(2) The licensee shall, if available on reasonable terms and conditions, acquire by purchase or other agreement, the ownership or use of, or if unable to do so, construct such transmission lines as may be necessary to make the power and energy generated at the project available in wholesale quantities for sale on fair and reasonable terms and conditions to privately owned companies, to the preference customers enumerated in subparagraph (1) (A) of this subsection, and to the neighboring States in accordance with paragraph (3) of this subsection. (3) The licensee shall make a reasonable portion of the project power available for use within economic transmission distance in neighboring States and shall cooperate with the appropriate agencies in such States to insure compliance with this requirement. In the event of disagreement between the licensee and the power-marketing agencies of any of such States, the Federal Power Commission may, after public hearings, determine and fix the applicable portion of power to be made available and the terms applicable thereto: Provided, That if any such State shall have designated a bargaining agency for the procurement of such power on behalf of such State, the licensee shall deal only with such agency in that State. With respect to the share of the power so allocated, the arrangements made by the licensee for the sale of power to or in such States shall include observance of the preferences numbered (i) and (iii) in subparagraph (1) (A) of this subsection. (4) Project power shall be sold and distributed primarily for the benefit of the people as consumers, and particularly for the benefit of domestic and rural consumers, to whom it shall be made available at the lowest rates reasonably possible and in such manner as to encourage the widest possible use. (5) In the event project power is sold to any purchaser for resale, contracts for such sale shall include adequate provisions for establishing resale rates, to be approved by the licensee, consistent with paragraph (4) of this subsection. (6) The licensee, in cooperation with the appropriate agency of the State of New York which is concerned with the development of parks in such State, shall construct a scenic drive and park on the American side of the Niagara River, near the Niagara Falls, pursuant to a plan, the general outlines of which shall be approved by the Federal Power Commission; and the cost of such drive and park shall be considered a part of the cost of the power project and part of the licensee's net investment in said project: Provided, That the maximum part of the cost of such drive and park to be borne by the power project and to be considered a part of the licensee's net investment shall be $15,000,000. (7) The licensee shall pay to the United States and include in its net investment in the project herein authorized the United States share of the cost of the construction of the remedial works, including engineering and economic investigations, undertaken in accordance with article II of the treaty referred to in the first section of this Act whenever such remedial works are constructed by the United States. SEC. 3. The license issued under the terms of this Act shall be granted in conformance with Rules of Practice and Procedure of the Federal Power Commission, but in the event of any conflict, the provisions of this Act shall govern in respect of the project herein authorized. SEC. 4. This Act may be cited as the "Niagara Redevelopment Act of 1957". [S. 1037, 85th Cong., 1st sess.] A BILL To authorize the construction of certain works of improvement in the Niagara River for power and other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, CONGRESSIONAL FINDINGS SECTION 1. The Congress hereby finds and declares (a) that an emergency exists in the western part of the State of New York as a result of a rock slide which on June 7, 1956, destroyed most of the facilities employed by the licensee of Federal Power Commission project 16 for the generation of power by the use of waters of the Niagara River; (b) that the power generated at such facilities was largely used by electrochemical and electrometallurgical industries vital to the defense of the United States and employing a large proportion of all workers resident in the vicinity; (c) that these industries would be forced to curtail their operations drastically or abandon them at a cost of tens of thousands of jobs were it not that they are able to reecive necessary power at high cost on a temporary basis from the generating facilities of the Hydro-Electric Power Commission of Ontario which is using not only Canada's share of the water permitted under the treaty signed on February 27, 1950, between the United States and Canada, but also a large part of the United States share of such water; (d) that the licensee of project 16 is entitled to use nineteen thousand seven hundred and twenty-five cubic feet per second of the United States share of the waters until 1971 and to use a further twelve thousand seven hundred and seventy-five cubic feet per second until further order of the Commission; (e) that by the use of this total of thirty-two thousand five hundred cubic feet of water per second, the licensee of project 16 annually produced approximately four billion kilowatt-hours of energy; (f) that a modern hydroelectric plant proposed to be constructed by the Power Authority of the State of New York to take advantage of the entire drop of the Niagara River can produce about the same amount of power by the use of nineteen thousand seven hundred and twenty-five cubic feet of such water per second; (g) that, by the use of this water and of the additional water permitted to be used under the 1950 treaty, approximately thirteen billion kilowatthours annually of urgently needed power can be produced by the project; and (h) that it is, therefore, imperative that the works to produce such power be constructed without further delay. ISSUANCE OF LICENSE SEC. 2. The Federal Power Commission is hereby expressly authorized and directed to issue a license pursuant to the Federal Power Act to the Power Authority of the State of New York for a power project with capacity to utilize all of the United States share of the waters of the Niagara River permitted by international agreement. CONDITIONS OF LICENSE SEC. 3. The Federal Power Commission shall include among the conditions of the license issued under section 2- (a) a provision requiring the licensee to reimburse the United States for its share of the cost of construction of remedial works, including engineering and economic investigations, undertaken in accordance with article II of the 1950 treaty; (b) a provision requiring the licensee, as a part of the cost of the project and in cooperation with the agency of the State of New York in charge of the development of parks, to protect the scenic values of the American side of the gorge in a manner similar to that in which they have been safeguarded on the Canadian side and to construct a scenic drive and park on the American side of the Niagara River near Niagara Falls pursuant to a plan, the general outlines of which shall be approved by the Federal Power Commission; (c) a provision requiring the licensee to contract, with the approval of the Governor of the State of New York, pursuant to the procedure established by New York law, to sell to the licensee of project 16 for a period ending on the final maturity date of the bonds initially issued to finance the project works herein specifically authorized, four hundred and forty-five thousand kilowatts of power, which is equivalent to the amount produced by project 16 prior to June 7, 1956, for the same general purposes for which power from project 16 was utilized and in order to restore as nearly as possible low power costs: Provided, That the licensee of project 16 consents to the surrender of its license at the completion of the construction of such project works upon terms agreed to by both licensees and approved by the Federal Power Commission which shall include the following: (i) the licensee of project 16 shall waive and release any claim for compensation or damages from the Power Authority of the State of New York or the State of New York except just compensation for tangible property and rights-of-way actually taken, (ii) without limiting the generality of the foregoing, the licensee of project 16 shall waive all claims to compensation or damages based upon loss of or damage to riparian rights, diversionary rights or other rights relating to the diversion or use of water, whether founded on legislative grant or otherwise; (d) a provision giving defense agencies of the United States a preference to purchase power; (e) a provision requiring a reasonable amount of power to be made available within the project's economic market area in neighboring States to be distributed according to their laws; (f) a provision requiring that a reasonable amount of the power available in the State of New York and of the power made available in neighboring States under paragraph (e) be allocated for the present and reasonably foreseeable future needs of rural electric cooperatives and municipalities in the project's economic market area. SHORT TITLE SEC. 4. This Act may be cited as the "Niagara Development Act of 1957." Senator KERR. There will be incorporated in the record at this point letters pertaining to this hearing from the following: Mr. Robert E. Merriam, Assistant Director, Bureau of the Budget; Mr. Robert C. Hill, Assistant Secretary, Department of State; Mr. Wilber M. Brucker, Secretary of the Army; and the reports of the Federal Power Commission. (The letters referred to follow :) EXECUTIVE OFFICE OF THE PRESIDENT, Hon. DENNIS CHAVEZ, Chairman, Committee on Public Works, United States Senate. MY DEAR MR. CHAIRMAN: This is in reply to your letters of January 15 and February 5, 1957, requesting the views of the Bureau of the Budget on S. 512 and S. 1037, to authorize the construction of certain works of improvement in the Niagara River for power and other purposes. Although these bills differ in certain respects, they both would authorize the Federal Power Commission to issue a license to the New York Power Authority for the redevelopment of the United States share of the waters of the Niagara River. In accordance with the President's recommendation in his recent budget message, we strongly support prompt enactment of legislation which will make it possible to fully develop the hydroelectric power potential of this river. In view of the need for congressional action to permit redevelopment to go forward and the emergency created by the destruction of part of the generating capacity at Niagara, the Bureau believes that the enactment of S. 1037 would be in the best interests of all concerned, and recommends favorable action on it by the committee. In making this recommendation, we assume that power distribution (other than that specified in the bill) will be made in accordance with New York law. Sincerely yours, ROBERT E. MERRIAM, Assistant Director. DEPARTMENT OF STATE, Hon. DENNIS CHAVEZ, Chairman, Committee on Public Works, United States Senate. DEAR SENATOR CHAVEZ: Reference is made to your letter of January 15, 1957, and the reply of this Department dated January 16, 1957, concerning your desire to receive comment on S. 512, a bill to authorize the construction of certain works of improvement in the Niagara River for power and other purposes. ***when Section 2 (7) of the bill as it stands concludes with the words " ever such remedial works are constructed by the United States." It is our suggestion that the words which we have italicized be deleted. This is because the last sentence of article II of the treaty between the United States and Canada signed February 27, 1950, states as follows: "the total cost of the works shall be divided equally between the United States and Canada." There is no condition that the amount which the United States is to pay is dependent upon the amount of construction done by the United States alone. Since matters of domesic policy are involved, no comment is made as to the propriety of the bill's passage. The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report. Sincerely yours, ROBERT C. HILL, Assistant Secretary (For the Secretary of State). DEPARTMENT OF STATE, Washington, March 6, 1957. Hon. DENNIS CHAVEZ, Chairman, Committee on Public Works, United States Senate. DEAR SENATOR CHAVEZ: Reference is made to your letter of February 5, 1957, and the reply of this Department dated February 6, 1957, concerning your request for comment by this Department on S. 1037, a bill to authorize the construction of certain works of improvement in the Niagara River for power and other purposes. So far as the interests of this Department are concerned there is no objection to the enactment of this bill. The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report. Sincerely yours, ROBERT C. HILL, Assistant Secretary (For the Secretary of State). DEPARTMENT OF THE ARMY, April 8, 1957. Hon. DENNIS CHAVEZ, Chairman, Committee on Public Works, DEAR MR. CHAIRMAN: Reference is made to your requests to the Secretary of Defense for the views of the Department of Defense with respect to S. 512 and S. 1037, 85th Congress, bills to authorize the construction of certains works of improvement in the Niagara River for power and other purposes. The Secretary of Defense has assigned to the Department of the Army the responsibility for preparation of a report. The Department of the Army has considered the above-mentioned bills. The purpose of the bills is to authorize a project for power redevelopment to utilize the United States share of the waters of the Niagara River made available by treaty between the United States and Canada. The bills would authorize and direct the Federal Power Commission to issue a license to the Power Authority of the State of New York for the construction and operation of the project. The bills provide that the licensee shall pay to the United States the United States share of the cost of construction of the remedial works undertaken in accordance with the treaty. The bills differ principally in certain conditions which are specified for inclusion in the license with respect to the disposition of project power. On August 9, 1950, the Senate ratified the aforesaid treaty of February 27, 1950, with the following reservation: "The United States on its part expressly reserves the right to provide by act of Congress for redevelopment, for the public use and benefit, of the United States share of the waters of the Niagara River made available by the provisions of the treaty, and no project for redevelopment of the United States share of such waters shall be undertaken until it be specifically authorized by act of Congress." The treaty makes additional water available for generation at the falls by both countries. That additional water, combined with the potential head in excess of 300 feet, constitutes an important additional power resource. Canada, through the Hydroelectric Power Commission of Ontario, already has in an advanced state of construction the new facilities to develop Canada's share of the increased power. Under article VIII of the treaty Canada may use our added share of the diversion of water for power purposes until such time as we provide facilities to utilize that flow. Among other things, the 1950 treaty expresses the primary obligation of the two governments to preserve and enhance the scenic beauty of the Niagara Falls and River; indicates the minimum flows that must be passed over the falls; and provides for the International Joint Commission to submit for approval of the two governments recommendations as to the nature and design of remedial works deemed necessary to produce an unbroken crestline on the falls. The remedial works to preserve and enhance the scenic beauty of the Niagara Falls and River are now being constructed by the United States and Canada under the supervision of the International Joint Commission and are scheduled for completion in 1957. By resolution adopted June 5, 1951, the Senate Public Works Committee called upon the Corps of Engineers to review previous Niagara River reports with a view to determining the most feasible general plans for utilization of the waters apportioned to the United States for power development at this locality, consistent with the provisions of the 1950 treaty, and the effect of such developments upon the Federal navigation projects in that area. The report of the Chief of Engineers dated December 8, 1955, and contained in Senate Document No. 113, 84th Congress, recommends early action by Congress to provide for development of the power potential at Niagara in accordance with the general plans for maximum utilization as presented in the report. The Department of the Army favors enactment of legislation to permit early development of the Niagara Falls power potential in accordance with the recommen'ed general plans. The Department has no objection to designation of the Power Authority of the State of New York as the agency to develop the power. To insure the best possible utilization of the potentialities, it is recommended that section 2 of the bills, S. 512 and S. 1037, be amended to provide for consideration, in the action upon any application for license, of the recommendations in the report of the Chief of Engineers contained in Senate Document No. 113, 84th Congress. The different conditions in the bills as to disposition of power involve policy matters concerning which the Department of the Army prefers to express no opinion. The Bureau of the Budget advises that there is no objection to the submission of this report. Sincerely yours, WILBER M. BRUCKER, FEDERAL POWER COMMISSION REPORT ON S. 512, 85TH CONGRESS A bill to authorize the construction of certain works of improvement in the Niagara River for power and other purposes This bill would authorize redevelopment of the Niagara River to provide for an increase in the hydroelectric-generating capacity on the United States side of the international boundary, such redevelopment to be undertaken in accordance with existing general laws of the United States and this bill. Section 2 authorizes and directs the Federal Power Commission to issue a license to the New York Power Authority, subject to conditions deemed necessary and require under the terms of the Federal Power Act, and subject to certain additional conditions specified in the bill. The Niagara Treaty (1 UST 694), under which the redevelopment of these water resources must be undertaken, became effective on October 10, 1950. Soon thereafter, the Hydroelectric Power Commission of Ontario started the Sir Adam Beck No. 2 hydroelectric development on the Canadian side which is planned for 1,375,000 kilowatts of generating capacity, of which a substantial portion is already in service with additional capacity going into operation from |