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Reporting to the President upon the defense needs, Chairman Leland Olds, of the Power Commission, said a large part of the project's capacity (75,000 kilowatts when the last generator is installed in the next few months) will be needed for aluminum production. Some will be needed for Camp Crowder.

Mr. Olds also pointed to the relation of the project to defense power area in Oklahoma, Arkansas, Texas, and Louisiana. Here, he said, plans already call not alone for aluminum, but for magnesium, smokeless powder, TNT, DNT, airplane assembly, and bomb- and shell-loading plants, together with some 50 Army camps, bases, and other defense activities. All of these require large blocks of power. Mr. Olds cited Power Commission estimates indicating a prospective shortage of power for the area, increasing through the next few years.

Operation of the project will continue without interruption, Mr. Edy said, and without any present change in staff.

The Executive order provides for restoration of the property when it is no longer needed for defense purposes, with fair compensation and other adjustments.

The project, situated on the Grand River in northeastern Oklahoma, includes the longest multiple arch dam in the world. It was built to provide power, flood control, and recreational facilities.

For its construction the Public Works Administration committed to the authority, from October 1937 to October 1941, an aggregate of $25,113,636, of which $11,113,636 is a grant and $14,000,000 is a loan. Of these sums the authority has been paid $12,700,000 of the loan funds, and $8,933,000 of the grant, leaving a balance of $3,480,636 of Federal funds which has not yet been advanced.

Besides defense needs, present and prospective, the project has service contracts or commitments with Rural Electrification Administration farmers' electric service cooperatives and with certain small cities in Oklahoma. It also has a contract to sell to the Oklahoma Gas and Electric Company a substantial amount of power, which is recapturable for defense purposes.

Legal and other controversies have been numerous since the initiation of the project. Difficulties arose early over the selection of a competent director. In the spring of 1940, after long controversy between Governor Leon M. Phillips and the authority over the flooding and relocation of certain highways, the Governor ordered out State troops to take charge of the property. A Federal court enjoined this action, on application of the Federal Works Administrator. The litigation was settled at the instance of the Governor in February 1941.

Subsequently the board of the authority was reorganized. It selected a general manager, whose appointment was not approved by the Administrator of Federal Works. It recently made another selection which was not acted upon here in view of the action announced today.

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EXECUTIVE ORDER

DIRECTING THE FEDERAL WORKS ADMINISTRATOR 'TO TAKE POSSESSION OF AND OPERATE A CERTAIN PROJECT OF THE GRAND RIVER DAM AUTHORITY

Whereas Grand River Dam Authority of Vinita, Oklahoma, is the holder of a license (project No. 1494) under the Federal Power Act (41 Stat. 1063) and is constructing, maintaining and operating a project (as defined in said Act) under such license in the State of Oklahoma; and

Whereas in my opinion, the safety of the United States demands that the United States enter upon and take possession of such project for the purposes and time, and upon the conditions hereinafter stated; and

Whereas I have, simultaneously with this order, issued an order addressed to Grand River Dam Authority, reading as follows:

"To: GRAND RIVER DAM AUTHORITY, VINITA, OKLAHOMA:

"Pursuant to section 16 of the Federal Power Act, I hereby order and direct that the project now being constructed, maintained, and operated by you in the State of Oklahoma under a license (project No. 1494) held by you under the Federal Power Act, be surrendered to, and entered upon, taken possession of, managed, and operated by the Federal Works Administrator, acting for and on behalf of the United States, through such person or persons as he may designate, for the reasons, the purposes, and the time, and upon the conditions set forth in the Executive order issued by me simultaneously with this order, a copy of which Executive order is attached as a part of this order."

Now, therefore, by virtue of the power vested in me by the Constitution and the statutes of the United States, and particularly by section 16 of the Federal Power Act, it is hereby ordered as follows:

1. The Federal Works Administrator, acting for and on behalf of the United States, through such person or persons as he may designate, is hereby authorized and directed immediately to enter upon, and take possession of, manage, and operate, the project above mentioned for the purpose of generating and supplying power for the manufacture of explosives or munitions of war or otherwise necessary to the safety and defense of the United States, and for other purposes involving the safety of the United States.

2. The Federal Works Administrator shall retain possession, management, and control of said project until such time as it shall appear to the President that further retention of the project by the United States is unnecessary for the accomplishment of the above-stated purposes, and, thereupon, shall restore possession and control of the project to the party or parties then entitled thereto.

3. The Federal Works Administrator shall pay just and fair compensation for the use of the property of the Authority as may be fixed by the Federal Power Commission upon the basis of a reasonable profit in time of peace, and shall also pay the cost of restoring the property to as good condition as existed at the time of the taking over thereof, less the reasonable value of any improvements that may be made by the United States and which are valuable and serviceable to the licensee.

4. The Federal Works Administrator may employ, without compliance with the requirements of the Civil Service Rules, such personnel as may be necessary to carry out the provisions of this order, and may exercise any existing contractual or other rights of the Authority, and take such other steps as may be necessary to carry out the provisions of this order.

THE WHITE HOUSE, November 19, 1941.

[s] FRANKLIN D. ROOSEVELT.

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FEDERAL POWER COMMISSION,
Washington, November 12, 1941.

The PRESIDENT,

The White House.

MY DEAR MR. PRESIDENT: This letter is written at the request of the Federal Works Agency as a result of several conferences with representatives of that agency concerning the financial difficulties which threaten to interfere with the best use of the Pensacola Dam in the interest of national defense.

This project on the Grand River, which will have a capacity of 75,000 kilowatts when the final generator is installed, is now being operated under Federal Power Commission license by the Grand River Dam Authority, an agency of the State of Oklahoma.

The importance of prompt action to prevent the Authority's financial difficulties from interfering with full use of this power for expansion of munitions production is apparent from the following summary of the power situation in the area:

(i) The War Department and the Office of Production Management have found the territory, in which the Pensacola project is located, particularly adapted to the location of large defense plants and Army training centers;

(2) Plans for the area already call for alumina, aluminum, magnesium, smokeless powder, TNT, DNT, airplane assembly, bomb and shell loading plants, together with some 50 Army camps, bases and other defense activities, all requiring large blocks of power;

(3) The Commission estimates that the demand for power by the end of 1943 will reach a total of 1,693,000 kilowatts against a net assured capacity, including units now on order, of only 1,512,000 kilowatts, indicating a prospective shortage of about 180,000 kilowatts by the end of that year which will increase to 250,000 kilowatts in 1944 and 325,000 kilowatts in 1945;

(4) In addition to the already constructed Grand River and Brazos River projects, plans to meet these prospective needs call for federally financed projects to be constructed during the next 4 to 5 years totaling approximately 340,000 kilowatts in dependable capacity;

(5) These projects will include steam plants with a total of 145,000 kilowatts for production of aluminum in Arkansas and smokeless powder in Oklahoma, together with the Norfolk, Bulls Shoals, and Table Rock projects on the White River, the Markhams Ferry and Fort Gibson projects on the Grand River, and the Whitney project on the Brazos River;

(6) The coordinated use of these projects under Federal control will assure the maximum contribution of power to the defense program; emergency interconnections between the Pensacola project and the steam plants supplying aluminum production in Arkansas and the Choteau powder plant in Oklahoma will be required;

(7) The Pensacola project is scheduled to provide in the near future at least 32,000 kilowatts of interim power to carry part of the new aluminum plant load until completion of its steam plant. It will also carry approximately 5,000 kilowatts of the load of Camp Crowther near Neosho, Okla.;

(8) Since the initiation of the project, Oklahoma authorities have secured a constitutional amendment rendering it impossible for the authority to issue more bonds. This may prove a serious obstacle to the project's best use for defense purposes, The Federal Government therefore appears to offer the only source of additional funds which may be required.

In the light of these facts, showing the relation of the Grand River Dam Authority project to the general area defense power situation as well as the early need for its output for aluminum production, the Commission feels that prompt action should be taken to remove the operation of this project from the uncertainties involved in the authority's present financial condition. National defense requirements demand the assurance that its output will be devoted to the fullest possible extent to the production of munitions.

This may be accomplished most simply by exercise of the broad authority vested in the President of the United States by section 16 of the Federal Power Act.

Under this section the United States has the right, when in the opinion of the President the safety of the United States demands it, to take possession of any licensed hydroelectric power project for the purpose of manufacturing nitrates, explosives, or munitions of war, or for any other purpose involving the safety of the United States. A full copy of section 16 of the Federal Power Act is attached. The authority contained in this section, which provides full protection for the interest of the authority, is ample to assure that the substantial quantity of power available from the Pensacola project will be used for the manufacture of essential munitions of war or for other purposes relating to the safety of the United States.

Respectfully,

LELAND OLDS, Chairman.

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FEDERAL WATER POWER ACT, SECTION 16

(16 U. S. C. A. 809)

Temporary use by Government of project works for national safety; compensation for use: When in the opinion of the President of the United States, evidenced by a written order addressed to the holder of any license hereunder, the safety of the United States demands it, the United States shall have the right to enter upon and take possession of any project, or part thereof, constructed, maintained, or operated under said license, for the purpose of manufacturing nitrates, explosives, or munitions of war, or for any other purpose involving the safety of the United States, to retain possession, management, and control thereof for such length of time as may appear to the President to be necessary to accomplish said purposes, and then to restore possession and control to the party or parties entitled thereto; and in the event that the United States shall exercise such right it shall pay to the party or parties entitled thereto just and fair compensation for the use of said property as may be fixed by the Commission upon the basis of a reasonable profit in time of peace, and the cost of restoring said property to as good condition as existed at the time of the taking over thereof, less the reasonable value of any improvements that may be made thereto by the United States and which are valuable and serviceable to the licensee (June 10, 1920, c.h 285, 16, 41 Stat. 1072).

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NOVEMBER 13, 1941.

MEMORANDUM TO THE PRESIDENT

Subject: Grand River Dam Authority.

I have read Mr. Olds' letter to you, suggesting that the United States take over the Grand River project, acting under section 16 of the Federal Power Act. I concur in the findings and the recommendation of Mr. Olds. It is my view that the interest of national defense is sufficient warrant for the taking over of the project.

ROBERT P. PATTERSON,
Under Secretary of War.

Mr. DIRKSEN. I was thinking more nearly of the taking over of the dam.

Mr. OLDS. What the situation is on the taking over of the dam? Mr. DIRKSEN. That is right, and its relationship to the war effort. Now, are you directly or indirectly doing any work on the St. Lawrence project?

Mr. OLDS. Not at the present time, sir.

Mr. DIRKSEN. Nothing at all?

Mr. OLDS. No, sir.

Mr. DIRKSEN. I think that is all, Mr. Chairman.

CONSTRUCTION ASSISTANCE RENDERED IN CONSTRUCTION

OF ROSS DAM

Mr. CASE. Mr. Olds, you testified you were giving or had given some assistance to the city of Seattle in connection with the construction of the arch dam at Ross Dam. Have you given assistance in the construction of any other project at any other point in the country?

Mr. OLDS. Yes; in the same sense that we gave it in Seattle. Wherever there are problems in connection with safety of a structure that is under license, or the proposed alteration of a structure under license, our engineers advise with the licensee in order to make sure that the safety of the structure and the best utilization of the water resources is achieved.

Mr. CASE. Is that the only construction assistance you are giving? Mr. OLDS. I hardly would term that construction assistance. What we have been trying to do in connection with the Seattle proposition was to make sure it was constructed on sound engineering principles and in such a way that it would be safe.

Mr. CASE. Who is the construction agency for this dam?

Mr. OLDS. For the Ross Dam, I suppose it would be the city of Seattle.

Mr. CASE. Do you give the same type of construction assistance in the construction of facilities by Army engineers, or the Bureau of Reclamation?

Mr. OLDS. In connection with the Army engineers, wherever our advice is sought in connection with construction, we give it. I was going to say I think somewhat similar construction advice has been given by our engineers in connection with the Lexington Water Power Co.'s Saluda Dam, where there were questions involving the safety of the structure. It was given exactly in the same way in that

case.

AUTHORITY OF COMMISSION IN CONNECTION WITH CONSTRUCTION OF POWER FACILITIES

Mr. CASE. What is your interpretation of the authority you have in connection with construction of power facilities?

Mr. OLDS. Well, there are several lines of authority. In the first place, where projects are proposed on streams subject to the jurisdiction of Congress, they are subject to being licensed by the Commission. We have authority to investigate the situation, to make sure the project is best adapted to the comprehensive use of that water resource, and to issue a license with such terms and conditions as we think necessary for that purpose.

Mr. CASE. Speaking of the point which I mentioned, do you interpret under the Federal Power Act and the Executive orders pertinent thereto, that you have authority to engage in the construction of power facilities?

Mr. OLDS. No, sir.

Mr. CASE. There has been some discussion of that in the press during the past year, and the suggestion has been made that the Federal Power Commission, or some individual connected with it, did have authority to engage in the construction and operation of power facilities.

Mr. OLDS. We have never had. In fact, I think we have taken directly the opposite view at all times.

Mr. HENDRICKS. You do not plan to engage in the construction and operation of power facilities?

Mr. OLDS. No.

Mr. WEAVER. I was wondering if what the Congressman has reference to is the fact that the President, under his Executive Order No 8155, I think it was, and under letters from the Bureau of the Budget, designated the Commission as the construction agency, class 1, interested in the planning stages of power facilities-not in the con struction?

Mr. CASE. I do not care to go further into that at this time, as the time is limited, but I have another type of question I would like to ask.

I would like to have you put a statement in the record on that; because, unless there is a clear understanding about that, I thought it was appropriate that the committee give consideration to the placing of a limitation on this fund, to provide that no part of the funds appropriated to you are to be used for construction or engaging as the new construction agency, along with the Army engineers or the Bureau of Reclamation.

Mr. OLDS. I will put a statement in on that, because there is not any intention on our part, or desire on our part, to enter into that field, nor would we have the funds to do so.

Mr. HENDRICKS. Mr. Olds, you do not care if we do put that limitation in, do you?

Mr. OLDS. It would not trouble me.

(Statement of Mr. Weaver :)

Under the Federal Power Act the Commission's Bureau of Water Power handles applications for permits and licenses for the construction of water power projects, by private and public (non-Federal) agencies. This work includes

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