(The bills, H.R. 5309 and H.R. 7201, are as follows:) [H.R. 5309, 86th Cong., 1st sess.] A BILL To amend part I of the Federal Power Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 10(f) of the Federal Power Act is hereby repealed. SEC. 2. The Federal Power Act is amended by adding the following as a new section: "SEC. 31. (a) (i) Whenever any hydroelectric power project owned by nonFederal interests is or will be benefited by the construction, operation, or maintenance of any reservoir or other water-use facility, whether upstream or downstream, the Commission, after notice to the owner or owners of any projects so benefited, and the Federal agency or owner of the facility furnishing the benefit, and after opportunity for hearing, shall determine and fix a reasonable and equitable annual charge to be paid to the owner of such facility furnishing such benefits, including the United States if it be the owner of the facility providing the benefit. The annual charges hereunder shall be such part of the fixed costs of the facility furnishing the benefit plus such part of the annual operating and maintenance costs of such facility, including land rentals and similar charges, as the Commission may deem equitable: Provided, That such annual charges shall not exceed the value of the benefits realized or received. "(ii) Whenever any hydroelectric power project owned by the United States is or will be benefited by the construction, operation, or maintenance of any reservoir or other water-use facility, whether upstream or downstream, the Commission, after notice to the Federal agency operating the project so benefited and the Federal agency or owner of the facility furnishing the benefit, and after opportunity for hearing, shall determine and fix a reasonable and equitable annual charge to be paid to the owner of such facility furnishing such benefits, such charge to be determined as provided in the preceding paragraph: Provided, That no payments shall be required for benefits furnished by one Federal facility to another Federal facility, but where no such payment is required, the charges determined for benefits so received shall nevertheless be considered in determining and fixing any other charges to be paid under this subsection. 66 "(b) In all cases otherwise within the provisions of subsection (a) of this section, the owner of any project owned by non-Federal interests, or the agency operating any project owned by the United States, may enter into an agreement with the person owning, or agency operating, the reservoir or other water-use facility that provides the benefit, subject to approval of its provisions by the Commission, for the coordinated operation of such projects and facilities through regulation of upstream reservoir releases, and the transfer, exchange, or sale of energy to provide firm energy capabilities at each party's power developments within the coordinated operation. In all cases where such an agreement is made by the parties and approved by the Commission, the provisions of subsection (a) of this section shall be inapplicable to the facilities provided for in the contract during its term. "(c) Annual charges assessed hereunder may be readjusted by the Commission at periods of not less than five years after notice and opportunity for hearing or readjusted at any time by the Commission as changed conditions may warrant after notice and opportunity for hearing. "(d) All charges collected for the benefits provided by any facility owned by the United States shall constitute revenues of the facility providing the benefit and such revenues shall be disposed of in accordance with any provision of law applicable thereto. "(e) All parties affected by any determination hereunder (except any agency of the United States in each instance where the cost of operating the facility involved is financed by direct appropriations) shall bear a reasonable share of the cost to the Commission of making the determination and all such parties shall pay their share of such cost, as fixed by the Commission, into the Treasury of the United States for credit to miscellaneous receipts: Provided, That for those Federal facilities where payment into the Treasury is not required by this paragraph, the reasonable share of the cost as fixed by the Commission shall nevertheless be considered as an expense of the facility involved. "(f) Appropriations or other funds available for operation of the facility concerned shall be available to pay the annual or other charges that may be assessed against the United States pursuant to the provisions of this section. "(g) No party receiving a notice under subsections (a)(i) or (a)(ii) of this section shall be required to pay annual charges under this section for benefits received prior to the enactment of this section or be required to pay annual charges under this section for benefits received more than five years prior to the date on which the Commission gives notice to such party as provided in subsections (a) (i) and (a) (ii) hereof; nor shall any party receiving a notice under subsection (a) (i) of this section be required to pay any non-Federal interest annual charges under this section if it is paying or is required to pay similar annual charges under State law." SEC. 3. Subsection (b) of section 10 of the Federal Power Act is hereby amended by striking out the words "one hundred" and inserting in lieu thereof the words "two thousand”. SEC. 4. Subsection (e) of section 10 of the Federal Power Act is hereby amended by striking out the words "one hundred" and inserting in lieu thereof the words "two thousand". SEC. 5. Subsection (i) of section 10 of the Federal Power Act is hereby amended by striking out the words "one hundred" and inserting in lieu thereof the words "two thousand". SEC. 6. Section 15 of the Federal Power Act is hereby amended to read as follows: "SEC. 15. That if the United States does not, at the expiration of any license issued under this Act, exercise any right it may have to take over, maintain, and operate any project or projects of the licensee as provided in section 14 hereof, and if the licensee has made an application for a new license, the Commission shall issue a new license to the licensee upon such terms and conditions as may be authorized or required under the then existing laws; or, if the licensee has not made an application for a new license, then the Commission may issue a new license under said terms and conditions to a new licensee, which license may cover any project or projects covered by the expiring license, and shall be issued on the condition that the new licensee shall, before taking possession of such project or projects, pay such amount, and assume such contracts as the United States is required to do, in the manner specified in section 14 hereof: Provided, That in the event the United States does not exercise the right to take over, or does not issue a new license to the then licensee, or issue a license to a new licensee, upon reasonable terms, then the Commission shall issue from year to year an annual license to the then licensee under the terms and conditions of the expiring license until the property is taken over or a new license is issued as aforesaid." [H.R. 7201, 86th Cong., 1st sess.] A BILL To provide for the comprehensive operation of hydroelectric power resources of the United States, and for other purposes Be is enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the following new section be added to the Federal Power Act: "SEC. 31. (a) Whenever any hydroelectric facility owned by the Federal Government or by non-Federal interests is or will be benefited as a result of the construction, operation, or maintenance of any water control facility, the parties owning or operating any of such Federal or non-Federal facilities may enter into an agreement or agreements, which shall be subject to approval by the Commission, for the coordinated operation of such facilities through regulation of reservoir releases, and the transfer, exchange or sale of energy to provide power benefits at each party's power developments within the coordinated operation. All such agreements shall satisfy and discharge any and all obligations, as to the parties to such agreements, which would otherwise apply pursuant to the terms of subsection (b) of this section. "(b) Whenever the owner or operator of any water control facility owned by the Federal Government or by any non-Federal interest has assured the owner or owners of any hydroelectric facility or facilities owned by the Federal Government or any non-Federal interest that it will reasonably coordinate the operation of its facility so as to produce the optimum amount of firm energy for itself and all downstream owners of hydroelectric facilities, the Commission, after notice to the Federal or non-Federal agencies operating all such facilities, and after opportunity for hearing, shall determine and fix a reasonable and equitable annual charge which shall be paid to the owner of such water control facility and which payment may, by agreement of the affected owners, be paid in an exchange of power or energy, such annual charge to be apportioned among all parties in proportion to the additional amount of firm energy that each hydroelectric facility at site of the water control facility and downstream from the water control facility can produce as a result of coordinated operation including storage releases; firm energy as used in this section means the amount of energy a hydroelectric facility is capable of producing with the full release of the stored water and such coordination of operations, assuming streamflows of a river basin equivalent to those experienced in the historical period of streamflows producing the minimum amount of energy: Provided, That in the event the Commission shall determine that, under operating conditions in a particular river basin the use of hydroelectric facilities is primarily for peaking service, or for producing energy other than firm energy then the Commission shall, in lieu of coordinated operation, after notice and opportunity for hearing, in the light of all the circumstances, including all benefits furnished by any facility to any other facility, whether upstream or downstream, determine and fix a reasonable and equitable annual charge to be paid to the owner of each facility furnishing such benefit by the owner of each facility receiving such benefits: Provided further, That in no case shall the resultant charge to any facility exceed the value of the benefits realized by such facility. In determining such annual charge, the Commission shall include, among other things, such part of the fixed annual costs of the facility furnishing the benefit, and of the annual operating and maintenance cost of such facility (including land rentals and similar charges), as the Commision may deem equitable, and, where applicable, the Commission shall consider any costs incurred by the owners of the water control facility and of downstream facilities for energy required to maintain firm energy: And provided further, That the annual charges provided for in this subsection (b) shall not apply with respect to such of the affected owners as have entered into and are parties to a valid and subsisting agreement or agreements, subject to the provisions of subsection (a) of this section, for the coordinated operation of their respective facilities, reservoirs, or other water control facilities referred to in this subsection. "(c) The owner or operator of a water control facility will be considered to have assured the owner or owners of a hydroelectric facility or facilities that it will reasonably coordinate the operations of its facility within the meaning of subsection (b) of this section if such owner or operator files with the Commission at any time after the effective date of this Act a commitment commencing at the beginning of the following drawdown period of the water control facility invloved and extending for a period of not less than five years to operate such facility on a coordinated basis in accordance with subsection (b); and on the filing of such commitment the provisions of this section shall become binding upon all interested parties, as of the date of such filing unless the Commission shall, within six months after the date of such filing, after notice and opportunity for hearing, disapprove the proposed coordination: Provided, That such commitment may be extended for successive periods of one year by written notice filed with the Commission at least two years prior to the date on which it would otherwise expire. "(d) In the event that an operator of a water control facility so operates as part of a coordination operation under subsection (b) of this section in such a manner as to result in a detriment to the owner of a hydroelectric facility, the Commission, after notice and opportunity for hearing, shall allow to the owner of the hydroelectric facility suffering the detriment such offset charges assessed under subsection (b) of this section as the Commission shall determine to be equitable, which offset shall be charged against the operator of the water control facility and such charge shall be included in the annual charge to be paid to the owner of the water control facility by the owners of all hydroelectric facilities in the coordinated operations. In the event the operator of a water control facility not operating as part of a coordination agreement or plan under subsections (a) or (b) of this section so operates as to unlawfully interfere with the natural flow of the river or to interfere with the storage releases of a water control facility upstream which have been released in accordance with coordination agreement or coordinated plan pursuant to subsections (a) or (b) of this section and such interference results in a detriment to the owner of a downstream hydroelectric facility, the Commission, after notice and opportunity for hearing, shall determine and fix a reasonable and equitable charge which shall be paid to the owner of such hydroelectric facility by the owner of the water control facility creating the detriment. "(e) Annual charges under subsections (b) and (d) of this section may be readjusted by the Commission, on its own motion or the motion of any interested person or organization and after notice and opportunity for hearing, at any time that changed conditions may so warrant. "(f) All charges collected for the benefits provided by any facility owned by the United States shall constitute revenues of the facility providing the benefit and such revenues shall be disposed of in accordance with any provisions of law applicable thereto. "(g) All parties affected by any determination under subsection (b) or (d) of this section (except any agency of the United States) shall bear a reasonable share of the cost to the Commission of making the determination, and all such parties shall pay their share of such cost, as fixed by the Commission, into the Treasury of the United States for credit to miscellaneous receipts: Provided, That in fixing the reasonable share of the cost each party is required to pay by this subsection (g), the Commission shall apportion the total cost among all parties, including Federal agencies affected, notwithstanding the fact that no payment into the Treasury is required to be made by such Federal agencies. "(h) Appropriations or other funds available for operation of the facility concerned shall be available to pay the annual or other charges or costs that may be assessed against or payable by the United States, or any agency thereof, pursuant to the provisions of this section. "(i) No party receiving a notice under subsection (b) or (d) of this section shall be required to pay annual charges under this section for benefits received prior to the effective date of this section or be required to pay annual charges under this section for benefits received more than five years prior to the date on which the Commission gives notice to such party as provided in subsection (b) or (d) hereof; nor shall any party receiving a notice under subsection (b) or (d) of this section be required to pay to any non-Federal interest annual charges under this section if it is paying or is required to pay similar charges under State law." SEC. 2. Subsection (f) of section 10 of the Federal Power Act (16 U.S.C. 803 (f)) and all other Acts or parts of Acts in conflict with the provisions of this Act are hereby repealed and the following subsections of said section 10 are redesignated accordingly: Provided, however, That nothing contained in this Act shall in any manner affect any right or obligation which vested or accrued prior to the effective date of this Act. (Note.-H.R. 7494 by Mr. Hemphill of South Carolina is identical to H.R. 7201.) The CHAIRMAN. We are glad to welcome the sponsors of the bills here today, as well as other witnesses. I have known for some time the interest of the National Association of Railroad and Utilities Commissioners in this problem, too. To start with, however, with the indulgence of our colleagues, the sponsors of the bill, who are here, unless you have another program which calls for your presence very soon, I think it would be advisable to start the hearings with the Federal Power Commission, so we can get their position in the record at the outset. (Discussion off the record.) The CHAIRMAN. With that understanding, we will start with Mr. Willard Gatchell, who is General Counsel for the Federal Power Commission. Do we have a report from the agency? Let the report be included in the record at this point, and such other reports from the agencies that have been received. (The reports referred to follow :) Hon. OREN HARRIS, EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., May 14, 1959. Chairman, Committee on Interstate and Foreign Commerce, MY DEAR MR. CHAIRMAN: This is in response to your letter, dated March 9, 1959, requesting the views of the Bureau of the Budget on H.R. 5309, a bill to amend part I of the Federal Power Act. The President has recommended that legislation be enacted to provide that the Federal Government make payments to owners of non-Federal water resources projects when Federal hydroelectric power developments benefit from these projects. Sections 1 and 2 of H.R. 5309 would accomplish this objective. Sections 3, 4, and 5 of this bill would amend existing law by providing for exemption of projects of 2,000 horsepower or less from certain licensing provisions of the Federal Power Act. These relatively small projects do not appear to be of great importance in the development of hydroelectric power resources, and a resulting decrease in license applications should produce savings in administrative expenses of the Federal Power Commission. Section 6 of the bill would amend section 15 of the Federal Power Act to provide for relicensing the same licensee, upon application, if the United States does not take over a project at the end of the license period. According to the Federal Power Commission, in its report to your committee on H.R. 5309, the proposed amendment is unnecessary when viewed in the light of the other provisions of the act. The Bureau of the Budget would favor the enactment of legislation to accomplish the objectives of section 1, 2, 3, 4, and 5 of H.R. 5309. Sincerely yours, PHILLIP S. HUGHES, Assistant Director for Legislative Reference. REPORT OF FEDERAL POWER COMMISSION ON H.R. 5309, 86TH CONGRESS Sections 1 and 2 of this bill would repeal section 10(f) of the Federal Power Act and enact a new section 31 which would require not only reimbursement by non-Federal power developers for benefits accruing to them from upstream facilities constructed by another, as does the present section 10 (f), but also require reimbursement by the United States for benefits accruing to its downstream facilities from headwater improvements constructed by non-Federal interests. In addition. it would broaden the present provision to provide for the determination of benefits and fixing of charges when a downstream facility such as a reregulating dam benefits an upstream reservoir or facility. Annual charges thus assessed could be readjusted by the Commission at 5-year intervals after notice and opportunity for hearing. The bill further provides that in lieu of the Commission determining and fixing such annual charges for benefits payable by federally constructed and operated plants, the owners of any non-Federal water-control facilities and the United States, subject to Commission approval, may enter into contracts or agreements for coordination of their hydraulic and electrical operations so as to assure firm power benefits from such facilities. The Commission agrees in principle with the proposal of the bill to provide for annual payments for upstream or downstream improvement benefits received by non-Federal power developments and for similar annual payments by the United States to non-Federal interests. The Commission has consistently since 1951 recommended that the Federal Power Act be so amended, and accordingly in its reports to the House Interstate and Foreign Commerce Committee on H.R. 7468, 84th Congress, and H.R. 2438, 85th Congress, urged enactment of amendatory language which is essentially the same as that contained in section 2 of H.R. 5309. (See the Commission's Thirty-seventh Annual Report (1957), pp. 20, 21, 26, 27.) The Commission believes that the proposed legislative authority providing for payment by Federal hydroelectric developments for benefits received from non-Federal water resources projects is sound in principle and essential to more effective carrying out of the purposes of existing Federal waterpower legislation. |