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Wash., its successor or a combination, under a license issued pursuant to the Federal Power Act, and subject to conditions specified in the bill, such license to authorize the development essentially the same as now authorized, and recommended in House Document 531, 81st Congress.

The license would provide for further construction with respect to flood control and navigation, either initially or at a later date, at Federal expense, with allocation of costs for such features approved by the Federal Power Commission.

Development of the Priest Rapids site by local interests at this time would make available the power benefits to the region at an early date.

I may say that the administration is very much interested in this bill. The Secretary of the Interior and, as I shall later show, various other authorities connected with the Government who have an interest in such matters are all in favor of the bill.

The bill assures that a reasonable portion of the power generated will be made available for equitable distribution within the economic marketing area in adjacent States. The committee recommends an amendment proposed by the sponsors of the companion Senate bill that would permit the Bonneville Power Administrator to use funds from his continuing fund to purchase power surplus to the requirements of the licensee and other non-Federal marketing agencies, and distribute such power through the Bonneville grid for sale at established rates in accordance with the Bonneville Project Act.

The committee believes that the bill adequately protects the public interest insofar as it concerns development in accordance with the comprehensive plan that has been approved by Congress.

With reference to the preference clause, the committee considered an amendment, proposed by the sponsors of the companion Senate bill, which would require that all sales of power by the licensee from this project be made in accordance with the preference requirements of section 5 of the Flood Control Act of 1944 which reads as follows: "Preference in the sale of such power and energy shall be given to public bodies and cooperatives." This was enacted to apply to power sold from dams constructed and operated by the Federal Government in the exercise of its control over navigable waters. Similarly, the Federal Power Act provides that preference be given to public bodies in the granting of licenses for development hydroelectric power in navigable waters.

Neither of these laws contemplated any dictation as to the subsequent disposition of the power after it was purchased or developed under license by such public bodies.

To require public bodies to give preference to other public bodies could result in discrimination against the selling agency and its individual customers. The demands of neighboring public bodies could reach such a volume that the selling agency would have insufficient power for a normal growth in demand of the individual domestic residents, farmers, and industries located in its

own marketing area. Such a result would be contrary to the statutory purposes of the public body.

The Federal Government has given financial assistance by loans and grants and has issued licenses for water-power developments to numerous State, municipal, and cooperative public power agencies in the past. It has not imposed any public preference requirements upon these public power agencies which are chartered and dedicated to the marketing of power in the best public interest. The committee feels that it would be wholly inconsistent and discriminatory to impose such conditions in this bill. It has therefore rejected the proposed amendment.

Mr. President, the committee report includes a letter from the Secretary of the Army approving this proposed legislation, a letter from the Bureau of the Budget signed by Mr. Hughes, who is now the Director of the Budget, and a letter from the Federal Power Commission, both recommending the passage of this bill. Those letters are addressed to the chairman of the committee, the distinguished Senator from Pennsylvania [Mr. MARTIN].

It is the purpose of the bill to enable the public utility district in that area to finance and operate this property under license. The money for this projectand it is a very large sum, amounting to $364 million-will largely be raised by the sale of bonds which will be issued by this public power authority. Thus the bill provides, as the Senators from Washington so ably pointed out to the committee, that private funds will be used for the development of this great project, which is so vital to the area in which it is located.

I believe that one of the very fine features of the bill is that it puts no load on the Federal Treasury. The bill was passed by the other House without opposition. So far as I know, there was no yea-and-nay vote, but my information is that there was no opposition to the bill.

Mr. President, that completes my remarks on the bill, and I recommend that it be passed as reported, without further amendment.

Mr. MARTIN. Mr. President, will the Senator yield?

Mr. BUSH. I yield.

Mr. MARTIN. Mr. President, as I understand, no public funds will be used in the construction of the project.

Mr. BUSH. That is correct. Mr. MARTIN. It will be a self-liquidating project.

Mr. BUSH. That is correct. The

financing will be provided locally by the local management of this particular public utility district, through the sale of its obligations, bonds, to the public. They will be tax-free bonds. They will be very attractive bonds, I believe.

However, no public funds are involved in financing the project, and therefore there will be no load placed on the Federal Treasury.

Mr. MARTIN. If the Senator will yield further I should like to ask him whether there are any bonds of State or local governments involved.

Mr. BUSH. No. I will say to the distinguished Senator that none of the local governments, State or otherwise, have their credit pledged behind the proposed bonds. They will be obligations of the public utility district. I should like to liken them to bonds of the Port of New York Authority, or bonds of an agency which is created by a State government, but an agency which is sufficient unto itself. It has its own treasury and its own obligations. These obligations will be met from the proceeds from the sale of power under the management of the local public utility district.

Mr. MARTIN. Mr. President, will the Senator yield further?

Mr. BUSH. I yield.

Mr. MARTIN. As I understand, the bonds would be somewhat similar to turnpike bonds.

Mr. BUSH. In a sense, that is correct. They would be the same type of bonds. They would be revenue bonds.

Mr. MARTIN. The only advantage they would get is that they would be tax exempt.

Mr. BUSH. Yes; that is a very important advantage.

Mr. MARTIN. It is a very important advantage; but that is their advantage. Mr. BUSH. Yes; they would have that advantage.

Mr. MARTIN. I thank the Senator. The PRESIDING OFFICER (Mr. REYNOLDS in the chair). The Secretary will state the committee amendment. Mr. MAGNUSON. Mr. President, if

the Senator would like to have the committee amendment adopted before I begin, I shall be glad to have that procedure taken now.

Mr. BUSH. I should like to have the committee amendment adopted to this point.

The PRESIDING OFFICER. The Secretary will state the committee

amendment.

The LEGISLATIVE CLERK. On page 4, line 12, after the word "thereto", it is proposed to insert the following:

Power surplus to the requirements of the licensee and other non-Federal marketing agencies within the economic marketing area, as may be economically usable to the Federal system, may be made available to and may be purchased by the Bonneville Power Administrator at rates not higher than the rates charged such non-Federal marketing agencies, and under such terms and conditions as shall be mutually agreeable to the licensee and the Secretary of the Interior. The Administrator may use funds in the continuing fund, established under the provisions of section 11 of the Bonneville Project Act of August 27, 1937 (50 Stat. 731), as amended, to purchase such power. Such power may be co-mingled with power from Federal dams in the Columbia River system for which the Bonneville Power Administrator has been designated marketing agent and shall be sold by the Administrator in accordance with the provisions of the Bonneville Project Act at established rate schedules.

The PRESIDING OFFICER.

The

question is on agreeing to the amendment reported by the committee.

The amendment was agreed to. Mr. MAGNUSON. Mr. President, my colleague [Mr. JACKSON] and I appeared before the Public Works Committee and stated our position on this bill at some length and in some detail. However,

because, as the Senator from Connecticut has pointed out, this is a project of great magnitude, I believe the RECORD should not be lacking in some explanation; and I am glad to make an explanation, in which I am sure my colleague joins me.

For the benefit of Members of the Senate who may not have had the opportunity of visiting the State of Washington, I will identify the portion of the Columbia River affected by this bill and give you a brief résumé of the circumstances which bring this particular piece of legislation before us.

Priest Rapids is a dam site on the main stem of the Columbia River, located 10 or 12 miles upstream from the Hanford Engineering Works at Richland, Wash., and about 35 miles upstream from a point where the Snake River runs into the Columbia.

The site is about 25 to 30 miles downstream from an existing dam known in the area by the name of Rock Island. The existing dam was built originally by the Puget Sound Power & Light Co., of Seattle.

In 1950 Congress authorized Priest Rapids Dam for construction by the Corps of Engineers. It was included in the 1950 Flood Control Act and is an integral unit in the comprehensive plan for the development of the Columbia River and its tributaries. As recommended in House Document No. 531, the initial installation of power facilities would develop about 2,100,000 kilowatts with an ultimate installation of 1,500,000 kilowatts.

Senators can see from these figures that the Priest Rapids stretch of the Columbia River, some 30 miles in length, is extremely important to the present and future growth of the Pacific Northwest.

As the

The project will cost in the neighborhood of $360 million. It will be financed by the sale of revenue bonds. As the Senate knows, these are not general obligation bonds. They are bonds which, in effect, represent a mortgage on the revenues produced through sale of power from the project. The key to financing the project, therefore, is not the physical assets owned by the local groups but the feasibility of the project itself-the net revenues the project will produce.

What does the bill, as reported from the committee, provide?

First, the bill modifies the authorization of Priest Rapids Dam as contained in the Flood Control Act of 1950, to permit Grant County Public Utility District and/or such other public agencies as may wish to join with it to seek a license from the Federal Power Commission. This proposed legislation does not give them a license. They must justify their project as to its feasibility and all the other aspects involved in order to obtain a license from the Federal Power Commission.

If the license is granted the local government agency or agencies have the opportunity to see whether they can finance the project and, if they can, they will have the authority to proceed with construction.

If the Federal Power Commission refuses a license, or if the FPC grants a li

cense and the local government agencies are unable to finance the project within a reasonable time, the 1950 authorization of Priest Rapids Dam reverts to its present status.

It is somewhat similar to the agreement which was provided in the case of the Coosa, Ala., project, which allowed a private company, the Alabama Power Co., to develop power there. This is at the other end of the stick, so to speak. It would give an opportunity to a public body to do it.

The 1950 authorization of the project for construction by the Corps of Engineers will become operative just as though H. R. 7664 had never been enacted. In other words the legislation gives the local groups a chance to see what they can do. If they can't perform, Priest Rapids will still be authorized as provided by Congress.

Second, the proposed legislation stipulates that the Priest Rapids reservoir site must be developed to conform to the comprehensive plan already approved by comprehensive plan already approved by Congress.

That is the reason why in the beginning of my statement I said the bill was a modification of the authorization of Priest Rapids.

The FPC is directed to require this as a condition in any license it may issue. This provision of the bill will prevent underdevelopment of the site-will insure that no portion of the benefits available in this stretch will be lost to the region and the country.

Third, the bill stipulates that the Department of the Army shall review any plans submitted by the local groups to the FPC with particular regard to flood control and navigation. This provision will obviate any possibility that plans developed by the local groups fail to obtain navigation and flood control benefits. It also insures that the Corps of Engineers will have an opportunity to review the plans so as to make certain that the designs and specifications will actually get from the river the full power actually get from the river the full power potential-that the plans actually conform to the concept of comprehensive development.

Mr. President, I wish to say that my colleague and I introduced this bill some 16 or 17 months ago. During that period of time, we have had many conferences with representatives of the Public Utility District, and also with the Corps of Engineers, as to the wording which would permit the construction to proceed. They finally came to an agreement about it. Their views were taken into consideration and they participated in conferences on the bill on several

occasions.

Fourth, the bill authorizes the construction of navigation and flood control features in connection with the project. These features may be added either during initial construction or at a later date. I emphasize the word "may."

Since navigation and flood control benefits are nonreimbursable, the Federal Government would stand those costs when and if the Congress decides to appropriate the funds.

That is the same feature that is found in the so-called Coosa bill. There was some uncertainty about the flood-control

features, but if later on the Federal Government decided to proceed with them, that feature of the project could be taken care of if the Congress should appropriate the necessary funds.

Mr. MARTIN. Mr. President, will the Senator from Washington yield? Mr. MAGNUSON. I yield.

Mr. MARTIN. As I understand, that feature of the project would be considered if conditions warranted it at some time in the future.

Mr. MAGNUSON. If it was desired to proceed with it. But I must say, without going into the engineering features of the project, that flood control and navigation are somewhat a minor part of the project. It is primarily a hydroelectric project being built by a public utility.

Local groups, however, will have to make provision in their designs for the addition of these features at their own expense. The power features costing about $300 million can be constructed without a single dime from the Federal Government, if the local groups can finance it. I do not know whether they can or not, but we are giving them the opportunity. The distinguished Senator from Connecticut said that the bonds might be productive. I hope they will be.

Mr. MARTIN. Mr. President, will the Senator from Washington yield further? Mr. MAGNUSON. I yield.

Mr. MARTIN. I asked these questions of the distinguished Senator from Connecticut, and I think they are very important. As I understand, neither Federal Government nor any local government credit will be extended in issuing these bonds.

Mr. MAGNUSON. That is correct.

The proposed legislation provides that the Corps of Engineers, if requested to do so by the licensee, may undertake actual construction of the project. The licensee would turn over to the Corps the funds obtained from sale of revenue bonds and with these funds the Corps would proceed with construction. It would act as the constructing agent for the licensee.

Sixth, the project when completed would have to be operated and maintained in accordance with reasonable rules and regulations stipulated by the Secretary of the Army in the interest of flood This flood control and navigation. means that the public utility district would have to operate the project so that it would contribute to the control of floods on the Columbia, and to navigation, even in the way in which it must be built in its initial stages.

Seventh, a reasonable portion of the power output must be offered for sale in neighboring States. I have before me a memorandum which shows that Ohio preserves the concept of regional distribution of benefits from a regional asset. In other words, there is a precedent for this action.

Eighth, the Bonneville Power Administration may purchase power surplus to accommodate the needs of the licensee and other non-Federal customers; and the licensee must sell such power at its cost.

Ninth, the local groups are required to file an application for a license within 2

years following the enactment of the bill. In other words, there is a 2-year limitation, and I think that has been the standard limitation on similar types of legislation. If the application is not filed within 2 years, the legislation will become null and void, and Priest Rapids will revert to its present authorized status.

In addition, section 7 stipulates that if the application for a license is denied, the project reverts to its present status. In other words, if the Federal Power Commission says "No," the project will revert to its present status.

Furthermore, the section provides that if the license is granted and construction on the project is not started within a reasonable time, the authorization and the Flood Control Act of 1950 again become controlling. Moreover, the Federal Power Commission is directed to act on the application within 1 year after it is filed.

That, in substance, is what the bill provides. My colleague and I felt that there should have been a further amendment, and it was considered by the committee. We felt that the amendment would make a much better measure out of the bill, but the committee decided not to accept the amendment. As I understand, at one time it was accepted, and then it was rejected by a close vote. I wish to say, in all fairness, that what the amendment did was to adopt the preference clause which has been enacted in flood control acts by previous Congresses. Perhaps the amendment is not necessary.

Mr. BUSH. Mr. President, will the Senator yield?

Mr. MAGNUSON. I yield.

Mr. BUSH. Is Is the Senator from Washington quite certain he is correct about that statement? Does not the Flood Control Act preference clause pertain to operations which are owned by the Federal Government? Is there any precedent for the preference clause in the case of a project of this kind, which is financed by a local public utility district and with private funds? Is there any precedent for giving the Federal Government the power to dictate where the power should go? I wish the Senator would cite some authority for his state

ment.

Mr. MAGNUSON. I think the Senator from Connecticut is technically correct with the reference to the application of the preference clause. It is only applied generally to federally-owned dams, because there are very few of the other types. But the Federal Power Commission, in considering most applications-I have not run them downof other public bodies to build dams, has also suggested the inclusion in the license of the preference clause.

tion for a license to construct a hydropower project. The specific question which the distinguished senior Senator which the distinguished senior Senator from Connecticut is now raising has never before been presented to the Senate.

Mr. BUSH. That is the point I wish to make.

Mr. JACKSON. I wish to call the attention of the Senator, the fact that in 1920 there was written into what was then called the Federal Water Power Act a specific provision which called for the granting of preference to a public body over a private body, for an application for a license to construct a dam on a navigable stream in the United States.

Historically, of course, the preference clause itself goes back to the Reclamation Act of 1903.

It is included in the Flood Control Act of 1944, section 5. It is in the Bonneville Power Administration Act. It is in the Tennessee Valley Authority Act.

dam for local area needs. I say that under the amendment which the Senators from Washington suggest, that is exactly the possibility which is offered.

Mr. JACKSON. I wish to make it clear that we are dealing with a public resource. It is our desire to have the power resource of the dam distributed fairly and equitably, not merely to the people of the State of Washington, but to the entire Northwest area. The amendment will insure a fair, just, and equitable distribution of a public resource. It will prevent the monopolization of the sale of the power in a given State, by requiring that preference shall be given to the public bodies in that area. I believe that is sound public policy. It is a policy which has been followed in connection with other Federal projects. I think it is a reasonable condition to attach to the bill.

Mr. BUSH. It would surprise me very much, I may say to the Senator, if the laws and the administration of the laws The reason why I say it is important in the State of Washington would perin this particular instance is that this mit the public utility district in question dam is being integrated, in effect, into to operate this facility unfairly to people the Northwest Regional Federal power of the State of Washington. It seems development program. Federal power in to me that the Federal preference rethis region is now being sold on a public- quirement which is suggested in the propreference basis. This amendment posed amendment opens up an opporwould continue that wise policy. tunity for unfair distribution of power, Mr. BUSH. Mr. President, will the and it puts the Federal Government Senator yield?

Mr. JACKSON. I yield.

The

Mr. BUSH. The instances which the Senator has cited, in which preference has been authorized, relate to federally owned projects. That is the point. The only bills which have been before the Senate this year, as I recall, related to the Coosa River, in Alabama, where no such preference clause was even suggested. Likewise in the case of the Markham Ferry development, in Oklahoma, in which a similar situation exists, no Federal preference clause was suggested.

I do not know of any precedent for the amendment about which the Senators from Washington are speaking.

Mr. JACKSON. In this case, the dam is to be part and parcel of the overall regional power development of the Northwest. The bill contains a unique provision to the effect that the power is to be sold in the other States on a proportional basis.

This would mean that the power in those areas, marketed from the dam, would be sold first to the public preference customers in the region.

Mr. BUSH. Mr. President, I may say to the Senator from Washington that what he is speaking about is very different from the policy contained in the bill. Of course, the power to be will be interconected with the power system of the area. The bill so provides. The bill also contains an amendment which is

Mr. BUSH. Can the Senator cite any permissive, giving the local authorities similar example?

Mr. JACKSON. Mr. President, will the Senator yield?

Mr. MAGNUSON. I yield. Mr. JACKSON. It is my understanding that in the Federal Water Power Act of 1920 there is a provision to the effect that when the Federal Power Commission grants a license, preference must be given to a public agency, in the applica

the opportunity to sell surplus power. It also gives the Bonneville Dam Authority the right to buy power.

But under the provision which the Senators from Washington desire to include in the bill, the Federal Government would be placed in the position of dictating the flow of the power, which might, as a result, embarrass the public utility district which is promoting the

agency in a position of suggesting or dictating a diversion of the power from the place where it is actually supposed to be needed.

That is the reason why this is a local bill, as I understand. The Senator explained to the committee that the power is needed in this particular area. If there is a surplus, surely it has been agreed to make it available. But to say that the Federal Government shall have the right to dictate what amount of the power shall be taken out of the area is, to me, hardly being fair to the people of the State of Washington and to the public utility district which will finance the operation.

Mr. JACKSON. I think there may be some misunderstanding of the nature of the power development in the area. Over the past 20 years we have worked out a fair plan for distributing the power which is marketed from those great dams. We have not paid much attention to State boundary lines, because the Great Columbia River flows through the entire Northwest community. I think the worst thing that could happen to the State of Washington, the State of Oregon, the State of Idaho, and the State of Montana would be to get into a Stateversus-State fight.

The bill goes a long way toward preventing that possibility. The addition of the preference clause will insure, in my opinion, a more just marketing of the power in the area. The bill requires that the power be distributed equitably. The State of Washington cannot monopolize the power. The State of Washington should not be given an opportunity to monopolize the power, because it belongs to the people of the United States.

With reference to the preference clause, it is true that the present public utility law in the State of Washington does grant preference. That same rule

does not apply in other States. The amendment is offered for the purpose of assuring the people of the Northwest area that a fair and just formula will be worked out for the marketing of the power. That is the reason for offering the amendment.

I think it will be found on an examination of the amendment, that it is in keeping with a long tradition which we have had in the Northwest community, a tradition which has existed in the United States going back to Theodore Roosevelt's time, when the preference provision was enacted in the Reclamation Act.

Mr. BUSH. May I respond to one point?

Mr. MAGNUSON. Mr. President, I remind the Senator that I have the floor, but I yield to him.

Mr. BUSH. There are certain places where public power is the right solution to the power problem. I know that to be so, and I do not dispute it. There are many places where power would not be available unless the Federal Government had been in a position to step in and develop it.

When it is essential in the public interest and when the situation justifies the Federal Government's doing that, it should be done; but when there are local interests ready, willing, and able to step in and do the job, the idea of the Federal Government's doing it instead is repugnant to me, and I believe it is bad for the country to encourage such a philosophy. Certainly, a majority of the committee is not in favor of it at all.

I hope the Senators from Washington will not press the amendment, because I know they are very much interested in having the bill passed. It is a very important bill. It involves a tremendous project and a very constructive one. However, if the Senators press the amendment, I am afraid it will tie the bill up and that the bill will not be passed during this session of the Congress. I respectfully urge that they not press the amendment.

Mr. MAGNUSON. I should like to say to the Senator from Connecticut that what he says about the amendment is technically correct. There is much precedent for the suggestion, but it is true that this is the first time the suggestion has been applied to this type of legislation.

been in the forefront of that fight more than on any other issue. In many instances it has not been a Republican or a Democratic issue. I started the fight back in the State legislature more than 20 years ago, when I authored the socalled Bone power bill, named after a member who served in this body in a very distinguished manner, representing my State, for many years. He was known in the Norestwest area as the father of public power.

I think good progress has been made in 20 years. There should be no interruption of that progress, despite the fact that in my opinion, a change is taking place in the power policy, as I have said on many occasions. I think I have been one of the most frequent critics of what I call the new policy of the administration and the Secretary of the Interior. I thought we should have continued as we have been proceeding in our area for 20 years, because I believe the accomplishments were good. The area was being developed under a comprehensive plan. As a matter of fact, public and private interests, public utility districts, and consumers were happy about the situation. I do not think it was wise to make a change. I have listened to vague terms such as "partnership," but the truth is that there is a change in the policy. For 2 years in that area there have not been any additional power projects, and because of population increases, the power needs there double every 10 years. The people of the Northwest may as well face up to the fact that if they are anticipating new industries and new developments which can use hydroelectric power, we are 2 years behind because of the change in policy. I wanted the policy to continue as it had been in the past, because, in the long run, I think such a policy would be cheaper.

When we talk about more kilowatts for the Northwest, we also have in mind cheap kilowatts. Additional kilowatts are not of any use unless their availability is widespread and they are cheap for industry and consumers. That is my position.

However, I also know that power is needed, and needed badly, in that area, and there is a public body which is going to undertake to provide for its developto undertake to provide for its development. Had the development of the Priest Rapids site not been authorized in the comprehensive plan, it could have been built, anyway, by obtaining a license from the Federal Power Commission. All that is being proposed in the bill is the affording of an opportunity to do so. I hope that may be Mr. BUSH. I cannot agree with that done, because the added power is badly statement.

Mr. BUSH.

I am glad the Senator

has made that clear.

Mr. MAGNUSON. But it is also the first time this type of legislation has been before the Senate.

Mr. MAGNUSON. As to the public utility districts, I do not think any fear should be expressed that they would not want this type of amendment, because they have gone on record as very much favoring extending the preference clause to public utility dams.

I wish to reiterate my statement, and then I shall sit down. I think I can say that I yield to no one on the floor of the Senate and no one in the Pacific Northwest in my adherence to the importance of the development of public power in the Northwest area. I suppose I have

needed.

In my judgment, the bill would have been a much better measure had it included the preference clause, but I do cluded the preference clause, but I do know that the project must go forward.

As to the State law, I say to the Senator from Connecticut that, as a practical tor from Connecticut that, as a practical matter, I do not believe there will be any trouble about the sale of power if the preference principle is adhered to. However, when the State of Oregon and the State of Idaho are considered, all that was intended was to have the same principle apply, because an interregional development is involved. That is why

my colleague and I were so insistent that the amendment be agreed to.

So that the record will be clear, I may say I am still of the opinion I expressed before the committee. I offer the amendment, and ask that it lie on the desk. I appreciate that there is a legislative problem involved. I have been in legislative bodies long enough to know that everything asked for cannot be obtained. Legislation is largely a matter of compromise. But that fact does not deter me from my firm feeling that agreement to the amendment would make the bill much better than it now is. I want the record to be clear on that point, and I think I speak for my colleagues on this matter, because we have discussed it.

The public-utility district and everyone else involved in this matter did not particularly object to the preference clause. clause. So far as I know, there was no objection in the conferences we had, even from the engineers or anyone else. They were for it. But they also realize that there are some persons who are not for it, and that we have to get some cheap kilowatts in the Pacific Northwest because we are away behind when it comes to an adequate power supply. Let me say to my friend, the Senator from Oregon, that the people of the Northwest do not realize it so very much now, but within 2 or 3 years, when the normal development will catch up, these kilowatts will be sorely needed on the line. So I wish to make clear my position on the entire matter.

The

This bill involves a public body. same type of public body built a part of Rocky Island Dam, 2 or 3 years ago, and it now furnishes cheap kilowatts. Even though it had not been authorized, they went ahead and sold revenue bonds and built the project, and it has been a very good thing.

In this case we are authorizing it, and are giving the public utility 2 years to obtain a license, and are giving them time to see whether they can sell the revenue bonds, under a great number of restrictions. I think the preference clause would add a great deal to the value of the bill.

Mr. MORSE. Mr. President, will the Senator from Washington yield for a question?

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Mr. MORSE. I also address the question to the Senator from Connecticut [Mr. BusH]; I do not care which Senator answers it.

The Senator from Connecticut spoke of the bill's providing for interconnection. tion. Can either Senator point out language in the bill that provides for interconnection?

Mr. MAGNUSON. Does the Senator from Oregon mean the sales throughout the area?

Mr. MORSE. I assume the Senator from Connecticut meant interconnection for sales throughout the area.

Mr. BUSH. The committee amendment reads in part as follows:

Power surplus to the requirements of the licensee and other non-Federal marketing agencies within the economic marketing area, as may be economically usable to the Federal system, may be made available to

and may be purchased by the Bonneville Power Administrator at rates not higher than the rates charged such non-Federal marketing agencies

And so forth.

Mr. MORSE. The Senator himself said that was permissive.

Mr. BUSH. Let me now read beginning at the bottom of page 3:

To assure that there shall be no discrimination between States in the area served by the project, such license shall provide that the licensee shall offer a reasonable portion of the power capacity and a reasonable portion of the power output of the project for sale within the economic market area in neighboring States and shall cooperate with agencies in such States to insure compliance with this requirement

And so forth.

Mr. MORSE. Mr. President, in my judgment, that is not interconnection at all. In the first place, the Senator from Connecticut himself, in the course of his explanation earlier today, pointed out that the language he read first was entirely permissive.

Mr. BUSH. Mr. President, will the Senator from Oregon yield to me?

Mr. MORSE. I yield.

Mr. BUSH. What I said was permis

sive was the sale of surplus power. That is permissive, under the committee amendment. But how in the world can power be delivered unless there is interconnection? Furthermore, the bill provides for it.

Mr. MORSE. That is my question: Where does the bill provide for it?

Mr. BUSH. I just read that part of the bill.

Mr. MORSE. It does not provide for

the power output of the project for sale within the economic market area in neighboring States and shall cooperate with agencies in such States to insure compliance with this requirement: Provided, That in the event of disagreement between the licensee and the power marketing agencies (public or private)

And in our case they are mainly public

in any of the other States within the economic market area, the Federal Power Commission may determine and fix the applicable portion of power capacity and power output to be made available hereunder the terms applicable thereto.

Then it proceeds to state that they may sell power.

Mr. MORSE. But I respectfully submit that is not interconnection. That is allocation of power at the bus bar.

Mr. BUSH. Mr. President, will the Senator from Washington yield to me? Mr. MAGNUSON. I yield.

Mr. BUSH. Is it not true that this public utility district now is already connected?

Mr. MAGNUSON. It is connected with the power pool, yes. I do not know how sales could be made in the neigh

boring State without interconnection.

If they were to go into the Bonneville power pool and lines, I do not know how they could spell out just what lines would be used. Their hope is-and I do not think the project can be justified unless provision is made to fulfill that hope that the cost of the power will be such that it can be put into the Bonneville pool. In other words, if Bonneville is not going to be their customer in this situation, they take the position,

Mr. MORSE. I wish to talk about that point in a few minutes.

Mr. MAGNUSON In my opinion the contract for the sale almost has to provide for integration into the Bonneville pool, under the same type of contract which has been very satisfactory in our area for municipalities and other public utility districts. The contract for sale has to be arranged before the very first step is taken in the actual construction of the dam.

Mr. MORSE. Mr. President, I proceed to discuss this matter today with a very heavy heart, because for the first time on a power issue in 9 years in the Senate I find myself in disagreement with my two very close and highly respected friends, the senior Senator from Washington [Mr. MAGNUSON] and the junior Senator from Washington [Mr. JACKSON].

I speak from a heavy heart, too, Mr. President, because we see so differently on this issue. I think it is most regrettable that great public power forces in the Pacific Northwest-and we represent great public power forces in our respective States and in that area-do not see eye to eye on this issue.

I speak from a heavy heart also because of my conviction that what we are dealing with is a stick of legislative dynamite which is being placed under the whole Federal power program of many years' standing. When we touch off the fuse, I think we shall have an explosion which will do terrific damage to the regional power program.

I know exactly the position of the Senators from Washington. I understand the point of view they have ex

interconnection at all. It provides only "Maybe we would not want to go ahead pressed. I have no question as to the

for allocation, not delivery. This could be no more than bus-bar sale. There is the whole question of wheeling agreements and transmission lines, and there is no mandatory requirement. It is so different from the regional approach of past Federal power policy, that it would be like walking into a county fair ring and bringing a stallion and a bull into the same ring, and asking the judge to judge them.

Mr. BUSH.

Of course it is different. It is not a Federal power project.

Mr. MORSE. It is not interconnection; that is the point I am making. Not a word in the bill really provides for interconnection of the power and really guarantees the development of the power on a regional basis, and consistent with the pooling principle. When that is cut out, the objective of integrated, regional development and use of power of the Army engineers 308 report has really been cut out.

Mr. MAGNUSON. Mr. President, I should like to answer the Senator from Oregon. If he will examine section 6, on page 3, beginning in line 21, he will notice that it provides:

SEC. 6. The operation and maintenance of a project under license pursuant to this act shall be subject to reasonable rules and regulations by the Secretary of the Army in the interest of flood control and navigation. To assure that there shall be no discrimination between States in the area served by the projert, such license shall provide that the licensee shall offer a reasonable portion of the power capacity and a reasonable portion of

with the project."

Mr. MORSE. But Bonneville will be made the wheeler, and the wheeling costs will be added.

Mr. MAGNUSON. They wheel now from the public utility districts and from cities.

Mr. MORSE. But they wheel now from a regional pool over which they have complete control over delivery from where the power is generated to points at which the power is needed.

Mr. MAGNUSON. But they wheel from cities, including, for instance, Tacoma City Light.

Mr. MORSE. But on a regional basis by means of which they have control of the power.

Mr. MAGNUSON. But they do it by agreements. I have no reason to believe that they are not good agreements. Otherwise, to whom would they sell the power?

Mr. MORSE. I think it is perfectly obvious where some people hope they will sell the power, and to whom-but not to public groups.

Mr. MAGNUSON. I wish to tell my friend, the Senator from Oregon, a little about financing. When an agent puts on his hat and goes down to the lower end of Manhattan Island, to sell revenue bonds, one of the first things he is asked is, "Do you have a contract for the sale?" So that will be taken care of a long time before even the first bit of concrete is poured.

sincerity of their intentions. I have no doubt as to their conviction that the Federal power program would not be injured as a result of the enactment of this bill. However, I completely disagree with them.

A BLOW AT THE 308 REPORT PLAN FOR
REGIONAL DEVELOPMENT

What we are doing here today is starting the beginning of the end of the comprehensive program of the Corps of Engineers 308 report. When I refer to the 308 report, I am talking about the great power, reclamation, flood-control, and navigation development program worked out by the Army engineers and the Bureau of Reclamation engineers, which really has become the economic development bible of the Pacific Northwest for some years past. All groups-private groups as well as public bodies-have for some time been in remarkable unanimity of agreement in support of the 308

report. It calls for the development by the Federal Government of great multiple-purpose projects in the Pacific Northwest, leaving to private utilities and which are not integral parts of the comother groups the development of sites prehensive plan.

PRIEST RAPIDS SHOULD REMAIN A FEDERAL
PROJECT

We are dealing here with a great site for multiple-purpose development. In my judgment it is a site which ought to be developed in consonance with and in keeping with the intention of 308 report,

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