. 

The Berkeley project is under the faculty direction of 
J.W. Johnson, Director, Hydraulics Engineering Laboratory; 



ii 



Professor, Hydraulic Engineering, and David K. Todd, Ph.D., 
Professor of Civil Engineering. Gerald J. Giefer, Librarian, 
Water Resources Center Archives, is responsible for the inter 
viewing and processing of the manuscripts which are being 
handled in co-operation with the Regional Oral History Office of 
the Bancroft Library. Final manuscripts are available for 
research at the Water Resources Center, UCIA; Department of 
Special Collections, Library, UCIA; Department of Special 
Collections, Library, UC Davis; Water Resources Center Archives, 
UC Berkeley; The Bancroft Library, UC Berkeley; and the Regional 
Oral History Office, UC Berkeley. 

Included in the series at this date are Harvey 0. Banks, 
Sam Leedom, and Sidney T. Harding. The researcher is also 
referred to oral history interviews on California water develop 
ment done previously by the Regional Oral History Office with 
Frank Adams, Louis Bartlett, Stephen Downey, William Durbrow, 
Herbert Jones, Charles Lambert, and J. Rupert Mason. 



Willa Klug Baum, Head 
Regional Oral History Office 



15 September 1967 

Regional Oral History Office 
Room 486 The Bancroft Library 
University of California 
Berkeley, California 



iii 
INTRODUCTION 

The following interview with Harvey 0. Banks was conducted 
by Gardner M. Brown, Jr. in August, 1965. The interview was tape 
recorded at the San Francisco offices of Leeds, Hill and Jewett, 
Inc., Consulting Engineers, where Mr. Banks is a Vice-President. 
The interview was held in two sessions, a week apart. 

Dr. Brown received his Ph.D. in Agricultural Economics in 
196U at the University of California, Berkeley. His thesis 
topic was titled, "Distribution of benefits and costs from water 
development: a case study of the San Joaquin Valley -- Southern 
California Aqueduct." Dr. Brown joined the faculty of the University 
of Washington at Seattle in September, 1965. 

An early draft of the transcript of this interview was checked 
for accuracy by Dr. Brown before final copy was typed. Mr. Banks, 
however, did not have the opportunity to read the transcript. 

Funds supporting the recording and transcription of this 
interview were provided by the Water Resources Center of the University 
of California (Project 1-1&2U96-19900, 1965-66). The project was 
under the immediate direction of the Water Resources Center Archives, 
University of California, Berkeley. 



Gerald J. Giefer, Librarian 
Water Resources Center Archives 



Sacramento Bee 
9/27/96 



Harvey Banks, water pioneer 

_- . . . r * * ^^^ . - 



By Steve Gibson 

Bee Staff Writer ^ -" 

Harvey O. Banks, an interna 
tionally known water engineer 
who played a key role in develop 
ing the State Water Project, died 
of leukemia Sunday in Austin, 
Texas, where he had resided the 
past few years. ,: ; . 

He was 86. 

Mr. Banks, a former director of 
the California Department of Wa 
ter Resources, .was perhaps best 
known for his efforts to get the 
State Water Project built. 

"I d say that was his biggest 
contribution," said William Gi- 
anelli, a former director of the De 
partment of Water Resources. 

Mr. Banks worked tirelessly to 
promote the legislation that creat 
ed the gigantic system of dams, 
reservoirs and viaducts to trans 
port surplus Northern California 
water to the San Joaquin Valley 
and Southern California. 
. The water project s pumping 
plant at the south end of the Delta 
- at the head of the 444-mile Cali 
fornia Aqueduct - is named after 
Mr. Banks. 



. He was appointed director of 
what was then a new agency, the 
Department of Water Resources, 
in 1956 by Gov. Goodwin Knight. 
He was reappointed in 1958 by 
Knight s successor, Edmund G. 
"Pat" Brown. 

He was graduated from Syra- . 
cuse University with a bachelor s 
degree in civil engineering in 
1930. At Stanford University, 
where he later earned a master s 
degree in hydraulic and sanitary 
engineering, he also taught math. 
During World War IT, he served 
with the Army Corps of Engineers 
in the Pacific. By the time he re 
turned to civilian life, he had 
reached the rank of lieutenant col 
onel. He did a stint as a consulting 
engineer, and then went to work 
for what was then called the Cali 
fornia Division of Water Re- 
so.urces. 

j After leaving state service in 
1961, he worked as a consulting 
engineer, helped Texas develop its 
water plan and served on the gov- / 
eming board of the Water Educa- { 
tion Foundation, a Sacramento- 

j based nonprofit group. 

^ "He had his own opinions, but 



he tried to see all points of view," 
said Rita Schmidt Sudman, execu 
tive director of the foundation. 

Though his background was in 
engineering, "he respected the 
emerging ideas that the etiyiron- 
znent needed protection," Sudman 
said. "He didn t live in the past 
He was proud of what he had ac 
complished with the vrater proj 
ect, and felt the pluses out 
weighed the minuses. But he also 
recognized the need to return wa 
ter to the environment. 1 * 

After leaving Sacramento, he 
resided in Belmont far more than 
25 years. 

He was preceded in death by his 
first wife, Mary Morgan Banks. 
He is survived by his second wife, 
Jean Ott Williams of Austin. Oth 
er survivors include his three sons 
from his first marriage Robert, 
Philip and KimbaJl. 

The family suggests that any 
contributions be made to the Wa 
ter Education Foundation, 717 K 
St.. Sacramento. 95814. 

Services were held Thursday st 
First United Methodist Church in 
Austin. 



Water pioneer Harvey Banks dies 




Oren Banks, who played a key role in breaking through the emotionalism and 
gjsarive deadlock surrounding California water issues in the late 19505 and helped 

; the marvel that would become che State Water Project, died of leukemia this past 
September. He was 86. 

Banks began state service as a young civi! engineer in 1938, was named director 
of the just-formed state Department of Water Resources by Gov. Goodwin Knight in 
1956, stepped down from DWR in 1961, and then ran a busy engineering consulting 
firm into his 8os. 

Banks was already a respected engineer when he came to DWR. He had a bachelor s 
degree in civil engineering from Syracuse University and a master s degree in hydraulic 
and sanitary engineering from Stanford, as well as stints with the Army Corps of 
Engineers, die California Division of Water Resources and as a consulting engineer. 
But he also brought to DWR something most engineers didn t have the ability to 
work with politicians. Much of his previous work was, in fact, in the political arena, 
and his skill in forging compromise played a major role in keeping die State Water 
Project moving. 

When Edmund G. "Pat" Brown, came to the governorship in rgsS, he reappointed 
Banks as director of DWR. Besides helping to build bipartisan support for the project 
Banks was a registered Republican the reappointmcnt allowed Banks to proceed with 
a strategy that would soon be embodied in the Bums-Porter Act. 

That strategy was a bond measure for financing the project at that time called the 
Feather River Project whereby $3.75 billion in general obligation bonds would be repaid 
from die sale of power produced by the project and from contracts for water service. 

With Browns political muscle and Banks savior fairc as chief negotiator, the Burns- 
Porter Act later to become Proposition i -passed die Legislature by a 25-11 vote. 

At the polls, it would be much doser. A total of 5.8 million Califomians cast tiicir 
ballots on November 8, 1960, and at one point Proposition 
i was trailing by 100,000 votes. Only one Northern 
California county, Butte, where Ortrville Dam was to 
be built, voted for the bonds. Then the heavy Soudiem 
California voces began to come in and, with San Diego 
County voting 4-10-1, Proposition i passed by a slim 
173,944 votes. 

The State Water Project provides water to 6 out of 
10 Califbmians, and this past November, 36 years after 
Proposition I s original passage, California water was again 
the focus of a major ballot measure. This time another suc 
cessful bond initiative, Proposition 104, provides funds to 
repair the ailing San Francisco Bay/Sacramcnto-San Joaquin 
Delta Estuary, the source of water to the State Water Project. 

Banks stepped down from public office a year after 
Proposition 1 passed and went on to have a remarkable 

career in the private sector until his retirement earlier this year. The internationally 
renown water engineer once was asked about his decision to leave DWR just after he 
had scored such a success. 

"I always believed you should quit while you re ahead," he joked. 

A glance at his lifetime full of accomplishments and it s apparent that Harvey Banks 
was never behind. 




TABLE OF CONTENTS 

Introduction ill- 
Professional background 1 
Water quality activities of the State 3 
Water-rights activities of the State U 
California water plan 5 
Flood Control Act of 19UU 6 
California Water Project 

Metropolitan Water District and Colorado River 9 

Water-based recreation 11 

Development of Project plans lU 

Areas of origin 17 

Pricing policy 20 

Land values, unjust enrichment issue 21 

Bond Issue 2U 

Allocation of cost 26 

Uses of water (agriculture vs. municipal and industrial^? 

California Water Fund 3U 

Salt water demineralization 36 

Department of Water Resources and policy-making Ul 

Project power sales UU 

Agricultural water and surcharge U6 

Pricing policy U8 

Reorganization of water agencies, 1956 50 

Davis - Grunsky Act 5^ 

Burns - Porter Act 56 

San Luis Act 63 

Department of Water Resources, contracting, policy 

development 6? 

State Legislature and Project policy 71 

State and role in multi-purpose water development 73 

Index 81 



INTERVIEW WITH HARVEY BANKS 
AUGUST 17, 1965 



Brown: This is an interview with Mr. Harvey Banks of Leeds, Hill 
and Jewett on August IT, 1965. The interview is conducted 
on behalf of the Water Resources Center Archives at the 
University of California. The interviewer is Gardner Brown. 
Mr. Banks, let s start off by having you give some of your 
professional background prior to your coining to the Depart 
ment and the kinds of activities that you are involved in. 
When did you come to the California Dept. of Water Resources? 

Banks: My undergraduate work was taken at Syracuse University from 
which I was graduated in June of 1930, with a degree of 
Bachelor of Sciences in Civil Engineering. Upon completion 
of undergraduate work I attended Stanford University for 
three years with a half time instructorship in Civil 
Engineering and taking graduate work in Hydraulic and 
Sanitary Engineering the other half of the time. I 
received a Master of Science Degree from Stanford. After 
leaving Stanford in 1933, I worked with the City of Palo 
Alto on sanitary work of one kind and another and went with 
the U.S. Soil Conservation Service in May of 1935 and spent 
nearly three years with the federal government in that 
particular agency. In 1938 I went with the then Division 
of Water Resources at the end of the State in its L.A. 
Office, working on ground water investigations and ground- 
water adjudications. In 19^2, along with a few million 
others, I went into the Armed Services and served a little 
more than three years with the Corps of Engineers, from 



Banks: which I was released in Oct. ly^5j having spent some two 
years in overseas duty in the Solomon Islands . After 
military service I went back with the Division of Water 
Resources for a short time, and in 19^6 I entered into 
private practice in Los Angeles as a partner in the firm 
Harold Conkling, Consulting Engineer. In 1950, Boh Edmonston, 
then State Engineer, asked me to come back to the Division of 
Water Resources to take charge of the newly activated Water 
Quality Program of the Division which was authorized by the 
Dickey Water Pollution Act of 19^9. I continued to have 
charge of that activity until June of 1953 when I was made 
Assistant State Engineer, in charge of the administration 
of water rights and the water quality activities of the 
Division. In November of 1955, on the retirement of the 
State Engineer Bob Edmonston, I became State Engineer, and 
when the Department of Water Resources was formed in July 
of 1956, I was appointed by Governor Knight as Director of 
the Department of Water Resources. I was reappointed as 
Director when Gov. Brown succeeded Gov. Knight. 

Brown: That s very complete and quite specific. You ve had a 
long record of involvement with the State. 

Banks: My total years of service indluding credit for military 
service amounts to about 19 and one half years. 

Brown: This makes you as intimately qualified as anyone. Lots 

of water problems. Two things interest me. The kinds of 
work you did when you were associated with the water quality 



Brown: investigations, and also the type of work you did when you 

were working in the area of water rights adjudication. This 
seems to be something distinct from engineering training. 

Banks: The water quality activities of the then Division of Water 
Resources and now of the Department Water Resources are 
probably unique in the world. The water quality investi 
gation program that was delegated to the Division by the 
Dickey Water Pollution Control Act is very comprehensive. 
Of course it does not encompass administration of the 
pollution control laws themselves, but it does form a program 
for not only extensive but intensive studies of the quality 
of the water resources of the State, both surface and ground 
water, and of the saline waters of our bays and off-shore 
with respect to impairment of the quality of water, not only 
due to sewage and industrial waste, but all other sources 
in addition to investigations of quality and causes of 
variations in quality. The program also encompassed the 
investigations of feasibility of reclamation and reuse of 
waste waters and the formulation of well drilling standards 
to protect the quality of ground waters from the adverse 
effects of improperly constructed wells and that sort of 
thing. 

Brown: How does California s involvement in water quality problems, 
in its magnitude and extent compare with the concern of 
other states and also perhaps with the federal program? 
Is it in the avant-garde? 



Banks: It is far ahead of the other states. Far ahead actually 

of the federal programs. I would say that in most instances 
when people think of quality they think solely in terms of 
the effects of sewage and industrial waste whether treated 
or not. The water quality program of California not only 
considers those deleterious effects, but also such matters as 
salt balance in ground water basins, the inflow of natural 
saline waters, sea water intrusion into ground water basins, and 
effects of return agriculture flows. The whole gamut of 
quality problems. 

Brown: That s very broad, far reaching. 

Banks: Very broad. 

Brown: And what about a remark or two on the period around 1953 
when you were concerned with water rights? What kind of 
things were you doing then? 

Banks; Well, of course, at that time the Division of Water Resources- _ 
and we must make the distinction between the Division and 
the Department because while the Department grew out of the 
Division, the Department didn t succeed to all of the powers 
and duties of the Division--but at the time the Division of 
Water Resources in its administration of water rights, had 
three principal functions: 

l). Action on applications to appropriated and 
unappropriated waters and granting of permits and licences in 
connection with such application. 

2). Adjudication of water rights 



3). Provision of water-master service where water rights 
had been determined either by court action or agreement. 

Brown: Let s come a little closer to the present and maybe you d 
talk about the setting in the mid 50 s out of which the 
blueprint for the first stage of the California Water Plan 
emerged, and indeed the California Water Plan itself, although 
it does have predecessors dating back to the 20 s. 

Banks: We should be clear. Are we speaking of the California Water 
Plan as it is expressed in Bulletin 3* as a Master Plan or 
are we speaking of the California State Water Project? 

Brown: Let s talk about both. More generally about the plan as 
expressed in Bulletin 3, and more specifically about the 
precise projects which are called the State Water Facilities. 

Banks: As far as the Calif. Water Plan is concerned we have to go 

back to 19^5 when the State Water Resources Board was created 
by the legislature. Initially the State Water Resources 
Board was principally concerned with flood control in 
California and the reallocation of State funds for flood 
control purposes (reallocation to local agencies). Then 
in 19^7 the powers and responsibilities of the State Water 
Resources Board were broadened into the whole field of water 
planning, water conservation and water utilization, as well 
as flood control. 

Brown: Let me interject a question. Do you know off-hand, in this 
allocation of funds for flood control over various regions 
within the State, what kinds of rules, specifif-d or ad-hoc, 



*The California water plan . California State Water Resources 
Board, May, 1957. 



Brown: were applied? This is around the time the Watershed 
Protection Act was applied. 

Banks: It wasn t the Watershed Protection Act. The small Water 
shed Protection and Flood Prevention Act was in 195 1 *-- 

Brown: I m sorry, yes. 

Banks: But if you recall in the Flood Control Act of 19^> Congress 
caught up on authorizations of flood control projects. In 
other words, because of the war years, there had been little 
or no activity in flood control for some period of time and 
the Congress, looking to the future and the probable end of 
the War in the need to reinstitute activity in the public 
sector of water development, authorized a large block of 
projects throughout the Nation, principally for flood control 
although others were for other purposes. There were a con 
siderable number of those authorized in California. And 
there was some concern over whether or not local agencies 
would be able to bear the non-federal costs of those. So 
the legislature provided that the State would reimburse the 
local agencies for their costs for lands easements, 
rights of way and relocation of utilities, in connection with 
federal flood control projects where those costs were specified 
to be borne by non-federal interests. 
Brown: Once again was California leading in development of policy 

along these lines? 

Banks: As far as I know, no other state had that provision and very 
few of them have it at the present time. 



7 



Brown: And so, it was this agency in California that ranked 

proposed flood control projects as they saw it and agreed, 
in some cases, and agreed not to in other cases, to provide 
reimburseable f unds. 

Banks: Well, in effect the State Water Resources Board, which was 
created by the Water Resources Act of 19^5 , w &s given 
jurisdiction over flood control activities as far as the 
State is concerned and in fact, the Water Resources Board 
developed a policy along the lines that you suggest of 
ranking proposed flood control projects in the order of 
importance as they saw it and presenting that to the Congress 
in support of flood control appropriations. Now, as far 
as this reallocation of State funds, they had little discretion 
in that, other than to review the amounts to make sure that 
the money was properly expended. 

Brown: What kinds of rules did they use in ranking? Or what 

kinds of notions did they have? Were they well formalized? 

Banks: Well, in the early days of the game they weren t too well 
formalized. 

Brown: This was before the "Green Book". 

Banks: Yes. Well, normally in federal flood control projects the 
Corps of Engineers, or Agriculture, as the case may be, 
specifies that certain costs must be borne by a non-federal 
interest, and on level and channel projects particularly 
those non-federal costs include the cost of ]and easements, 
rights of way, and relocation of utilities. 



8 



Brown: Channel improvements are more expensive locally than reservoirs. 

Banks: That is correct. 

Brown: O.K. When I interrupted we were distinguishing between the 
water plan and the California Water Project as we know it 
today, and you were saying it had, for your purposes, roots 
dating back to 19^5- 

Banks: At least. To reiterate, in 19^7 the scope of authority and 
responsibility of the Water Resources Board was broadened by 
the legislature and the Board was directed to develop plans 
for the country and hence the development of water resources 
of the State. Now this was in rather broad terms, but the 
Board, in conjunction and cooperation with the State Engineer, 
who was designed by law as Secretary to the Board, decided 
that there should be a master plan developed for all of the 
water resources of the State. That gave rise to what we 
now call the California Water Plan. 

Brown: Was the decision not to buy the Central Valley Water 

Project an important inducement to work at a more rapid 
rate towards development of what we now know as Bulletin 3- 

Banks: So far as I m aware, the decision, or rather lack of action 

toward buying the Federal Central Valley Project had relatively 
little impact on the whole thing in spite of the allegations 
of some of the, to put it bluntly, some of the acreage 
limitation proponents. 
Brown: What was the status of a couple of things at this time: 

1st Were there any rumblings about attention to the Colorado 



Brown: River Controversy? and 2nd Was there I m thinking in the 
mid 50 s again a realized or perceived need for increased 
water-based recreational facilities? 

Banks: As far as the Colorado River water controversy is concerned-- 
that started in 1951, as I recall it- -the last action. N$w, 
whether or not this had an impact depends on the viewpoint 
that you re interested in. As far as the Metropolitan 
Water District is concerned, up until 1960, that District 
refused to admit even to themselves, so far as I m aware, that 
they possibly could be cut down on the Colorado River supply. 
I can remember distinctly in 1957 and 1958 being told by 
members of the Board of Directors of the Metropolitan 
Water District that there was no possibility of their being 
short on water, and the fact that they did have ample water 
supply for foreseeable future needs, at least as far as 1975, 
and that they saw no reason to be interested in a state water 
plan. 

Brown: In your estimation this wasn t a bargaining tactic? 

Banks: In my estimation, no. The reason of course that many people 
wouldn t acknowledge the possibility of loss of the Colorado 
River suit, or loss of part of the supply then considered to 
be available from the Colorado, was simply legal tactics; 
but I am sure that many members of the Metropolitan Water 
District Board of Directors were convinced that they couldn t 
possibly lose that suit. Now, on the other hand, many of us, 
including myself, had no such conviction at all. In fact I 



Banks : personally was much worried that the supply from the Colorado 
might be cut down. And furthermore, I was also much more 
certain that even if it were not cut down, that by 1970 or 
19T5 j Southern California would need more water than they 
had available to them on a firm basis, even were the Colorado 
River supply to be maintained intact. 

Brown: This raises an interesting problem of differences in the way 
two public units view an uncertain event and gives a possible 
explanation for necessity of state water planning. 

Banks: Well, I think that it should be made clear that as far as 
I m aware the Metropolitan Water District had done no 
planning for future water supply at that time for that 
District. At least, if they had, they never showed any 
such plans to me. 

Brown: Were there any important developing national or local trends 
which might have accelerated the design of this blueprint, 

both the grand conception in Bulletin 3 and a more specific 

* 



conception, say in Bulletin 78? 
Banks: It should be made clear the Bulletin 3 is not a project 
proposal. Bulletin 3 is, in effect, a physical plan for 
conserving and redistributing the water resources of the 
State to meet projected needs as such needs may arise in the 
future in the various areas of the State and for the several 
purposes concerned. It never was invisioned as being a 
specific project proposal, in any way, shape or manner. Now... 
This question is misinterpreted in the professional literature. 



Brown: 

* Bullet in~3 is: The California water plan. California State Water Re 
sources Board, May, 1957; Bulletin 7b is: "investigation of 
alternative aqueduct systems to serve Southern California, Dept , 
of Water Resources, 1959 -"0." 



Banks: Yes, very much so and it continues to be misinterpreted... 
We tried our best of course in writing it to make it clear 
as to what its intent was, its objective, and its limita 
tions, but unfortunately, too few people read it. The 
California Water Plan as proposed in Bulletin 3 doesn t in 
any way imply that this is to be a gtate constructed system 
or a locally constructed system or a federally constructed 
system. 

Brown? Or that any of the facilities they talk about should actually 
be constructed. 

Banks: That s right. This is the way it can be done, when, as, and 
if it becomes necessary and economic to serve this particular 
need in this particular area. Now you asked a question 
about recreation. I think possibly the State itself was 
the leader in pointing up the importance of recreation. 
In the mid 50 s, water based recreation was a nice thing, 
but no one really paid too much attention to it and did 
relatively little planning for it until such time as the 
reservoirs were constructed, as at Folsom, and then everyone 
flocked to it, and in the late 50 s, it was realized that 
this was a tremendous social benefit as well as a economic 
benefit, and that it should be planned for rather than allowed 
to happen. 

Brown: When you say nobody, are you thinking of people within the 
State or people also outside the State? 

Banks: I m thinking of both. If you ll recall, federal projects-- 



Banks: up until very recently the maximum Congress would go for was 
minimum basic recreation facilities. It has only been in the 
last four years that Congress has recognized the overall 
importance of recreation. 

Brown: When you were describing Bulletin 3 briefly, you talked in a 
very general way about the kinds of objectives that were 
implicit in it, or explicit in some cases. I wonder if you 
could be more specific about the thinking of the department 
along these lines. What real kinds of objectives were they 
considering? 

Banks: Well, of course, as an engineer I define objectives a little 
differently than you do as an economist. I think we could 
see at that time the fact that there would be a scramble 
for water, that overall, there would be competition among 
users for the available water resources and particularly, 
the cheaper water resources. 

Brown: Could you be more precise about who the competition would 
be between? 

Banks: Well, fundamentally, of course, the competition is both on 
an areal basis and on a use basis. On an areal basis, we 
have the competition between the primarily agricultural 
demands and of course parenthetically, it should be pointed 
out that the areal basis and use overlap here; but on an 
areal basis you have the competition between the San Joaquin 
Valley and the Sacramento Valley which are almost a unit 
for the surplus waters of the Sierras versus Southern Call- 



Banks: fornia and the Bay Area. On a use basis, of course, you 

have the competition between agriculture on the one hand and 
municipal-industrial use in the other direction. Plus 
recreation and enhancement of fish and wildlife. 

Brown : Power? 

Banks: And power. Although by-and-large the competition for power 

is not as severe in this state as other places simply because 
water used for developing power by-and-large is available for 
other uses. This may not be the case, for instance, on the 
Colorado River in Texas, where the Lower Colorado River 
Authority, which is primarily a power developing agency, is 
determinedly hanging onto its water rights for power 
development, even though the water is needed upstream for 
other developments ---what we conventionally term as "higher 
uses". But that conflict between power and consumptive uses 
has never been as significant in this state as it is other- 
places. 

Brown: There was competition in the 30 s between the representatives 
of power and the representatives of other uses. 

Banks: Yes, competition has been not so much over the water itself 
as over who should develop the power. 

Brown : Yes . 

Banks: That has been, of course, an acrimonious and, at times, 
almost a violent controversy. 

Brown: So the State felt there would be increasing competition 
between areas and uses in the future for water. But in 



Brown: constructing and writing Bulletin 3> they were thinking about 
the actual facilities for a State Water Project. What sort 
of objectives were they designing these projects for? 

Banks: You speak now of the State Water Project. 

Brown: Yes. Let s look only at the Water Project because that s a 
definite plan. 

Banks; Well, at that time, and this was in the early 50 s, we could 
see a substantial need for supplemental water in the Bay 
Area, Alameda County, Santa Clara County, in the west and 
south. . . 

Brown: In the area served by the North Bay Aqueduct too? 

Banks: In time, yes (to some extent) although in our planning 

it was not of high priority. That came about, of course, 
because of the Abshire-Kelly Salinity Control Bill and the 
directive to plan for a full water supply for the entire 
Bay Area- 
Brown: It was a reaction to a legislative... 

Banks : Yes . 

Brown: I see. And if the Department had had its own way, it might 
not have included the North Bay and its plans initially? 

Banks: It might well have considered it as a later development. 

Brown: Along with the development of the Eel or something. 

Banks: Yes, but we could see also a very large demand for agricul 
tural water in the west side of the San Joaquin Valley, 
Western Fresno County on south, and in Kern County. Those 
portions of Kern County not projected for service under the 
Central Valley Project. And of course we could see a very 



15 



Banks: substantial need for additional water in Southern California. 

Brown: And you said that in part, Southern California "couldn t 
see"; but how about the San Joaquin Valley? 

Banks: I didn t say Southern California. I said the Metropolitan 

Water District. There has always been In Southern California 
a rather deep schism in thinking between some of the member 
agencies of the MetopolLtan Water District, such as the 
Department of Water and Power of the City of Los Angeles, 
and San Diego County people, as to their viewpoints as to 
the -future and the viewpoint of the Board of Directors of 
the Metropolitan Water District as formally expressed. Now, 
there was this schism within the Board of Directors of 
Metropolitan, but I m speaking of their official policy and 
official statements as adopted by the Board, and of course 
its voting strengths, shall we say. 

Brown: Well, my reason for asking the question is I m trying to 

determine whether it was Sacramento on its own initiative 
or if the Department of Water Resources was receiving 
pressure from local groups to be concerned. 

Banks: Initially, the magior pressure came from the San Joaquin Valley. 
There were, it is true, some land-owners in the San Joaquin 
Valley who turned to the State for additional water in the 
hope that by going that route, even though it would be far 
more costly-- and they recognized that it would be more 
costly-- that they would be able to escape the acreage 
limitations of the federal reclamation law, even though 



Banks: under federal reclamation law their water would be far cheaper 
than comtemplated under the State Water Project. 

Brown: In planning for the present Water Project, was there any 
objective that all geographic areas should receive some 
benefit, or all uses should receive some benefit? 

Banks; If you were referring to the Burns-Porter Act the State 
water facilities set up under the Burns-Porter Actthen 
"yes". There was, in formulating the entire program, as 
distinguished from the State Water Project, and here again 
we must make a clear distinctionthe State Water Project 
as we are using the term here means now these facilities that 
are actually being constructed and will be operated by the 
State or which the State, in the case of the San Luis Joint 
Facilities, the State is paying its share. Now, the total project, 
the total programs authorized and funded by the Burns-Porter 
Act and corollary acts includes not only these facilities 
to be constructed by the State, but it includes basin 
development. There is a provision in there that the State 
is authorized to build projects for local needs in the basins 
of origin. The Davis -Grunsky program is a part of the total 
program funded by the Burns-Porter Act;and in setting up 
that total program which is authorized and funded by the 
Porter Act, yes, there was the deliberate and definite 
thought of making this a program of as broad geographic 
and user benefit as possible. 

Brown: Were there any political reasons for doing this? Is it a 



-Lf 



Brown: kind of compensation for "robbing the North" of its waters. 

Banks: Well, "Robbing the North of its water" is a fallacious 

concept. The North could not possibly develop its water 
without the assistance of the rest of the State. I mean 
the North needed and still needs money. It could not 
possibly without assistance, either through the federal 
government or the state government, not develop its water. 
NOW, you ask about political considerations. I will answer 
tnat directly and say that you have to have a certain amount 
of votes in the legislature to get a bill through. We were 
not unaware of that necessity. 

Brown: What were the forces and concerns which played a significant 
role in the evolution of the area of origin doctrine. 

Banks: Well, the concept of protection of the areas of origin 

originated in the early 30 s. In 1929, as I recall the date, 
the State Engineer presented the State Water Plan in a formal 
report to the legislature. That particular plan generally 
is what we now know as the Central Valley Project being con 
structed by the Bureau of Reclamation. The concept in that 
plan of transporting northern water, that is Sacramento 
Valley water, to the San Joaquin Valley brought home to the 
members of the legislature particularly, as well as to their 
constituents, the fact that massive inter-regional transfers 
of water inevitably would take place, and it aroused the 
fears of the counties of origin, particularly the mountain 
counties, that once works for such transfers were built, that 



Banks: they might veil loose any possibility of ever acquiring 

any water rights for their needs. Of course, at that point, 
the State was operating under the strict appropriative 
doctrine: the developer first in time is first in right. 
And as a result of that concern on the part of the mountain 
counties, as I read history, the Veigelbaum Act was passed 
which set up what we know now as the County of Origin Act. 

Brown: When was this passed: 

Banks: 1931j I believe was the date. Now essentially, the County 

of Origin Act is of limited protection in that it only applies 
where State filings have been made pursuant to the provisions 
of Section 10500 of the Water Code. But it does accord in 
those instances water users within the counties of origin a 
prior right to water originating in that county of origin. 
Or, to put it in another context, the county of origin estops 
an exporter who is proceeding under one of these so-called 
State filings, from protesting a subsequent development for 
use within the county of origin. In 1933 , the so-called 
Watershed Protection Act was passed which applies to the 
builder and operator of the Central Valley Project, as such 
Project is authorized under the article. It is not a 
prior right to water in the conventional sense of a water 
right, but it is a prior right to Project water. There 
is a very definite distinction here which was brought out of 
course by the Attorney General in his opinions in interpreting 
these acts which I believe were handed down in 1958. 

Brown: I don t know. 

Banks; The Attorney General was asked to study the implications 



Banks: cr? both of these laws- -County of Origin Act and the Water 
shed Protection Law and I believe his opinions were published 
in 1958. 

Brown: Do you recall if there was much controversy at the time 
of the passage of the Area of Origin Act? 

Banks: I was not present. That was before my time with the State, 

so I can t really answer that question In any specific terms. 

Brown: Would you think it a good idea that the other states in the 
Northwest or Southwest pass area of origin laws? 

Banks: The State of Texas in the last session of its legislature 
passed an act which is even more specific than the Cali 
fornia laws in this regard. The protection of the basis of 
origin is a little more general term. It s implicit, I 
think, in nearly every state and federal act that has been 
passed in recent years. This is implicit even in the Water 
Resources Planning Act of 19^5 which has been recently 
signed by the President, whereby the River Basin Commissions 
which are authorized under that act, are forbidden to make 
any plans -for the export of water from another watershed 
not under their jurisdiction. 

Brown; As you look into the future, do you think there s going to be 
any conflict between the states area of origin or basin 
acts, and the plans of the federal government? 

Banks: Definitely, there will come a conflict particularly if there 
should be a series of water-short years. You see, in this 
State, neither the County of Origin Act or the Watershed 



Banks: Protection Act have actually caused any difficulty to anyone. 
Now, the lawyers have worried greatly about the implications 
of these acts as far as the firmness of contracts and that 
sort o f thing, but there has been no case to my knowledge, 
yet, where there has been any difficulty in that regard. Now, 
this will not be the case if we should get an extended drought 
period where water available, say for the Central Valley 
Water Project, becomes short. Then, I think, there well may 
be an assertion on the part of the Department of Justice 
that it doesn t have to abide by these acts anyway. 

Brown: Tf the conflict does develop, would you care to speculate 
what the resolution would include? 

Banks: Well, I have a considerable sum of money that I would be 
willing to bet that if any state law pertaining to water 
resources is ever contested in federal courts, and carried 
through to the Supreme Court, that the state law would be 
held ineffective and unenforcable as against the federal 
agencies. This is implicit in all of the Supreme Court 
decisions in the last 10 to 12 years. 

Brown: Going back to the original question of objectives, was 

there any thinking on the part of the policy planners in 
the Department that there should be no windfalls, no specu 
lative gains. Was this a concern in designing the policies 
and projects? 

Banks: Definitely. It wasn t a concern in the design of projects, it 
was a concern when we came to formulating pricing policy. 



Banks: There were very significant political overtones about this 

matter which demanded a pricing policy which would, at least, 
minimize the political objections toshould we sayunjust 
enrichment. 

Brown: So far, are there policies having to do with the ownership 
of lands around a reservoir? Are these such that there is 
not likely to be unusual, unjust enrichment, wind-fall, 
speculative gains? 

Banks: Oh, I think there will be some speculative gains. In fact, 
I m sure there will be from land surrounding reservoirs. 

Brown: You once testified about the kinds of increase in land 
values as a result of substantial increases. And I m 
wondering what are the State policies to prevent such a 
recurrence . 

Banks: Only to the extent that the taking of land around a reservoir 
can be justified in connection with public recreational 
development. I think it should be made clear that, illogical 
though it actually. was, the concern with unjust enrichment 
had only to do with the large owners of agricultural land. 
There are many subdividers, and as you mention, land-owners 
around reservoirs: This was not of concern with those who 
raised the political issue of unjust enrichment. 

Brown: Except perhaps Senator Cobey. 

Banks: Yes, I m sure Cobey was slightly concerned with this because 
the Senator was trying to broaden the concept of this. 
Remember, the Senator comes from an agricultural county, and 



Banks: he saw the fact that all blame, or theories of unjust 

enrichment, as the thinking then went, would fall upon his 
constituents, the agriculturalists. And he also foresaw and 
correctly that many other classes of landowners would achieve 
a very large unjust enrichment, and Senator Cobey was trying 
to point this out. 

Brown: That is a very good insight that one doesn t get explicitly 
from reading the public record. What were the principle 
hurdles which the Department thought could impede the 
actualization of the State Water Project? 

Banks: First and foremost was the problem of financing. Then there 
was the public relations problem of convincing the people of 
California that they had no justification for expecting that 
the U.S. would solve all of their problems. One of the 
fundamental reasons that I supported the State Water Project 
when I became State Engineer and Director was that I could 
see no prospect, whatso-ever, and events, I think, have proven 
that I was right, I saw no prospect of Congress taking on 
the job of developing all of the water resources in the 
State o^ California for all purposes and for all areas of 
the State. Now if you will examine the history of federal 
appropriations and reduce those to constant value dollars 
in terms of construction, you will find that the rate of 
development of the water resources of California by the 
federal agencies has not greatly accelerated even in recent 
years. The dollar appropriations have gone up, but this has 



23 



Banks: been negated by the value and the decline of the dollar as 
it relates to the volume of construction actually achieved. 
In the last two or three years there has "been somewhat of a 
upsurge. But again, the backlog of federal projects even 
to serve the areas which are under federal service is very 
large . 

Brown: Do you have any offhand reason for this in view of the fact 
that the State of California is as large? 

Banks: Well, California has actually always got what people in some 
states regard as an undue proportion of the federal appropri 
ations for water development. Congress does not, frankly, 
look at this in terms of total relative need. Congress 
thinks more in terms of spreading its benefit over as wide 
an area... its "largesse" if I may use the term. ..over as 
wide an area as possible. And the fact that it authorizes 
a large project in California in a given year acts to 
prevent any subsequent authorization until a few other 
states have been taken care of, irrespective 
of the relative urgency of need. Unless some disaster 
happens. Given a tremendous flood, or a disaster such as is 
threatened in the East at the moment, then Congress does 
look at the urgency of need. But in the normal course of 
events where there is no real critical situation involved, 
if California gets a major project authorized in the year 
1965 and it looks like we might get Auburn authorized this 
year, then it may be several years before another project is 



Banks: authorized of significant size. 

Brown: If the passing of the bond issue was as important as you 
indicate, what sorts of things did the Department do to 
influence its passage? 

Banks: There is a State law which prohibits the use of State 
monies to influence bond elections. 

Brown: What I was referring to... 

Banks: Our actions were limited solely to setting the facts before 
the voters of California as to resources, needs, and ways 
of statisfying those needs. 

Brown: Was there any attempt on the part of the Department to how 
the public concensus was going over the State and in any 
one region? Did it have sensors out? 

Banks: No, it did not have sensors out as far as the Department is 
concerned. Of course, there were public relations firms 
engaged; not by the Department , but by others, who did conduct 
polls and that sort of thing. On the other hand, I think 
I and my staff had a fairly good series of contacts, shall 
we say, throughout the more critical areas of the State. 

Brown: Would you care to mention the kinds of contacts? 

Banks: Well, we always, even Before the bond issue was proposed, 

maintained close contact with various and sundry water-user 
organizations throughout the State as well as the state-wide 
organizations which are interested in such matters, such 
as the County Supervisors Association, Irrigation Districts 
Association, the League of California Cities, and others. 



Brown: Were there any other non-direct water organizations whose 
opinion you were interested in? Banks or the League of 
Women Voters? Labor unions? 

Banks: We re very much interested in the opinions and works of the 
League of Women Voters. We cooperated with the League in 
their studies; furnished them with help; assistance and 
data and that sort of thing, and we were very much interested 
in their opinions. And I kept rather careful check on the 
opinions, statements and policies of the AFL-CIO Federation. 

Brown: As the referendum of the election was coming closer, did you, 
or did the Department predict how it might go? Were there 
any times when the Department fftlt it might not have a 
majority? 

Banks: There were numerous occasions when we had butterflies in our 
stomachs . 

Brown: As it was, it only passed by 2 per cent margin? 

Banks: Less than that I think. 

Brown: 1.5 per cent. 

Banks: Yes, very, very close. No, we were never positive at any 
time that it would go over. 

Brown: The Federal Government in the very recent past has allocated 

project cost by the method of separable cost remaining benefits . 
This was the procedure adopted by the Department for the 
allocation of the costs of the conservation facilities. But 
the proportionate use of facilities method was used for the 



Brown: transporation features. What were the reasons for this 
choice? 

Banks: Well, remember that in the allocation of the conservation 

features, the reservoirs such as the Oroville, San Luis and 
the other storage facilities, we did not allocate as between 
consumptive uses. There has been an allocation to power, 
an allocation to flood control, an allocation to recreation, 
an allocation to the enhancement of fish and wildlife, and 
an allocation to water conservation. We did not at anytime, 
ever make a distinction between the use of water for irrigation 
vs. the use of water for municipal-industrial purposes in the 
cost-allocation process. So that fundamentally, the problem 
of allocation of cost of the transportation facilities 
was not among uses but as among users. This is the basic 
reason for the distinction. 

Brown: I see, but one might have used separable cost remaining 
benefits to allocate over users. 

Banks: Then we would have had a tremendous job of trying to quantify 
benefits between contractors, and this would have been almost 
insurmountable in point of difficulty. For instance, what 
proportion will be used by Metropolitan Water District for 
agriculture versus municipal-industrial purposes within 
Metropolitan as contrasted to Kern County Water Agency, 
where in the order of 90 per cent will be irrigation, and 
only 10 per cent for municipal and industrial uses. It would 
run into tremendous difficulties in trying to project the 



Banks: relative amounts of water used by any one contractor for 
various types of uses within its service area. 

Brown: But, of course, the first approximation towards defining 
these benefits was made in Bulletin 78. 

Banks: There was an attempt there, yes. 

Brown: In which favorable benefit-cost ratios were shown. 

Banks: On an areal basis, but not among contractors. 

Brown: Yes. 

Banks: See, the purpose of a cost allocation on the transportation 
facilities is among contractors not among areas. 

Brown: But, it turns out to be among contractors... 

Banks: In Southern California, yes, although now you have a considerable 
number more contractors in Southern Calif, than we had originally 
envisioned* 

Brown: Was it only the technical difficulty of estimating benefits 
or was it thought that any publication of the benefit to 
some use or to some region might evoke a great deal of 
controversy? 

Banks: It was entirely on the basis of the technical difficulty of 
trying to do it. 

Brown: In a television program a number of years ago, there was 

some discussion of what the use factor should be in a cost 
allocation method whether it would be capacity or 
quantity. I think on this program, you said that negotia 
tion took place between the Met and the Department of Water 
Resources, but that the Department wanted quantity use rates 



Brown: to be used and the Met wanted, of course, capacity. And 
so the two groups slit down the middle. 

Banks; Remember that the Feather River Project, or more properly 
as the report title gives it, the Feather River Diversions 
Projects, were formulated long before any pricing policies 
were dealt with or ever established. The Project was 
formulated as far as yield was concerned on the conventional 
basis that no deficiency would be allowable in municipal 
and industrial supply, but that ^or agricultural purposes 
a deficiency of up to say 50 per cent could be allowed in 
any one year of a critical period with a total deficiency 
in a critical period of one year s total supply. Then when 
we came to formulate the . . . 

Brown: ...the essence of this remark has been specified in the 
contract itself. 

Banks: Yes, that s true, but when we began to formulate pricing 

policy and a policy which did not distinguish between types 
of use, then we ran into the anomoly: that in the formulation 
of the project, there was a distinction between types of use 
in the firmness of supply. Furthermore, for agricultural 
purposes, the aqueduct system had to be able to deliver about 
18 per cent of the total years supply in the maximum month, 
which requires a larger relative capacity as contrasted 
to the municipal and industrial supply, where the design 
criteria was the delivery of, as I recall it, of about 11 
or 12 per cent of the years supply in the maximum month. 



Banks: Now, had we gone to allocation of aqueduct cost strictly on the 
basis of design capacity, then we would have put the agricul 
tural user at a disadvantage, because he, under the formulation 
of the project, had to take the first cut in the event of 
shortage. It was my position in the beginning of negotia 
tions with Met that inequitable treatment as between the 
agricultural users in Kern County, recognizing that the 
project was so formulated that they had to take the first 
cut, that equity would demand a little more favorable cost 
allocation to the agricultural user versus the municipal and 
industrial user, in view of this mandatory requirement 
that agriculture take the first cut in the event of shortage. 
So I proposed that the cost allocation be based not on design 
capacity but on total annual delivery. Metropolitan was 
not willing to go along with that. They felt that irrespective 
of the fact that agriculture whould have to take the first 
cut in event of shortage that the cost allocation should 
be on the basis of design capacity. Well, we finally 
compromised by using the average of the two. That s about 
what it amounts to. 

Brown: What if the Metropolitan had said, "We won t compromise," 
and given the requirement that the State needed the Metro 
politan before it could construct its program because of the 
legislation? 

Banks: We probably couldn t have had a program. 



Brown: You wouldn t have? 

Banks: We would not have because it would have gone on beyond the 

payment capacity of agriculture. 

Brown: ...perhaps the Metropolitan knew this too? 
Banks: In the latter stages of negotiations, I m sure they knew 

this. 

Brown: So it was in tneir own interest too? 
Banks: Well, certainly, it was in their own interest. Had I been 

Metropolitan, I would have taken the same position for 

negotiating purposes. 
Brown : Sure . 
Banks: I m not blaming them; after all, we were dealing with 

considerable numbers millions of dollars and a considerable 

volume of water. 
Brown: Did the Metropolitan know how many millions of dollars you 

were dealing with? 
Banks: Oh, yes, I don t remember the exact figures, but they were 

available and were freely discussed. 
Brown: Let me ask another question. Did you want agriculture to 

receive a break in its cost allocation? In the cost 

allocation method to determine prices in order that all 

the water could be sold to facilitate the actualization of 

the plan, or only because of the equity reason which you 

mentioned. Was there a pragmatic reason? 
Banks: Well, there are pragmatic as well as idealistic considerations 

involved. I certainly did not want to see the resultant 



Banks; cost to agriculture be beyond their ability to pay with 
the result of ruling out any agricultural sales. 

Brown: But, had the prices been a little bit higher, it would 
have meant that they would have taken . . . 

Banks: ...a lot less water, if any. 

Brown: So was there some objective then, that the San Joaquin Valley 
should receive a certain amount of water at least? 

Banks: There was a philosophic objective in that my concept of the 
reasons for the State ever getting into this field of water 
development, in the first place, was to insure a fairly 
wide spread areal distribution of the benefits of water 
development. If all of the water were going to Southern 
California, there would be really no reason for the State 
to have ever proposed the project. Metropolitan could have 
financially built the projects to serve their needs. 

Brown: And it was cheaper for them to have a State project than 
their own project? 

Banks: Yes, on a multiple purpose basis. I think we must remember 
though that at the time we were negotiating this in 19^0 
there had begun to percolate through to at least some members 
of the Metropolitan Water District, the possibility that 
they might need more water than they had originally contem 
plated because of the probability of an adverse Supreme 
Court decision in the Colorado River case. 

Brown: And so they were trying to press for a lower... 

Banks: They were trying to press ^or as much water as they could 
possibly get out of this thing. 




Signing of new Hogaa contract between Department of 
lattr Keaourcsa and the U.S. Bureau of Reclamation 
10ft to right: Col. H.A. Morris, Amy Eagineersj 
Senator Alan Short, Stocktonj Councilman Harray Stull, 
StooJrtonj Irving ^eumiller, Stockton t Gorernor "Pat" 

Duggan, Bureau of Seclaaationi seated, Harre.7 o| Benka 



Brown: Did the legislature, whatever that means, hold the same 

philosophic position? Or was it something that you had to 
argue strongly for with important members of the legislature? 

Banks: I think the legislature would have been extremely critical 
had we agreed to something which would have ruled out any 
substantial sale for use of water in the San Joaquin Valley. 

Brown: When you say substantial, can you think of a number? 

Banks: I m thinking of anything less than 1/2 million acre-feet 
per year. Something in that order. 

Brown: In 1959* y u presented a paper to the Subcommittee on 

Financing in Economic Policy for the State Water Project. 
It was my impression that the tone of the paper implied 
the implicit belief on your part, or on the Department s 
part, that agricultural uses, and municipal and industrial 
districts should be offered different repayment policies 
and that other things being equal, agriculture should 
pay a lower price for its water. 

Banks : Well . . . 

Brown: It seems that there was a change a shift in policy- - 

between August of 59 and December or January of 60 when 
the Governor s contracting principles came out. 

Banks: Well, remember that we had, at the time... as I recall it, at 
the time that that statement was made, I don t think that 
the Burns-Porter Act had been finalized. 

Brown : I think that s right . 

Banks: Bo that we did not at that time have any real basis for 



Banks: judging the repayment requirements. With the passage of the 
Burns-Porter Act and the financing of the Project by general 
obligation bonds, which of course could become a charge upon 
the general taxpayer, and in due consideration of the total 
financial needs of the State, it became apparent that we 
had to have a pricing policy which would guarantee that 
these bonds would never become a charge upon the State. 

Brown: So it was a change that the Department made on its own and 
not as a resvlt of pressure from the legislature that there 
shouldbe no discrimination between uses? 

Banks: Well, there were certain... 

Brown : I think it s true . . . 

Banks: The final policy was not the result of any specific pressure 
from the legislature or direction from the legislature 
although there were some members of the legislature who 
were, as the record clearly shows, adverse to any distinc 
tion in price. But fundamentally, the pricing policy has... 

Brown: They were by-and-large all urban representatives, so it was 
along use that the legislature... 

Banks: But by-and-large the final pricing policy was developed in 
recognition of two factors. Principally one factor. And 
that is setting up a pricing policy that would assure the 
State of sufficient revenue to meet its obligations on time. 

Brown: Yes, the time. 

Banks: Now this was the basic consideration. There were other 

considerations that entered in the demand that there be no 



Banks: unjust enrichment of agricultural lands and that sort of 

thing^ and it was well known that very large blocks of the 
lands in the areas proposed to be served were, and are, 
owned by the Kern County Land Company and the Standard Oil 
Company and Southern Pacific, et al, so that these political 
demands had to be taken into account in the final policies 
that evolved from the Governor s contracting principles of 
January 19^0 and on through the contract negotiations with 
Metropolitan. 

Brown: I f the concern for developing a pricing policy was very much 

determined by a need to meet certain fixed revenue obligations, 
why did the Department of Water Resources argue that the 
California water fund should be returned, indeed, the pay 
ments returned with interest. Because, if they hadn t argued 
for this, then repayment obligations could have been lowered? 

Banks: There was a time when I think we might have agreed to some 
differential as between repayment of bond funds versus re 
payment of California water funds. On the other hand, the 
Metropolitan, when we got to contracting a negotiation 
with Metropolitan, Metropolitan was very insistent that 
the California water fund be fully repaid with interest. 
This was their position because they wanted to create 
there-by additional monies to assure the construction of 
additional projects to offset possible depletions to the 
County of Origin Act and the Watershed Protection Act. 

Brown: Actually, you re arguing that it wasn t the Department s 



Brown: desire to aggrandize in the sense of getting earmarked 
funds for the future but it was pressure from. . . 

Banks: This was a significant element. Now, we also recognize that 
there would by convention be some non-reimbursable costs 
involved in this and that we wanted the flexibility of 
repayment of the California water fund with interest in 
order to have some money to cover these non-reimbursable 
allocations. 

Brown: Now, what about the advocacy on the part of the Department 
for the repayment of the water fund plus interest. This 
advocation was made prior to public negotiations. It was 
made in 1959, I believe. 

Banks: figain it comes back to the matter of being able to say 
that there was no subsidy in this. 

Brown: The Department felt this was important? 

Banks: The Department felt this was a necessity to sell the program. 

Brown: To the voters? 

Banks: Yes. 

Brown: And the fact that it was only simple interest and not 

compound interest wasn t felt to be subsidy and felt to be 
important. 

Banks: There is compound interest. 

Brown: There is compound interest on the general fund? 

Banks: Well, now, there is simple interest charged on any advances 

made out of the general fund to meet the bond. The mechanics 
of the Burns-Porter Act is that the bond payment obligations, 



Banks: both capital and interest, are an automatic charge on the 
general fund. This is an automatic appropriation to meet 
those in any one year. Now, if there isn t sufficient 
revenue to repay that general fxind obligation in that year, 
then any balance carries simple interest, but the repayment 
schedules are so designed so there will be no carry-over of 
this automatic general Fund appropriation. 

Brown: But I m thinking specifically of that part of the California 

water funds contributed by the tidelands oil and gas royalties. 

Banks: Well, you get two different things here. The California 
water fund monies do not go to pay anything on the bonds. 

Brown: Yes, I see. 

Banks: They do not go to pay any bond charges. 

Brown: But if there were no tidelands oil royalties, perhaps a 
higher bond issue would have to have been made. 

Banks: Yes, there would have had to have been about little more 
than a two billion bond issue instead of a 3/4 billion. 

Brown: Why did they fix it at a billion and 3/U instead of two 
or one? 

Banks: The answer for the record is that we added up what we thought 
the projects would cost and subtracted what we thought we 
would get from the oil revenues and the answer was one and 
3/4 billion. 

Brown: In the mid 1950 s only a very few experts believed that the 
price of desalinated water would become competitive with 
State Water Project water in, say Southern California, during 



Brown: the next three decades. Nov many more scientists and tech 
nicians believe water can be desalinated in the 1980 s for 
around 20 cents a thousand gallons or less. What was the 
Department s thinking on this matter around the time Bulletin 
7 8 was prepared? And in view of recent plant performance and 
research developments, should and could the Department make 
any changes in its present plans? 

Banks: Well, if you will recall, Bulletin 78 proposes the aqueduct 
be designed to meet the projected 2020 demands. 

Brown: And it also estimates that the cost of desalination and uses 
will be around $150.00 an acre-foot and uses that figure for 
putting a value on benefits in that period. 

Banks: Yes. At that point of time, that was a good value. But now, 
as an administrative matter, after Bulletin ?8 was issued and 
accepted by the legislature, or at least acknowledged by the 
legislature, I cut the design period for the aqueduct back 
to the projected needs for 1990 rather than the year 2020. 
And one of the principal reasons for doing that was to be 
able to take advantage of sea water conversion or desalination, 
if it became economically competitive. In other words, it 
seemed to me that it would be Justified to build a system to 
supply 1990 needs without too much over- investment in case 
water could, at sometime in the 1980 s, be developed at 
competitive prices by desalination. In other words, we would 
not have committed ourselves as to source of water supply so 
far in the future that we could not take advantage of what 



Banks: might develop in the way of a cheaper desalination cost. I 

think that this may well prove out to be the case. We could 
not have waited, of course, for desalination. Southern 
California could begin to use today if it were available, the 
additional water to be made available by the State Water 
Project. It is interesting to note that Bechtel r s recent 
report for Metropolitan projects a possible cost that may 
be reached for its desalinized water, obtained from a 
multipurpose plant, at about 22 cents per thousand gallons, 
and a plant producing 150 million gallons a day. This would 
be about close to $70 an acre-foot which is still somewhat 
more than the average equivalent cost of State water. That 
is for the overall. It ll be somewhat less than the cost 
of the first few million acre-feet delivered, but considering 
over the design period. 

Brown: But they do have some design studies that show lower than 22, 
one that even does 19 cents. 

Banks: Larger sizes, yes. My own personal view is that in view of 
the advances in technology and the possibility of combining 
desalination with power generation, as far as Southern 
California is concerned this may well be the next source to 
which they should look for water 

Brown: But if the price becomes competitive, the price of the 

desalinated water becomes competitive in the 80 s, suppose 
that were true, should the Department, if it had no constraints, 
should the Department make any changes in its planning? 



39 



Banks: Oh, I think so, yes. If it does it certainly might not be 
necessary. I emphasize "might" because we re getting into 
variable costs, here, instead of total costs. The figures 
we ve been tossing around here have been total costs. It 
might not be necessary to install additional pumps on the 
aqueduct. It probably would delay the construction or even 
possibly make unnecessary construction of additional 
conservation facilities. So it would, assuming desalination 
costs to come down to competitive values in the BO s, it 
would certainly necessitate a major change in the Department 
planning, and I might say, this would be true in all agencies 
planning for water development. 

Brown: Is there a way in which, if the Department had its way, it 

could better organize itself to handle elements of uncertainty 
such as this, technological uncertainty? I suppose another 
uncertainty would be demand uncertainty? 

Banks: Well, the only way that this can be handled is maintaining 

an attitude of flexibility. Water is not, and this ie where 
I disagree with economists, water cannot be considered 
wholly in the same light as we consider an industrial commodity. 
In part, because of its essential nature to certain human 
activities, and secondly, even with sea water conversion 
plants, it takes time to build the plants and get them in 
operation. And in our present attitudes towards water supply, 
the water has to be there when the people want it. It 
doesn t matter that we can buy a new car or don t need to buy 



Banks: a new car; as long as you have wheels, you can get along. 

But our present attitudes demand that the water be there when 
the tap is opened. 

Brown: You feel this is a public attitude. 

Banks: This is a public attitude. 

Brown: To wit, the New York Crisis. 

Banks: Well, in fact, yes. The people in New York have long since 
made the decision that they would rather spend more money 
and have lots of water available at a flat rate, and this has 
cost them money; it has cost them money not only from the 
standpoint of building structures and distribution systems 
and all the rest, but it has cost them more money for sewage 
treatment. But they have made the decision that they would 
much prefer to do it that way than to ration themselves by 
the installation of meters. Now we can argue about the logic 
of that attitude, but nevertheless, this has been their decision 
to-date. 

Brown: Of course, someone else who is much more optimistic of 

desalination capacities or desalination technology might have 
not only cut back the planned aqueduct capacity from the year 
2020 to 1990, but also had built one aqueduct of a smaller 
size anticipating building a second, if it turned out that 
the desalination cost didn t come down. I realize that at 
the time when engineering studies were being made, in the late 
: 50 s, even in the early 60 s, there was very little 
evidence that the desalination cost would come down as much 



Brown: as researchers now believe it will. 

Banks: Well, remember that actually the aqueduct capacity in view of 
the probable impact of the Supreme Court decision on the 
Colorado, the present acqueduct capacity could not, may not 
be adequate even to 1990. The whole project was designed... 

Brown: It might be right for the wrong reasons. 

Banks; This is possible. On the other hand, the degree to which 

one is justified in taking a risk in this business is a matter 
of complete subjective judgment as of the moment. There is no 
rational basis of determining the degree of risk that is 
Justified. 

Brown: Might there be any other, or any organizational rearrangements 
which could insulate the Department from forces outside it, 
which would better enable it to adjust to risk? In the 
back o*" my mind, I guess I m thinking of, at the present time 
it seems to me that it s necessary for the Department of Water 
Resources to go through with its promise, but under another 
situation where it didn t have to feel the pressures, if it 
were insulated from pressures from the outside; but then, of 
course, there are costs of insulation too. 

Banks: Well, here you enter the whole field of the philosophy of 

government. Personally, I don t think that any agency should 
be insulated. I think this is a matter of personal philosophy, 
of course, but I think the political forces, varied as they 
are, tend to force compromises which are probably better in 
the public interest than some arbitrary administrative decision 



Banks: which is made more or less in a vacuum and without consideration 
by political forces. 

Brown: And these political forces that would also impinge on water 
resources agencies at the federal level, is it your judgment 
also that the solutions that are brought about, as a result of 
these forces, are also pretty good too? 

Banks: By-and-large, yes, I think they re pretty good. We made some 
mis investments; we build projects before they re actually 
needed; this has been true in some instances. But if one 
considers it from a standpoint of the philosophy of a demo 
cratic government, it may be better to do it this way and incur 
some economic costs than to turn the decision -making power 
completely over to administrative discretion. 

Brown: If you had a free-hand at a redesign of the Water Resources 
Agency of California, what kinds of chages would you make, 
and for what kinds of reasons. 

Banks: Well, you re asking a question there which I hesitate to 
answer because whatever I say could and might well be 
construed as criticism of the present setup. I do believe, 
frankly, that there is a place in this for a policy making 
board or commission. In other words, I believe that the 
California Water Commission, which is a representative board 
of water interest through the State, should have some greater 
role than that merely of an advisory agency. 

Brown: What sorts of results might the implementation of this 

proposal provide in the future that could possibly not be 



Brown: provided if the institution continues? 

Banks: It s a matter of making the whole action a little bit more 
responsive to overall needs on a State- wide basis, and in 
this I have no intention of directly, indirectly, or impliedly 
or other of criticizing any actions that have been or are 
being taken. But I do believe that there is a place for 
policies to be developed on a board or commission basis 
rather than strictly as a line function in the executive 
branch. 

Brown: It s my understanding that there are some plans for 

decentralization in the Agency today. Would it not be 
possible for these decentralized units to serve as a vehicle 
for reaching a regional consensus and then these consensus... 

Banks: Well, remember the branch managers or district engineers, 

whatever you want to call them are in fact, line positions. 
They are, in effect, administrative positions and the branch 
managers, apart from advising the Directors, are not a policy 
making activity. Now, they will bring, of course, to the 
Director, presumably, the views and attitudes and needs of 
the particular areas which a specific branch represents. 

Brown: But you feel that the commission that you mention might be 
able to do this just as well. 

Banks: Perhaps, I think, a little better. You re getting into 
sensitive areas now. 

Brown: I know. Let s switch to what I think of as a problem today-- 
I ve observed a continued reluctance o^ Pacific Gas and 



Brown: Electric or other energy retailing agencies within the State 
to enter into contract for over 600 thousand kilowatts of 
Oroville power and other power from facilities. This appears 
to be a classic case of monopolies bargaining. At the present 
time, the Department, representing the State, does not appear 
to be doing as well as it hoped. 

Banks: Well, remember that the reluctance is over price, and the 

hydroelectric power and energy simply is not worth as much 
today as five years ago. 

Brown: For what reasons? 

Banks: Two reasons: The increased size and the increased efficiency 
of thermal-generating units, and the decreased cost of thermal- 
generating units. In other words, you can produce energy 
cheaper, far cheaper today, by thermal-generation than you 
could five years ago. And as I say, this is due partly to 
increased efficiency which go together, and has caused a 
general decrease in cost of thermal-generating units. 

Brown: And has the unit-cost decrease been a trend through time? 
Has it continued to decrease? 

Banks : There s been a rather marked and sharp decrease in the last 

four years. We used to consider that somewhere in the order 
of 120-130 dollars per kilowatt of installed capacity was not 
a bad price for even large size thermal-generating units. 
Today, that s down in the order of 80-85 dollars and this 
decrease has occurred in the last four years. 

Brown: Will this threaten the ability of the plan to repay all its 



Brown: costs, in your estimation? 

Banks: It means that there isn t going to be as much surplus of power 

revenue from Oroville, if any, to go toward payment for 

conservation features conservation allocation. I m sure that 

the . . . 

Brown: And local projects? 
Banks: And local projects, too 
Brown: Will this be viewed as a piece of bad faith on the part 

of the Department by the Northern counties who believed 

that they were going to get some of this local project... 
Banks: I doubt it. 
Brown: Is there any way that the Department could have enhanced its 

bargaining position? Any way that comes to your mind? 
Banks: Well, even as late as 19^1, I think that Oroville power 

and energy could have been contracted for at substantially 

greater prices than is the case now. 
Brown: What kind of reasons might there have been for their not 

being contracted? 
Banks: I think the basic, I m guessing now frankly, and let s 

make it very clear that I m guessing because I have had no 

contact with this aspect of the Department, but I ll guess 

that there was a sincere desire to explore the possibilities 

of other markets. 

Brown; You mean outside the S-tate or.... 
Banks: No, other than the private utilities. 
Brown: We have time for just a few more questions. In the interview 



Brown; there has been mention at a couple of points of the federal 
policy of acreage limitations. This policy was rejected by 
the Department of Water Resources and by the majority of the 
legislature as a feasible policy for the California State 
Project. To whom would you trace the notion of the surcharge 
which was thought to be useful and an important substitute 
Tor the acreage limitations policy? 

Banks: Well, I think that it should be made clear that the acreage 
limitations policy or reclamation law is accompanied fcj> a 
very great subsidy to agriculture. 

Brown: Over $10.00 an acre- foot, it s been estimated. 

Banks: Well, it s something in that order, and in some cases it 

amounts to something much more than that. Actually in the 
Central Valley under the^ederal reclamation laws the true 
cost o p agricultural water delivered in the Valley is possibly 
in the order of three to four times what the farmer actually 
pays for. So that acreage limitation under reclamation law is 
accompanied by a very large subsidy . The State obviously 
cannot afford that type of subsidy--it doesn t have any sort 
of revenue to pay the subsidy. TJow, as far as the surcharge 
is concerned, remember that there was a widespread demand that 
there be no opportunity for unjust enrichment. The basic 
cost of water, of course, to the water users under the pricing 
policy adopted by the State takes advantage of any excess 
revenue from power generation to decrease the cost of water. 
In other words, if there is $2.00 an acre-foot excess revenues, 



Banks: why that goes into paying part of the conservation cnarge 
or to decrease the Delta water charge. Now this can be 
construed as a subsidy by the poweruser to the water user. 
And in order to assure that there would be no subsidy in 
any way, shape or manner to the large land owner, whether 
he uses it for agricultural purposes or whatever, it was 
decided that he should not get the benefit of this power 
credit for the water used on the excess lands. 

Brown: Where did this idea originate? Was it in the legislature or 
in the Department? 

Banks: No, the idea originated with the Governor and myself and 
Ralph Brody. 

Brown: Very good. What were some of the mcst difficult problems 

with which you were confronted as Director of the Department? 

Banks: Well, in the early stages of the game, of course, one of the 
most difficult problems was to convince the legislature that 
there was a necessity for the State to get into the water 
development business if you want to put it that way. There 
never was any question, of course, as to the propriety and 
necessity of the State doing planning work, but there was 
some question on the part of a good many legislators as to 
whether it was really necessary and proper for the State to 
actually build and operate water projects. That was the 
initial hurdle that had to be gotten over. The second most 
difficult aspect of the whole thing, of course, was the 
development of a basic body of policy going beyond the very 



Banks: broad and very generalized policies in the law. 

Brown : The law was . . . 

Banks: If you have examined our basic laws relating to water 

development by the State, the basic policies in this regard 
are not at all specific. 

Brown: The Department has virtually infinite degrees of freedom in 
setting policy. 

Banks: That s right, so that the basic concepts and the basic policies 
had to be developed at the executive level, and very largely 
through the mechanism of contract negotiation, which, I may 
add, is a rather difficult way to formulate policy. 

Brown: Did the Department make any mistakes? 

Banks: Oh, sure, we made lots of mistakes. 

Brown: Were they of a reversible nature or...? 

Banks: Unfortunately, what I considered to be some of our most 

serious mistakes were not reversible. I m not at all sure 
that the present pricing policy is the best policy that 
could be evolved. But it is formalized and contracts made 
and as such is irreversible for quite a few years. 

Brown: And maybe this is tied in with your re*ommendatlon or your 
view that it would be useful to have a policy-making board. 

Banks: Unfortunately some of the work that has been done in recent 
years by the University of California as to the economics of 
water development was not available to us at the time that 
we had to make decisions. 

Brown: And It would have been helpful had it been more timely? 



Banks: It would have been extremely helpful had we had some of the 
more recent studies of the economics of water development, 
the inputs and outputs, the McGaughey-Erlich study, the data 
on economic farm sizes, that sort of thing. This would have 
been extremely Helpful. 

Brown: Thank you, Mr. Banks for allowing me to interview you today. 

Banks: Wen, its been my pleasure and I hope I haven t confused the 
issues too much. 




L 



Harvey 0. Banks, November 1958 



iW WITii HHRV^Y BANKS 
AUGUST 2k, 1965 



Brown: Tn our last interview, Mr. Banks, you mentioned that there 
was an important reorganization of the State water agencies 
in 195^- Would you elaborate on what this meant for the 
State? What kinds of changes were made? What changes in 
decision-making powers did this imply? 

Banks: Well, prior to 195^, of course, the agencies at the State 
level of the Water Resources Board were the Division of 
Water Resources which was a separate division of the State 
Department of Public Works. The Division of Water Resources 
was headed by the State Engineer whose duties were defined 
by law, but who was a civil service appointee. The other 
agencies were the State Water Resources Board which had 
certain policy-making functions and certain functions with 
respect to the allocation of funds, like allocation of funds 
to the local agencies. There was, of course, the State 
Water Pollution Control Board of which the State Engineer 
was a member. Then there were the nine regional Water 
Pollution Control Boards. The State Division of Water Resources 
under the State Engineer handled all water planning for the 
State under the overall direction of State Water Resources 
Board. The State Engineer administered water rights, provided 
water-master service, handling adjudications of water rights, 
and the like. 

There was a considerable area of uncertainty as to the 



Banks: specific delineation of the duties and responsibilities 
o p the State Water Resources Board as contrasted to the 
State Engineer and the Division of Water Resources. There 
was another agency which I should have mentioned- -the 
State Water Project Authority which had been set up in 
1933j T believe, under the Central Valley Project to provide 
principally for the handling of the financial details of 
construction of the Central Valley Project as it was then 
planned, that is in 1933- The Water Resources Board was 
composed entirely of ex-officio members, the State Attorney 
General, the Director of Finance, and three of four others. 
This information can be found in the old Central Valley 
Project Act. I have forgotten the exact details o^ the 
thing, but suffice it to say that the Water Project Authority 
was composed entirely of ex-officio members, that is other 
State officials. 

Here again there was some considerable uncertainty as 
to where the authority of the Water Project Authority ended 
and the authority of the State Water Resources Board began 
and ended, and where the authority of the State Engineer or 
the Division of Water Resources started and stopped. It was 
in recognition of that, and the fact that the job of water 
development was becoming so important that it needed a com 
pletely separate and straight -line agency to Governor Knight 
that certain members of the legislature decided to reorganize 
the whole set-up. 



52 



Brown: Who were these members of the legislature? Do you recall? 

Ranks: principal]/ Senator Williams was in favor of it. Caspar 
Weinberger was another. He Is now local head of the 
Republican Party here in San Francisco. There was genera] 
concurrence in the legislature that there should be a re 
organization, there should be a straight-line set-up reporting 
directly to the governor rather than through another department 
as was the case with the Division of Water Resources, which 
was under the Department of Public Works. There was practically 
no dissension concerning the need for reorganization. However, 
there was considerable dissension as to whether or not there 
should be any commission formed. Governor Knight was quite 
adamant in his belief that he wanted a completely straight - 
line department with no boards or commissions. On the other 
hand, certain of the water organizations, such as the 
Irrigation Districts Association and others, ^elt that there 
should be a policy-making board or commission appointed to work 
with the new department. 

Brown: Do you know why Knight wanted it to be completely straight -line? 

Banks: The Governor was a strong believer in the straight-line type 
of government; he was not a believer in the board or com 
mission form of government. 

The compromise, of course, was that the Water Resources 
Board became the California Water Commission and given 
advisory powers only, except in some very minor respects. 

Brown: Who drew up the reorganization? 



Banks: Primarily, Weinberger was the leader in the Reorganization 
Bill. 

"Brown: Were there alternatives which were seriously considered? 
Alternatives to those which were \iltimately enacted? 

Banks: Not too many. The only alternatives, as I said, were the 
incorporation of a policy-making commission. 

Brown: Would you elaborate on what the important differences would 
be had a policy-making board been adopted? What differences 
were entailed in this choice? 

Banks: As the reorganization actually was enacted, the Director of 
Water Resources had, at that time, the full authority to 
make all the decisions on his own initiative subject only to 
the governor s approval. Of course, his decisions had to be 
within the framework of the enabling legislation. Once the 
legislation was passed, the decisions as far as implementation 
of it were concerned, the decision-making power rested solely 
with the Director of the Department of Water Resources. Had 
there been a commission with policy-making powers, these 
matters would have been referred to the comirlsiion for 
decision, with a recommendation, but the decision in many 
cases would have been made by the commission. The commission 
would have taken the responsibility for it. 

Brown: Under the new arrangement would the California Water Commission 
have had to be constituted in any different way? 

Banks: Not necessarily. As I recall it , it never got as far in the 
legislature as going into details as to how the policy-making 



Banks; commission should be composed, that is geographic representa 
tion or professional representation, etc. 

Brown: Would you discuss the evolution of the Davis-Grunsky Act? 
Who wanted it? Why? 

Banks: Well, the Davis-Grunsky Act, I suppose I would have to take 
as much responsibility for that as anyone. It grew out of 
my conviction that if we were to have comprehensive water 
development, multi-purpose water development, then some 
way had to be found whereby the State could stimulate the 
local agencies to broaden the purposes and perhaps the 
scope and size of the projects. The only way this can be 
done really is by putting some money into it. We must 
remember that say a city enclosing a reservoir has little 
or no interest in providing recreation around that reservoir 
in general. In general, the city regards its reservoir as 
a single purpose project. The same is true of many irrigation 
systems. Furthermore, it seemed to me that in the northern 
part of the State some of the smaller districts could, if 
given some financial assistance, proceed on their own; but 
they simply did not have the financial capability to go 
it alone so to speak and needed financial assistance. So 
the big purpose of the Davis-Grunsky Act was to encourage 
the expansion of local participation in the job of water 
development and at the same time enable their projects to 
be enlarged in some cases, or in other cases to broaden 
their "unctions in the state-wide interest. It evolved from 



Banks: that initial beginning. 

Brown: How did this proposal go through the legislature? Were there 
any difficulties? Was there any opposition? Who were the 
principal advocates in the Senate and in the Assembly? Did 
it have an easy road? 

Banks: In its Initial phases, as T recall it, it had no particular 
difficulty. Of course, initially the legislature would have 
had to appropriate the money in any event so that the 
legislature still retained some considerable control over 
it. Also at the time, Southern California regarded the Davis- 
Grunsky Act to some extent as a good will gesture toward 
the Northern counties. So initially there was not a great 
deal of opposition to it. There was really no great amount 
of money involved to start with. 

Brown: When you or other members of the Department felt that 
it was important to have a piece of legislation introduced, 
discussed and eventually passed, what was the route that this 
proposal took? What happened between the conception of the 
idea and its ultimate passage in the legislature? I am 
really thinking of informal lines. 

Banks; Assuming that the proposal had the approval of the governor, 
the first step would be to just chat with members of the 
legislature interested to see what their reaction would be. 

Brown: But the idea would first go up to the governor? 

Banks: Oh, yes. 

Brown: Then changes would be made on the basis of these informal 



Rrovn: conversations. Turning to another important policy decision, 
the Burns-Porter Act passed in 1959? can you discuss its 
evolution and the kinds of forces that were brought to bear 
on its passage? 

Banks: The Burns-Porter Act evolved during the entire 1959 session 
of the legislature. When Governor Brown went into office on 
the first of January 1959* he went in with the concept that 
to solve the stalemate which had developed over water 
development In the State we should forget about the problems 
which had caused the stalemate and concentrate solely on 
financing. So in the 1959 session the only real issue before 
the legislature was should money be provided for water 
development or shouldn t it. 

Brown: Could you .just tell briefly what the causes of this stale 
mate were? 

Banks: Primarily they had evolved from very simple issues. Tor 
example, whether or not the County of Origin Act would be 
fully applicable to the water projects constructed by the 
State. Southern California had been seeking for about two 
years what it termed a constitutional amendment to protect 
its rights in and to the waters that might be developed by 
the State to supply them. They had not succeeded in even 
drafting an acceptable constitutional amendment. They had 
not even succeeded in drafting one that would be acceptable 
to all the people in Southern California. 

Brown: Did they take this position because they believed that the 



Brown: right to a particular source of water might mean that there 
would be a consequent lower cost? 

Banks; Basically this is right. The real reason for Southern 
California and more particularly the Metropolitan Water 
District s desire to acquire a firm right in a particular 
water sources was their realization that as time goes on 
water source are going to get increasingly expensive to 
develop. Therefore, they wanted a firm right in their 
particular source so that they would not have to bear the 
cost of any additional development. By the first of 1959 
a complete stalemate had developed on that score. Governor 
Brown said, "Let s develop water instead of argument." So 
his whole platform was the providing of funds to build water 
projects. 

Brown; Was it believed that once there was a certain very substantial 
sum of money made available, then these other issues would 
decrease in importance? 

Banks : That was the Governor s fundamental concept that once water 
was actually made available, all of these other issues wonld 
become a small concern. 

Brown 1 : What was the behavior of the members of the legislature from 
the South during the time of this discussion over the 
formulation of the Burns-Porter Act? 

Banks: The Southern California people still hoped to get into the 
Burns -Porter Act amendments which would accomplish substan 
tially what they would hope for all along, which is, in effect, 



Banks: negating the County of Origin Act in order to give them more 
protection. 

Brown: Who was it that fought to prevent these amendments? 

Banks: Quite often the Northern California Senators, with some 
help from other people . I was frankly never who] ly 
sympathetic to Southern California s demands that they 
be accorded a firm right to a specific amount of water 
from each specific source so that further future demands 
by others would have to rely on the more expensive sources. 
I think I can say that I never gave them too much heed and 
comfort in their desires. Frankly recognizing the complexion 
of the Senate, that was before re apportionment, it was obvious 
that the South did not have the power in the Senate to pass 
any legislation which would be adverse to Northern Califor 
nia. 

Brown: Were there any joint discussions about this issue between 
the Assembly and the Senate during 1959? 

Banks: There was quite a bit of joint action. I have forgotten the 
exact date but I would guess that it was in February or 
March of 1959> there was an evening conference held for 
the members of the legislature where the Department put on 
a series of discussions of the water problems of the state. 
They provided them with -factual information on where the 
water is, where the needs were, how they proposed to solve 
them, and that sort of thing. 

Brown; DM the Governor at any time bring pressure to bear on the 



59 



Brown: Southern legislators to con-form with the Department s view 
and perhaps with his view? 

Banks: Yes, he held many discussions with the Southern California 
legislators. After all, remember that Assemblyman Porter 
wan -from Southern California. 

Brown: How did he feel about the potential of introducing amend 
ments, which as you said would mitigate the original act? 

Banks : Assemblyman Portor had never been anything hut sympathetic 
to the needs of Northern California. I think It can be 
fairly and accurately stated that Carley has held consist 
ently to a State-wide viewpoint as contrasted to a narrow 
need of his own district. He has always adopted a very 
broad-gauge approach to the water problem. 

Brown: What enabled him to do this? Was his constituency passive 
as to his role, or what? 

Banks: In his particular area water was not a great issue. I 

believe he was from Compton. In that area it has never been 
a major issue. There was also the fact that he was always 
very popular with respect to other issues anyway. 

Brown: Could you highlight any particular skirmish that took place 

in the legislature at this period in which you could describe 
particularly the Department s role, the Governor s role, and 
the role of a few of the Senators? 

Banks: I suppose one of the best instances was the day the Burns- 
Porter Act passed the Senate. We had held, in the earlier 
pert of the day, particularly in the morning, a conference with 



Banks: Senators who had amendments to of -Per. Some of them had 

agreed to accept certain amendments when they were offered 
on the Floor of the Senate. During the debate on the bill, 
Ralph Brody and myself (Brody was at that time the Deputy 
Director of the Department of Water Resources), sat with 
Senator Burns at his desk. As amendments were offered, we 
advised the Senator whether they could be accepted or 
weren t accepted in the House. Amendments came from both 
the North and the South. Some of the Northern Senators 
offered amendments by which they desired to protect their 
interests which would have hamstrung the whole project. It 
would have made things so tight that nothing could have 
happened. 

Brown: Could you give an illustration of one such amendment? Also 
the consequences that you foresaw if that amendment had been 
introduced and passed? 

Banks: I think the outstanding example of an amendment which has 

consistently cropped up is one that Senator Christensen has 
offered every year since 1959 which would have in effect 
prohibited almost any export of water out of Northern 
California. He has been consistent; it has been offered 
every year. 

Brown: Even now? 

Banks : Yes . 

Brown: What was the alignment, if any, of the interest groups with 
regard to the passage of the Burns-Porter Act? The 
Irrigation Districts Association, the Chamber of Commerce? 



6l 



Banks: Most of the organizations were in favor of it. The AFL-CIO 

was not. They never had been. 
Brown: Had they worked hard for its defeat or was it .just that they 

went on record as being against it? 

Ranks: No, their representatives had actvr.lly opposed it. 
brown: Why? Do you recall? 
Banks: primarily because there were no acreage limitations for 

regions. This was the announced reason. What other reasons 

they had I don t know. 

Brown: Wh; were they against acreage limitations? 
Banks: TY=y were not against it. They were consistently in ^avor 

o-f it. 
Brown: Rut their membership was in the urban area, not in the rural 

area really. 
Banks: One can only speculate as to what really motivates the ATTL- 

CIO. Their pitch, o f course, had always been for preventing 

unjust enrichment, the necessity of breaking up the large 

l*nd holdings and that sort of thing. 
Brown: But were they concerned with the enrichment if there was 

any accruing to large manufacturers that hired..? 
Banks: No one has ever to the best o^ my knowledge worried about 

the unjust enrichment of land subdividers. 
Brown: Were there any other major interest groups that come to mind 

as opposed to the Burns-Porter Act? 
Banks: The State Grange consistently opposed it very largely for 

much the same reasons as the ATj-CIO, plus the additional 



62 



Banks; reason, which also applies to the AFL-CIO, of the necessity 
of having land for farm families. 

Brown: How did urban representatives regard the AT-CIO s claims? 

Banks: I don t think that the A FL-CIO itself had very much influence, 
Many member local unions of the AFL-CIO state organization 
were in favor of the Burns-Porter Act. Many local machinists 
unions and that sort of thing. On the other hand, I found 
that thin worry about unjust enrichment of the large agri 
cultural land-holder and the desireability of breaking up 
the large land holdings was a great concern of many urban 
residents. This was a matter of great concern to the League 
o f Women Voters, for instance, p or a long timewhy acreage 
limitations would not be desirable. 

Brown: Did they ever change their position at all, moderate it with 
time? 

Banks: The League of Women s position on that was moderated; the 
League did support the project, supported the Burns-Porter 
Act and Proposition 1. Actually, as far as I know, the 
League has never actively taken a position on acreage 
limitation; however, my contact with members of the League 
indicated that this was a question o^ great concern. When 
I pointed out what acreage limitation would mean to the 
State project, that it would necessitate extensive subsidies 
to farmers, then they began to see that from the State s 
standpoint at least that this was an impossibility. I think 
it should be borne in mind always that when you are speaking 



Banks : of acreage limitation you are speaking of the acreage limita 
tions provisions of the Reclamation Law. Now in the Reclamation 
Law there is a tremendous subsidy to the farmer. 

Brown: There was another important policy decision which I am sure 
California played a role in, but it took place outside of 
California. That was the San Luis Act. I wonder if you would 
talk about the underlying forces here? 

Banks: Well, the principal problems with respect to the San Luis 
Act was convincing both the Department of the Interior and 
the Congress that California was, in fact, sincere in its 
desire for a joint project. If enabling legislation was 
passed then, in fact, it would be able to fulfill its part. 
You must remember that there had never been anything pro 
posed before similar to the joint undertaking which is now 
being implemented in the San Luis construction... 

Brown: Do you mean that the State of California had never before... 

Banks: Never before in the nation had there been a situation where 
the state had come forward and said, "Let s participate. We 
are ready to pay a share of this provided we own a portion of 
it when it is completed." This was a unique concept which had 
never come before Congress before. 

Brown: So it came at the behest of California Senators and Repre 
sentatives? 

Banks: No, again this concept was very largely my responsibility. 
You see, the history of the San Luis Project is this: the 
Bureau of Reclamation had been requested by the land-owners 



Banks: in western Fresno County, those that now form the Westlands 
Water District, to prepare or to formulate a project for 
their benefit. This is about 1952 or 1953, I believe. Late 
in 1955 the Bureau came up with its report on the feasibility 
o p the San Luis unit as a unit of the federal Central Valley 
Project. They proposed a million acre-feet o^ storage, I 
believe, there. It would be supplied by pumping from the 
Delta into the canal. In turn water would be released down 
into the San Luis Canal to about Kettleman City to serve 
the western l- resno County area. 

Brown: What was the distribution of land ownership in that region? 
Was it highly small ownership units, large ownership units? 

Banks: The major landowner in that area was the Southern Pacific 
Company. It was a very large land owner. 

Now that report of the Bureau s was submitted to the 
State for review, in accordance with the provisions of the 
Flood Control Act of 19UU. About that time, too, the State 
had reformulated or shortly before that, the State had 
reformulated what was originally the Feather River and Delta 
Diversion Project, and had itself proposed off -stream storage 
at the San Luis site. In my review of the federal report 
on the San Luis site, I made the first proposal for a joint 
undertaking at that site, sharing the available source 
capacity. It took from then until 1960 to arrive at 
agreements with the federal Interior Department. Finally, 
as I say, we convinced Congress that we were serious about 



Banks: this matter. Actually, the legislation was very largely 
drafted by Pat Conner and myself in Washington with the 
o^icials of the Bureau of Reclamation. So I suppose you 
could say that we bear whatever blame or praise can be attached. 

Brown: What was the view of the California legislature through this 
proposal period with regard to the San Luis Act? 

Banks; As I recall it, the legislature was wholly in ^avor. " There 
was no dissension in the legislature over the desirability. 

Brown: When you worked on this arrangement, did you have any fear 
that men like Douglas or Senator Morse would introduce 
crippling amendments? 

Banks: We knew that they would try but we felt pretty confident 
that it could be overpowered. 

Brown: What was achieved by this joint arrangement? What were thebene 
fits to be gained, benefits incident upon the State? 

Banks: Primarily benefits of scale. 

Brown: Do you have in mind any kind of number that would express 
this? 

Banks: I don t recall the numbers but they are available in various 
statements given in the 1959 and 1960 support of the San 
Luis legislation as to the relative benefits accruing to 
both the State and the United States through joint financing 
o-f 1 a large project. I don t recall, but the benefits were 
substantial to both parties. This is not a case where the 
United States pays the base cost and the State only pays the 
increment. They pay a portion of the cost. As a matter of 



66 



Banks: ^&ct, the actual proportion is 55$ state and kj jo federal. 

The figure of $60,000,000 savings to the United States comes 
to mind, but I do not guarantee that it is the correct 
value. There were a good many millions in savings on both 
parts. Plus the fact that there is no other site, that is, 
as good a site. There is another site the State could have 
developed to the south, but it would certainly have involved 
more pumping. 

Brown: Why did it take so long to get the San Luis Act formalized? 

Banks: The principal reason was that we had to convince Interior that 
we really meant business, reach an agreement, and various 
sundry provisions. 

Brown; They felt that you might renege at a later point? Does this 
have anything to do with the State authorization of what is 
now the Central Valley Project in the 1930 s? 

Banks: No, I don t think that entered into it. It is just that it 
was a new concept. It was something that Interior foresaw 
as being difficult to sell Congress. It might delay their 
project. Remember, they had not had a irajor project authorized 
in California for quite a while. 

Brown: When did they plan to build their facilities in the absence 
of State participation? 

Banks: I suppose if it had not been for the State participation, the 
Bureau might have gotten the San Luis unit authorized one 
year sooner, something in that order. 

Brown: Authorized sooner than 19^0, but when had they expected that 



Brown: there would be appropriations? That is, when, in their minds, 
would the project have been completed as compared to when it 
will now be completed? 

Banks: I would guess maybe two years, not much difference. We also 
had some opposition to the concept of a joint development 
from people in the Westlands Water District area, particularly 
Jack O Neal who is a leader of the Westlands Water District. 
He is a man who in fact really sold the Federal San Luis 
Project to people in his area. Jack was likewise convinced 
that this was just a stalling tactic on the part of the 
State, that the State had no real intention of ever going 
ahead with it; the State was merely trying to stall the 
San Luis Project. 

Brown: Were there good reasons why he thought the State would want 
to stall? What kinds of reasons did he have? 

Banks: In the early days, say in the early 1950 s, there was some 
considerable antagonism between the State and the Bureau of 
Reclamation. They weren t always friendly. 

Brown: In response to one of my questions in the last interview 

about difficult problems you encountered, you said that it 
was necessary to develop policies at the executive level and 
through contract negotiations, and that this was difficult. 
I wonder if you would talk a bit about what other ways would 
have been better. If there are other ways, why weren t they 
adopted? 

Banks: Well, remember that I said when Brown came in as the governor, 



68 



Banks: his concept of the solution o p the water problem vas to appro 
priate money for the projects; the policy questions, pricing 
policy and all that sort of thing, should be put aside in 
favor o f the single objective of getting a -funding bill 
through the legislature. In fact this vas what was done in 
the 1959 sessions. There were practically no policy bills at 
all. The whole focus o" attention was in getting the Burns- 
Porter Act passed, which is not in any way a policy bill ex 
cept in the negative sense because it says that there are 
certain things which can not be done. Other policies already 
in the law apply to this. But such matters as pricing policy, 
sale of hydroelectric power and all that sort of thing, no 
consideration was given to those and the governor did not 
want such bills in the legislature. Matters of agricultural 
subsidy, differential pricing between agricultural water and 
municipal-industrial water, and that sort of thing, there was 
and still is no law on that subject. With no policy bills 
having been enacted in the 1959 session, the 19^0 session 
was a budget session so there were no bills enacted then 
either, so that meant that in the process of negotiation in 
getting that contract, all of these questions had to be 
resolved by administrative decision within the very broad 
framework that was already a part of the law. It was 
extremely broad. 

Brown: As the Director of the Department for Water Resources, were 
you aware of any necessary conditions, certain policies or 



69 



Brown: changes which the governor or the legislature specified 

implicitly to the Department? That is, while you were given 
a great deal of freedom in reaching certain pricing policies, 
coming to agreements on the contract negotiations, were you 
guided by any limitations that you felt? 

Banks: We were guided by certain financial constraints stemming 

from the State s financial condition and from the fact that 
in support of the Burns-Porter Act before the Congress there 
were certain commitments made so that this program would not 
be allowed to become a charge or a burden on the general tax 
payer. 

Brown: For example, one of the solutions was to contract with large 

units who would then subcontract. The Department did not have 
to make this decision, but did. It had an alternative. It 
could have contracted with every small irrigation district. 
For example . . . 

Banks: It could have, but this had both a practical and a political 
significance. The practical significance is that, say in 
Southern California, if we attempted to contract with a 
multiplicity of the smaller units and cities , it would have 
meant that our distribution system would have to be much 
more extensive. We would not have been able to take advantage 
of the existing distribution system which the Metropolitan 
Water District owned. From a political standpoint, remember 
that the Metropolitan Water District, very largely in broad 
water matters, speaks for Southern California. There would 



70 



Banks: have been political hazards involved shall we say. But 
fundamentally, the decision to contract with the large 
agencies such as Met. where it is available, was made mostly 
on practical considerations, plus just the concept that for 
good public administration, as long as there is a large 
over-riding agency, why go down below that? 

Brown: But in Kern County there was none until 19^1 or later. 

Banks: Well, the Kern County Water Agency was created not for the 

purpose that you imply, but to have an agency with sufficient 
powers and sufficient breadth to bring the full financial 
resources of Kern County to bear. That is, the Kern County 
Water Agency has taxing powers, pnd has an areal extent far 
greater than any of these member agencies of the Kern County 
Water Agency with which contracts might have been initiated. 

Brown: Were there irrigation districts within Kern County that 

did not want to have a master agency contracting for them? 
Was this a difficulty? 

Banks : No, with the possible exception of, I do believe, that some 

of the municipal water districts around the Bakersfield area 
have on occasion voiced the thought that they might better 
contract with the State. However, by and large, the agri 
cultural agencies such as Semitropic Water Storage District, 
Wheeler Ridge-Maricopa Districts I and II and the others 
know and realize full well that they have to have the financial 
support of the rest of the area before they can make it. 

arown: I am interested in the role of the legislature in determining 



71 



Brown: water policy. You said that the pricing policy, for example, 
had to be largely determined by administrative action. Apart 
from the passage of the very important Burns-Porter Act 
specifying the financing arrangement, could the legislature 
be criticized for its failure to act in this very important 
area o p decision? 

Banks: Oh, I think one could level a mild charge of criticism against 
the legislature for not being concerned with these problems. 
The principal area of concern of the legislature seemed to 
me not to be so much with regard to pricing as it was with 
respect to economic evaluation. If you will read some of 
the reports of the legislative analyst, for instance, he was 
more concerned with how you justify projects whether you 
use the benefit-cost ratio or a revenue-cost ratio, so he 
was much more concerned with "pays how much" . 

Brown: Why do you think that he had this concern and not the concern 
of who pays how much? 

Banks: I think this is very largely a personal idiosyncrasy of the 
people involved. 

Brown: What people were involved? 

Banks: This again refers to people that are living, and some at least 

are nominal friends of mine. Well, Don Benedict* for instance, 
has always been concerned with the economics of projects. 
I have never known Don to be overly concerned about pricing 
policy. As far as pricing is concerned, his principal area 
of Interest is whether or not the total revenue is sufficient; 



legislative Budget Committee 



72 



Brown : 
Thanks 

Brown : 
Hanks : 
Brown : 
Banks: 
Brown : 

Banks: 



Brown: 



Banks : 



prices "between agriculture on the one hand, and municipal 
and industrial uses on the other, and that sort of thing. 
He took a great deal of interest in it. 
And he was the legislative analyst? 

I mention that as one governmental entity concerned with 
the problems of the economics of the project. 
Was he the analyst for the Senate and the Assembly both? 
No, Don s work has been mostly with the Senate . 
What was the Senate s position? 
The Senate never took much interest in this. 
How would you explain their lack of concern for a multi- 
billion dollar project, or for some of the policies? 
I can t really. You will find that the Senate Water 
Committee did issue some reports. However, they never acted 
on them. Why, I don t know. At that point the Senate depended 
largely on Senator J. Howard Williams, of course, for its 
leadership in water matters. I don t think J. Howard was 
concerned too much about these matters. He was concerned 
with getting the project going. 

Did Williams and others realize the connection between getting 
the project built and paying for it? 

Well, no. I don t think they did. As a matter of fact, I 
doubt there are very many people who understand the impl- 
cations of economic theory, economic evaluation, and pricing 
policies as they relate to the project formulations. Very 
few people worry about these things. 



Brown: Would it have made the Department s task any simpler if the 
legislature had played a stronger role, or would it have 
hampered the Department in actualizing their planned move 
ment? 

Banks; Oh, yesl Assuming that the legislature would have adopted 
sound policies, it would have simplified things. On the 
other hand, the legislature could have adopted policies which 
would have been greatly restrictive. I remember, on an 
analogous subject, one legislator from a mountainous county, 
one time introduced a bill which would have reserved water 
in quantitative amounts for the area s watershed. It actually 
came out to be an average of about four feet over a whole 
mountainous county that would have been reserved. Well, there 
is not that kind of water. 

Brown: In the last interview you made a distinction between the role 
of the Department as the provider of information vs. the 
Department playing a more active role in the planning and 
actual development of water resources. Why was there this 
difference in views and who held these different views? 

Banks: I don t recall exactly the question that gave rise to that 
distinction. If the question is "Why do I ^eel that the 
State has to take a greater role?" the answers are manifold, 
of course. I think it is necessary to understand that the 
demands for water are rather rapidly expanding. Fifteen 
years ago you could generally catagorize water demands 
PS pover generation, irrigation, domestic municipal supply, 



Banks: industrial supply, and there you stopped. Then gradually 
there have been built up a number of other demands. The 
demand of water for recreation is new; the demand of water 
for fish and fishery enhancement; and now, what is very 
important, water for water quality control. These are 
relatively newly recognized demands shall we say. All of 
these newer demands have a much broader base of interest than 
the earlier ones. If we were only concerned with providing 
water for irrigation, an irrigation district could well 
handle them, or a city could well handle its regional water 
by building, say a Hetch Hetchy Project as San Francisco has 
done on the Tuolumne, or Pardee Dam, as the East Bay District 
did on the Mokelumne. With these newer demands however, and 
the increasing scarcity of water to meet the demands, it 
becomes more and more necessary that multi-purpose development 
be encouraged and, in fact, accomplished. This necessarily 
implies a much broader base of interest in a given water resource 
than any one particular district or particular locality can 
handle. Now, that is one aspect of the problem: The 
broadening base of interest in the whole field of water 
development, the broadening base of benefits and the broadening 
base of demands, all these things necessitated that the higher 
levels of government take an interest in this field and act 
to see that all of this broad base of interest and demand 
was satisfied to the extent that it can be. In general, as 
I say, it cannot and will not be satisfied fully by a local 
agency without some participation by the higher levels of 
government because their interests are restricting. 



Brown: Is it far more difficult, in your view, to design legislation 
which would enable local agencies to construct and manage 
projects in a way which would be in the best interests of 
this broad sector? 

Banks: You also have to consider the question of money. Why should 
an irrigation district, say, which is solely interested in 
the irrigation of lands within its district, and where the 
source of revenue is in the land, why should it build storage 
in its reservoir at its expense to provide water for the 
fishery down-stream which will perhaps be enjoyed by a few of 
its land owners, but mainly will be a benefit to many people 
from San Francisco and other places who come there to fish? 
Or why should a city building a project on this river for 
its benefit, why should it at its expense build storage in 
that reservoir to release down-stream to dilute wastes from 
other cities and industries not within its boundaries? Do 
I make the distinction clear? 

Now turning to another spectrum and going to the higher 
levels of the government, namely the federal government, it 
is important to recognize that the Congress has never stated 
that it has any responsibility. It has set up certain 
programs and certain policies the reclamation program, the 
flood control program and a few others, and it has authorized 
specific projects within those programs. It has never said 
though, that this area of water development is our responsi 
bility, and we will fulfill it. 



Banks: With one or two exceptions, Congress has never said that 
it will take on the full job of developing the water resources 
of any given river basin or any given area. It has authorized 
specific projects. Now, in connection with the Colorado, 
Congress may say, "Now this is our job and we are going to do 
it." On the other hand, it may take them a long time to do it 
because Congress does not necessarily make appropriations on the 
basis of relative needs, or even with proper consideration of 
economy, taking into account the time of construction of that 
sort of thing. 

It seemed to me, considering the history of the federal 
appropriation, the difficulty of getting federal appropriations 
and the fact that actually from 1951 until about 1962 the 
actual level of federal construction in water development 
had gone down, considering that aspect of it, looking at the 
federal picture and the limited objective of local development 
in most cases, it seemed to me that here was an area where 
if we are to develop the state s water resources effectively 
with the broadest possible benefit, then there is no other 
way in which the State should move. 

Brown: You say, "It seemed to you . Do you mean that the California 
legislature felt that should a problem of water need develop 
that the federal government could be relied upon to fulfill it? 

Banks: Some of the members of the legislature felt that way, but not 
all or not even the majority. There were, and there are still 
people who feel that the federal government has all the 



77 



Banks: answers. I might point out something that I learned last 
Friday in a discussion with the officials of the State of 
New Jersey who are dealing with the so-called water crisis 
in New Jersey. The State officials through their public 
relations had succeeded in driving the water consumption 
in New Jersey down this year to about half of its 19^* value 
by urging conservation. The day aPter President Johnson 
and Secretary Udall made their pronouncements about the 
solving of the State s water crisis, the water consumption 
went up about 50$- There is no other apparent reason for 
it other than the fact that people felt that the United 
States is moving in so we have no more problems. There is 
nothing in the world they can do except perhaps provide 
money to drill a few little wells. Tney cannot alleviate 
the crisis at all. 

Brown: So while you held this view privately and, I am sure, more 
publically than privately, how did you go about educating 
the people of the State, the important people, that the 
Department of Water Resources should get involved more 
actively in water planning and development than it had been 
up to that time? 

Banks: Primarily by telling them that there was a problem whicu had 
to be soi/w;d. This was goLig bo be a. future problem. There 
ware no great crises which had to be resolved such as now 
occurs in the East; there was no such crisis. The floods 
in r>55, o^ course, gave an impetus to the construction of 



78 



Brown; 



Banks: 



Brown: 



Banks: 



the Orovllle Dam. Since the State at that time had proposed 
to "juild it itself, well that particular crisis, regretable and 
tragic though it WHS, helped the program , if you want to look 
at it realistically. Basically thougli, it was a matter of 
convincing the people, organizations, the legislwture, that 
there is a need for the State to get into this picture. 
Basically, that is the ground which I mentioned. There is 
no reason to expect on the one hand the local agencies to 
spend their money in the statewide interest . On the other 
hand, there is no justification whatsoever for the people to 
expect "the Great White father" in Washington to solve all 
their problems. It ,}ust is not in the cards; you haven t 
got that kind of money; you never have had it and you ere 
not going to get it. 

Were there other people in the legislature who had this, 
I would call it, vision? 

I think people like Car ley Porter, J. Howard Williams, 
Weinberger, Prances Lindsey, to mention a few, Bruce Allen, 
Nick Richards from Los Angeles recognized these problems. 
Can you recall any important legal decisions which were made 
and were not well documented, and also which we have not 
discussed? A legal decision which facilitated the 
actualization of a plan? 

I suppose that the series of Supreme Court decisions, such as 
the Pelton Dam decision, had some influence with water 
organizations throughout the State in convincing them that if 



79 



Banks: the State vas to protect Its Interests in water resources, 

then it had to take a more active role. Otherwise they could 
loo 17 to increasing federal domination in water developing. 

Brown: When was this decision made? 

Banks: The decision came down in 1955 or 195-, somewhere in there. 

Brown: How did it come about? Was it a push or a pull? Who was 
instrumental in bringing about this decision? 

Banks: Of course, this had nothing to do with California directly. 
It was a decision involving the power development in the 
Deschutes River in Oregon. The State had denied the right 
and permit to the power company to build the dam on the 
grounds that the State legislature had said that no dam 
should be built on the Deschute because of the possible 
interference with the salmon run. On the other hand, the 
T.P.C. had granted the power company a license to build the 
dam. The State appealed the Federal Power Commission s 
license. The State was defeated. The court upheld the 
federal license on the ground that the federal government 
had jurisdiction. One end of the dam rested on federal 
reserve land and the other site was on some other federal 
reserve. The State had no jurisdiction. 

This has given rise to a philosophy which if fully tested 
will probably be held by the Supreme Court that the federal 
government does, in fadt, own and control any and all water 
arising on or flowing across federally withdrawn or reserved 
land. It is subject to rights only which accrued thereto only 



Banks: prior to the time of withdrawal or reservation. 



Bl 



INDEX 



Abshire -Kelly Salinity Control Bill, lU 
Acreage limitation, 15, ^6, 6l ff. 
Allen, Bruce, ?8 
AFL - CIO, 61 

Bechtel Corporation, 38 

Benedict, Donald W., 71 

Brody, Ralph, U?, 60 

Brown, Governor Edmund, 56 ff . 

Burns - Porter Act, 16, 32, 33, 56 ff., 59 

California Department of Water Resources, 50 ff., 69 

California State Grange, 61 

California Water Commission, 1*2, 52 

California water plan (Bulletin 3), 5, 8, 10-11 

California State Water Resources Board, 5, 7 

California Water Fund, 3U ff . 

Central Valley Project, 8, 18 

Christensen, Senator Carl L. , 60 

Cobey, Senator James A., 21 

Colorado River, 9, 31 

Conner, Pat, 65 

"County of origin", 17 ff., 56 

Davis - Grunsky Act, 16, 5U ff . 
Dickey Water Pollution Control Act, 3 

Flood Control Act of 19UU, 6 
Irrigation Districts Association, 52 

Kern County Land Company, 3U 
Kern County Water Agency, 26, 70 
Knight, Governor Goodwin J., 52 

League of Women Voters, 25, 62 

Lindsey, Frances, 78 

Los Angeles Department of Water and Power, 15 

Metropolitan Water District of Southern California, 9 ff., 15, 26, 29, 38, 69 
North Bay Aqueduct, lU 
O Neal, Jack, 67 

Pacific Gas and Electric Company, U3 
Pelton Dam Decision, 78 ff . 
Porter, Senator Carley, 59, 78 



Richards, Nick, 78 

San Luis Project, 63 

San Joaquin Valley, 15 

Semi tropic Water Storage District, 70 

Southern Pacific RR Company, 3^, 6U 

Standard Oil Company, 3^ 

Texas, 13 

University of California, 1+8 

Water Resources Planning Act of 1965 19 
Watershed Protection Act, 18 
Weinberger, Caspar, 52, 53, 78 
Westlands Water District, 6k 
Wheeler Ridge - Maricopa Districts, 70 
Williams, Senator J. Howard, 52, 72, 78 



FRENCHMAN DA 

- L 



1st OF 5 DAMS APPROV 
FOR CONSTRUCTION II 
COUNTY 




Frenchman Dam groundbreaking ceremonies 



STATE DEPARTMENT OF WATER RESOURCES PRESS RELEASE 

1120 N Street FOR IMMEDIATE RELEASE 

Sacramento, California March 2, 1959 



(photo caption) 



GROUNDBREAKING Governor Edmund G. Brown officiated today (Monday, 
March 2) at the groundbreaking ceremony for the Whale Rock Dam Project 
in San Luis Obispo County, marking the start of construction on the 
$7 million earthfill dam near the community of Cayucos, 18 miles northwest 
of San Luis Obispo. The project is a joint venture between the City of 
San Luis Obispo and the State of California for the purpose of supplying 
water for the City and two nearby State institutions -- California State 
Polytechnic College and the California Men s Colony. Construction of the 
dam, which will store 40,000 acre-feet of water, will be completed in 
1960. Governor Brown is pictured here at the controls of a large bull 
dozer, and is being assisted by an engineer for the construction company. 

(Department of Water Resources Photo) 



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KLAMATH RIVER COMMISSION 

Seated left to right 

Bert A. Phillips, Chairman - California Kla-nath River Commission 

Nelson Reed, Chairman - Oregon Klamath itiver Commission 

:>obert B. Bond, Executive Assistant - California Klamath River Commission 

Standing left to ripht 

F. L. Lathrop, Consultant - California Klamath River Commission 
Ellis Louie, Member - California Klamath kiver Commission 
Halph Koozer, Member - Oregon Klamath i-.iver Commission 
James Kf;rns, Jr., Member - Oregon Klamath River Commission 
Harvey 0. Banks, Member - California Klamath River Commission 

and Director, California Dept. of Water Resources 

James 0. Stearns, Vi ce-Chairrnan, California Klamath Hiver Commission 
Georpe Stevenson, Member - ;)^e,~on K.lamath jtiv;;r Commission 
Harry Pearson, Member - Oregon Klaiaath itiver Coramisrdon 
Ariolnh f- oskovitz, Deputy Attorney General, State of California 




Harvey 0. Banks 



75 2 ft