NAVIGATION FACILITIES ON THE COLUMBIA RIVER

JUNE 24, 1937.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. MANSFIELD, from the Committee on Rivers and Harbors, submitted the following

REPORT

[To accompany H. R. 7642]

The Committee on Rivers and Harbors, to whom was referred the bill (H. R. 7642) to authorize the completion, maintenance, and operation of the Bonneville project for navigation and other purposes, having considered the same, report favorably thereon and recommend that the bill do pass with one amendment which is incorporated in the bill as reported:

On page 11, in lines 7 to 11, inclusive, strike out:

The Federal Power Commission in fixing rates for power on amortization costs on all major Federal power projects shall establish a rate of interest which shall be uniform throughout the United States.

GENERAL PURPOSES OF THE BILL

The bill provides that the Bonneville project, now in the course of construction and nearly completed on the Columbia River at Bonneville in the State of Oregon and North Bonneville in the State of Washington, shall be completed, maintained, and operated under the direction of the Secretary of War and the supervision of the Chief of Engineers, subject to certain powers therein conferred upon the Columbia River Administrator respecting the transmission and distribution of surplus electric energy generated at said project. Power will be ready for transmission late this year or early in the next and consequently the matter requires prompt consideration.

This bill also confers jurisdiction upon the Federal Power Commission to approve and revise rates to be charged for the sale of the surplus electric energy.

The bill represents the synthesis of recommendations made by various members of the Congress from the Northwest and of the committee after extensive study of this subject. The Bonneville admin

istration is intended to be provisional pending establishment of a permanent administration for Bonneville and other projects in the Columbia River Basin.

The bill, with the exception of section 6, deals exclusively with the maintenance and operation of the Bonneville project and provides that surplus electric energy generated at said project may be sold under contracts to States, political subdivisions thereof, or to individuals or privately owned corporations, but preference is given to States and public bodies. In order fully to preserve and protect the preferential rights established by the bill, 50 percent of the firm electric energy generated at Bonneville shall be reserved until January 1, 1941, for public bodies, and thereafter conflicting applications between any public agency on the one hand and any private agency on the other shall be resolved in favor of the public agency. Contracts for the sale of surplus energy shall be for terms not exceeding 20 years, including renewals.

Section 6 provides machinery for making certain readjustments in the Boulder Canyon Project Act occasioned by the standards set up in this act.

SECTIONAL ANALYSIS OF THE BILL

Section 1 carries the reference to the Bonneville project which is to be completed for the purpose of improving navigation on the Columbia River and leaves the operation in the control of the Secretary of War.

Section 2 states that the Administrator shall dispose of surplus energy. The Administrator is to be appointed by and be responsible to the Secretary of the Interior. He shall act in consultation with an advisory board composed of a representative designated by the Secretary of War, another by the Secretary of the Interior, and a third by the Federal Power Commission. The Administrator is authorized to transmit electric energy so as to encourage the widest possible use and to prevent monopolization by limited groups or localities. He is authorized in the name of the United States to acquire by purchase, condemnation, or otherwise, real and personal property, including lands, franchises, transmission lines, substations, and patent rights. The Administrator is authorized to sell or dispose of property, except that in the case of real property or transmission lines he must secure the approval of the Secretary of the Interior. He is authorized to enter into such contracts as are necessary to carry out the purposes of the act.

Section 3 defines the terms "public bodies" and "cooperatives" as used in the act and establishes a preference in the disposal of electric energy for public bodies and cooperatives. To preserve these preferential rights, not less than 50 percent of the electric energy at Bonneville shall be reserved for sale to public bodies until January 1, 1941. Public bodies and cooperatives are to be given every opportunity to perfect their legal organization and vote bonds and market them.

The policy of Congress is declared in section 3 to be the preservation of the preferential status of the public bodies and cooperatives and to give the residents of States within economic transmission distance of the Bonneville project reasonable opportunity to take any action necessary to become fully qualified purchasers and distributors of electric energy available under the act. Further, the Administrator insofar as practicable shall cooperate with States and public bodies and co

operatives within economic transmission distance of the Bonneville project to enable them to avail themselves of the preferential rights and priorities afforded by the act.

Section 4 authorizes the administrator to negotiate contracts for the sale at wholesale of electric energy for resale or direct consumption provided that private persons or agencies other than privately-owned public utilities are forbidden to resell electric energy to a private utility; contracts shall be for not more than 20 years, with provisions for equitable adjustment of rates not less frequently than once in 5 years, and in the case of a private utility contracts shall be cancellable upon 5 years' notice in writing if there is reasonable likelihood that any part of the electric energy sold under the contract will be needed for a public body. Contracts shall also contain stipulations concerning resale and resale rates to insure that the ultimate consumer shall pay rates which are reasonable and nondiscriminatory.

Section 5 prescribes that the Administrator shall fix rates for surplus electric energy subject to the approval of the Federal Power Commission. If any rate schedule so submitted is not approved then the Federal Power Commission may revise such schedules in conformity with standards prescribed by the act, and as so revised such schedule shall become effective. Rate schedules shall be fixed with a view to encouraging the widest possible use of electric energy, having regard, however, to the recovery of the costs of producing and transmitting electricity, including amortization of the capital investment, including interest over a reasonable period of years in order to distribute the benefits of an integrated transmission system and to encourage the equitable distribution of electric energy. The rate schedules may provide for uniform rates or rates uniform throughout prescribed transmission areas.

Section 6 authorizes the President to direct the holding of public hearings by an agency designated by him, to report to him by December 31, 1937, respecting any unreasonable discrimination against the Boulder Canyon project with respect to charges against power for construction costs, amortization, and interest. Subject to the approval of the President, the Secretary of the Interior shall make such changes as are recommended by the investigating agency notwithstanding the provisions of any other statute. Authorization is also given for lumpsum payments to the States of Nevada and Arizona in lieu of payments now provided for by the Boulder Canyon Project Act. The Government is protected as to the payments to these two States because it fixes rates, and any deficiency in revenue to meet the payments may be covered in effect by surcharges upon rates otherwise appropriate. The seven States of the Colorado River Basin are interested in a "separate fund" which comes into existence only after the Government has been repaid in full. Prior to this time residual revenues, if any, after payments to the States of Arizona and Nevada, do not, under the Boulder Canyon Project Act or under this section, go into such fund, but are applied to accelerate amortization of the investment. Any rights any States may have are very specifically protected by paragraph (c).

Section 7 provides a method for purchase of supplies and services. Section 8 directs the Administrator to keep certain accounts; authorizes certain expenditures and directs him to make an annual report to Congress through the Secretary of the Interior.

Section 9 authorizes employment of attorneys, engineers, and other experts and imposes civil service on the general staff.

Section 10 provides that all receipts from the Bonneville project shall be covered into the Treasury and sets up a continuing fund of $500,000, subject to check by the Administrator to defray emergency expenses and to insure continuous operation. It also authorizes appropriation out of moneys not otherwise allotted such sums as may be recessary to carry out the provisions of the act.

Section 11 authorizes the Administrator to bring suits either at law or in equity and to be represented in all litigation by such counsel as he may select.

Section 12 is a separability clause.

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