Hungry Horse Dam a project that produces 840,000 kilowatts-at ratio of 3 to 1 of downstream benefits to actual production at the project itself. Certainly, there was no political ideology mixed up in this. No one can define an acre-foot of storage as Federal, public or private. It belongs to the people of the region and of the United States. This coordinated operation will make feasible projects with storage that otherwise would be infeasible from the standpoint of construction by the Federal Government due to an unfavorable benefit-to-cost ratio and also make feasible projects that could not, under the law, be licensed by the Federal Power Commission due to an unfavorable benefit-to-cost ratio.

So, this operation will do just the opposite from the "fear and tear" approach and the benefits will then be measured with increased employment and increased taxes on the local, State, and Federal levels-all to the economic benefit of the Pacific Northwest region, in this particular instance, and to the Nation as a whole. Bonneville power rates of $17.50 a kilowatt-year have just been reestablished and projected for an additional 5-year period. At this rate, the Federal Government's investment in our power system within the ColumbiaSnake River watershed is being repaid on the basis of 3-percent interest. This is a terrific demonstration of the worthwhileness of a multiple-purpose program in which the Federal Government can participate and the coordinated operation of federally, privately, and publicly-owned projects will again demonstrate the wisdom of the enactment of H.R. 7201, a bill whose sole purpose is to provide for the coordinated operation of hydroelectric power resources of the United States.

The argument of fear today is as invalid as the argument of fear was back when President Roosevelt started the Grand Coulee and the Bonneville projects in the Pacific Northwest. It is the sincere belief of this association that this legislation under review by this committee is for the benefit of the Northwest region and the United States as a whole.

Thank you so much for the privilege of having this statement introduced in the record and it is our sincere hope that we have contributed somewhat to a better understanding of the objectives and purposes of this legislation.

YEAR-AROUND DEPENDABLE ENERGY PRODUCTION OF DOWNSTREAM PLANTS Coordinated System Operation based on 1962 Installations & Load Estimates

(The following material was submitted for the record:)

STATEMENT OF ANGUS MCDONALD, COORDINATOR, LEGISLATIVE SERVICES, NATIONAL FARMERS UNION IN OPPOSITION TO H.R. 7201

Mr. Chairman and members of the committee, I am appearing here in opposition to H.R. 7201, which allegedly would provide for the comprehensive power resource development of the United States. We believe that this bill is contrary to the long-established principle of water resource development. We believe that it is not only contrary to water policy as developed over a period of 50 years in many statutes, executive agencies' policy decisions, and court decisions, but that it is contrary to the interest of the people of the United States in that it would authorize perpetual subsidies to private interests.

I call attention to the policy of the National Farmers Union as set forth in many resolutions adopted at county, State, and National conventions over a long period of years. These resolutions set forth the principle that the navigable waters of the United States belong to the people and that benefits from these waters should be distributed as widely as possible. These resolutions set forth the additional principle that every river basin should be developed on a comprehensive basis. These resolutions spell out this principle in regard to flood control, navigation, electrical power, conservation of soil, forests, grassland, fish, and wildlife.

The executive branch of the Government and the Congress apparently have been in accord with these principles over a period of 50 years. Theodore Roosevelt in a famous veto message of 1909 declared that to hand over powersites to private interests without laying down certain conditions would be an act of folly. He pointed out that such an act would result in our children being "forced to pay an annual return upon a capitalization based upon the highest prices which the traffic will bear." Roosevelt affirmed the second principle in a message to Congress in 1908 by saying that "every stream should be used to its utmost. No stream can be used unless such use is planned in advance." President Taft in his White River veto message of 1912 emphasized the idea that each dam in a series should be operated on a coordinated and integral basis. This philisophy was affirmed repeatedly over a period of many years.

I emphasize this because apparently the authors of this bill were unaware of this well-established policy. They refer to coordination of various installations in a river system as if it were something new and untried. They apparently are unaware that Congress together with the administrative agencies have been making provisions for comprehensive, integrated, and coordinated operation of our streams for many years. This is evidenced in numerous statutes. The principle of coordinated operation has been emphasized over and over again.

Those who have developed wise water policy took into account the principle that the rivers of the Nation belong to all the people and that those who came seeking special privileges and sought to exploit our river basins for private profit should be required to conform to comprehensive river basin policy.

Attention is called to section 5 of the Federal Power Act of 1920 wherein it is stated that a license to a private power company "may be canceled by the Commission upon failure to comply with the conditions thereof or for other good cause. Attention is called to a portion in sec. 6 which is as follows:

“* * * license shall be conditioned upon acceptance by the licensee of all the terms and conditions of this act and such further conditions, if any, as the Commission shall prescribe in conformity with this act which said terms and conditions and the acceptance thereof shall be expressed in said license."

In section 7, preference in regard to applications for licenses is given to States and municipalities. However, it is stated that preference may be given to an applicant for a license to develop and sell power if the applicant's plans are "best adapted to develop, conserve, and utilize in the public interest the water resources of the region," if the Commission is satisfied as to the "ability" of the applicant to carry out such plans.

I call attention to the word "ability" in sec. 7 of the Federal Power Act. This word suggests that the Commission before granting a license for a power project must be satisfied as to the ability financially and otherwise of the applicant to play his part in carrying out a comprehensive plan and fulfilling conditions imposed by the Government. It was not suggested and apparently never imagined that the Government would have to subsidize a private power company to obtain its cooperation in carrying out its plan of comprehensive development. In looking at the bill, it seems to use that the first part which states that agreements

may be entered into in regard to coordinated operation is completely unnecessary. The language that the Commission, after having received assurance that the non-Federal interest will reasonably coordinate its facilities and that the Government must pay for such coordination in "power, energy and money," seems a little absurd in the light of the language in the Federal Power Act above. Attention is called to language at the bottom of page 3 in regard to the annual Federal charges which the Federal Power Commission would assess against the Federal facilities on the basis of "fixed annual cost" of the facilities furnishing the benefit. Attention is called to Senate Report 1865, part 2, 84th Congress, 2d session, which comprises the views of Senators Neuberger, Jackson, and O'Mahoney. These distinguished Senators, eminently qualified because of their long experience and familiarity with congressional water policy and with power projects, both public and private, take the view that legislation similar to the bill under consideration here, using this method of computing benefits, would require the Federal Government to pay on upstream private projects for benefits received at a rate of approximately three times the cost of equivalent Federal storage. The authors of the document refer to the legislation (S. 1574, 84th Cong.) as a "generalized enabling bill and a perpetual appropriations bill for permanent payments in lieu of taxes in an unknown amount to an unknown number of governmental entities."

A final word should be said in regard to the groups who would benefit from this legislation. Over a period of many years in expensive newspaper and magazine ads, in special brochures, over radio and on television, before congressional committees and other places, spokesmen for the private power companies constantly dinned in our ears that they wanted no subsidies, no handouts, and that they were ready to build the projects on the Snake River and in other areas without a cent of taxpayers' money. These pronouncements apparently have been believed by certain groups within this administration, who mistakenly, we believe, turned over the great Hells Canyon site to the Idaho Power Co. for private development.

Under this legislation, the Idaho Power Co. stands to benefit greatly. Since eight Federal dams in the Columbia River system are below Oxbow and Brownlee Dams, subsidies to the Idaho Power Co. will amount to many millions of dollars. This is only one example. Such a situation will exist in other river systems throughout the United States.

The purpose of one of the groups supporting this legislation has been made clear. It proposes to take over an entire river system. This is the dream of Mr. Kinsey Robinson, who, commenting on S. 1574, 84th Congress, stated that it was the purpose of the Pacific Northwest Power Co., of which he is president, to take over the development of the Columbia River.

We urge the committee to disapprove this legislation. We feel very strongly that it is against the public interest and that it would do irreparable harm to long-time established congressional policy. It would overturn to some extent not only the Federal Power Act but would cast a shadow on a number of statutes, such as the Flood Control Act of 1944, which in section 5 states that it shall be the policy of the Federal Government to encourage the most widespread use cí electric power at the lowest possible rates to consumers.

JULY 23, 1959.

Hon. JAMES E. MURRAY,
U.S. Senator,

Washington, D.C.

DEAR SENATOR MURRAY: As I indicated to you in our telephone conversation, in my opinion S. 1782, the downstream benefits bill, is a thoroughly bad piece of legislation. It is designed to exact tribute from the U.S. Government for the sole benefit of the power companies. It constitutes a reversal of comprehensive river basin policy which has been repeatedly affirmed by the Congress over a period of many years.

Basic to the consideration of this legislation is the fact that the people own the rivers, and, as set forth in the Federal Power Act of 1920, they may operate projects on rivers only as a privilege. The conditions under which a private power company may operate a dam at a profit are explicitly set forth. The private power company uses the river and enjoys great profits, but only if it complies with the conditions of the license.