energy as one of their features is within the delegated powers of the Federal Government, Ashwander v. Tennessee Valley Authority, 297 U. S. 288 (1936). It follows that the electric energy produced at these projects is "property" lawfully owned by the United States. Under article IV, section 3, clause 2, of the Constitution the United States has plenary power to take such steps as may be necessary to dispose of its property and hence of its electric energy. United States v. San Francisco, 310 U. S. 16 (1940).

The acquisition of electric utility systems in Oregon and Washington will aid the Government in disposing of the electric energy produced at Bonneville and Grand Coulee. Generating plants at various points on the Government's large transmission systems would tend to make more firm and dependable the supply of energy which the Government is selling. Such plants will aid in avoiding transmission losses and maintaining proper voltages, and in some cases will provide a substitute source of energy when the Bonneville and Grand Coulee plants cannot produce at their normal capacity because of flood conditions in the Columbia.

Existing transmission lines can often be purchased more economically and more speedily than new lines can be constructed, thus facilitating the transmission and sale of Federal energy.

Because the distribution properties will be operated by public distribution agencies which will contract to purchase Federal power, the purchase of distribution properties will provide a new and expanding market for that power. The Federal Government's experience at the Tennessee Valley Authority and at Bonneville shows that public operation of distribution facilities permits the sale of energy at lower retail rates, and that the lowering of these rates results in a sharp increase in consumption by consumers. In the Northwest the rate reductions that have followed transfers from private to public ownership have led to increases in consumption that in some cases have been well in excess of 100 percent in the period of a few years. The average increase has been over 25 percent. Since these increases in consumption provide increased markets for electricity, they facilitate the sale of Bonneville and Grand Coulee power. It follows that the Federal Government may constitutionally purchase such distribution facilities.

The validity of purchases of distribution facilities may also be established on the ground that they are necessary in connection with purchases of generating and transmission facilities. If the Government were to exercise its clear right to buy a company s generating and transmission facilities without at the same time taking its distribution facilities, the taking would seriously injure the value of the distribution facilities to the company and the Government presumably would have to pay for the distribution facilities while only acquiring the generating and transmission facilities. In these circumstances the Government's right to buy the distribution facilities would follow as an incident to the purchase of generating and transmission facilities.

The decisions in the Tennessee Valley Authority cases have established the soundness of these conclusions. Ashwander v. Tennessee Valley Authority, 297 U. S. 288 (1936); Tennessee Electric Power Co. v. Tennessee Valley Authority, 306 U. S. 118 (1939). Both of these decisions are clear holdings that the generation and sale of electric property by the Federal Government fall within its delegated powers. And in the Ashwander case the court held that the Federal Government might build or purchase transmission lines to aid the sale of power. In this connection the Chief Justice observed:

"We know of no constitutional ground upon which the Federal Government can be denied the right to seek a wider market" (207 U. S. 288, 339).

Similarly in Tennessee Electric Power Company v. Tennessee Valley Authority (21 F. Supp. 947 (E. D. Tenn., 1938) the district court upheld the constitutionality of the Authority's purchase of distribution facilities. The extent of the Congressional power to dispose of electric energy has been well summarized in Tennessee Valley Authority v. Ashwander, (78 F. (2d) 578, 582 (C. C. A. 5th, 1935) aff'd. 297 U. S. 288 (1936), as follows:

"It is within the province of Congress to adopt any reasonable means, whether of lease or sale, for disposing of the surplus."

Since the United States may purchase electric utility systems, it may likewise condemn them. The United States is a sovereign, and as such it may exercise the power of eminent domain whenever necessary for the performance of its constitutionally valid functions. Kohl v. United States, 91 U. S. 367 (1875). The only limit upon this power is that it must be exercised for a "public purpose" (United States v. Gettysburg Electric R. Co., 160 U. S. 668 (1896); Brown v.

United States, 263 U. S. 78 (1923); In Re Manderson, 51 Fed. 501, 503 (C. C. A. 3d, 1892); United States v. Certain Lands in Louisville, 9 F. Supp. 137, 138 (W. D. Ky., 1935), aff d. 78 F. (2d) 684 (C. C. A. 6th, 1935) certiorary dismissed on motion of Government, 297 U. S. 726 (1936). However, a long line of cases establishes beyond doubt that any taking for a constitutionally valid activity of the Federal Government is a taking for a "public use." See Cherokee Nation v. South Kansas Railway Company, 135 U. S. 641, 657 (1890); United States v. 4.450.72 Acres of Land, 27 F. Supp. 167 (D. Minn., 1939). As the Supreme Court expressed it in Luxton v. North River Bridge Co. (153 U. S. 525, 529 (1894), the United States may exercise the power of eminent domain "whenever it becomes necessary for the accomplishment of any object within the authority of Congress." A recent decision reiterating this view is Bainbridge v. United States, 101 F. (2d) 295, 298 (C. C. A. Sth, 1939).

The fact that electric utility properties are already devoted to a public use would give rise to no constitutional objection to condemnation of them by the United States. Since the decision in United States v. Gettysburg Electric Railway Company, 160 U. S. 668 (1896) it has been well established that the United States may condemn property already devoted to a public use United States v. City of Tiffin, 190 Fed. 279 (C. C. N. D. Ohio, 1911); United States v. Jothan Bixby Company, 55 F. (2d) 317 (S. D. Cal., 1932), affirmed 61 F. (2d) 970 (C. C. A. 9th, 1932) reversed and dismissed as moot, 289 U. S. 705 (1933); United States v. Sixty Acres of Land, etc., 28 F. Supp. 369 (E. D. Ill., 1939); United States v. Parcel of Land, etc., 32 F. Supp. 719 (D. C. Del., 1940); see Stockton v. Baltimore & N. Y. R. Co., 32 Fed. 9 at 19 (C. C. N. J., 1887); United States v. Southern Power Company, 31 F. (2d) 852 at 856 (C. C. A. 4th, 1929); United States v. Wheeler Township, 56 F. (2d) 977 at 982 (C. C. A. 8th, 1933).. No contrary decisions or dicta have been found.

The fact that the public use to which the Government proposes to put the property is similar to the prior public use to which the property was devoted by the private owner is immaterial. The public good may frequently be served better by public than by private ownership, even of property already devoted to a public use. Long Island Water Supply Co. v. Brooklyn, 143 N. Y. 593, 38 N. E. 983 (1894); City of Tacoma v. Nisqually Power Co., 57 Wash. 420, 107 Pac. 199 (1910); Nichols, Eminent Domain (2d Ed. 1917), sec. 353.

II. CONSTITUTIONALITY OF FEDERAL CONDEMNATION OF DISTRIBUTION FACILITIES IN OREGON AND WASHINGTON FOR THE PURPOSE OF IMMEDIATE RESALE THEREOF TO NONFEDERAL PUBLIC AGENCIES

There is no constitutional objection to the condemnation of distribution facilities by the Columbia Power Administration for the avowed purpose of immediately selling them to public bodies or cooperatives.

Since the distribution of Federal power by public bodies or cooperatives on a nonprofit, low-rate basis will increase the amount of electric energy which Columbia Power Administration can sell, the condemnation of privately-owned distribution properties for the purpose of transferring them to public bodies or cooperatives will, per se, protect and increase the Federal market for power and the feasibility of the Bonneville and Grand Coulee projects. Thus, the use of the properties by the public bodies will serve a public use of the Federal Government.

Moreover, if a company's generating and transmission facilities alone were condemned by the Federal Government, serious severance damages would be incurred, whereas system-wide condemnations, including condemnation of the distribution properties for purposes of resale, would avoid such damages and thus permit acquisition of generating and transmission facilities on an economical basis. In this connection, it should be noted that State agencies or cooperatives could not join with the Columbia Power Administration in condemnation proceeding under the Federal procedure (Act of August 1, 1888, c. 728 (25 Stat. 357)). Hence, the condemnation of distribution properties, since it will facilitate the acquisition of generating and transmission facilities, would be for a public "purpose" of the Federal Government, even if their use by the transferee would not be a public "use" of the Federal Government.

Condemnation by a sovereign for the purpose of immediate transfer to another agency has ample precedent. For example, it is well established that State agencies can condemn private property for transfer (even by donation) to the United States when the use to which the property will be put will serve a public purpose of the State. Via v. State Commission, 9 F. Supp. 556 (D. C. W. D. Va.,

1935) affirmed on other grounds Mem. Op. 296, U. S. 549 (1935) (park purposes); Lancey v. King County, 15 Wash. 9, 45 Pac. 645 (1896) (canal purposes). Further, the Supreme Court has held that the Federal Government may condemn property for the purpose of an immediate transfer to a private person for private use if a public purpose of the Government is served by the transaction. In the case of Brown v. United States, 263 U. S. 78 (1923), land was condemned by a Federal agency and transferred to private persons as compensation for the condemnation of other land for a reservoir site. The constitutionality of the transaction was upheld on the theory that a public purpose of the Government was served because, under the circumstances, compensation by substitution was the best and least expensive method of making the owners of the reservoir land whole. Certainly, as has been stated, the condemnation of all of the properties of a system is the best and least expensive method of acquiring the generating and transmitting facilities.

Therefore, the provisions of the proposed Columbia Power Authority in regard to the acquisition of electric distribution systems, even when considered in the light of the direction for the disposition thereof to public bodies or cooperatives, are not subject to constitutional objection.

Mr. DONDERO. Mr. Hart, while you are here I have a few questions to ask.

Is it your understanding that if this bill becomes law, all State laws, so far as they relate to condemnation proceedings, will not be applicable to any procedure under this legislation?

Mr. HART. No, sir. It is a very complicated situation. I will state it this way:

The Federal condemnation statute says that condemnation proceedings shall follow State law except where any Federal statutes supersede the provisions of the State law.

Mr. DONDERO. Do you not understand that this would supersede the State law?

Mr. HART. No; I do not; because, as I recall, this bill, S. 2430, says that the condemnation proceedings shall be in accordance with the procedure in the United States courts. I have forgotten just how it is worded.

That procedure is to conform to State law. It is in conformity with State law. It follows the State practice in State condemnation cases. Senator OVERTON. Is there not this vital distinction between the procedure under the Federal statute and under the State statute in condemnation proceedings: That under the State law you proceed in court, obtain a jury, and the damage is fixed, the necessity is found, and then, when that has been done and the compensation is paid, you take over the property. But under the Federal statute a certificate of necessity for the taking is filed, and you immediately take over the property, and then battle out the question of compensation later. Am I right in that?

Mr. HART. You are both right and not quite right. May I put it this way:

Many States also have proceedings for summary possession, such as the Federal proceedings that you are speaking of.

I am not sure whether. Oregon and Washington do. I have the impression that they do. We never had occasion to look that up, because there is a Federal statute. It is called the declaration of taking statute, and it provides for such summary possession.

Since there is a Federal statute, we would, insofar as summary possession is concerned, proceed under the Federal law.

Now, let me speak for a moment about that Federal law. That is not mandatory. I have a correction that I would like to make in your statement in this respect: That not all Federal agencies in condemning under the Federal condemnation proceedings utilize that declaration of taking statute. It is optional with the acquiring agency. It is available, but I suppose that most condemnations follow the ordinary procedure, what you spoke of as the State procedure. The case is filed. It goes to trial. The jury determines the amount of the compensation, and the condemning agency then acquires possession.

Mr. DONDERO. Would it not be fair to assume that under this legislation, however, the acquiring agency, which will be the Columbia Power Authority, will exercise their right under the Federal statute? Mr. HART. I think the contrary is the case, sir. I would like to explain why.

The Federal declaration of taking statute requires that in order to obtain summary possession, you must deposit in the court estimated just compensation.

Now, in the first place, that is a requirement which would, I think

Mr. DONDERO. Is that an ex-parte proceeding?

Mr. HART. Yes; it is. In other words, it is the acquiring agency's estimate.

Mr. DONDERO. How does that protect private enterprise?

Mr. HART. May I point this out, sir: I think that it would be utterly impossible, certainly impractical, to deposit that money under this bill, for this reason:

In order to get these millions of dollars—

And I would expect, I may remark parenthetically, that the acquiring agency would deposit as its estimated just compensation its lowest estimate. That would be normally the case. The deposit would be the jury's minimum. It is ordinarily the jury's minimum. It is likely to be taken as a minimum by the jury. When the case proceeds to verdict, if the jury's award is more than the deposit, the Government must pay that sum plus interest on the excess. That is the way the statute reads.

Now, what I want to point out, sir, is this: How could you get that money under this bill for deposit of the estimated just compensation? It is inconceivable, I think, that any bond underwriters would agree to sell or any bond buyers would agree to buy the bonds for the purchase of a system when they do not know how much the system is finally going to cost.

Mr. DONDERO. It is your impression, then, that they would proceed under the State statute?

Mr. HART. No. Well, yes; they would proceed without regard to the Federal declaration of taking statute.

Mr. DONDERO. This thought has come to me: that if you proceeded under the Federal statute to take this property, you could take actual physical possession of their entire equipment, their personnel, their books, their records, and everything pertaining to the property, the private utilities would have practically nothing left, not even a witness, to come into court and testify in their behalf, which would place them at a tremendous disadvantage and in an unfair position.

74169-42-pt. 1—37

Mr. HART. I think the answer to that is that it is simply an impractical procedure, because you could not get the money to deposit. You could not sell your bonds on that basis.

Mr. DONDERO. You may be right about that.

Mr. HART. There is another objection. This declaration of taking is the instrument which transfers the title. In other words, it must describe the property being acquired with sufficient exactness to be recorded on the county records and actually transfer the title.

Now, I know that one of the systems out there has 16,000 easements scattered

Mr. DONDERO. Pipe lines and transmission lines?

Mr. HART. Yes; distribution lines-scattered through 16 or 18 counties. It is difficult for me to see how any acquiring agency without the cooperation and assistance of the company, which it would not have in the circumstances that we are assuming, it is difficult for me to see how the acquiring agency could draw a declaration of taking.

Mr. DONDERO. I took this matter home with me last night and took it to bed with me. The thought occurred to me what a tremendous advantage the Federal Government would have over private companies if it exercised its privileges under Federal statute, by simply taking their property upon a declaration of taking and not proceeding under the State laws, which gives them a right to come in and demand a showing of necessity for the taking and payment of fair compensation before the taking.

Senator OVERTON. May I interpolate a question there?
Mr. DONDERO. Certainly.

Senator OVERTON. Does the statute contemplate that the taking should be of any other property than the physical property? Does it contemplate the taking of their books and accounts and so forth?

Mr. HART. While I have not checked this point recently, I think the declaration of taking statute can probably be used for the immediate possession of any property which can be condemned. And therefore, if condemnation is available against such things as you speak of, then also the declaration of taking would be available against them.

Senator OVERTON. Do you know whether this bill authorizes the taking of any property other than the physical property?

Mr. HAFT. I suppose it would permit the taking of the books and records. When the company is selling its system, I suppose it does not particularly want to keep its customers' accounts and the other papers incidental to the operation of the business. I would assume that those would go along with the system.

Senator BURTON. Can you tell us, Mr. Hart, to what extent this system of taking by declaration of taking has been used, and whether it has been used in this type of procedure in many cases by the Government?

Mr. HART. Let me put it this way: I do not know of any case in which the Federal Government or any Federal agency has condemned a utility system. So, of course, also I do not know of any case in which the Federal declaration of taking statute has been