Title: Federal Development and Operation
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Permanent Link: http://ufdc.ufl.edu/WL00003111/00001
 Material Information
Title: Federal Development and Operation
Physical Description: Book
Language: English
Publisher: President's Water Resources Policy Commission
 Subjects
Spatial Coverage: North America -- United States of America -- Florida
 Notes
Abstract: Richard Hamann's Collections - Federal Development and Operation
General Note: Box 12, Folder 9 ( Water Resources Law - Vol #3 - 1950 ), Item 29
Funding: Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.
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Bibliographic ID: WL00003111
Volume ID: VID00001
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Full Text

290
Federal Development and Operation
As the desirability of increased conservation and utilization
of water resources and the necessity for greater flood protection
have become more generally recognized, Congress has extended
legislative authorizations toward more and larger power plants,
and toward comprehensive development under river-basin
plans. Moreover, the Supreme Court has sustained federal de-
velopment of power as desirable for utilizing water resources
in development for other purposes such as navigation and
flood control." And when Congress authorized construction
of a steam-electric plant to assist in the operation of TVA
hydroelectric plants, it was stated by the House Committee first
reporting the item to be justified "if the Government is to
make full utilization of the natural resources and of its invest-
ment in that area."1
Of a total of 82,469,742,000 kilowatt-hours hydroelectric
generation in the United States during 1948, the output of
federal hydroelectric plants amounted to 32,728,673,000 kilo-
watt-hours, or approximately 40o.1%"
Pertinent provisions of law relevant to federal development
fall logicallyinto three groups. Here again, power and multiple
use generally go hand-in-hand. First, we shall consider those
concerning federal development of power and multiple use, and
next those concerning the marketing of power. Finally, we
shall consider those special enactments relating to specific proj-
ects or prescribed areas.
MUrnsPL-UsE PROJEGWI AND FEDERAL DEVELOPMENT OF
Powia.-In general legislation concerning multiple-use proj-
ects and federal development of power, Congress has relied
largely upon the Army Engineers, the Department of the In-
terior, and the Federal Power Commission. Since we have
SUnited States v. Chandler-Dubar Co., 229 U. B. 58, 73 (1913); Ash-
wander v. Tennessee Valley Authority, 297 U. S. 288, 884-835 (1986).
H. Rep. No. 111, 81st Cong., 1st seas., p. 6 (1949) ; Act of May 24, 1949,
1 1, 63 Stat. 76, 80. See also ANNUAL REPORT OF TH TERNEBSSB VALLE
Aum urryr, p. 52 (1949).
PRODnUCnON OF EULCTBrC ENERGY AND CAPAcrIT OF GzNEIATIN PLANTS,
Federal Power Commission, 8-70 (1948).





291
already touched upon most of the laws relevant here, we need
only recapitulate."
In connection with navigation improvements, a number of
laws contemplate or provide for federal development of power.
Congress in 1912 delegated discretionary authority to the Sec-
retary of the Army to include in the permanent parts of navi-
gation dams such foundations, sluices, and other works as may
be desirable for the future development of water power." And
since 1913, the Army Engineers have been continuously re-
quired to include in examination and survey reports, informa-
tion regarding the development and utilization of water power
for industrial and commercial purposes." Also important are
the comprehensive "308 Reports" embracing plans on streams
throughout the country for navigation improvement in combi-
nation with "development of the potential water power," con-
trol of floods, and the needs of irrigation." Moreover, with
respect to dams authorized in River and Harbor Acts since 1945,
with one possible exception, Congress has directed the installa-
tion of penstocks and other facilities adaptable to future use
for development of power, when approved by the Secretary of
the Army upon recommendation of the Chief of Engineers and
the Federal Power Commission."
The situation is much the same in the case of flood-control
projects, since the foregoing 1912 and 1913 requirements apply
here also. In addition, under 1917 legislation, examinations
SSee upra, pp 108, 141, 239-240, 274-281.
See wpra, p. 141.
Sr ee supra, p. 93.
See supra, pp. 92-9e.
Act of March 2, 1945, 2, 59 Stat. 10, 11; Act of July 24, 1946, 11, 60
Stat. 684. This provision was omitted from" the 1948 River and Harbor Act,
but that Act did not authorize any dams. Act of June 80, 1948, title I, 62
Stat. 1171. And although the provision itself is omitted from the 1950 River
and Harbor Act, it seems clear that it applies to dams authorized therein.
Act of May 17, 1950, title I, 64 Stat. 16&8 For the provision, as included in
1 204 of the 1950 Flood Control Act, directs the installation of penstocks in
dams "authorized in this Act." The 1950 River and Harbor Act is title I
of the Act of May 17, 1950, of which the 1950 Flood Control Act is title II.
Moreover, the word "Act" was deliberately substituted for "title." As
passed by the House, the provision read "in this title." The Senate Com-
mittee on Public Works changed this to read, "in this Act." The COlferees
concurred. H. Rep. No. 1968, 81st Cong., 2d sees., p; 17 (1950).






and surveys must include data relating to the possible econom-
ical development and utilization of power and other properly
related uses.' Furthermore, we have already noted the up-
surge of federal interest in flood control and the national devel-
opmental program growing since 1936. So far as federal power
development is concerned, it is therefore important to note that
in authorizing flood-control projects since 1938, Congress has
provided for the installation of penstocks and other facilities,
just as in the 1945 and 1946 River and Harbor Acts.'
In legislating for reclamation projects in the West, Congress
has made provision for development of power in addition to
the control of water for other purposes and uses. The develop-
ment of power at irrigation projects was expressly recognized
in a 1906 supplement."2 Similarly, the 1939 Reclamation
Project Act contemplates that surveys and! studies of pro-
spective reclamation projects will take into account the possible
development of power and other project uses, including munici-
pal water supply, flood control, and navigation."0 Such is
the character of those surveys and studies as to require con-
sideration of both existing and potential developments on the
stream from which any proposed project will draw its supply.
This in turn necessitates basin-wide surveys and basin-wide
planning.
In addition, it has already been indicated that the Federal
Power Act authorizes the Federal Power Commission to carry
on continuing surveys of waterpower potentialities in river
basins throughout the United States.20 The scope of that
authority measures the importance of that function to federal
as well as nonfederal development. For such authority com-
prehends investigation of the possibilities of utilizing water re-
sources, the relation of waterpower development to other
electric-power generation and transmission, the electric-power
requirements of economic regions, power-load variations and

S" ee supra, pp. 134-135.
" See supra, p. 141.
"Act of April 16, 1906, 5, 34 Stat. 116, 117, as amended, 43 U. S. C. 522.
Act of August 4,1989, 9(a), 53 Stat. 1187, 1193, 48 U. S. C. 485h(a).
SSee suapr, pp. 274-275.







sources of supply, and existing and possible interconnections
between power plants and power systems, both public and
private.2
Also, in federal development as in nonfederal development,
existing law makes specific provision for consideration of fish
and wildlife resources.2
MARKETING OF FEDERAL PowER.-At the outset, it should be
borne in mind that federal power-marketing operations are
confined almost entirely to the wholesaling of power.27 Ac-
count must be taken of this fact in the following examination
of legislation concerning power-market surveys, rates, trans-
mission lines, preferences, and marketing agencies.
Power-Market Surveys.-As already noted, the Federal
Power Commission makes continuing surveys and technical
studies of market areas within economic transmission distance
of proposed hydroelectric plants to determine their usable ca-
pacity, possible rate of development, and type of load for which
they are suitable.28 These studies are made not only in con-
nection with proposed federal power developments but are also
conducted as a part of the Commission's studies of the electric
industry generally, including analysis of power markets, trans-
mission networks, interconnections, and related matters under
Part II of the Federal Power Act.' As a part of their power-

2 Noteworthy in this connection is a 1934 preliminary report transmitted
to Congress by President Franklin Roosevelt, concerning a comprehensive
plan for the improvement and development of rivers of the United States
and contemplating legislation providing for flood control, navigation, irriga-
tion, and development of hydroelectric power. DEVELOMENT or THE RIVuEB
or T3E UNITD STATES, H. Doc. No. 895, 73d Cong., 2d sess., p. 54 (1984).
See also a discussion of multiple uses in REPORT OF THE NATIONAL RESOURCES
BoABM, pp. 263-265 (1934).
See infra, pp. 327-330.
In the case of TVA, however, the Board has "power to construct trans-
mission lines to farms and small villages that are not otherwise supplied
with electricity at reasonable rates." Act of May 18, 1983, 10, 48 Stat. 58,
64, as amended, 16 U. S. 8811
See, e. g., MISsoUv BASIN POWEa MARKEr STUDY, NOVEMBER 1947; POW=
MARKET SURVEY, NEW ENGLAND, AUGUST 1949; POWER MARKET SUBVEY,
SOUTHWESTERN REGION, JUNE 1950, Federal Power Commission.
Id.







marketing activities, studies of power needs and resources are
also conducted by the Bureau of Reclamation, Bonneville
Power Administration, Southwestern Power Administration,
Southeastern Power Administration, and Tennessee Valley
Authority, each for its particular region." In addition, the
National Security Resources Board has conducted power
surveys."1
Rates.--By a 1944 statute, it is required that surplus
power and energy generated at reservoir projects under the
control of the Secretary of the Army be turned over to the
Secretary of the Interior for marketing.= Such power must
be marketed so "as to encourage the most widespread use
thereof at the lowest possible rates to consumers consistent
with sound business principles." While Congress has not re-
quired that costs allocated to flood control and navigation be
reimbursable, it has required that power-rate schedules be
drawn "having regard to the recovery of the cost
of producing and transmitting such electric energy, including
the amortization of the capital investment allocated to power
over a reasonable period of years." It should also be noted
that costs incurred in preparing definite planning reports, called
Definite Project Reports, for authorized flood-control and navi-
gation projects are included in the cost of such projects, al-

"Bureau of Reclamation (see, e. g., PowEB MARKwr SunvRP, COwOBADO
Riva STOMACe PBO~CT, Bureau of Reclamation, February 1949, revised
1950); Bonneville Power Administration (Department of the Interior
Order No. 2115, par. 3, October 16, 1945); Southwestern Power Administra-
tion (Department of the Interior Order No. 2135, Part II, par. 2, November
21, 1945) ; Southeastern Power Administration (Department of the Interior
Order No. 2557, par. 8d(1), March 21, 1950); Tennessee Valley Authority
(see, e. g., Hearings, Independent Offices, House Appropriations Commit-
tee, January 19, 1950, pp. 984-1042; ANNUAL R roar or THE TMENEssBm
VAuz AurTOBrrI, p. 48, 1949).
"See, e. g., THID NATIONAL ELECTRIC POWun SUBVT, National Security
Resources Board (April 1950).
Act of December 22, 1944, 5, 58 Stat. 887, 890, 16 U. S. C. 825s. But
Congress later expressly directed that surplus energy generated at the new
hydroelectric power plant, Saint Marys River, Michigan, shall be leased by
the Secretary of the Army upon such terms and conditions as he shall
determine. Act of March 2, 1945, 2, 59 Stat. 10, 20.






though the costs of preliminary examinations and surveys are
not so included."
The 1944 statute specifies that rate schedules shall become
effective upon "confirmation and approval" by the Federal
Power Commission. But the Commission is given neither con-
tinuing supervision over such rates, nor authority to require
changes if it deems proposed rates too high or too low. Pro-
ceeds from sales of power from Army dams are deposited in the
Treasury as miscellaneous receipts.
In the case of reclamation projects, the marketing of power
is also under the control of the Secretary of the Interior. He
is generally authorized under the Reclamation Project Act of
1939 to enter into contracts for not exceeding 40 years for the
sale of power, or the lease of power privileges.2' But no
power contract may be made if the Secretary deems that it
will "impair the efficiency of the project for irrigation pur-
poses." The statutory power-rate standard requires rates to
be set so as to produce power revenues at least sufficient to
cover "an appropriate share" of the operation and maintenance
costs, 3% per annum on "an appropriate share" of the con-
struction investment, and "such other fixed charges as the
Secretarydeems proper." The general practice of the Secre-
tary is to set power rates so as to return annual operation,
maintenance and replacement costs, plus amortization of the
power investment in not to exceed 50 years, with interest at
the rate of 3% per annum on the unamortized balance of the
power investment.27 Also, costs incurred in investigating a
potential reclamation project which are directly attributable
to that project, generally become a part of the costs included

See, e. g., TaE DrITErr PBOJEOr RIOPR or TH ARBm COPB Or Emi-
mes, BU.SO ISLAND AN AND RaEBrVOIB, ROANOKE RIVEB, NOwTH CAEOUNA
AN VInOIM pp. 30-81, App. XII-8 (February 1, 194).
Act of August 4, 189, 5 9(c), 58 Stat. 1187,1194, 48 U. S. 0. 485h(c).
*id.
'Id.
See, e. g., AVMEBAG RATE AND REPAYMENT STUDIES FOR POWEB STBYSMS
oN BunEAu or REaC&MATION PROJEOra, Department of the Interior, Bureau
of Reclamation, pp. 1-5 (January 1950).





296
in those constituting% the construction investment, if the
project is eventually authorized.2s
The power-rate standard is a minimum rate provision. The
Act has a separate provision for allocation of project costs re-
payable or returnable to the United States.21 Costs allocable
to irrigation but beyond the water users' ability to repay may
be assigned for return from power revenues. The provision for
allocating repayable or returnable project costs makes no men-
tion of interest. And the Act has been administratively con-
strued as permitting the application of interest, collected as a
component of power rates, to the return to the United States
of irrigation costs to be borne by power.220 Wherever revenues
representing the interest component are so applied, they con-
stitute a subsidy to assist in repaying irrigation costs.22
With specified exceptions, proceeds from the disposition of
power at reclamation projects are covered into the Reclama-
tion Fund in the Treasury2 I may also be noted that, while
allocations to navigation and flood control are authorized, they
are treated as nonreimbursable.228
Under the supervision of the Secretary of the Interior, the
Bureau of Indians Affairs operates two hydroelectric and one
diesel plant, and purchases power for distribution. On the

For a number of years, appropriation legislation has specified that
interests requiring an investigation by the Bureau of Reclamation advance
at least 50% of the estimated cost thereof. See, e. g., Act of June 29, 1948,
62 Stat. 1112, 1126; see also supra, pp. 188-189.
S 9(a), 58 Stat. 1190, 48 U. S. 0. 485h(a).
2 Unpublished opinion of the Solicitor of the Department of the Interior
concerning power-rate schedules and minimum-revenue requirements for
Grand Coulee, Opinion M-38478, January 29, 1944, and its supplement of
September 10, 1945. In this connection, see the so-called Hayden-O'Mahoney
Amendment, Act of May 9,1938, 1,52 Stat. 291, 322,43 U. C. 92a.
Thus, the revenues representing the Interest component are applied
toward the repayment of the irrigation investment assigned for return from
power revenues. See, e. g., AVERAGE RATE AND REPAYMENT STUDIES FOR
POWER SYSTEMS ON BUREAU OF RECLAMATION PROJECTS, Department of the
Interior, Bureau of Reclamation, pp. 1-5 (January 1950).
m Act of May 9, 1938, J 1, 52 Stat. 291, 322, 48 U. S. C. 392a. For details
as to the Reclamation Fund, see supra, pp. 198-202.
mAct of August 4,1939, 9, 53 Stat. 1187, 1193.







Flathead Indian Reservation in Montana, the Bureau operates
a power plant for pumping irrigation water and purchases a
substantial block of power from the Montana Power Com-
pany's Kerr Plant which is located on the Reservation and is
operated under a Federal Power Commission license.4 Such
power is sold at the lowest rates which, in the judgment of the
Secretary of the Interior, will repay power costs and certain
irrigation costs.2" Power at the Coolidge Dam is used for
irrigation pumping and distribution on the San Carlos Indian
Reservation in Arizona, in addition to power from a small diesel
plant.2 Here, power revenues are used to repay power costs
and irrigation costs, and to make improvements on the irriga-
tion project., Such power revenues may also be used to
liquidate the cost of transmission lines." None of the rates
for power sales by the Bureau is subject to review by the
Federal Power Commission.
Transmission Lines.-In the marketing of power generated
at reservoir projects under the control of the Department of the
Army, the Secretary of the Interior has authority:22
to construct or acquire, by purchase or other agreement,
only such transmission lines and related facilities as
may be necessary in order to make the power and energy
generated at said projects available in wholesale quan-
tities for sale on fair andreasonable terms and conditions
to facilities owned by the Federal Government, public
bodies, cooperatives, and privately owned companies.

Act of April 23, 1904, 14, 88 Stat. 802, 805, as amended by Act of
May 10, 192, 44 Stat. 453, 464; Act of March 7, 1928, 1, 45 Stat. 200, 210,
212, 213, see 25 U. S. C. 387 note following. The FPC license is Montana
Power (ompany, Project No. 5, which was specially authorized in the Act
of March 7, 1928, 1, 45 Stat. 200,212
Act of May 25, 1948, i 2 (g), 2(h), 62 Stat. 29, 270,271.
m Act of June 5, 1924, 43 Stat. 390, 401, as amended by Act of May 10,
1926, 44 Stat. 453, 464, and Act of May 25, 1948, 62 Stat. 269.
Act of March 7, 1928, 1 1, 45 Stat. 200, 211, see 25 U. S. C. 387 note
following.
m Act of June 22,1936,49 Stat. 1822.
SAct of December 22, 1944, S 5, 58 Stat. 887, 890, 16 U. S. C. 825s.







The efficacy of the foregoing provision is expressly made de-
pendent upon the availability of "funds to be appropriated by
Congress." 2
In the case of reclamation projects, there is no comparable
blanket provision. As already noted, however, authority for
the development of power and for the lease of surplus power
or power privilege is contained in Reclamation Law, And
we have adverted to repeated instances in appropriation legis-
lation where Congress has expressly recognized that transmis-
sion facilities constitute parts of reclamation projects author-
ized by Congress.2"
While applicable only for prescribed areas, certain additional
provisions respecting transmission facilities merit notice here.
The Tennessee Valley Authority is authorized "to construct,
lease, purchase, or authorize the construction of transmission
lines within transmission distance from the place where gen-
erated, and to interconnect with other systems." Similarly,
it is authorized "to construct transmission lines to farms and
small villages that are not otherwise supplied with electricity
at reasonable rates" in order "to promote and encourage the
fullest possible use of electric light and power on farms" within
reasonable distance of its transmission lines.2. In the case of
projects governed by the Bonneville and Fort Peck Project
Acts, the Secretary of the Interior is "directed" to provide
and maintain such transmission facilities as he finds neces-
sary or appropriate to transmit electric energy to "existing and
potential markets," as well as to make interconnections "for the
purpose of interchange of electric energy.") m
Preferences.-For many years, various federal statutes re-
lated to development of water resources have provided a pref-

"*d.
See supra, pp. 239-240.
See swpra, p. 240.
Act of May 18, 193, 12, 48 Stat. 58, 65, 16 U. S. C. 881k.
S' 10, 48 Stat. 64, as amended, 16 U. S. C. 8311.
SAet of August 20, 1937, 2(b), 50 Stat. 731, 732, as amended, 16 U. C.
832a(b) ; Act of May 18, 1938, 2(b), 52 Stat. 403, 404, 16 U. S. C. 833a(b).







erence for public bodies and cooperatives." In 1944, Congress
prescribed generally that, in the marketing of power generated
at reservoir projects under control of the Secretary of the Army,
preference "shall be given to public bodies and cooperatives." "
Likewise, in the case of reclamation projects, preference "shall
be given to municipalities and other public corporations or
agencies; and also to cooperatives and other nonprofit organi-
zations" financed in whole or in part by REA loans." Similar,
provisions apply at specific projects and in prescribed areas,
as we shall shortly see."
SFor example, in lease of power from irrigation projects, preference to
"municipal purposes" (Act of April 16,1906, S 5, 4 Stat. 116,117, as amended,
48 U. S. C. 522); San Francisco prohibited from selling or letting the right
to sell or sublet water stored on national park land or the energy therefrom
to anyone "except a municipality or a municipal water district or Irrigation
dtitriet (Act of December 19, 193, 1 6 :38 Stat. 241, 245) ; FO to 'ive
preference to applications by states, and municipalities" for per-
mits and licenses for power projects, "Imuncipality" being defined to include
a "city, county, irrigation district, drainage district, or other political sub-
division or agency of a state" competent to develop, utilie, or distribute
power (Act of June 10, 1920, if 8, 7, 41 Stat. 1068, 1067, as amended, 16
U. S. 0. 796(7), 800); coetraets for use of energy from Hoover Dam to
be let "in conformity with the policy expressed in the Federal Water Power
Act as to conflicting applications," with specified exceptions (Act of Decem-
ber 21, 1928, 5 (c), 45 tat. 1057, 1060, 48 U. S. C. 617d(c)); in sale of
power from TVA projects, preference to "states, counties, municipalities,
and cooperative organizations of citizens or farmers" not doing business
for profit but organized primarily for purpose of supplying electricity to
their members (Act of May 18,11938, l1, 48 Stat. 58, 64, as amended, 16
U. S. 0. 8811); in making BB.R loans, preference to "States, Territories,
and subdivisions and agencies thereof, municipalities, peoples utility dis-
tricts, and cooperative, Abnprofit, or limited dividend associations" (Act
of May 20,6,1988, 4 ; ta49 t 186 186, as amended, 7 U. S. C. 904); in
disposing of Bonneville Project energy, "preference and priority to public
bodies and cooperatives" (Act of August 20, 1987, 4a, 50 Stat. 781, 738,
16 U. S. 0. 88e(a)) ; in disposing of Fort Peck Project energy, "preference
and priority to public bodies and cooperatives" (Act of May 18, 1988, 1 4,
52 Stat 408, 405, 16 U. S. C. 838c); preference prescribed for sale of
power from projects constructed pursuant to Water Conservation and
Utilization Act (Act of October 14, 1940, 1 9, 54 Stat. 1119, 1124, 16 U. S C.
590z-7) ; in lease of recreation sites at Army reservoir areas, preference to
"Federal,, State, or local governmental agencies" (Act of December 22,
1944, 4, 58 Stat. 897, 889,16 U. 8. 0. 460d).
Act of December 22, 1944, 5, 58 Stat. 887, 890, 16 U. 8. C. 825s.
Act of August 4,1989, I 9(c), 58 Stat. 1187,1194,48 U. S. Q 485h(e).
See ifra, pp. 00-309.






Marketing Agncies.-In large measure, marketing of fed-
eral power is a responsibility of the Secretary of the Interior.
To market power generated at reservoir projects under the
control of the Department of the Army, the Secretary of the
Interior has created the Southwestern Power Administration
to operate in the States of Arkansas, Louisiana, and parts of
Kansas, Missouri, Oklahoma, and Texas."0 For a like pur-
pose, he has created the Southeastern Power Administration
to operate in the States of West Virginia, Virginia, North Caro-
lina, South Carolina, Georgia, Florida, Alabama, Mississippi,
Tennessee, and Kentucky.' The Bonneville Power Admin-
istration has been assigned this responsibility in the Pacific
Northwest.22
In the case of reclamation projects, the marketing of power
is under the control of the Secretary of the Interior and is gen-
erally assigned to the Bureau of Reclamation.243 As already
noted, the Secretary also controls the marketing of power from
dams of the Bureau of Indian Affairs.
SPECIAL PROJECTS AND PRESCRIBED AwES.-Thus far, we
have discussed provisions generally applicable to projects con-
structed by the two principal construction agencies. However,
with respect to the development of multiple-purpose projects
and the generation and marketing of power, Congress has fre-
quently legislated particularly for individual projects or pre-
scribed regions. We shall mention here the more significant
instances only so far as they concern the development of power
and other uses, reserving for later consideration their influence
upon comprehensive development.2"

SSee Department of the Interior Order No. 2135, November 21, 1945, 10
F. R. 14527.
M See Department of the Interior Order No. 2558, March 21, 1950, 15
F. R. 1901.
See infra, p. 304.
"Exceptions to this general rule include notably the Grand Coulee
Project, where the power-marketing function has been assigned to the
Bonneville Power Administration and merged with its like responsibilities
for other federal dams in the area. See Ex. O. No. 8526, 5 F. R. 3390 (1940).
SSee nfra, pp. 383-491.







Boulder Canyon Project.-Statutory authorization for the
Boulder Canyon Project marks the initial undertaking by the
Federal Government of a truly large-scale, multiple-purpose
development."" Congress authorized the Secretary of the In-
terior to construct, operate, and maintain the project for flood
control, navigation, reclamation, and other beneficial uses. In
addition, the generation of energy was expressly described as
a means for making the project a "self-supporting and finan-
cially solvent undertaking." "
Unique and extensive provisions are prescribed for facilities
constructed, the rights and obligations of the Colorado River
Basin States, sale of power, water use, irrigation rights, and
approval of the Colorado River Compact. For example, dis-
cretionary power is vested in the Secretary of the Interior to
lease "units of any Government-built plant, with right to gen-
erate electrical energy," or to lease the use of water for such
generation.247 Moreover, Congress directed that the Secretary
make provision by contract for revenues to meet expenses of
construction, operation, and maintenance within 50 years from
the completion date of the works.28 A maximum power-con-
tract period of 50 years is prescribed, but an entitlement to
renewals is included."
In 1930, the Secretary disposed of the entire output of firm
energy to be generated during the 50 years following comple-
tion of the dam and reported to Congress that he had obtained
the required contracts.2!
Under requirements adopted by statute in 1940, several
changes were made: in lieu of rate adjustments every ten years
upon a basis of competitive conditions, rates are stabilized for
a period from June 1, 1937 to May 1, 1987; the interest rate is
reduced from 4% to 3% and applied to all of the Government's
investment except $25,000,000 allocated to flood control; and
Act of December 21, 1928, 45 Stat. 1057, 43 U. S. C. 617-617t; Act of
July 19, 1940, 54 Stat. 774, 43 U. S. 0. 618-18o.
Act of December 21, 1928, 1, 45 Stat. 1057, 43 U. S. C. 617.
6, 48 Stat. 1061, 43 U. S. C. 617e.
4 4(b), 45 Stat. 1059, 43 U. S. 617c(b).
S 5(a), (b), 45 Stat. 1060,43 U. S. C.617d(a), (b).
2 Sen. Rep. No. 1784, 76th Cong., 3d sess., p. 3 (1940).







contract payments are required to be sufficient to cover costs
of operation and maintenance and replacements, an amount
equal to 100% of the principal of the Government's invest-
ment, plus 3% interest on all but $25,000,000 allocated to flood
control, plus an amount in lieu of taxes to the states wherein
the project is located, as well as sums for annual transfer to the
Colorado River Development Fund.'" From this fund, pro-
vided for by the 1940 Act, appropriations were authorized dur-
ing an initial period for studies and investigations for the for-
mulation of a "comprehensive plan," later appropriations being
authorized in the same Act for investigation and construction
of projects in the Colorado River Basin."2
It is also important to note that, under the 1940 Act, the
Secretary was authorized to contract for the termination of the
existing lease of the power plant and to operate it either di-
rectly or through agents.2" Pursuant to this provision, a con-
tract was consummated in 1941 whereby the lease was ter-
minated and the then lessees became the operating agents of
the power plant."
Fort Peck Project.-Another special act dealing with the
role of power in a multiple-purpose project is that relating to
the Fort Peck Project, the completion of which was authorized
in 1938.2 Constructed primarily for improving navigation on
the Missouri River, and for "other purposes incidental
thereto," the project is maintained and operated by the Army
Engineers, but surplus energy is marketed by the Secretary of
the Interior through the Bureau of Reclamation."
Rate schedules prepared by the Bureau shall be fixed "with
a view to encouraging the widest possible diversified use of
m Act of July 19,1940, 54 Stat. 774, as amended, 43 U. S. C. 618-618o (and
Supp. III). See also Sen. Rep. No. 1784, 76th Cong., 3d sess., p. 9 (1940).
"g 2(d), 54 Stat. 175, as amended, 48 U. S. C. 618a(d) (Supp. III).
m" 9,54 Stat. 777,43 U. C. 618h.
See HooVEB DAM POWER AND WATER CONTfAOrT AND R1LATEI DATA, De-
partment of the Interior, Bureau of Reclamation, pp. 787-813 (1950).
Act of May 18,1938,52 Stat. 408,16 U. S. 83-838p.
M 1, 52 Stat. 403, 16 U. S. C. 833; Reorganization Plan No. 3 of 1950,
effective May 24, 1950, 15 F. R. 8174; Department of the Interior Order No.
2563, May 2, 1950. See also Sen. Doe. No. 247, 78th Cong., 2d sess., p. 2
(1944).






electric energy," and must provide for uniform rate or rates
through prescribed transmission areas to extend the "benefits
of an integrated transmission system and encourage the equit-
able distribution" of Fort Peck energy."7 They must be drawn
having regard to the recovery of the cost of producing and
transmitting energy, including amortization of the capital in-
vestment over a reasonable period of years, and must be based
on an allocation of costs by the Federal Power Commission."
And specifically here, as generally in the case of rates for power
produced at reservoir projects under the control of the Depart-
ment of the Army, rates are subject to "confirmation and
approval" by the Federal Power Commission," but without
continuing supervision over rates or authority to require
changes in proposed rates.
Broad authority is provided for the construction and main-
tenance of transmission lines and appurtenant facilities and
their interconnection with other systems, in order, as stated by
Congress:2
to encourage the widest possible use of all electrical
energy that can be generated and marketed and to pro-
vide reasonable outlets therefore, and to prevent the
monopolization thereof by limited groups.
To insure the operation of Fort Peck generating facilities
"forthe benefit of the general public, and particularly of domes-
tic and rural consumers," the Bureau is required to give "pref-
erence and priority to public bodies and cooperatives." "l
Bonneville Power Administration.-Legislation relating to
the Bonneville Power Administration is a further example of
special Congressional treatment of the role of power in
multiple-purpose projects-in this instance dealing with a series
of large dams on one river system, the Columbia.
In 1935, Congress authorized construction of the Bonneville
m 15, 52 Stat. 405, 16 U. S. 833d.
Si 6, 52 Stat 405,16 U. S. 888e.
"I 5,52 Stat. 405,16 U. S. C. 838d.
i 2(b), 52 Stat. 404, 16 U. S. 833a(b).
S4, 52 Stat. 405,16 U. S. C. 83c.
911611-1--21







Dam by the Army Engineers.2" The same act authorized the
President, through such agent as he might designate, to con-
struct, operate, and maintain the Grand Coulee Project, and
the Bureau of Reclamation was so designated.26 With the
impending completion of Bonneville Dam, Congress in 1937
authorized its completion and provided a temporary form of
administration, pending establishment of a permanent ad-
ministration embracing other Columbia Basin projects.2
Operation of the dam and power house is the responsibility
of the Secretary of the Army; marketing of the power is the
responsibility of the Bonneville Power Administrator who is
responsible to the Secretary of the Interior. As the Grand
Coulee Project neared completion, the President, in the ab-
sence of further congressional action, assigned responsibility
for the marketing of its power to the Bonneville Power Ad-
ministrator.26 Operation of the dam itself was left with the
Bureau of Reclamation. Subsequently, the Bonneville Power
Administrator's marketing responsibilities have been extended
to other projects, including principally the Detroit Dam Proj-
ect,`6 Hungry Horse Project,"2 McNary Project,26 Lower Snake
River Project,269 and Chief Joseph Project.270

Act of August 30, 1935, 1, 49 Stat. 1028, 1088.
President's letter of January 29, 1936, to the Secretary of the Interior.
See Bu=ra& or RECLAMATION PROJECT FEASIBILIIES AND AUTHORIZATION,
p. 415 (April 1949).
M Act of August 20, 1987, 50 Stat. 731, as amended, 16 U. S. C. 882-8821
I z. O. No. 8526, August 26, 1940, 5 F. R. 8890. In 1943, Grand Coulee
was reauthorized as the Columbia Basin Project, subject to specified provi-
sions of Reclamation Law, together with provisions of the reauthorization
statute. Act of March 10, 1943, 57 Stat. 14, 16 U. S. C. 835-835.
"Act of June 30, 1948, 62 Stat. 1171; Department of the Interior Order
No. 2115, October 16, 1945, 10 F. R. 14211. See also Act of June 28, 1938,
52 Stat. 1215, 1222.
Act of June 5, 1944, 58 Stat. 270, 48 U. S. C. 593a-593b; Department of
the Interior Order No. 1994, September 26, 1944, 9 F. I. 11966.
*"Act of March 2, 1945, 2, 59 Stat. 10, 21; Department of the Interior
Order No. 2115, October 16, 1945, 10 F. R. 14211.
Id.
o Act of July 24, 1946, 1, 60 Stat. 534, 637 (therein designated "Columbia
River, at Foster Creek") ; Department of the Interior Order No. 2237, August
9, 1946, 11 F 8830.







Rate-schedule provisions for the foregoing projects are
varied. As to Grand Coulee, provisions of the Reclamation
Law are applicable."1 As to the Detroit Dam and Chief Joseph
Projects, the applicable rate-schedule provisions are those gen-
erally governing power, produced at reservoir projects under
the control of the Department of the Army, discussed above.*"
In authorizing the Hungry Horse Project, Congress declared
its action for stated multiple purposes "and other beneficial
uses primarily in the State of Montana but also in downstream
areas." Apart from the possible relevancy of this provision,
the statute is silent as to marketing requirements generally.
But language used in appropriation acts contains conflicting
suggestions as to the applicability of Reclamation Law."'
As to Bonneville, McNary, and Lower Snake River Projects,
the rate-schedule provisions of the Bonneville Project Act
govern.Y These are substantially the same as those applicable
to the Fort Peck Project. In addition, contracts must insure
that resale rates to ultimate consumers are reasonable and non-
discriminatory."6 Moreover, the usual provision for pref-
erence to public bodies and cooperatives is extensively
augmented by requirements allowing time for their creation,
organization, and financing.~ '
SAuthority for the integrated transmission network of the
Bonneville Power Administration stems from statutory sources
varied on a project basis exactly as in the case of provisions
relating to rate schedules for those projects. In other words,
in the case of the Bonneville, McNary and Lower Snake River
Projects, authority for transmission lines is derived from the

SSee super, pp. 295-296.
2 Se supra, pp. 294-295.
Act of June 5, 1944, 1, 58 Stat. 270, 48 U. S. C. 598a.
"Act of July 8, 1945, 59 Stat. 818, 840-341; Act of December 28, 1945,
59 Stat. 682, 648; Act of July 1, 1946, 60Stat. 848, 867-868; Act of July 25,
1947, 61 Stat.. 40, 475; Act of June 29, 1948, 62 Stat. 1112, 1129. See also
Act of August 4,1939, 2(c), 58 Stat. 1187, 48 U. S. 0. 485a(c).
*Act of August 20, 1987, I 6, 50 Stat. 781, 785, as amended, 16 U. S. 0.
832e; 7, 50 Stat. 735, 16 U. S. C. 882f; Act of March 2, 1945, 2, 59 Stat. 10,
21-22.
5, 50 Stat. 784, as amended, 16 U. S. C. 832d.
4,50 Stat. 733, as amended, 16 U. S. C. 882c.







Bonneville Project Act in language substantially the same as
in the Fort Peck Act."' As noted above, the Hungry Horse
Dam Act is silent as to power marketing. As to other projects,
the authority is that applying either to reclamation projects
or to projects under the control of the Department of the
Army.
As we shall later see, the foregoing diversity results from
varying statutory efforts toward comprehensive development
in the Pacific Northwest.m Likewise, we shall reserve for later
discussion the obvious possibilities for difficulty in attempting
to coordinate such statutory heterogeneity."
Tennessee Valley Authority.--Congress accorded unique
recognition to the need for coordinating multiple uses of water
under comprehensive river-basin development when it estab-
lished the Tennessee Valley Authority in 1933." Created in
the form of a government corporation, it is responsible for con-
structing such daibs and reservoirs as would best serve to pro-
mote navigation on the Tennessee River and its tributaries.8s
It is directed to operate its dams and reservoirs to regulate
stream flow primarily for navigation and flood control."
Moreover, so far as may be consistent with those purposes,
it may operate the projects for generation of power.~ Use
of power revenues is authorized to assist in liquidating the cost
or to aid in the maintenance of TVA projects, but since 1947
such revenues may not be used in constructing new power-
producing projects unless approved by Congress."

2b, 50 Stat. 732, 16 U. S. C. 882a(b); 2(b), 52 Stat. 404, 16 U. S. 0.
838a(b). There is no authority to condemn transmission lines in the case
of the McNary and Lower Snake River Projects, however. Act of March
2,1945, 1 2, 59 Stat. 10, 21-22.
See infra, pp. 468-466.
"* ee Chapter 10, Comparative Summary.
rAct of May 18, 1988, 48 Stat. 58, as amended, see 16 U. S. C. 831 et
seq.
m 4(j), 48 Stat. 61, as amended, 16 U. S. C. 881c().
Act of August 31,1935, 5, 49 Stat. 1075, 1076, 16 U. S. O. 831h-1.
Id.
SId.; Act of May 18,1988, 1 26,48 Stat. 58, 71; Act of July 80,1947, 1 201,
61 Stat. 574,577,16 U. 8.. .8381-2 (Supp. mI).







But the foregoing are not the only uses of TVA projects. In
its integrated operations, TVYA must take account of still fur-
ther aspects of development, utilization, and conservation of
water and land resources. These we shall examine in the
chapter on Comprehensive Development.~ Here, our atten-
tion is centered upon multiple uses of projects, particularly in
relation to the generation and marketing of power."'
In that connection, it should first be noted that TVA may
make studies, experiments, and determinations "to promote
the wider and better use of electric power for agricultural and
domestic use, or for small or local industries," and it may coop-
erate with other agenciesin the "application of electric power to
the fuller and better balanced development of the resources of
the region." 8
Surplus power may be sold to states, counties, municipalities,
corporations, partnerships, or individuals.2 The contract
term may not exceed 20 years, but contracts with private com-
panies or individuals for sale of power which is resold for a profit
must reserve the right to cancel upon five years' notice if such
power is needed to supply states, counties, or municipalities."
Resale rate schedules may be included in the terms and condi-
tions of power contracts."
Extensive authority is included in respect of transmission
lines. For example, the Act stipulates that:
In order to promote and encourage the fullest possible
use of electric light and power on farms within reasonable
distance of any of its transmission lines the board in its
discretion shall have power to construct transmission
lines to farms and small villages that are not otherwise
supplied with electricity at reasonable rates, and to make

SSee infra, pp. 488-488.
Act of May 18,1983, $ 10-12, 48 Stat. 58, 4-8 as amended, 16 U. S. O.
831ti-88k.
SI 10, 48 Stat. 64, as amended, 16 U. S. 0. 881L
SId.
'*Id.
'"Id.
Id.


T~eY"P~;rCL







such rules and regulations governing such sale and dis-
tribution of such electric power as in its judgment may
be just and equitable.
And "in order to supply farms and small villages," as contem-
plated by the Act, existing electric facilities used in supplying
them may be acquired.2"9
Likewise, surplus power generated at Muscle Shoals must
be distributed "equitably among the States, counties, and mu-
nicipalities within transmission distance." 29 Congress also
declared that TVA projects shall be consideredd "primarily as
for the benefit of the people of the section as a whole and par-
ticularly the'd6mestic and rural consumers to whom the power
can economically be made available." Sale toe and use'by
industry is specifically made a secondary purpose, to be u1ti-
lized principally to secure a sufficiently high loiad factor and
revenue returns "which will permit domestic and rural use at
the lowest possible rates and in such manner as to encourage
increased domestic aid rural use of electricity." "
In addition, TVA is authorized in specified circumstances to
construct, lease, purchase, or authorize the construction 'of
transmission lines within transmission distance from the gener-
ating plant, and to interconnect with other systems.297 And it
may lease any such transmission line to any person or corpo-
ration.'" If any state, county, municipality, or electric co-
operative constructs or agrees to construct transmission facili-
ties to the generating plant, or to a transmiission line owned by
the Government or leased by TVA and under its control, TVA
is directed to contract for the sale of power to such organization
for a term not exceeding 30 yearsY.2 Contracts with munici-
palities, political subdivisions, and cooperatives must provide
for sale and distribution to ultimate consumers "without dis-
Id.
11,48 Stat. 64, 16 U S. 0. 831j.
20 Id.
SId.
8 12, 48 Stat. 65. 16 U. S. C. 831k: see also Act of July 26, 1939, 53 Stat.
1083,16 U. S. 0. 831n-2.
IW ta.







crimination as between consumers of the same class." 00 A
provision for regulation of resale rates must be included in con-
tracts with systems engaged in distribution for profit.01
TVA has taken over several steam-electric generating plants,
and Congress has on occasions approved the use of funds for
construction of steam-electric generating facilities."2
Unlike some situations previously mentioned, the Federal
Power Commission here has no responsibilities as to cost allo-
cation or as to rates.

International Waters
A number of treaties and statutes relating to international
waters permit or limit their use for power development. For
example, Congress has prescribed particularized provisions re-
lating to certain international waters in Northern Minne-
sota." And we have previously noted the relevant func-
tions of the International Joint Commission,B" and the Inter-
national Boundary and Water Commission, United States and
Mexico.8 In connection with the latter, mention should be
made of a recent treaty relating to the Colorado and Tijuana
Rivers and the Rio Grande.'" Under its provisions, the Fal-
con Dam on the Rio Grande is to be built by the latter Com-
misnsidn, for wiom the Bureau of Reclamation is preparing
the plans and specifications.'07
At Niagara Falls, diversions for power have long been made
under the provisions of agreements between the United States
and Canada." On the United States side, power is now de-
mId.
SId.
*l. Res. 583, July 31, 1940, 76th Cong., 3d sess. (1940) ; Pub. Res. 95,
54 Stat. 781; see also supra, n. 193, p. 290.
Act of July 10, 1930, 46 Stat. 1020, 16 U. S. C. 577-577b.
'See supra, pp. 121-122, 148.
SSee supra, pp. 122-123, 148-149.
Effective November 8, 1945, 59 Stat. 1219.
"Act of October 5, 1849, 63 Stat. 701.
SSee Treaty between the United States and Great Britain, Act of Jan-
uary 11, 1909, 36 Stat. 2448; exchange of notes between United States and
Canada at Washington on May 20, 1941, 55 Stat. 1276, on October 27 and
November 27, 1941, 55 Stat. 1380, and on December 23, 1948, S. Ex. J., 81st
Cong., 1st sess. (1949).




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