(2) Section 14 to require the Commission, no earlier than 5 years before a license expires, to entertain and decide applications for a new license pursuant to section 15. If a Federal agency recommends takeover, the Commission is directed to notify Congress and to stay the effective date of a new license until the expiration of the following full Congress.

(3) Section 15 to authorize the Commission (i) to amend a license granted thereunder at any time, and (ii) upon application of any licensee, person, State, municipality or State commission, to issue a license for nonpower use when it finds that a project should no longer be used for power purposes. Such nonpower license is terminable upon an assumption of regulatory supervision by a Federal, State, interstate or municipal agency over lands and facilities included in the nonpower license.

(4) Section 10 (d) to require that amortization reserves be established and maintained from the effective date of licenses issued under section 15.

The key feature of the bill is establishment of procedures to determine whether the United States will take over a project after a Federal license expires. Under the bill the Commission, after notice and hearings and consideration of the views of interested agencies, will report to the Congress the projects for which licenses are about to expire and which the Commission has determined should be taken over by the United States.

In cases where a department or agency recommends takeover of a project but the Commission does not itself recommend such action, the Commission will notify the Congress and stay the effective date of a new license until the end of the next full Congress.

We believe the amendments embodied in the bill will materially assist the Commission in streamlining procedures for determining whether relicensing of a project or takeover by the United States would be better adapted to a comprehensive plan of water resource development and improvement in the public interest. In this regard, the provision of issuance of a temporary, exclusively nonpower, license, pending assumption of supervision by a governmental agency, should provide an appropriate vehicle for advancing water pollution control, recreation, conservation of fish and wildlife and preservation or restoration of aesthetic and historic values. The bill also will maintain intact the prerogative of Federal departments and agencies to recommend, in Commission proceedings and, if necessary, to the Congress, takeover of projects by the United States. Section 4 of the bill provides that, in the case of new licenses under section 15, amortization reserves shall be established and maintained from the date of the new license. A possible question arises as to how section 4 would apply where a new license is issued to the original licensee who is already under an obligation to accumulate amortization reserves. The Federal Power Commission, in paragraph 2, page 7, of the letter of transmittal of August 28, 1967 (113 Cong. Rec. 11436, August 29, 1967), from Chairman White to Speaker McCormack, reserves called for by section 10 (d) of the Act would continue to accumulate stated that the proposed amendments "provide explicitly that the amortization without interruption, suspension or revaluation" in the issuance of a new license to the original licensee. The bill does not contain the explicit provision referred to. This Department understands, however, that the Commission will so construe section 4 as to accomplish the stated intention.

The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely yours,

KENNETH HOLUM, Assistant Secretary of the Interior.

OFFICE OF THE DEPUTY ATTORNEY GENERAL,
Washington, D.C., March 1, 1968.

Hon. WARREN G. MAGNUSON,

Chairman, Committee on Commerce,
U.S. Senate, Washington, D.C.

DEAR SENATOR: This is in response to your request for the views of the Department of Justice on S. 2445, a bill to amend Part I of The Federal Power Act to clarify the manner in which the licensing authority of the Commission and the right of the United States to take over a project or projects upon or after the expiration of any license shall be exercised.

Section 1 of S. 2445 would add a new subsection to Section 7 of the Federal Power Act (16 U.S.C. 800) to provide that the Federal Power Commission shall determine whether the United States should exercise its right to take over any project for public purposes and shall submit its recommendation to Congress. Section 2 would amend Section 14 of the Federal Power Act (16 U.S.C. 807) to authorize the Commission to receive applications for a new license and to decide them in a relicensing proceeding pursuant to Section 15 of the Federal Power Act (16 U.S.C. 808) and to permit any federal department or agency to recommend that the United States exercise its right to take over any project. If the Commission recommends take over of a project for public purposes, the Commission must, upon motion of any interested department or agency, stay the effective date of any order issuing a license (not including annual licenses) until expiration of the next full Congress. The Commission would be required to notify Congress of each stay.

Section 3 would amend Section 15 of the Federal Power Act (16 U.S.C. 808) to authorize the Commission, after notice and opportunity for hearing, to impose further reasonable requirements upon a licensee. The Commission would be authorized, whenever it finds that in conformity with a comprehensive plan for beneficial public use that all or part of any license project should no longer be used or adapted for power purposes, to license all or part of the project for non-power uses. Licenses issued for non-power uses would be temporary and subject to termination by the Commission whenever a state, municipality, or federal agency assumed regulatory supervision of lands included under the nonpower license.

Section 4 would amend Section 10 (d) of the Federal Power Act (16 U.S.C. 803) to provide that amortization reserves be established and maintained from and after the effective date of licenses issued pursuant to Section 15 (16 U.S.C. 808).

S. 2445 does not affect the activities of the Department of Justice; accordingly, the Department defers to the views of the Federal Power Commission concerning the desirability of enacting this legislation.

The Bureau of the Budget has advised that there is no objection to the submission of this report from the standpoint of the Administration's program. Sincerely,

Hon. WARREN G. MAGNUSON,

WARREN CHRISTOPHER,

Deputy Attorney General.

DEPARTMENT OF AGRICULTURE, Washington, D.C., February 26, 1968.

Chairman, Committee on Foreign Commerce,
U.S. Senate.

DEAR MR. CHAIRMAN: This is in response to your letter of February 13, 1968, requesting a report on S. 2445, a bill "to amend part I of the Federal Power Act to clarify the manner in which the licensing authority of the Commission and the right of the United States to take over a project or projects upon or after the expiration of any license shall be exercised."

The bill establishes standards and procedures for the recapture or relicensing of hydroelectric projects upon expiration of their license terms in accordance with Sections 14 and 15 of the Federal Power Act, and authorizes the Federal Power Commission to license for nonpower use project works no longer used or adapted for use for power purposes. The provisions of the bill are as described in the letter of September 20, 1967, from Commission Chairman Lee C. White to the President of the Senate, transmitting the bill for consideration by the Congress (reproduced in the Congressional Record for September 20, 1967, at pages $13272-3).

This Department concurs in the objective of the legislation to free the Congress of the burden of reviewing all licensed projects as their license terms expire regardless of Federal interest in recapture. The Congress would, even in the absence of a Commission recommendation for recapture, continue, of course, to have the prerogative of directing recapture of any project upon license expiration. The procedure prescribed in the proposed legislation would afford any Federal department or agency the opportunity to recommend recapture. The stay in licensing and notice to Congress thereof which are provided for in such cases would give the Congress full opportunity to exercise that prerogative.

Section 3 of the bill would amend Section 15 of the Federal Power Act by adding a new subsection (c) which authorizes the Commission to take actions including issuances of licenses for nonpower projects. We have no comment to make as to the desirability of giving the Commission authority to license for nonpower purposes. We are, however, vitally concerned insofar as such authority would relate to nonpower features of projects involving National Forest lands. On the basis of discussions of this provision by this Department with the Commission prior to the submission of the draft bill by the Commission's Chairman, we understand that the Commission recognizes that some licenses are for projects involving lands administered by Federal agencies. For example, the National Forests administered by this Department are affected by many licensed projects. We understand that it is the intention of the Commission to consult with this Department with respect to the issuances of any licenses for nonpower purposes affecting lands administered by this Department. In such situations, if this Department can and will be responsible for and administer the lands and facilities which would be included in the nonpower licenses, the license for such use will be issued only with the consent of this Department and subject to such conditions as we deem necessary for the adequate protection and utilization of the lands under our jurisdiction. Arrangements have already been made with the Commission to develop the appropriate procedures to implement this understanding.

The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the Administration's program.

Sincerely yours,

ORVILLE L. FREEMAN, Secretary. Senator CANNON. Our first witness is the Honorable Lee C. White, Chairman of the Federal Power Commission.

Mr. Chairman, we are happy to have you here. You may proceed.

STATEMENT OF HON. LEE C. WHITE, CHAIRMAN, FEDERAL POWER COMMISSION, ACCOMPANIED BY F. STEWART BROWN, CHIEF ENGINEER AND CHIEF, BUREAU OF POWER; M. FRANK THOMAS, CHIEF, DIVISION OF LICENSED PROJECTS; RICHARD A. SOLOMON, GENERAL COUNSEL; EDWARD BERLIN, ASSISTANT GENERAL COUNSEL; AND JOSEPH B. HOBBS, PRINCIPAL STAFF ATTORNEY Mr. WHITE. Thank you, Mr. Chairman. We are very pleased to be able to present the Commission's views on what we regard as an important piece of legislation.

With me at the witness table, to my right, is Mr. F. Stewart Brown, the Chief Engineer of the Federal Power Commission and the head of our Bureau of Power. To his right is Mr. Frank Thomas, who is the Chief of our Division of Licensed Projects. Immediately to my left is Mr. Richard A. Solomon, the General Counsel of the Commission. To his left, Mr. Edward Berlin, Assistant General Counsel of the Commission. And to his left Mr. Joseph B. Hobbs, Principal Staff Attorney.

We have a rather detailed statement, Mr. Chairman, which we would like to submit for the record. It contains a somewhat fascinating and interesting history of the Federal Water Power Act of 1920, which I believe gives some insight into the problems from the point of view of the Congress when it first enacted this legislation, as well as some detailed observations. If you have no objecton I would prefer to read an abbreviated version of that statement, and then hold ourselves open for any questions that you may have.

Senator CANNON. The statement will be made a part of the record. You may proceed.

Mr. WHITE. It is a pleasure to appear before the committee in support of S. 2445 introduced by Chairman Magnuson at the unanimous request of the Federal Power Commission. The bill would amend the provisions of part I of the Federal Power Act which govern the Commission in the processing of expiring hydroelectric licenses. Simply stated, it is a bill designed to establish more adequate procedures for determining whether, upon the expiration of a hydroelectric license, a project should be recaptured by the Federal Government or relicensed. In 1920, when Congress delegated to the newly created Federal Power Commission authority to license non-Federal hydroelectric projects, it limited the term of any license to a maximum of 50 years. This limitation was intended to preserve for subsequent Congresses a full opportunty to reevaluate the best use of each project site. At the expiration of each license, except those issued to States or municipalities, the United States enjoys the right to recapture and take over the project. Alternatively, the Commission is authorized to issue a new license to the original licensee or to any other non-Federal applicant, public or private.

Under current practice the recapture and relicensing determinations involve a three-fold process. Five years before a license is to expire, the Commission solicits the views of the licensee concerning its plans for the future development of the site and the views of each Federal and State agency which may have an interest in recapture. Two years before the expiration date, the Commission makes a report on the project to the Congress on whether the project should or should not be recaptured. The Congress is then asked to decide whether it wishes to recapture a project. Where Congress forgoes that right, relicensing procedures must be undertaken by the Commission.

This procedure is unsatisfactory. It requires the Commission, in advance of the more detailed factfinding relicensing proceeding, to adopt its position as to recapture even though some facts bearing on the desirability of recapture may not be disclosed until a relicensing proceeding. Existing procedure requires the Congress to focus on each expiring licensed project that is subject to recapture, even though no Federal agency has expressed any interest in recapture.

We are now rapidly approaching the day when the licenses of projects subject to recapture will be expiring in large numbers. There are presently 270 licensed hydroelectric projects which are subject to recapture, and in the next 5 years 67 of these licenses will expire.

We strongly urge that a procedure be established whereby all the alternatives may be canvassed and all of the facts bearing on the desirability of recapture, as opposed to possible relicensing, be brought to light before the Commission and the Congress are required to consider the recapture question. We do not believe Congress will wish to be burdened with a requirement that it consider recapture of a project where, after such a proceeding, neither the Commission nor any interested Federal agency recommends recapture. A procedure should be developed which would permit the concentration of Commission staff and outside resources in one proceeding and which would require the Congress to give consideration to recapture only where, as a result of that fact fiinding proceeding and upon the basis of the record there established, some federal interest in recapture has been articulated. Quite obviously, Congress should not--and could not-be precluded

from considering recapture of any project even if all Federal agencies recommend against it; what we are focusing on here is a procedure for handling the large volume of expiring licenses in a reasonable. and rational fashion.

S. 2445 would establish such procedures. It should be clear that it is a procedural bill designed solely to permit the recapture and relicensing determinations to be made efficiently and in harmony with the purpose underlying the limited term license. The bill does not attempt to modify any of the substantive standards which the Commission is required to apply in determining whether or not to recommend recapture and in passing upon relicensing proposals.

Under the bill we are proposing the Commission, prior to the expiration of a license, would receive applications for a new license. In the relicensing proceeding on the applications, the Commission would consider the desirability of recapture as one of the central issues. If the Commission were to conclude that in its judgment the United States should exercise its right of recapture, then it would be required to so recommend to the Congress; in that event the Commission would not issue a new license (other than the automatic annual renewal of the expired license which is required by present law to prevent a hiatus pending ultimate resolution of the recapture question. If the Commission were to conclude that recapture would not serve the statutory objective of optimum site utilization in the public interest, it would be able to proceed to issue a new license upon appropriate conditions either to the original licensee or some other applicant. It would, however, be required to stay the effectiveness of its order upon the motion of any Federal department or agency desiring to recommend recapture to the Congress. Unless earlier terminated upon motion of that department or agency, any such stay would automatically terminate at the expiration of the next full Congress immediately following the Congress then in session and the license would become effective.

In selecting this procedure for recommendation to the Congress, the Federal Power Commission rejected a suggestion that it seek legislation granting it the final say on the recapture question. In view of the financial commitments and policy considerations involved, we believe that such a decision is one that the Congress would not wish to delegate, at least as a matter of general law. Similarly, we consider it inappropriate to make a Commission decision against recapture the final word on the matter. We believe the Congress is entitled to the advice of any Federal agency or department that wishes to urge recapture and such agency or department's channel of communication should not end at the steps of the Federal Power Commission. We think the procedures contemplated by S. 2445 strike a proper accommodation of these basic concepts.

In any relicensing proceeding, the existing standards set out in section 10(a) of the Federal Power Act would be the critical test. Accordingly, where relicensing is considered appropriate, the new license would be issued to that applicant whose plans are best adapted to the comprehensive development of the waterway which of course includes considerations not only of water power development but of all beneficial public purposes, including the promotion of recreation, resource conservation, fish and wildlife protection and water quality control.