Senator BURTON. There are three questions that I want to inquire about.

First of all, we have this tremendous amount of power that we all want to use to the fullest possible extent for the use of the ultimate consumer. This bill is built on the plan, as I see it, that the Federal Government shall undertake the generation and transmission of that power, but does not wish to be burdened with the retailing of it in the final analysis.

Secretary ICKES. That is correct.

Senator BURTON. Therefore, in order to secure the public distribution of that power at retail, it will be necessary to act through public utility districts as far as they may exist.

Secretary ICKES. Right.

Senator BURTON. We have a practical problem that arises, more in Oregon apparently than in Washington, where these public utility districts do not exist, and where there is no municipal plant to take over the local distribution from the system.

What would you think of a provision in the bill which provided that before the Federal Government could exercise its right of condemnation, that it should have some sort of a certificate, some sort of action from a local body or some sort of a request from a local body that it would take over the local district in the event that the Federal Government should exercise this power of condemnation?

Secretary ICKES. There would be no objection to that if properly phrased. We do not want to force it on any community.

Senator BURTON. Because of the absence of that it has seemed to us, in discussing the matter here, that the Federal Government might find itself taking over the transmission and distribution lines and not being able to get rid of them.

Secretary ICKES. That would not be good policy.

Senator BURTON. My second point deals with the contracts which the Federal Government, through the Bonneville Power Administration, now makes with the local distributing units. We had some testimony to indicate that the Federal Government not only sells the power at a certain rate, but in that contract it will sometimes exercise control over the resale rate of the local distributing agency.

Do you agree with that?

Secretary ICKES. There is a very strong sentiment in Congress to the effect that there should be a resale rate put in the contract, in order to assure that the ultimate consumer is going to get the benefit of this public power.

Senator BURTON. But if the distributing agency is a public agency, can't you trust that public agency to exercise its own discretion in fixing the rate of the consumers who elect the officials of that public agency?

Secretary ICKES. I do not want to be categorical in answering that, because I have not had a chance to discuss all that is involved. Theoretically I agree with you, but there are practical questions there which would warrant variation. That I am not prepared to go into

now.

Senator BURTON. The final question that I wanted to ask was in regard to the labor provisions of the bill. As I understand it, these are not merely superimposed upon the civil-service system, as has been

frequently done throughout the country, to permit civil-service employees to have collective bargaining, and so forth, but in some instances here the collective bargaining apparently supersedes the civilservice regulations, so that in those crafts, such as linemen and that sort of thing where they do have a union organization, they can bargain collectively and set aside the civil-service regulations in the process of doing it.

Is that your understanding?

Secretary ICKES. Mr. Fortas tells me that you are quite right in what you say, and the reason for that is that they have strong unions out there that are accustomed to handling their affairs on a collectivebargaining basis. Of course, in a bill of this kind, wherever we can we do not want to do anything upsetting to any local social institutions. Senator BURTON. I think that this is somewhat fundamental. Agreeing as I do with the right of collective bargaining, even among public employees, which I think has been beneficial, it nevertheless seems to me that the principle of the Government being the primary party concerned should be retained, and that if electrical workers, for example, are in the Government employ they should be under the civil service first, and then they could come to the Government as an organized body of electrical workers and negotiate, but that we should not set aside our civil-service regulations in Washington and Oregon any more than we could in Ohio, for instance.

Secretary ICKES. It would be gratifying to me personally if some formula could be agreed upon that would recognize the principle that you state, with which I agree, and which at the same time would not have to upset things in the Northwest.

Mr. ANGELL. Mr. Chairman, there is an additional question that I would like to ask the Secretary.

Mr. Secretary, being from Oregon, of course, I am particularly interested in the welfare of my own State. Is it your understanding that this power that is being developed, and the revenues from it, may be used to subsidize reclamation projects?

Secretary ICKES. My understanding is that the rate will be so low for Grand Coulee power that even if there is a slight subsidy for reclamation you won't feel it.

Mr. ANGELL. I would be very loathe to have any development take place which would add to the price of the electricity that is available for the consumers in Oregon even though the purpose is subsidizing reclamation.

Secretary ICKES. I understand that; but, as a practical matter, I do not believe that you will feel any burden or discrimination.

Mr. ANGELL. Of course, in Washington, as has been shown in the hearings before this committee, and which I knew previously, the development of public power has gone much further than in Oregon, and if this electric energy should be limited to public bodies and public-utility districts, Oregon might be cut off almost entirely unless it voted for public power, and in such an event it might not get any use of the developed power at Bonneville.

Secretary ICKES. I do not think that that will happen.

Mr. ANGELL. In other words, arrangements would be made whereby that power would be furnished to other modes of distribution, if public power did not receive approval of the people?

74169-42-pt. 1-45

Of course, as you know, my own city of Portland has voted it down.
Secretary ICKES. Yes; I know.

Mr. ANGELL. And that is the heaviest industrial center in the State.
Secretary ICKES. That situation is going to "evolute," isn't it?
Mr. ANGELL. In time, perhaps; it is hard to say when.

Secretary ICKES. Your utility company, I think, won't have much difficulty in coming to terms with us.

Mr. ANGELL. Mr. Secretary, would it be the policy of the Administration, until such time as public-utility districts were authorized by vote of the people, that distribution would be made through such agencies as were available in Oregon?

Secretary ICKES. As you know, we are now selling a block of power every year to the P. G. E., and I think that that could be taken as typical of our policy.

Senator OVERTON. There is one other question, Mr. Secretary.

This bill provides, on page 26, in reference to the Administration's indebtedness to the Treasury, that that indebtedness

shall be determined by charging the Administration with moneys appropriated by Congress from the general fund of the Treasury, representing

(1) The portions of the present total cost, and as further moneys are invested therein from appropriations from the general fund of the Treasury, the portions of the then current total costs, of the Bonneville project allocated to electric facilities by the Federal Power Commission.

(2) The portions of the costs of the Grand Coulee Dam project determined by the Secretary of the Interior to be allocable to be returned from power revenues in accordance with the allocation of costs contemplated as the basis for revenue apportionment under Executive Order No. 8526, dated August 23, 1940.

Now, it has been shown, and I wish to question you about that, that there is some ground for distinction between the two projects, in the allocation of costs on the Bonneville project being made by the Federal Power Commission and on the Grand Coulee by the Secretary of the Interior.

Secretary ICKES. It is on account of the reclamation features connected with Grand Coulee. Under existing laws the Secretary of the Interior has the right to make that determination in connection with reclamation projects. It is the only agency of the Government that has had any experience with reclamation. The Federal Power Commission does not know anything about reclamation.

Senator OVERTON. But what I want to address your attention to is the suggestion made, I think by myself-at any rate, made by somebody-that it might be well to amend the bill to provide that, in the case of Bonneville project, the allocation of costs should be made by the Federal Power Commission after consultation with the War Department, and in the case of Grand Coulee, by the Secretary of the Interior, after consultation with the Secretary of War and the Federal Power Commission.

The controlling agencies would be the same, but it would require a consultation with other agencies that are concerned.

Secretary ICKES. Well, we will abide by the will of Congress, but we cannot view with favor any abridgment of the power that now exists in Interior to determine allocations of reclamation projects as between power and reclamation features of a project. I think that that belongs in Interior.

Senator OVERTON. It would not be an abridgment.
Senator BONE. No; it would be a modification.

Secretary ICKES. But the final power would lie with the Federal Power Commission under such an amendment.

Senator OVERTON. No. As to Grand Coulee, the Secretary of the Interior would make the allocation, but after consultation.

Secretary ICKES. Oh, I see.

Senator OVERTON. They would not have coordinated authority, but it would be after consultation with the Secretary of War, the engineers. Secretary ICKES. We would have no objection to that. I did not understand you, Senator.

Mr. ANGELL. As far as the others are concerned, they would be merely advisory.

Senator OVERTON. As to Grand Coulee, the Federal Power Commission would be in an advisory capacity. As to Bonneville, the Secretary of the Interior is perhaps not concerned, but my suggestion as to Bonneville was that the allocation be made after consultation with the Secretary of War, because the War Department has navigation, and so forth, to deal with.

Secretary ICKES. Yes.

Senator OVERTON. All right.

Have you gentlemen any more questions?

If not, I hope that you will be in time for your broadcast.

Secretary ICKES. Thank you. As I said before, the world is waiting and listening, wanting to know how much rubber we have collected. Senator OVERTON. Senator Bone, how many more witnesses are there to be heard today?

Senator BONE. Dr. Raver is here, and I think that the Railway Brotherhoods have a man with a prepared statement.

Senator OVERTON. Are there any others, either pro or con?
Senator BONE. Are you going to sit this afternoon?

Senator OVERTON. As far as Senator Burton and I are concerned, the Senate is not in session, and we two can meet this afternoon.

Senator BONE. I would like to have my secretary tell the committee a little about Spokane. He wrote political news on the Spokesman's Review for a good many years. He is probably as well informed as anybody on the affairs of that city, and he is a very fine newspaper

man.

Senator OVERTON. Shall we have the doctor testify first?

Senator BONE. Yes; that will be all right.

Senator OVERTON. Because the hearings will close this afternoon. Senator BONE. Mr. Seelig knows more about that fight over there than anybody I know; and he could occupy a little time this after

noon.

Senator OVERTON. We will be glad to hear you, Doctor.

STATEMENT OF DR. PAUL J. RAVER, ADMINISTRATOR, BONNEVILLE
POWER ADMINISTRATION

Dr. RAVER. May I present a prepared statement to begin with?
Senator OVERTON. Yes.

Dr. RAVER. When I accepted the appointment as Administrator of the Bonneville Power Administration in 1939, I knew very little about the situation in the Northwest except the published material which I

had read and the newspaper accounts which usually referred to these two great dams on the Columbia River as the Federal Government's white elephants. I can assure you that I did not share these pessimistic opinions concerning the possibilities of marketing the power from these two dams.

One of the first problems I encountered when I arrived in Portland in the summer of 1939-and a problem which has affected the whole power-marketing picture in the Northwest ever since-was the problem of local power distribution, particularly in the State of Washington. I found a very chaotic condition. Apart from the great municipal plants in the State, practically all of the people were being served by three large private utility systems-the Puget Sound Power & Light, the Washington Water Power and the Pacific Power & Light Co. Yet as you know the people had voted for the formation of public utility districts in most of the counties of the State. There was no question but that most of these districts had been formed so that the people could obtain Federal power and distribute it themselves at the lowest possible cost. The formation of those districts, as their representatives here have told you, was a mandate for the districts to go into business and obtain Bonneville power as quickly as possible. But only a few of them had yet been able to do so.

The reasons for this frustration have already been told you. In many instances the companies simply refused to talk to the P. U. D. representatives and ignored their letters. In one instance that I remember these tactics enabled the company president to avoid any semblance of negotiations with the public authorities for over a year, even though in the meantime the public agency issued its bonds, had its purchase money in the bank, and was already paying interest on its bonds.

As you already know, those districts that did succeed in reaching the company officials were told that the company would not even discuss the sales of county-wide portions of their systems.

Frustrated in their efforts to negotiate the acquisition of properties, the districts were resorting to condemnation. I knew from my own experience that these actions would be costly to all concerned.

Another factor adding confusion to the Northwest scene when I arrived in 1939 was the fact that the Securities and Exchange Commission was then in the introductory stages of applying the integration provisions of the Holding Company Act. Since that time, of course, the Commission has issued its order requiring Engineers Public Service Co. to dispose of the Puget Sound Co.

Mr. SMITH. Right at that point, it might be well to ask him to give briefly his own background. The insinuation was made by a witness the other day that this was a political administration, and that it was not being administered by an engineer, and, of course, I made the remark that Dr. Raver was a very distinguished engineer, and I think that Dr. Raver should give his background and his past experience before he goes any further.

Mr. DONDERO. I do not recall that point being raised.

Mr. SMITH. Oh, yes; it is in the record.

Mr. DONDERO. I do not remember hearing it.

Mr. SMITH. I recall it very distinctly.