Now the reason we would like to have that revert to that language

Senator O'MAHONEY. Will you read that again, please?

Mr. KAMERMAN (reading):

the amount theretofore paid from the Colorado River Dam fund into the Treasury.

If and when this bill becomes effective law, payments in the amount of $3,300,000 will have accumulated. Those are the payments to the States of Arizona and Nevada, payments for the development fund, payments for 3 years for the above purposes. That means that probably for a year, anyway, the revenues that will accrue will have to go to take up these payments, and it means that in that period of a year nothing will be available for payment to the Treasury. So that, if in those early years replacements do become necessary, this authorization of an appropriation would be a nullity, because there would be nothing paid under this section 2 (b). For that reason we would like to have the language revert to the language in H. R. 9093, which I read, in order to have this authorization apply to any moneys heretofore paid, which would permit taking into account moneys already paid into the Treasury from the Colorado River Dam fund during these past few years.

Senator O'MAHONEY. Mr. Chairman, I find on examining the House bill now on the House Calendar that the language is exactly the same as that which the witness wants to change in the Senate bill, and, therefore, I ask whether you know why the House did not make the change you suggest, or did you make this suggestion to the House?

Mr. KAMERMAN. We did not, Senator.

Senator O'MAHONEY. You are making it now for the first time? Mr. KAMERMAN. We are making it now for the first time. We noticed it really when we saw the language in the House bill which varies in this minor respect from the language in this bill as reported, and in the bill now before us.

Senator MCCARRAN. Before the Senate committee?

Mr. KAMERMAN. Before this committee.

Senator O'MAHONEY. I think that is clearly an improvement. Under the bill as it stands, the Secretary of the Treasury may readvance only the amounts that have been repaid. It is possible that no funds may be repaid. Under the amendment which you suggest, the Secretary of the Treasury, under the circumstances outlined, may readvance the total amounts that have been paid into the Colorado River fund theretofore.

Mr. KAMERMAN. No. It is the total amount that has been paid from the Colorado River Dam fund into the Treasury.

Senator O'MAHONEY. I beg your pardon. That is what I meant ; yes.

Mr. KAMERMAN. Yes. It would provide this margin of several million dollars which have been paid into the Treasury on account of interest during the last few years.

Senator MCCARRAN. It would, in reality, take nothing from the Treasury?

Mr. KAMERMAN. No; nothing at all. The money has gone in there already.

Senator JOHNSON. I see no objection to that.

Mr. KAMERMAN. I have just received a copy of the outline of agency contract between the United States of America and the city of Los Angeles, and its department of water and power, and Southern California Edison Co., Ltd., which, if you wish, I will submit for the record.

Senator MCCARRAN. It may be inserted in the record.

(The contract referred to is as follows:)

OUTLINE OF AGENCY CONTRACT, UNITED STATES OF AMERICA AND THE CITY OF Los ANGELES, AND ITS DEPARTMENT OF WATER AND POWER, AND SOUTHERN CALIFORNIA EDISON CO., LTD., MARCH 2, 1940

BOULDER PROJECT-PREAMBLE AND RECITALS

1. Preamble.-Usual preamble stating date and parties.

2. Recitals. (a) Passage of Boulder Canyon Project Adjustment Act.

(b) Desire of United States to provide for assumption of operation by it through agents as authorized thereby.

(c) Other appropriate recitals.

TERMS OF AGENCY CONTRACT

3. Termination of Lease.-Upon the taking effect of Agency Contract, all leasehold rights of the lessees, under the Contract for Lease of Power Privilege, shall

cease.

NOTE. The City and the Edison Company also have rights in their respective capacities as allottees. In the present contract documents such rights are interwoven and not separately stated. It is assumed that, on the drafting of the Supplemental Contracts and Agency Contract, the rights of the City and the Edison Company as power allottees (with changes required by the Adjustment Act) shall be preserved.

It is also assumed that the Boulder Canyon Project Adjustment Act as passed will give adequate assurance that the Agency Contract cannot be terminated except for default of the agents.

It is also recognized that upon the actual drafting of the Agency Contract there may be provisions in the existing contract, of a formal nature, which are appropriate under the agency plan and which it will be mutually agreed should be carried into the Agency Contract for the protection of both the Government and the Operating Agents.

4. Designation of Operating Agents and Term of Agency.—(a) The City and the Edison Company, severally, designated as Operating Agents for their respective portions of the plant.

(b) Acceptance by each of appointment and duties.

(c) Agency to commence with first day of calendar month following that in which Adjustment Act becomes fully effective, and to continue until May 31, 1987, subject to termination for breach as hereinafter provided.

5. Specification of Properties to be Operated Directly by United States and Properties to be Operated by the Operating Agents.-(a) United States (directly) to operate the Boulder Dam and such incidental works as are specified in the contract.

(b) The Operating Agents (severally as to their respective portions) to operate the power plant and such incidental works as are specified in the contract.

(c) As to works in course of construction or future additions to plant, the responsibility of the Operating Agents to begin when the same are ready for use or operation.

(d) Facilities common to, or necessary for use in connection with, both portions of plant to be operated by the Operating Agent agreed upon by both such agents or designated by the Director, but to be available to the other Operating Agent and to the United States, subject to proper adjustments of

costs.

(e) Any uncertainty as to classification of any item, either as between U. S. and Operating Agents or as between Operating Agents, to be determined by Director.

(f) If requested by either Operating Agent, the U. S. will do at the machine shop, so far as facilities permit, machine work required in performance of Agency Contract.

6. Duties of Operating Agents.-(a) Each Operating Agent to have duty to operate and maintain its portion of plant, and except as herein provided, to make replacements of parts thereof, without interference from other Operating Agent, but subject to supervision of Director, as herein provided.

(b) Definition of maintenance.

(c) Definition of replacements.

(d) Operating Agents to furnish all necessary services and labor (except as per Item 6-f hereof), including engineering, accounting, and other overhead services.

(e) Operating Agents to furnish all supplies, materials, machinery, and equipment necessary for operation, maintenance, or replacements; except U. S. to purchase, on reasonable notice, (1) if any single purchase estimated to exceed $10,000,000; (2) if Operating Agents cannot make any purchase because of any law; and (3) if it is agreed with Director that purchase by Operating Agents is infeasible or not in interest of economy.

NOTE. This Item 6-e is tentative, as it is recognized by the Solicitor's office, Bureau of Reclamation, and the representatives of the power contractors that further study of applicable laws, both Federal and local, may require a different set-up, and also that the considerations noted under Item 12 may affect the form of this provision. It is the intention that, under this item, there shall be an adequate provision as to the responsibility for furnishing supplies, materials, machinery, and equipment, such as, on further study, may be found to be workable.

(f) Machinery, whether furnished by Operating Agents or U. S., to be installed by Operating Agents, except that, by agreement, machinery or equipment purchased by the U. S. may be installed by contractor furnishing the

same.

(g) Except in emergency, no substantial change to be made without written consent of Director, and Secretary's determination as to what is substantial, to be final.

(h) If, in opinion of Secretary, any machinery or other property shall be in defective, dangerous, or improper condition, then, on notice, Operating Agent shall correct condition by adequate repairs or replacements, and if it neglects so to do, U. S. may make repairs or replacements.

(i) Operating Agents to keep informed, so far as practicable, of various contractors' requirements for electrical energy, and to notify Director so that additional machinery and equipment may be available when needed. Operating Agents to cooperate in preparation of designs for additional machinery and equipment, and all contractors affected to have opportunity to be heard respecting design, capacity, and cost before contracts let.

(j) Each Operating Agent to have right to operate in such manner as to obtain benefit of reasonable integrated operation of portion of plant by which it is served, and its other sources of supply, provided other contractors are not detrimentally affected.

(k) Facilities operated by U. S. necessary or convenient for the performance of the duties of the Operating Agents to be available to them.

(1) If Secretary notifies an Operating Agent that any employee stationed at the plant is unsatisfactory, stating the cause of dissatisfaction, the Operating Agent shall promptly remedy cause of dissatisfaction by removal of employee, or otherwise.

7. Powers and Duties of Director.-(a) The Director appointed by the said Secretary shall have the power and duty to exercise general supervision over operation and maintenance and the making of replacements by the Operating Agents in order to secure the safe, economic, and efficient use of generating machinery and equipment and economic and efficient use of water at this Project and as between this Project and any other project on the Colorado River under the jurisdiction of the Department of the Interior at which power is developed, consistent with the reasonable integrated operation provided for in Item 6-j hereof and with the provisions of other contracts relating to this project heretofore or hereafter entered into by the United States.

(b) Director to have power to enforce rules and regulations duly promulgated by Secretary.

8. Record of Electrical Energy Generated.-Provision for records and reports of generation and delivery of energy.

9. Inspection and Access. (a) Secretary and representatives to have access to works for inspection, for work upon properties operated directly by U. S., and for all proper purposes.

(b) Secretary and representatives to have reasonable access to books, records, and accounts of Operating Agents relating to duties as such.

(c) Allottees to have similar right of inspection of books, etc., limited to matters affecting them.

10. Generation in Accordance with Contracts.-(a) Operating Agents to deliver electrical energy to various contractors in accordance with contracts and load requirements. In event of disputes, deliveries to be in accordance with instructions of Director.

(b) In event of shortage of water, and so far as practicable, in event of shortage due to other causes, electrical energy to be prorated among contractors on basis of contract rights.

11. Electrical Energy Reserved for United States.-U. S. to reserve right to require each Operating Agent to generate and deliver not to exceed 5,000 kilowatts of energy for construction and other purposes, to be paid for at cost.

12. Compensation of Operating Agents.-Operating Agents to be compensated for all expense reasonably incurred in the performance of their duties, with neither profit nor loss to them, and, so far as practicable, settlements to be on the basis of credits on the accounts of the Operating Agents, in their capacities as allottees, for energy charges; and with provision for Operating Agent submitting for approval of Secretary an annual budget or estimate of such expenses. NOTE. This Item 12 is tentative. The Reclamation Bureau and the representatives of the power contractors are in accord in feeling that the basic principles should be compensation for all expenses reasonably incurred. However, there are two circumstances which may render this impracticable. First: Such basis may be affected by the basis adopted for the making of generating charges against the allottees. The bill as drawn contemplates that such basis will be determined by the Secretary after hearing and promulgated simultaneously with the promulgation of energy rates. Inasmuch as the rights of all allottees are affected, it is impracticable that such determination should be made in advance of the submission of the legislation to Congress. Second: Practical considerations arising out of Federal and state laws, and regulations and procedures of the General Accounting Office, require further study by all parties, which may affect the form of the provisions.

13. Accounts.-Accounts of expenditures by Operating Agents to accord with system of accounting prescribed in rules and regulations duly promulgated by the Secretary.

14. Termination for Breach.—(a) If either Operating Agent shall commit any breach of the Agency Contract which deprives another allottee of electrical energy which it is the duty of such agent to deliver under Item 10 hereof, or shall commit any other material breach of such Agency Contract, the Secretary may enter and take possession of, and operate, so much of the plant as may be necessary to correct such breach, and may thereupon give 4 years' notice of termination. At any time prior to the expiration of said period, the defaulting agent may be reinstated by removal, or by giving assurances satisfactory to the Secretary of the removal, of all causes which resulted in such entry and taking possession, and payment to the U. S. of any and all loss incurred thereby. If default not so cured, contract to be of no further effect as to such agent after expiration of such notice.

(b) Agency not to be subject to termination for any cause other than breach as provided in Item 14-a, adding substance of such provisions of act as are designed to give adequate assurance against termination except for default, referred to in note to Item 3 above.

15. Rules and Regulations.-Agency Contract to be subject to rules and regulations duly promulgated prior to its execution, and to future rules and regulations duly promulgated, subject to the provision that no right of either Operating Agent shall be impaired, or obligation of either Operating Agent extended by any rule or regulation hereafter promulgated, and with provisions for hearing before promulgation of further rules.

NOTE. This assumes that prior to the execution of the Agency Contract rules and regulations appropriate to the carrying out of the terms of the Adjustment Act will have been promulgated, as contemplated by that Act, and that the regulations inconsistent therewith will have been rescinded.

16. Transfer of Interest in Contract.-No voluntary transfer without approval of Secretary; successors and assigns, by voluntary transfer, judicial sale, etc., to be subject to Project Act, Adjustment Act, and all provisions of Agency Contract; the execution of a mortgage or trust deed not to be deemed a voluntary transfer.

17. Disputes and Disagreements.-(a) The instructions, directions, and determinations of the Director shall be subject to appeal to the Secretary.

(b) They shall be complied with unless and until reversed or modified upon such appeal.

(c) Every instruction, direction, and determination of the Secretary (whether on appeal from the Director or otherwise) arising out of the Agency Contract, shall be final as to the Operating Agents, excepting only that any such instruction, direction, or determination affecting the rights of the City or the Edison Company

or

(i) under other contracts with the U. S. relating to the project;

(ii) under Item 6-j hereof (i. e., relating to reasonable integrated operation);

(iii) under Item 14 (i. e., relating to U. S. taking possession or terminating lease);

shall be subject to arbitration or court proceedings.

(d) Arbitration provisions substantially in accordance with form in general use in Boulder contracts applicable to disputes with U. S., except 3 arbitrators instead of 5.

18. Contingent upon Appropriations.—The usual clause, with additional provision that Operating Agents shall not be required to incur expenses for the reimbursement of which appropriations have not been made, but neither this nor anything in contract to preclude Operating Agents' making such repairs or replacements as they may desire, notwithstanding nonavailability of appropriations or provision for reimbursement.

19. Contingent upon Final Effectiveness of Adjustment Act.-If Adjustment Act not effective as to all provisions prior to July 1, 1941, contract be of no further force or effect.

20. Modifications.-Any modification, extension, or waiver of terms of contract for the benefit of either Operating Agent, shall not be denied to the other.

21. Contract Subject to Colorado River Compact.-Provision conforming to requirements of Project Act.

22. Members of Congress Clause.-Usual clause.

Senator MCCARRAN. Gentlemen, since tomorrow is a holiday, we will meet again at 10:30 on Friday morning.

(Whereupon, at 12:15 p. m., the committee adjourned until 10:30 a. m., Friday, May 31, 1940.)