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PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

FRIDAY, APRIL 19, 1935

UNITED STATES SENATE,
COMMITTEE ON INTERSTATE COMMERCE,

Washington, D.C. The committee met, pursuant to adjournment on yesterday, at 10 a. m., in room 412, Senate Office Building, Senator Burton K. Wheeler presiding.

Present: Senators Wheeler (chairman), Wagner, Barkley, Lonergan, Bone, Minton, Truman, Couzens, Hastings, White, and Shipstead.

The CHAIRMAN. The committee will please come to order. Mr. DeVane, you may state your name to the committee. STATEMENT OF DOZIER A. DeVANE, SOLICITOR, FEDERAL POWER

COMMISSION,WASHINGTON, D. C.

Mr. DEVANE. Mr. Chairman, my name is Dozier A. DeVane. The CHAIRMAN. What is your business, profession, or occupation ? Mr. DEVANE. I am a lawyer, and solicitor for the Federal Power Commission.

The CHAIRMAN. How long have you occupied that position? Mr. DEVANE. Since November of 1933. The CHAIRMAN. Prior to that time you were what? Mr. DEVANE. I have been engaged in public-utility work since 1918, when I became counsel for the Railroad Commission of Florida.

The CHAIRMAN. All right. Mr. DeVane, do you have a statement prepared that you wish to make to the committee?

Mr. DEVANE. I am here, Mr. Chairman, to discuss title II of the Wheeler bill, S. 1725.

The CHAIRMAN. Will you please speak up loud enough so that everyone in the room may hear you?

Mr. DEVANE. Mr. Corcoran explained to you yesterday how title I was prepared and its purpose. He also made reference to the fact that title II of the bill was prepared by the Federal Power Commission, and as Solicitor for that Commission I participated in the preparation of title II of the bill.

The CHAIRMAN. You may proceed. Senator WHITE. Let me ask you right there: At what page of the bill does title II begin?

Mr. DEVANE. It begins on page 78 of the Wheeler bill. The title II that I referred to, however, begins on page 104 with section 201. On page 78 of the bill there is proposed certain amendments to certain sections of the Federal Water Power Act. Sertion 212, un page 104, provides that sections 1 to 29, inclusive, of the Federal Water Power Act, as amended, shall constitute title I of that act. And section 213, on page 104 of this bill, provides that the Federal Water Power Act, as amended, shall be further amended by adding thereto titles II and III.

I mention this so that there may be no confusion as to the reason for the two separate designations of title II, on pages 78 and 104 of the bill.

The second title II, beginning at page 104 of the bill, provides for the regulation of the transmission and sale of electric energy in interstate commerce.

Title III, beginning on page 122 of the bill, contains administrative provisions applicable to both titles II, beginning on pages 78 and 104. None of the administrative provisions of title III are applicable to title I of this bill.

Title I of this bill relates exclusively to holding companies, and both title II and title III relate to the operating companies in the electric field.

I should like to make reference to the first title, beginning on page 78 of the bill, and if it is agreeable, Mr. Chairman, I should like to incorporate in the record the amendments to the Federal Water Power Act as I have them prepared here, which show the words that are stricken out and the words that are added as amendments, in order that you may have them clearly before you.

(There will here be printed in the record the paper headed (“Federal Water Power Act amendments proposed in S. 1725, pp. 78 and 104.")

FEDERAL WATER POWER ACT-AMENDMENTS PROPOSED IN S. 1725

(pp. 78-104) SEC. 201. Section 3 of the Federal Water Power Act is amended to read as follows:

"Sec. 3. That the words defined in this seetion shall have the following mean ings for the purposes of this Aet, te wit: For the purposes of this Act, unless the context otherwise requires

"(1) 'public lands' means such lands and interest in lands owned by the United States as are subject to private appropriation and disposal under publicland laws; # but shall not include “reservations', as hereinafter defined;

(2) 'reservations' means national monuments, national parks, national forests, tribal lands embraced within Indian reservations, military reservations, and other lands and interests in lands owned by the United States, and withdrawn, reserved, or withheld from private appropriation and disposal under the public-land laws; and also lands and interests in lands acquired and held for any public

purpose; 4. Corporation means a corporation organised under the laws of any State of of the United States empowered to develop; transmit, distribute, selt, lease, or #tilize power in addition to sueh other powers as it may possess, and authorized to transact in the State or States in whieh its projeet is loented all business Hecessary to effeet the purposes of a license under this Act. It shall not inelude municipalities' as hereinafter defined.

"(3) corporation' means any corporation, joint-stock company, partnership, association, business trust, organized group of persons, whether incorporated or not, of a receiver or receivers, trustee or trustees of any of the foregoing; but shall not include 'municipalities' as hereinafter defined;

"(4) 'person' means an individual or a corporation;

"(5) "licensee' means nay person licensed under the provisions of section 4 of this Act, and any assignee or successor in interest of such person;

“(6) 'State' means a State admitted to the Union of the United States, the District of Columbia, and any organized Territory of the United States;

"() 'municipality' means a city, county, irrigation district, drainage district, or other political subdivision or agency of a State competent under the laws thereof to carry on the business of developing, transmitting, utilizing, or distributing power;

"(8) 'navigable waters' means those parts of streams or other bodies of water over which Congress has jurisdiction under its authority to regulate commerce with foreign nations and among the several States, and which either in their natural or improved condition, notwithstanding interruptions between the navigable parts of such streams or waters by falls, shallows, or rapids compelling land carriage, are used or suitable for use for the transportation of persons or property in interstate or foreign commerce, including therein all such interrupting falls, shallows, or rapids, together with such other parts of streams as shall have been authorized by Congress for improvement by the United States or shall have been recommended to Congress for such improvement after investigation under its authority ;

"(9) ‘municipal purposes' means and includes all purposes within municipal powers as defined by the constitution or laws of the State or by the charter of the municipality;

"(10) 'Government dam’ means a dam or other work constructed or owned by the United States for Government purposes with or without contribution from others;

"(11) project' means complete unit of improvement or development, consisting of a power house, all water conduits, all dams and appurtenant works and structures (including navigation structures) which are a part of said unit, and all storage, diverting, or fore-bay reservoirs directly connected therewith, the primary line or lines transmitting power therefrom to the point of junction with the distribution system or with the interconnected primary transmission system, all miscellaneous structures used and useful in connection with said unit or any part thereof, and all water rights, rights-of-way, ditches, dams, reservoirs, lands, or interest in lands the use and occupancy of which are necessary or appropriate in the maintenance and operation of such unit;

"(12) ‘project works' means the physical structures of a project;

"(13) 'net investment' in a project means the actual legitimate prudent original cost thereof as defined and interprete } in the classification of investment in road and equipment of steam roads, issue of 1914, Interstate Commerce Commission', plus similar costs of additions thereto and betterments thereof, minus the sum of the following items properly allocated thereto, if and to the extent that such items have been accumulated during the period of the license from earnings in excess of a fair return on such investment: (a) Unappropriated surplus, (b) aggregate credit balances of current depreciation accounts, and (c) aggregate appropriations of surplus or income held in amortization, sinking fund, or similar reserves, or expended for additions or betterments or used for the purposes for which such reserves were created. The term 'cost' shall include, insofar as applicable, the elements thereof prescribed in said classification, but shall not include expenditures from funds obtained through donations by States, municipalities, individuals, or others, and said classification of investment of the Interstate Commerce Commission shall insofar as applicable be published and promulgated as a part of the rules and regulations of the Commission;

"(14) Commission' and 'Commissioner' means the Federal Power Commission, and a member thereof, respectively;

"(15) · State commission' means the regulatory body of the State or municipaliły having jurisdiction to regulate rates and charges for the sale of electric energy to consumers within the State or municipality; and.

*(16) . security' means any note, stock, treasury stock, bond, debenture, or other evidence of interest in or indebtedness of a corporation subject to the provisions of this Act.”

SEC. 202. Section 4 of the Federal Water Power Act is amended to read as follows:

"Sec. 4. That The Commission is hereby authorized and empowered"(a) To make investigations and to collect and record data concerning the utilization of the water resources of any region to he developed, the water power industry and its relation to other industries and to interstate or foreign commerce, and concerning the location, capacity, development costs, and relation to markets of power sites, and whether the power from Government dams can be advantageously used by the United States for its public purposes, and what is a fair value of such power, to the extent the Commission may deem necessary or useful for the purposes of this Act.

In order to aid the Commission in determining the net investment of a lieensee in any projeet, the “(6) To determine the actual legitimate prudent original cost of and the net investment in a licensed project, and to aid the Commission in such determinations, each licensee shall, upon oath, within a reasonable period of time to be fixed by the Commission, after the construction of the original project or any addition thereto or betterment thereof, file with the Commission in such detail as the Commission may require, a statement in duplicate showing the actual legitimate original cost of construction of such project, addition, or betterment, and of the price paid for water rights, rights-of-way, lands, or interest in lands. The Commission shalt deposit one of said statements with the Seeretary of the Treasury. The licensee shall grant to the Commission or to its duly authorized agent or agents, at all reasonable times, free access to such project, addition, or betterment, and to all maps, profiles, contracts, reports of engineers, accounts, books, records and all other papers and documents relating thereto. The statement of actual legitimate prudent original cost of said project and revisions thereof as determined by the Commission, shall be filed with the Secretary of the Treasury.

“(b) (c) To cooperate with the executive departments and other agencies of State or National Governments in such investigations; and for such purpose the several departments and agencies of the National Government are authorized and directed upon the request of the Commission to furnish such records, papers, and information in their possession as may be requested by the Commission, and temporarily to detail to the Commission such officers or experts as may be necessary in such investigations.

"(e) (d) To make public from time to time the information secured hereunder and to provide for the publication of its reports and investigations in such form and manner as may be best adapted for public information and use. The Commission, on or before the first Monday in December 3d day of January of each year, shall submit to Congress for the fiscal year preceding a classified report showing the permits and licenses issued under this Aet title, and in each case the parties thereto, the terms prescribed, and the moneys received if any, on account thereof. Such report shall contain the names and show the compensation of the persons employed by the Commission.

"fel) (e) To issue licenses to citizens of the United States, or to any association of such citizens, or to any corporation organized under the laws of the United States or any State thereof, or to any State or municipality for the purpose of constructing, operating, and maintaining dams, water conduits, reservoirs, power houses, transmission lines, or other project works necessary or convenient for the development and improvement of navigation and for the development, transmission, and utilization of power across, along, from, or in any of the navigable waters of the Haited States, streams or other bodies of water over which Congress has jurisdiction under its authority to regulate commerce with foreign nations and among the several States, or upon any part of the public lands and reservations of the United States (including the Territories), or for the purpose of utilizing the surplus water or water power from any Government dam, except as herein provided: Provided, That licenses shall be issued within any reservation only after a finding by the Commission that the license will not interfere or be inconsistent with the purpose for which such reservation was created or acquired, and shall be subject to and contain such conditions as the Secretary of the Department under whose supervision such reservation falls shall deem necessary for the adequate protection and utilization of such reservation: Provided further, That no license affecting the navigable capacity of any navigable waters of the United States shall be issued until the plans of the dam or other structures affecting navigation have been approved by the Chief of Engineers and the Secretary of War. Whenever the contemplated improvement is, in the judgment of the commission, desirable and justified in the public interest for the purpose of improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, a finding to that effect shall be made by the commission and shall become part of the records of the commission: Provided further, That in case the commission shall find that any Government dam may be advantageously used by the United States for public purposes in addition to navigation, no license therefor shall be issued until two years after it shall have reported to Congress the facts and conditions relating thereto, except that this provision shall not apply to any Government dam constructed prior to the passage of this tet June 10, 1920: And provided further, That upon the filing of any application for a license which has not been preceded by a preliminary permit under subsection fet (f) of this section, notice shall be given and published as required by the proviso of said subsection.

"(e) () To issue preliminary permits for the purpose of enabling applicants for a license hereunder to secure the data and to perform the acts required by section 9 hereof: Provided, however, That upon the filing of any application for a preliminary permit by any person, association, or corporation the Commission, before granting such application, shall at once give notice of such application in writing to any State or municipality likely to be interested in or affected by such application; and shall also publish notice of such application for eight weeks once each week for four weeks in a daily or weekly newspaper published in the county or counties in which the project or any part thereof or the lands affected thereby are situated.

fo preseribe rules and regulations for the establishment of a system of Accounts and for the maintenance thereof by lieensees hereunder, to examine al books and accounts of sueh licensees at any time, to require them to submit at such time or times as the commission may require statements and reports, including full information as to assets and liabilities, capitalization, not investment and reduction thereof; sross receipts, interest Hue and paid, depreciation and other reserves, cost of project; cost of maintenance and operation of the project, cost of Penerals and replacements of the project works, and as to depreciation of the projeet works and as to produetion, transmission, use and sale of power, also to require any licensee te make adequate provision for currently determining said ests and other faete. Al sueh statements and reports shall be made upon oath, unless otherwise specified, and in steh form and on oueh blanks as the commission may require. Any person who, for the purpose of deceiving; makes or causes to be made any false entry in the books or the accounts of sheh teensee, and any person who for the purpose of deceiving; makes or eauses to be made any false statement or report in response to a request or order or flireetion from the commission for the statements and report herein referred to shah upon convietion, be fined Hot more than $2,000 or imprisoned not more than five years, or both.

Fo hold hearings and to order testimony to be taken by deposition at *** designated place in conneetion with the application for any permit or license, of the regulation of rates, service, or securities, or the making of any investigaHon, as provided in this Aot; to require by subpena, signed by any member of the Commission, the attendance and testimony of witnesses and the produetion of dooumentary evidence from any place in the United States, and in case of disobedience to a subpena the Commission may invoke the aid of any court of the United States ið requiring the attendance and testimony of witnesses and the produetion of documentary evidence. Any member, expert, of examiner of the Commission may, when duly deisgnated by the Commission for such purposes, administer oaths and affirmations, examine witnesses and receive evidenee: Depositions may be taken before any person designated by the Commission or by its exceutive secretary and empowered to administer oaths, shah be redueed te writing by sueh person or under his direction, and subseribed by the deponent. Witnesses summoned before the Commission shall be paid the same fees and mileage that are paid witnesses in the courts of the United States, and witnesses #hoce depositions are taken and persons taking the same shall severally be entitled to the same fees as are paid for like services in the courts of the United

Ant fe perform any and all acts, to make sueh rules and regulations, and to issue steh orders not inconsistent with this Act as may be necessary and proper for the purpose of carrying out the provisions of this Aet.

(9) Upon its own motion to order an investigation of any occupancy of, or evidenced intention to occupy public lands, reservations, and/or streams or other bodies of water over which Congress has jurisdiction under its authority to regulate commerce with foreign nations and among the several States by any person, corporation, State, or municipality and to issue such order as it may deem appropriate, expedient, and in the public interest to conserve and utilize the navigation, water, and power resources of the Nation."

Sec. 203. Section 5 of the Federal Water Power Act is amended to read as follows:

"Sec. 5. That Each preliminary permit issued under this Aet title shall be for the sole purpose of maintaining priority of application for a license under the terms of this Act for such period or periods, not exceeding a total of three years, as

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