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provision reflects no discredit upon the Secretary's exercise of his power to appoint the administrator. I feel that the Secretary and the Department of the Interior have done a fine job in the development of this great Federal program and it is my hope that they will continue to have a guiding hand in its future. I am convinced, however, that the new duties that we impose upon the administration of the tremendous Columbia River development make the position of administrator one that should properly be filled by appointment by_the President with the advice and consent of the Senate.

In rewriting this section we have dispensed with the advisory board of representatives of the Secretaries of War, Agriculture, the Interior, and of the Federal Power Commission. Since the Columbia Power Administration is simply a power-sales agency, this board does not seem appropriate or necessary to the administration of its program. Mr. ANGELL. Mr. Chairman, may I interrupt?

I In Bonneville, the dam and the power project itself were built by the Army engineers of the War Department, were they not?

Mr. SMITH. That is correct.

Mr. ANGELL. And the dam and power facilities at Grand Coulee were built under the Department of the Interior, through the Bureau of Reclamation. After the partial completion of Bonneville, the marketing of power was turned over to the Department of the Interior. The power was delivered to the bus bar by the War Department and turned over to the Department of the Interior for marketing purposes only using the transmission facilities built by the Department of the Interior.

Mr. SMITH. That is correct.

Mr. ANGELL. And it is necessary to have a coordinated system for both Bonneville and Grand Coulee, so that all the power serving the whole territory may be unified under one control and the purpose of this amendment is to provide a set-up so that the power may be marketed in this manner. Under the provision of this bill this will be done through the Department of the Interior, with the appointment of an administrator who will be under the Secretary of the Interior.

Is that correct?

Mr. SMITH. The gentleman has well stated the objects of the legislation.

Mr. ANGELL. And, as was done under the original plan for Bonneville, any work on the plant itself will still be done by the War Department ?

Mr. Smith. That is true. We make no change whatever.

Mr. ANGELL. With reference to Grand Coulee, the power plant will still be under the supervision and control of the Department of the Interior? Mr. SMITH. Yes. Briefly stated, all that we accomplish by this

. legislation is to bring the Grand Coulee power also under one administrator, under the same administrator as that from the Bonneville project, and to make the legislation permanent instead of temporary.

Mr. ANGELL. Unified control?

Mr. Smith. Unified marketing of the power from both projects in the entire Columbia River Basin.

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Mr. ANGELL. Then, of course, you have some additional features, one of which provides for the acquiring of competing systems, which may be purchased outright by this administration, and portions of them sold and possibly portions of them retained permanently, and it provides for the sale of revenue bonds to finance that operation.

Mr. SMITH. Yes; but when you mention the word "bonds,” to correct some misapprehension which may exist, as you will find later, we provide that this financing shall be through revenue bonds, and there is no obligation created which rests upon the Federal Government; that is, no indebtedness created and no additional burden assumed by the United States Treasury, but the entire cost has to be financed through revenue bonds, secured by the revenue of the plants.

Mr. DONDERO. The bonds will be issued by this agency of the Government?

Mr. SMITH. Yes.

Mr. PETERSON. Following up the suggestions made by Mr. Angell, it comes back to the question asked by the chairman, that under this bill the Department of the Interior is concerned only with the distribution of power?

Mr. SMITH. That is correct; the distribution and sale.

Mr. PETERSON. The bill does not affect the operation of either project!

Mr. Smith. Not the physical operation.

Mr. PETERSON. It does not take it away from the authorities where it has heretofore existed ?

Mr. SMITH. No. It makes no change in that respect.

Mr. PETERSON. What about these bonds that you just talked about that the Department of the Interior is issuing? Will they be with regard to the operation of the project, or with regard to the distribuion of power?

Mr. Smith. Both. They would be revenue bonds that would be secured by the revenues from the generation, sale, and distribution of the power from these two projects.

Mr. PETERSON. If the Department is to float a bond issue to be used in the further development of the Bonneville project, who will use that money, the War Department or the Interior Department?

Mr. Smith. Bonds would not be issued to further the development of either of the two projects. They would be issued against the revenues for acquiring additional properties.

Mr. ANGELL. Mr. Smith, is it not true that all of that would be under the Department of the Interior?

Mr. Smith. That would be entirely under the jurisdiction of the administrator who will be appointed by the President and confirmed by the Senate, but the actual execution and administration would be in the Interior Department as provided in the act.

Mr. ANGELL. Is it not true also that the security for the bond issue is limited to the revenues, and it does not touch the capital investment?

Mr. SMITH. Absolutely. It would not be a debt of the United States Government at all. There would be no additional burden upon the taxpayers.

Senator BONE. These bonds would not be employed for capital investment, merely for the acquisition of one or two private systems

in that country that want to sell out; they have been ordered to unscramble themselves by the Securities and Exchange Commission, and they are prepared to sell, and these bonds possibly would be used to acquire those systems, not for construction.

The present agencies would still control any new capital investments both at Bonneville and at Grand Coulee.

Mr. ANGELL. Senator, that would come through congressional appropriation, would it not?

Senator Boxe. That is right, and, as those installations are made, they would be carried in the books as capital investment and amortized.

Mr. PETERSON. But, as a matter of fact, it would relate to the distribution of the power, rather than to any further improvements of the projects themselves?

Senator BONE Yes. For instance, the bond issues could not be utilized for operations. It is a business set-up, which follows quite closely the procedures that have been adopted in our municipal projects in Washington. This is an effort to key this operation to the same type of procedure we have so successfully employed in the State of Washington. It is not a new idea. The ideas are old, and have been fully tried out. I do not think that there is a new idea in the bill, so far as operation is concerned.

Mr. Smith. Of course, the thing that we want to emphasize, as Senator Bone has stated, is that we are not adding 1 penny to the national debt of the United States. This cannot possibly involve the Gorernment in any new indebtedness, and I know that that is one matter that we are all interested in. Senator OVERTOX. It would be better for Mr. Smith to discuss the

. details of the bond issue when he reaches that, but it is not clear to me now that there will be no debt obligation on the part of the United States with respect to some of these bond issues.

Mr. SMITH. Yes.

Senator OVERTOX. What I want to bring out, however, is that my understanding of the bill so far is that, with respect to the Grand Coulee project, that is not under the control of the War Department. but under the control of the Department of the Interior, Bureau of Reciamation!

Mr. Suith. That is correct.

Senator OSEXTOX. And, on the other hand, the Bureau of Lola mation and the Department of the Interior have nothing walive to do with the Bonneville Dam! Mr. SMITH. That is true. That would be directly under tit Via

' Department as at present.

Senator OVEXTOS. You are not disturbing that!

Mr. SMITH. We are not disturbing the present control of e. project: it continues as it ents at the present time.

Senator OTEKTOX. All of the Larketing will be done. I uperenn through the Administration!

Mr. SMITH. Yes: as it is Low beirt done under exist!
Senator OVEztOX. This law does provide for that aurr..---

Mr. SMITH. Yes: the existing law, and all that we at: bring the Grand Coulee power in urier the law alls ekkosen lation permanent instead of temporary.

Senator BONE. The Bonneville Act of 1937 directed the adminis. trator then appointed to sell the power produced at the Bonneville plant in our community. It authorized him to lay out transmission lines to get this power to the actual and potential markets, which he did. Bonneville Dam was operated under the War Department by the Engineers. All that the administrator did was to take the power from the Engineers and sell it.

That theory has been retained.

Grand Coulee came on, and it was constructed by the Reclamation Service, an entirely different branch of the Government. It started to turn out vast quantities of electrical energy, and we did not want the wheels to turn uselessly. So the President made an Executive order directing the Bonneville administrator to take the power produced at Grand Coulee and to sell it. So he became a sales agent for the power produced at Grand Coulee.

This Executive order was not a satisfactory permanent solution, and the purpose of this bill is to apply to Grand Coulee precisely the principle that we apply to Bonneville. We do not disturb the Reclamation Service control of Grand Coulee, but we simply take the power at the bus bars and under this bill proceed to sell it as we have been doing under Presidential order.

I had intended later to discuss this at some length.

Mr. ANGELL. Senator, is it not true that this proposal combines the two projects as if they were one insofar as the marketing of power is concerned ?

Senator BONE. Yes; that is true. It is an enormous set-up, and something had to be done with its power output.

Mr. Smith. We hope by this legislation to determine definitely how the power shall be sold and distributed as well as marketed, so that there will be no conflict between these projects. There will be one unified, harmonious administration of both projects.

Senator BURTON. As I understand it, the Bonneville project is under the control of the War Department and under the supervision of the Chief of Engineers. The Grand Coulee Dam is under the Secretary of the Interior, acting through the Bureau of Reclamation. There is not a consolidation of control of those two projects. There is, however, a consolidation of control in the sale of the product of both plants. These sales will be under the Interior Department, acting through the Columbia Power Administration. At the same time, although the Interior Department will be in charge of sales and also will be in charge of Coulee Dam, yet the Bureau of Reclamation, which will be operating the Coulee Dam for the Interior Department, will not be consolidated with or act with the Columbia Power Administration, which will have charge of sales for the Interior Department. There will be a separation of these two units, even though both are under the Department of the Interior.

Mr. SMITH. That is correct. I think that you have well stated the situation.

Senator BURTON. So far as the Federal Power Commission is concerned, that only comes in in setting up regulations in accounting and control, but it does not regulate the rates to be charged ?

Mr. Smith. The Bonneville Power Administration, I think, will certainly have jurisdiction of the rates, subject to approval by the Federal Power Commission.

the power.

Senator BURTON. The Federal Power Commission only is involved when certain features of accounting and regulation are concerned, but it will not set the rates to be charged to the public, or wholesale

Mr. SMITH. The Federal Power Commission approves the rates.

Mr. PETERSON. There is one further point that I would like to get clear. The original Bonneville Act, in connection with which my good friend, Mr. Smith, did such effective work before our committee several years ago, and as I gathered from your statement a few moments ago, was built by the War Department, but the same act which authorized the building of the project by the War Department also provided that the power should be distributed by the Interior Department.

So that in the original Bonneville Act there were two separate agencies at work, one building the project and the other distributing

In this act we propose that the same agency which distributes the power from Bonneville shall now distribute the power from Grand Coulee.

Senator BONE. That is correct. The War Department, having charge of rivers, was given an order by the President to build Bonneville. It built it, and retained it. No effort was made to take it from the jurisdiction of the Army engineers. So they put the water through the wheels and produced the power. Precisely that same intention applies to Grand Coulee. We did not disturb the status quo, and in order not to run into unnecessary conflict with the Reclamation Service, we decided to apply the same formula to the Grand Coulee.

There are 1,200,000 acres ultimately to be watered at Grand Coulee, so that the Reclamation Service has tremendous work ahead of it, and there is no need of usurping that function. The Reclamation Service can go ahead later with its operation and water all of that land, and deliver this power to the administrator for sale.

Senator OVERTON. Is there any reclamation project connected with the Bonneville Dam? Senator BONE. No. It is merely a power plant.

Mr. DONDERO. What do you mean by this 1,200,000 acres of land being watered? Do you mean that they will be open to irrigation ?

Senator BONE. That is right. It is the largest reclamation project ever contemplated. Water is backed 151 miles, creating one of the greatest artificial bodies of water in this country, and this water will be pumped out of that great reservoir and put into circulation and distributed from 75 to 100 miles below; and it is necessary that the Reclamation Service exercise that particular function through its own organization.

But this bill deals only with power; nothing else. It is merely a byproduct of the dam. A certain amount of power will have to be used for pumps by the Reclamation Service. The Reclamation Service will use as much power as it needs to deliver that water, and then this administrator will sell the rest of the power as sales agent.

Senator OVERTON. Are there any navigation features or flood control features in connection with it?

Senator Bone. The Columbia River at times pours more water into the Pacific than the Mississippi River pours into the Gulf. It

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