Mr. GATCHELL. Yes, sir. That is all right.

Mr. Moss. And if you take away from the project the cost of the upstream storage-which they may not have had any desire to have, but it occurs-then you are adding to the cost of irrigation. You are adding to the project cost.

Mr. GATCHELL. No, you are not. You are not adding a thing, Congressman, because what you are selling is energy which would not otherwise be available.

Mr. Moss. I say that you cannot do this. You are saying that every release from upstream, which may be as a result of the operation of their hydro project, which is beyond the normal flow, must be paid for. Mr. GATCHELL. If it is a normal flow

Mr. Moss. I said excepting a normal flow. You are laying down the rule that everything beyond a normal flow feeding into that downstream project must be paid for.

Mr. GATCHELL. Yes, sir.

Mr. Moss. I say, then, you are adding to project cost, and as you add to project cost you increase the cost of irrigating out in my area. Mr. GATCHELL. You have not added a penny.

Mr. Moss. We disagree. In my judgment, you have added to proj

ect cost.

The CHAIRMAN. Mr. Gatchell, thank you very much.
(The following letter was later received from Mr. Gatchell:)

FEDERAL POWER COMMISSION,
Washington, July 23, 1959.

Re H.R. 5309 et al., 86th Congress. Hon. OREN HARRIS, Chairman, Subcommittee on Communications and Power, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: At the hearing on July 16 before the Subcommittee on Communications and Power on the bills H.R. 5309, H.R. 7201, and H.R. 7494, to amend the Federal Power Act, you asked if I would advise the committee as to the authority of Federal power marketing agencies, such as the Bonneville Power Administration, under present status to enter into coordination agreements with other power suppliers, such as public utility districts and power companies, for the interchange and purchase of electric power and water.

We have made a study of this question only incidentally because the Federal Power Commission is not given any marketing responsibility for the sale of power from Federal powerplants. In order that your committee may be fully and correctly advised, in response to your request I have brought your inquiry to the attention of the Solicitor of the Department of the Interior for inclusion in the report of the Secretary of the Interior on pending bills.

Respectfully yours,

WILLARD W. GATCHELL,
General Counsel.

The CHAIRMAN. Is there anyone from the Department of Interior here? I understand that a report will be coming from the Department

very soon.

Mr. Gary?

STATEMENT OF HON. J. VAUGHAN GARY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA

Mr. GARY. Mr. Chairman and members of the committee, as you stated at the opening, Mr. Chairman, this matter has been before this committee for some time. As a matter of fact, I introduced this bill first on July 19, 1955. It was H.R. 7468 in the 84th Congress.

The reports from the departments did not come in, and the committee was not able to hold hearings on the bill at that time until June 5, 1956, 1 year later.

The committee held hearings and reported the bill to the floor of the House. There was no opposition during the first hearings that were held, but when the bill reached the floor, certain parties requested that it be returned to the committee for further hearings. The chairman did, after consulting with me, return the bill to the committee, and subsequent hearings were held on July 5. By that time, it was so late in the session that we did not feel that it was possible to get the bill through both the House and the Senate. Therefore, we just suggested to the committee that they hold it in the committee.

I introduced the bill again in the 85th Congress, on January 10, 1957. That bill was known as H.R. 2438. And as the chairman well knows, your committee was very busily engaged during that session, during that entire Congress, and therefore we were not able to get hearings on it during that Congress.

Therefore, I introduced the bill again in this 86th Congress.

Now, let me say to you that this is certainly not a private power bill. I introduced the bill at the request of Judge Lester Hooker, who is a member of our State corporation commission in Virginia and a former president of the National Association of Railroad and Utilities Commissioners. That association had endorsed the bill, and I introduced it at their request.

Now, there is nothing, absolutely nothing, new in the bill. The principle involved is in the bill at the present time. All it does is to extend that principle.

For example, if the Federal Government owns an upstream project, they can collect from any non-Federal users downstream for the benefits that those non-Federal users receive from the Federal project.

Now, all this bill does is to reverse it-in just plain justice and equity reverses it so that if a non-Federal user owns a project upstream, then they can collect from the Federal Government if the Federal Government project is benefited by their upstream holdings. And that is all the bill does.

It does have the provision, it is true, with reference to the voluntary agreements between the parties, in an effort to bring about coordination in a river basin, so far as the power in that basin is concerned.

By the way, let me say to you: If you will read the report of the budget committee, that recommendation, you will see that the President himself has recommended that that be done. It is a recommendation of the President of the United States that these payments be equalized to that extent. And this bill has been approved by the Budget Bureau, by the Department of Agriculture, and, as you have just heard testified, by the Federal Power Commission.

Now, those provisions are in all three of the bills. In addition to that, my bill does contain two other provisions. One of them is this: that under the present law, operations with less than 100 horsepower are exempted from certain licensing provisions of the Federal Power Act. Now, the Federal Power Commission has determined from its experience in handling this law that that limit can very well be increased, and therefore they have recommended, in every report of the

Federal Power Commission since 1951, that the limit be raised. They have not set any specific standard.

My bill does raise it from 100 horsepower to 2,000 horsepower, and that limit has been accepted by the Federal Power Commission, and they approve it.

Now, that, of course, comes about largely by reason of the fact that I am a member of the Appropriations Committee, and we believe in economy, as all of you gentlemen know, and that simply means economy and efficiency in the administration of the act. The Federal Power Commission have determined that these smaller units do not need the regulation, they do not need, certainly, to comply with certain provisions of the Federal Power Act, and therefore we will save money, we will save time, and we will save the Federal Power Commission a lot of headaches, unnecessary headaches, may I say, by changing that provision.

Then the third provision in the bill, which is section 6, does provide for the relicensing in certain projects. Now, the Federal Power Commission feels that that is not necessary. They say that it is already covered by present law, and it probably is. But what we were trying to do in this bill was simply to clarify the law, get the whole subject right in the Federal Power Act, and if it is immaterial, if it is not necessary, I personally see no objection to putting it into the law so that we will have it clarified and specifically spelled out in the bill.

That is the bill, gentlemen. And as I say, I have introduced this bill entirely at the request of the National Association of Railroad and Utility Commissioners. Here this morning is Mr. Roberts, the General solicitor of that association, and Judge Hooker, who is a member of our State corporation commission in Virginia and has been a member for many years and I think is one of the authorities in the United States on subjects of this kind. And I have talked to my colleagues, and they would be very glad if you would hear from them at this time, and I would appreciate it if the committee would yield to them for a brief statement.

Mr. ROGERS of Texas. Mr. Gary, one question in regard to the primary purpose of your bill.

In your language you were referring to the fact that there was a Federal installation downstream, and you said that if that Federal installation receives benefits from a private owner upstream, the Federal Government should pay for it. Now, do you mean this: that if that upstream owner turns water loose, the Federal Government would pay for that benefit only if they took energy out of that water? If they let the water go on without taking energy out of it, they would not be required to pay.

Mr. GARY. That is right. This does not change the present law one particle in that respect. It just applies the bill to Federal users as well as to non-Federal. And what is more, it is up to the Federal Power Commission, a Federal agency, to determine what benefits are received and the value of those benefits.

Mr. ROGERS of Texas. The point is simply this, too: that it is not the intention of this bill or those who advocate it to say just because some water is coming downstream and you could use it, you have to pay for it whether you use it or not?

51029-60- -3

Mr. GARY. No. Absolutely not.

Mr. ROGERS of Texas. That is the point I wanted to get clear.

Mr. GARY. I think that is absolutely plain. And as I say, the Federal Power Commission has to determine whether it is being used and whether they are using any benefits.

Mr. Moss. I will reserve my questions for the Federal Power Commission.

The CHAIRMAN. Any other questions of Mr. Gary?

Mr. AVERY. I would like to say, speaking for the minority, we feel highly honored that the distinguished gentleman from Virginia would appear before us this morning and give us his views on this legislation. And by virtue of his sponsorship, I think the bill must have considerable merit.

Mr. GARY. I appreciate my colleagues' remarks very much in that respect. It is always a pleasure for me to appear before this committee. I always receive the most courteous reception. And I certainly have the highest regard for the members of the committee, and I am perfectly willing to leave this matter in your hands.

The CHAIRMAN. Thank you very much, Mr. Gary. We appreciate your presentation as well as the attention you have given this matter. The CHAIRMAN. Mr. Metcalf?

STATEMENT OF HON. LEE METCALF, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MONTANA

Mr. METCALF. Mr. Chairman, I have but little to add to what has already been testified by the representatives of the Federal Power Commission and my colleague, Mr. Gary.

However, I want to call to the attention of the committee how this would work in my area on the Columbia system.

When Senator Murray introduced S. 1782, which is an identical bill introduced in the Senate, he said that the mere passage of this legislation would create from 500,000 to a million extra kilowatts of firm power, without building another dam on the Columbia. Without making another installation, without buying another generator, you have the equivalent of another Grand Coulee Dam in firm power, by coordinated operation of the present installations.

In addition to the equities that have been pointed out by the Counsel to the Federal Power Commission and by Mr. Gary, I want to call your attention to the fact that by requiring the private and the public systems along the river in the Columbia River system, we add, at a conservative estimate, 500,000 kilowatts. And that is my prime purpose in introducing this legislation, to bring about the most efficient and the optimum operation of the water resources of that river.

Now, I cannot tell you what would happen down in the southeast or in other authorities. And I have not figured out what would happen in the Missouri, in which I am also interested. But the same sort of additional prime power would result as a result of this coordinated operation.

Mr. ROGERS of Texas. Would the gentleman yield, there?

Mr. METCALF. Certainly I will yield to the gentleman from Texas. Mr. ROGERS of Texas. Would you explain in primer language why that is so? I think that is very important to have that.

Mr. METCALF. For instance, on the Columbia River system, on the South Fork of the Flathead, is the Hungry Horse Dam, a Federal dam. Down the river from Hungry Horse is a private power dam belonging to the Montana Power Co. at Kerr. On down the river is the Cabinet Gorge Dam, belonging to Washington Water Power, and then on down the river are a series of public dams. Hungry Horse Dam only operates about 6 months out of the year. In periods of large rainfall, we store the water, and then the normal flow of the water goes on downstream.

Kerr Dam, a private power dam, if it were setting there in isolation, and operated by the Montana Power Co. for the benefit of its customers alone, without any consideration to either the downstream or the upstream operation, would begin to be releasing water from Kerr today, in July. That water would run on down the stream and would be wasted in the public power dams on downstream.

Actually, by a coordinated operation, the Montana Power Co. can keep that water in Flathead Lake and behind Kerr Dam until late fall, September or October, when we are having brownouts in Spokane, at the aluminum factory and so forth, and let that run on downstream. Now, how is Montana Power Co. going to be encouraged to wait until September or October to release water that they need for their operation of their system in July? The way they are going to be encouraged is to send back-because power flows both ways, and water only runs one way to send back power that is generated by that water, by the normal flow of the river, from Bonneville or Grand Coulee or some other dam in the system along the Columbia. It is as simple as that. By a coordinated operation, we have firmed up the power all up and down the stream. And we encouraged the Montana Power Co. to participate in such a coordinated operation by saying to them that downstream we will pay them for the benefits conferred. As was pointed out by Mr. Gary, they are only paid for the benefits that are conferred as a result of this coordinated operation, and the determination of the payment is by the Federal Power Commission in accordance with the plan already filed before the Commission.

Mr. Moss. Could you not arrive at the same benefit by merely authorizing agreements of this type, rather than requiring, as the proposal before us does, that the benefit be paid for, in the hypothetical case I put on the dam out my way, where releases are stepped up to meet other than power needs, and only incidentally is it used for power?

Mr. METCALF. I do not know whether we can go in and require these people that have been licensed by the Federal Power Commission to operate their facilities and their reservoirs and their generators and so forth in any other way than what is for the best interests of the power company and its stockholders. In the license given to Brownlee Dam by the Federal PowerCommission there is a requirement that there be this coordinated operation. I should think that the Federal Power Commission in the future should make such a requirement, so that we would not have to come in and give this bait to the coordinated operation. But we have not done that in the past, as Mr. Gatchell testified. We did not realize the necessity for this coordinated operation, and certainly there would be some grave doubt about our going