The CHAIRMAN. And thus unifying and connecting them together? Mr. MERRILL. Yes. The CHAIRMAN. Mr. Merrill, have you finished your general statement? Mr. MERRILL. I have finished my general statement. If there are any questions about that, I will be glad to answer them. The CHAIRMAN. Gentleman of the committee, Mr. Merrill is now open to interrogatories from any member of the committee who wishes to ask him with reference to the proposed substitute for all other bills or, I suppose, on the general subject of water-power legislation. Mr. PARKER. Is Mr. Merrill going to go through the bill section by section? Mr. MERRILL. I would be glad to do that.. The CHAIRMAN. Then I will ask the members of the committee if it is their desire that Mr. Merrill shall take up the proposed substitute section by section and explain it, and when he is explaining any particular section he shall be open to questions as to that section by members of the committee. What is the pleasure of the committee about that? Mr. TAYLOR. I think that is a very good idea. The CHAIRMAN. Then, Mr. Merrill, we will take up the latest print of the proposed bill and you may explain it section by section. Mr. ANDERSON. Mr. Chairman, before Mr. Merrill goes into the bill section by section 1 should like to ask some questions with reference to his general statement. Is it your judgment, Mr. Merrill, that this bill will give the commission power to require interconnection between the systems? Mr. MERRILL. It does not. Mr. ANDERSON. Suppose you have two units in the same region, both of them asking for licenses. You have the power to refuse both licenses. Would not that power of a refusal be an implement to require an interconnection between those plants for development in a certain way? Mr. MERRILL. That is true; I misunderstood your question. I meant independently of its power to issue licenses. In issuing a license the commission could put on such restrictions or conditions as it wished and which were within the powers granted under the bill. Mr. ANDERSON. Then it would be within the power of the commission under the license provision of this bill to require an interconnection between the plants as a condition to the granting of the license? Mr. MERRILL. I think it would; yes. Mr. LEVER. Is that so intended? Mr. MERRILL. That would be covered. I think, under this general provision, page 14, section 10: That the project adopted, including the maps, plans, and specifications, shall be such as in the judgment of the commission will be best adapted to a, comprehensive scheme of improvement and utilization. The CHAIRMAN. Those matters will come up in their order when we take up the bill section by section. Mr. MERRILL. Yes. The CHAIRMAN. Are you through, Mr. Anderson? Mr. ANDERSON. If it is the intention to open the proposition up section by section, I do not care to go into the matter further now. The CHAIRMAN. It is proposed that Mr. Merrill shall explain the bill, beginning with the first section and going through the bill section by section, and for any member of the committee to interrogate him as soon as he has made his preliminary explanation of the section. Mr. SMITH of New York. Mr. Chairman, before Mr. Merrill proceeds further, I wonder if it will not take Mr. Merrill the entire day to go through this bill section by section? The reason I ask is that men are here from Albany and also from Buffalo to be heard. Of course, they can wait, if it is necessary, but I wondered if it would not be well to let them be heard now, as Mr. Merrill will more or less assist the committee in. hi? the bill finally. ent The CHAIRMAN. I think the time will take him to go through it section by section will depend upon the number of questions and the length of time it takes to answer them, and Mr. Merrill can not tell, and neither can the committee, how much time it will take. Mr. HAMILTON. It seems to me that inasmuch as Mr. Merrill is right here in Washington, we ought not to keep these gentlemen waiting who are here from out of town. The CHAIRMAN. Here is the thought that occurred to me. Mr. Merrill comes here representing the proposed bill. Now until he has finshed his statement, we will not know what to ask other gentle-men appearing before the committee as to the position he takes We would like to have the position he takes with reference to the whole bill before the committee before the other witnesses are examined. It seems to me that would be the logical method to pursue. Mr. TAYLOR. It seems to me the gentlemen from outside would like to hear the postion of the Government and the reasons for the various sections first. I should think they would want to hear that themselves. Maybe the Government will explain away some of the questions they have in mind. The CHAIRMAN. That is what I thought. In other words, when he gets through it may not take as long for these other gentlemen to make their statements, if they know in advance what his position is. Mr. MERRILL. Mr. Chairman, if there is no objection, I would prefer to pass over the administrative features at the start, and to take up the rest of the bill and go back to that later, if that is agreeable to the committee. The CHAIRMAN. Certainly; proceed in such way as you can best explain the bill. Mr. MERRILL. The first thing I wish to speak about is the character of tenure granted under the bill, and that will throw me a little out of the order of sections. That will begin at section 6, on page 11. What it is proposed to do under this legislation is to grant to applicants for power rights on the public lands, the national forests, and the navigable rivers, licenses for a period of 50 years. These licenses will contain in specific terms all the conditions binding upon the licensee, will not be subject to revocation or change during the period of 50 years, but will terminate at the end of the 50 years. At the end of the 50 years three courses are open: The United States may buy out the properties of the licensee and there after maintain and operate the project for governmental purposes; or it may grant a license to somebody else on the condition that the new licensee buy out the properties of the original licensee; or it may grant a new license to the holder of the original license. The bill provides that at the end of the 50 years, any one of these three courses may be taken. If the properties are not taken over, either by the United States or by a new licensee, the original licensee shall have a second license, and after the termination of the second license a third license, and so on indefinitely, each subsequent license to be issued for such period of time and under such conditions as the then existing law may prescribe. That is, there is to be no time when a licensee shall not have either the right to get a new license under appropriate conditions, or the right to have his properties taken over. The bill also provides that, if at the termination of the license. arrangements have not been ec.pleted either for taking the properties over or for issuing a new license, that the licensee, by making an application for a new license, may stay in possession under the conditions of the old license until the terms are arranged. Such a provision would be particularly necessary in case the United States wished to purchase the property and the determination of the purchase price should go to the courts. In such event the licensee should be maintained in his right of occupancy and use until the case is determined. The second important provision is the price which shall be paid if the property is taken over. Mr. ANDERSON. Before you leave the license proposition. I do not know that I understand that. The section provides that at the expiration of the original license period the licensee shall remain in possession and of course would continue under the terms of the original license? Mr. MERRILL. Yes, sir. Mr. ANDERSON. What inducement would there be for him to take a new license under those conditions, if the terms prescribed for a renewal of the license were more onerous on him than the conditions of the original license? Mr. MERRILL. The paragraph states how long he can stay in possession. He can stay in possession until the properties are purchased by the United States-purchased by somebody else--or a new license is tendered. Mr. ANDERSON. Well, suppose that he refuses the terms of the new license, what happens then? Mr. MERRILL. If the terms of the new license are reasonable and come within the provisions of that proviso of section 15 Mr. ANDERSON (interposing). What I am trying to get at is, what are the relative rights of the licensee and the Government at the expiration of the lease? Mr. MERRILL. At the expiration of the license the applicant must apply for a new license in order to maintain his rights. He has no rights even of occupancy until he applies for a new license. After his application is filed, the Government must do one of three thingstake the property itself, turn it over to some one else, or offer him a new license. It offers him a new license under the provisions of section 15 on page 22, under the terms and conditions prescribed by then existing law, with the further condition that such terms shall not be imposed upon him as will impair his investment. If terms are imposed by the United States that would impair his investment, I presume he would have the right to take it to the courts. If the terms imposed are not such as to impair his investment, then, if he does not accept the license, he is a trespasser and we can proceed under the law to get him off. Mr. ANDERSON. If he does not accept the terms of the license offered him the Government has two recourses, either to take over the property or to lease it to another licensee? Mr. MERRILL. If he does not accept a fair license offered those options are not open to him. If the Government does not wish to take the project over and can not find, or does not wish to find, anyone else, the original licensee must accept the new license tendered. We will admit for the sake of the argum... that the new license offered is within the provisions of this proviso of section 15. If it is and he does not take it, he is nothing but a mere trespasser on the land of the United States, without any authority in law to stay there. The CHAIRMAN. And his power to operate would cease? Mr. FERRIS. You leave the whole burden on the Government to get him out, rather than on the applicant to get a new license, which is a very important burden. Mr. MERRILL. We say that he must apply for a new license or else he has no further rights. Mr. FERRIS. His application for a new license sets out the terms satisfactory to him which, perhaps, may not be consonant with the terms that the Government would wish at all. In that way you arrive at a sharp conflict, and that conflict leaves the applicant in charge and in operation under the lease until such time as you get him out, which in the natural course may be forever. Mr. MERRILL. Even if his rights should absolutely terminate at the end of 50 years under the proposed act, the only way you could get him off would be by action instituted by the Government. Mr. FERRIS. We are now preparing a new law and this law will make it easier or harder just as we write it here. Mr. MERRILL. The bill provides that he must have a new license under conditions prescribed by the law at the time, which conditions shall not be such as to impair his investment. Mr. FERRIS. Just what does that mean? Where did that proviso in italics come from? Mr. MERRILL. Without the italics in there it means that the license would be tendered under any conditions that the law might prescribe at the time. If, at the termination of a license, the licensee had the option either of taking a new license or of having his properties purchased by the United States or by a new licensee, the original licensee need have no concern about the conditions that might be required in the new license, but he has no option at all, only the Government has that. If the Government does not take over the property or find some other applicant, the original licensee must either accept the conditions offered or abandon his property. Under such circumstances, it is only fair and reasonable to provide that the conditions of the new license, which he must take, shall not be such as to impair the investment he has made. The plant is built, the money is in it, and it can not be taken out. It is a far different situation from that which he faced when he took his original license before the investment had been made and when, if he did not like the conditions, he could have stayed out. I think we all agree that it is not reasonable to assume that Congress would relicense any properties 50 years from now under conditions which would be unreasonable, but you can not always make the man who puts up his money feel that way about it. Mr. FERRIS. That is true. We do not now want to tie the hands of Congress as to what they can do 50 years hence. What is done then will depend on what is reasonable 50 years hence. We do not want to write any law to-day that will involve any serious principle. Mr. MERRILL. We can not enact a law which will confiscate his property. Mr. FERRIS. We can enact a law providing that we will give a license for 50 years and when the 50 years have expired they can get a new license under the conditions which the law provides. There is no question about that. Mr. MERRILL. That can be done. Mr. FERRIS. We grant a street car company a license for a period of years, but we do not propose to buy their franchise or worthless junk, as the case may be, at the end of the period. When the license has expired they can go out and get a new license. The condition here is equivalent to that. Mr. MERRILL. When a 25-year license or franchise is granted to a street car company, and the company has laid its tracks in the streets of the city, it is not the expectation or the intention that when the 25 years are up that the franchise will be revoked, the service discontinued, and the rails removed. Mr. FERRIS. You do not have to do anything. The franchise_revokes itself. We do not obligate ourselves to do anything. The inertia and the activity must come from the applicant to keep himself in court. It is a very important question as to whether or not a ponderous, cumbersome Federal Government, slow of enactment and slow of accomplishment, should be left with this burden to get somebody out after they have had a term of years which, to most of us, seems sufficient. It is a thing that divides itself into a grant or a lease for a term of years or a grant in perpetuity. Mr. MERRILL. I rather think that we are not quite understanding each other. Mr. FERRIS. I am speaking generally. Mr. MERRILL. I will take it in general. We will suppose that there is a grant for 50 years, with no conditions beyond that of any kind. We do not even provide that there can be a new license. We will suppose that at the end of 50 years there is no law allowing renewal, that the man can not get a license. What is going to be done? His license has expired and he has no further rights. Mr. FERRIS. Congress can take action at that time. Mr. MERRILL. Assume that Congress takes no action, the man is operating on the public land and he has no license. Mr. FERRIS. If a man is operating at a profit, he knows that his rights terminate at a certain time, and that he must take certain action to protect his rights. |