COLUMBIA POWER ADMINISTRATION WEDNESDAY, JUNE 3, 1942 JOINT SUBCOMMITTEE OF THE COMMITTEE ON HOUSE OF REPRESENTATIVES, Washington, D. C. The joint subcommittee met, pursuant to call, at 10:30 a. m., in the hearing room of the Committee on Rivers and Harbors of the House, Senator John H. Overton presiding. Present: Senators Overton, McNary, and Burton; and Representatives Smith, Peterson, Carter, Dondero, and Angell. Senator OVERTON. The committee will come to order. This is a joint hearing, composed of members of the Senate Committee on Commerce and the Committee on Rivers and Harbors of the House of Representatives, to consider S. 2430, a bill to amend the Bonneville Act to authorize the acquisition of utility systems and to coordinate the operation of the Government's power facilities on the Columbia River, and for other purposes. I suggest that at this point there be incorporated in the record the bill that we have under consideration, and I think that it would be well, immediately following the introduction of that bill, to reproduce the present Bonneville Act. Senator BONE. I can supply the reporter with a copy of it; and I might add, Senator Overton, that there are two House bills that are identical to this S. 2430. Senator OVERTON. We will also consider the companion bills introduced in the House, H. R. 6889 and H. R. 6890, but it will not be necessary to reproduce but one of the bills. (S. 2430, and the so-called Bonneville Act, Public No. 329, 75th Cong., ch. 720, 1st sess., are reproduced below.) [S. 2430, 77th Cong., 2d sess.] A BILL To amend the Bonneville Act to authorize the acquisition of utility systems and to coordinate the operation of the Government's power facilities on the Columbia River, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Act of August 20, 1937 (50 Stat. 731, 16 U. S. C., sec. 832 ff.) as amended by the Act of March 6, 1940 (54 Stat. 47), hereinafter referred to as the Bonneville Act, is amended as in this Act provided. SEC. 2. Section 1 of the said Bonneville Act is hereby amended to read as follows: "For the purpose of improving navigation on the Columbia River; for controlling the destructive floods thereof; for the storage, diversion, and development of water for the irrigation of arid and semiarid lands; for promoting the widest possible and most efficient use of electric energy; and for other purposes incidental 1 thereto; the dam, locks, power plant, and appurtenant works at Bonneville, Oregon, and North Bonneville, Washington (hereinafter called Bonneville project), shall be completed, maintained, and operated under the direction of the Secretary of War and supervision of the Chief of Engineers, and the power facilities constructed as part of the Grand Coulee Dam project, authorized by the Act of August 30, 1935 (49 Stat. 1028, 1039), shall be completed. maintained and operated by the Secretary of the Interior through the Bureau of Reclamation under his jurisdiction as provided by law, subject to the provisions of this Act relating to the powers and duties of the Columbia Power Administration provided for in section 2 (a) (hereinafter called the Administration) respecting the transmission and sale of electric energy generated at said projects. The Secretary of War and the Secretary of the Interior through the Bureau of Reclamation shall each provide, construct, operate, maintain, and improve at the said project under his supervision, such machinery, equipment, and facilities for the generation of electric energy as the Administration may deem necessary to develop such electric energy as rapidly as markets may be found therefor. The electric energy thus generated and not required for the operation of the dams and of the locks and irrigation works at such projects and the navigation and reclamation facilities employed in connection therewith, shall be delivered to the Administration for disposition as provided in this Act.” SEC. 3. Section 2 (a) of the said Bonneville Act shall be amended to read as follows: "(a) The electric energy generated in the operation of the Bonneville and Grand Coulee Dam projects and made available for disposition hereunder by the Administration, together with such other energy as the Administration may obtain by exchange or purchase, shall be disposed of by the said Administration as hereinafter provided. There is hereby created in the Department of the Interior the Columbia Power Administration, all of the powers of which shall be vested in an Administrator and shall be exercised by him under the general direction of the Secretary of the Interior. The Administrator shall be appointed by the President and confirmed by the Senate, shall receive a salary at the rate of $10,000 per year, and shall maintain his principal office at a place selected by him in the vicinity of the said Bonneville and Grand Coulee Dam projects. The Secretary of War shall construct, install, and maintain additional machinery, equipment, and facilities for the generation of electric energy at the Bonneville project when in the judgment of the Administration such additional generating facilities are desirable to meet actual or potential market requirements for such electric energy. The Secretary of War shall schedule the operations of the several electrical generating units and appurtenant equipment of the said project in accordance with the requirements of the Administration. From time to time the Bureau of Reclamation and the Administration shall agree upon the installation of additional generating capacity at said Grand Coulee Dam project, and the Bureau of Reclamation shall install such additional generating capacity at said project as rapidly as may be necessary to meet the needs of the Bureau and the Administration. The Bureau of Reclamation and the Administration shall prepare a basic schedule of the energy to be available for sale by the Administration hereunder from the Grand Coulee Dam project, and the Bureau and the Administration may revive the said schedule from time to time as additional generating capacity becomes available or changes occur in the requirements of the Bureau or the Administration: Provided, however, That in the preparation and revision of the said schedule there shall be reserved at all times such portion of the energy available to the Administration as in the opinion of the Secretary of the Interior is required for operation of the said project, including its irrigation features: And provided further, That no revision shall, be made which will impair the Administration's ability to carry out contracts entered into under this Act. The Bureau of Reclamation shall make energy available to the Administration in accordance with the said schedule and pursuant to dispatching agreements between the Bureau and the Administrator. The Secretary of War and the Bureau of Reclamation shall each provide and maintain at the said project under his supervision, adequate station space and equipment, including such switches, switchboards, instruments, and dispatching facilities as may be required by the Administration for proper reception, handling, and dispatch of the electric energy produced at the said projects, together with transformers and other equipment required by the Administration for the transmission of such energy from such projects at suitable voltages to the markets which the Administration desires to serve." SEC. 4. Section 2 (e) of the said Bonneville Act is hereby amended by placing a colon at the end thereof after the words "United States", and adding the following: "Provided further, That the approval of the President of the United States shall not be required with respect to any sale or disposition to a public body or cooperative." SEC. 5. Section 2 (f) of the said Bonnneville Act is hereby amended by adding at the end thereof the following: "Other provisions of law governing the expenditure of public funds shall not apply to the Administration's expenditures or to its contracts, agreements, and arrangements. The Secretary of the Interior may prescribe by regulation the Administration's procedure for authorizing or approving its expenditures, contracts, agreements, and arrangements; and the Secretary's determination as to whether this Act authorizes particular expenditures, contracts, agreements, or arrangements of any kind or class shall be final and conclusive upon all officers of the Government." SEC. 6. Section 2 of the said Bonneville Act is hereby amended by adding after subsection (f) thereof the following new subsections: “(g) The Administration may acquire in the name of the United States by purchase, lease, condemnation, or donation, and may operate, maintain, extend, and improve, electric utility systems, the principal facilities or operations of which are in the States of Washington and Oregon (which States are hereinafter referred to as "the region"), or parts of such systems, and properties and assets reasonably incidental thereto or the acquisition thereof, and other generating, transmission, or distribution facilities, the acquisition of which in its judgment will improve the operation of the Government's electric facilities in the region or facilitate the development of appropriate marketing outlets for the electric energy produced at the Bonneville project and the Grand Coulee Dam project or at other Federal power projects hereafter constructed in the region: Provided, That condemnation proceedings shall not be instituted pursuant to this subsection against public bodies or cooperatives. Before the Administration undertakes the acquisition of a utility system or part thereof, the Administrator shall certify that in his judgment operation of such system or part thereof will increase the power revenues in an amount estimated to be sufficient to pay the operation and maintenance costs thereon and the principal and interest charges on the investment therein, and that the value of the acquired system or part thereof will be sufficient upon any sale or disposition pursuant to subsection (i) of this section substantially to repay the investment therein. Section 355 of the Revised Statutes (40 U. S. C., sec. 255), as amended, shall not apply to the purchase or improvement of lands and easements and other interests therein included in any acquisition authorized by this subsection. "(h) The Administration is authorized to issue and sell or exchange, from time to time, revenue bonds, revenue notes, and revenue obligations (all of which are hereinafter referred to as revenue bonds) and to use the proceeds thereof for carrying out the provisions of subsection (g) of this section, and for providing funds for the rehabilitation of properties acquired pursuant thereto and working capital with which to commence operation thereof, and for purchasing, refunding, or redeeming outstanding revenue bonds: Provided, That prior to the issuance of any such bonds the Administrator shall file with the Secretary of the Interior a declaration which shall set forth the purposes for which the bonds are to be issued, the uses to which the proceeds of the bonds may be put, and a general statement of the terms and provisions of the bonds to be issued. The interest and principal and other charges on such revenue bonds shall be paid only from the revenues from the Administration's generation, transmission, and sale of electric energy pursuant to this Act, or from any other receipts of the Administration, as provided in section 11 of this Act. Such revenue bonds shall be issued in such series and in such forms and denominations, shall mature within such periods not more than fifty years from the date of their issue, may provide for redemption before maturity at the option of the Administration or through the operation of any sinking fund in such manner and on such terms as may be stipulated therein, may carry such registration and conversion provisions and such provisions with respect to negotiability, may require the establishment of such sinking funds, shall bear such rates of interest, shall include such terms and conditions and such covenants and conditions not inconsistent with this Act, shall be issued in such manner and amount, and sold at such prices, as may be prescribed by the Administration: Provided further, That none of the properties under the supervision and control of the Administration other than the power revenues and the proceeds of the sales or other dispositions authorized by subsection (i) of this section shall be pledged or mortgaged as security for any such revenue bonds or for any other purpose. The Administrator is authorized to execute such indentures, agreements, and other instruments, which shall not be inconsistent with the provisions of the declaration filed with the Secretary of the Interior as he may determine to be necessary to set forth the terms and conditions upon which revenue bonds are or may be issued under this Act. Such revenue bonds shall be lawful investments, and may be accepted as security, for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority or control of the United States or any officer or officers thereof. The Reconstruction Finance Corporation and the Secretary of the Treasury in their discretion are authorized to purchase any revenue bonds issued hereunder, and for such purpose the Secretary of the Treasury is authorized to use as a public-debt transaction the proceeds from the sale of any securities hereafter issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under said Act, as amended, are extended to include any purchases of the Administration's revenue bonds hereunder. The Reconstruction Finance Corporation and the Secretary of the Treasury may, at any time, sell any of the revenue bonds of the Administration acquired by them under this section. All purchases and sales by the Secretary of the Treasury of the revenue bonds of the Administration shall be treated as public-debt transactions of the United States. "(i) The Administration is hereby directed to sell or otherwise dispose of, and it is authorized to convey, any distribution facilities acquired pursuant to subsection (g) of this section, and any improvements thereof, to public bodies or cooperatives as speedily as such sales or other dispositions can reasonably be consummated; and it may sell or otherwise dispose of and convey to public bodies or cooperatives such generating facilities and transmission lines acquired pursuant to the said subsection, and any improvements thereof, as it determines can be more conveniently and economically operated by such public bodies or cooperatives. The Administration may also sell or otherwise dispose of, and it is authorized to convey, any incidental properties or assets acquired by it when acquiring a utility system pursuant to the said subsection. All such sales or other dispositions shall be upon terms which in the judgment of the Administrator are reasonable and advantageous to the Government. The Administration may also enter into leases or management contracts of not to exceed six months' duration, providing for the temporary operation, maintenance, extension, and improvements of the said facilities and properties and for the sale of electricity at retail through the distribution facilities; and it may extend the said leases or management contracts for successive terms of not more than three months each. During the Administration's temporary ownership or control of the said distribution facilities, its sale of electricity at retail shall be at rates calculated to produce revenues sufficient to pay the costs of operating and maintaining the said facilities, including the cost of power at wholesale, payments in lieu of taxes with respect thereto as authorized in section 11 of this Act, and maintenance of proper reserves, together with interest on and the principal of the investment therein. Notwithstanding the provisions of section 3621, Revised Statutes, as amended (31 U. S. C., sec. 495), or any other provision of law relating to the collection and deposits of public money, the Administration may arrange for the collection, safekeeping, deposit, and transmission of revenues from sales through such agents, officers, or other persons and in such manner as may be provided in regulations prescribed by the Administration and approved by the Secretary of the Treasury." SEC. 7. Section 4 of the said Bonneville Act shall be amended by adding thereto the following subsection: "(e) In order to facilitate the marketing of energy under this Act and to give effect to the preference and priority for public bodies and cooperatives expressed in this Act and at the same time to preserve and integrate their distribution systems as going concerns, the Administration is authorized and directed to advise and cooperate with public bodies and cooperatives in their acquisition, construction, improvement, and operation of electrical facilities designed to serve the distribution areas in which such public bodies and cooperatives operate." SEC. 8. Section 7 of the said Bonneville Act shall be amended to read as follows: "It is the intent of Congress that rate schedules for the sale of electric energy which is or may be generated at the Bonneville and Grand Coulee Dam projects in excess of the amount required for operating the dams and the locks, irrigation and flood control works at such projects, and facilities appurtenant thereto shall be determined with due regard to and predicated upon the fact that such electric energy is developed from water power created as an incident to the construction of the dams in the Columbia River at the said projects for the purposes set forth in section 1 of this Act. The rates and charges for electric energy sold under this Act at wholesale and at retail shall be established and maintained at levels which the Administration estimates will produce aggregate revenues that will be sufficient to enable the Administration to pay the operating, maintenance, replacement, and marketing expenses; the payments in lieu of taxes; the payments of interest and principal upon all revenue bonds issued pursuant to section 2 (h) of this Act; and the payments to the Treasury of the United States; all of which payments shall be made to the extent and in the manner provided in paragraphs one to four, inclusive, of subsection (c) of section 11 of this Act. The Administration's wholesale power rates shall be reduced whenever necessary to prevent continued accumulation in the Columbia Power Administration Fund, hereinafter provided for, of a surplus derived from power revenues unless such surplus is required for the prudent operation of the Administration's business." SEC. 9. (a) The last sentence of section 8 of the said Bonneville Act is hereby amended to read as follows: "In comparing bids the Administration in its discretion may consider such factors as relative quality and adaptability of supplies or services, the bidder's financial responsibility, skill, experience, record of integrity in dealing, adherence of appropriate labor standards, ability to furnish repairs and maintenance services, the time of delivery or performance offered and whether the bidder has complied with the specifications; in the light of these considerations the Administration shall award the contract to the person who in its judgment is the lowest and best responsible bidder." (b) Said section 8 shall be further amended by adding at the end thereof a new subsection as follows: "(b) The Act of March 3, 1931 (46 Stat. 1494), as the same has been or may be amended from time to time, shall apply to contracts in excess of $2,000 entered into by the Administration for construction, alteration, or repair, including painting and decorating of public buildings or public works of the United States and which require or involve the employment of mechanics or laborers, except that the Administration shall incorporate in its advertised specifications and in its contracts, whether negotiated or awarded after advertising, wages which it has determined to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State in which the work is to be performed, and its determination shall have the same effect as a determination by the Secretary of Labor pursuant to the said Act, as amended: Provided, however, That within ten days after the invitation to bid is first advertised, or in an emergency, within such shorter time as the Secretary of Labor on application of the Administration deems proper, any contractor proposing to bid on such specifications or any present or prospective employee of any such contractor, or any agent of such employee may present an appeal, accompanied by supporting data, to the Secretary of Labor, who shall forthwith make a final determination of the prevailing wages, as provided in the said Act as amended." SEC. 10. Section 9 (a) of the said Bonneville Act shall be amended by adding the following at the end thereof: "The forms, systems, and procedures prescribed by the Comptroller General for the Administration's administrative appropriation and fund accounting shall be in accordance with the requirements of the Federal Power Act with respect to accounts of electric operations of public utilities and the regulations of the Federal Power Commission pursuant thereto." SEC. 11. Section 10 of the said Bonneville Act is hereby amended to read as follows: "(a) The Secretary of the Interior shall appoint, without regard to the civilservice laws, an Assistant Administrator, a chief engineer, and a general counsel, and shall fix the compensation of each subject to the Classification Act of 1923, as amended. The Assistant Administrator shall perform the duties and exercise the powers of the Administrator in the event of the absence or sickness of the Administrator until such absence or sickness shall cease, and, in the event of a |