The effort we are making in preparing our country for defense has for its purpose the hope that war can be avoided. Much of the force of this hope lies in the development within our country, and in those nations friendly to us, of strength of resources greater than that possessed by any likely enemy. SEAWAY AND INCREASED TRANSPORTATION The development of the seaway undoubtedly will affect the wellbeing of agriculture, industry, and labor, especially in the Northeast and Midwest areas bordering the Great Lakes. This project has within it a substantial contribution to both our transportation facilities as well as the power to be derived. The increase in the total transportation available is certainly an addition to American economic strength. The transportation phase should aid in the movement of substantial quantities of grain from the Midwest, which is available at the peak of harvest seasons when the lakes and the river are open to navigation. This will also lessen the necessity for additional storage facilities in certain areas which have in the past become congested. It is these attributes which the St. Lawrence seaway project possesses which lead us to back its development with the type of financial arrangement which will avoid the project becoming a further drain upon the Federal Treasury. The CHAIRMAN. In other words, you mean unless it can be financed with bonds and made self-liquidating, you are not for it? Mr. LYNN. That is right. The CHAIRMAN. All right. Next witness. Senator GREEN. Next is Mr. John Burton, State of New York Power Authority. The CHAIRMAN. Mr. Burton. How much time? Senator GREEN. Fifteen minutes. The CHAIRMAN. Why should New York Power Authority be given 15 minutes when ordinary men cannot get but 2? Senator GREEN. Because he is an expert. The CHAIRMAN. We will see whether he is an expert. Go ahead. STATEMENT OF JOHN E. BURTON, STATE OF NEW YORK POWER AUTHORITY Mr. BURTON. Mr. Chairman, the State of New York is vitally interested in this bill and I do believe I need 15 minutes to express its position. The CHAIRMAN. Go ahead. We have given you the 15 minutes. Go ahead and talk. Tell us who you are and what your business is. Mr. BURTON. My name is John E. Burton, chairman of the Power Authority of the State of New York, and I represent at this hearing the administration of the State of New York. The CHAIRMAN. Governor Dewey? Mr. BURTON. Yes, sir. The CHAIRMAN. You are for Governor Dewey, of course, and he for you. What salary do you draw! Mr. BURTON. $9,200 a year, sir. The CHAIRMAN. All right, go ahead. You are trying to earn it. The CHAIRMAN. Yes, go ahead. NEW YORK AND THE SEAWAY SINCE 1931 Mr. BURTON. The power authority is a Government corporation, sir, incorporated in 1931 to assist the Federal Government in the improvement of navigation of the St. Lawrence River and also to finance, construct, and operate the power projects on the St. Lawrence River. The trustees of the power authority wish to speak out in behalf of all States The CHAIRMAN. I thought you represented New York. You are going to speak for all States now? Mr. BURTON. There is a principle involved here. The CHAIRMAN. I am not talking about the principle. You say that you represent all the States in the Union? Mr. BURTON. In one respect I would like to speak on behalf of all the States as against centralism that is descending upon us from Washington. The CHAIRMAN. Yet you come to Washington for a hand-out here? Mr. BURTON. No, sir. We want no hand-out. New York State has never asked for a hand-out and we never will. The CHAIRMAN. This bill is a hand-out, is it not? Mr. BURTON. It does not need to be. The CHAIRMAN. It is in the bill. Mr. BURTON. New York State will put cash on the barrel-head to build the power project, and the Federal Government does not have to put up one penny and we have said that for many years. The CHAIRMAN. That is not the testimony heretofore. Go ahead, though, and give your testimony. Mr. BURTON. We wish to urge consideration and regard for the integrity of all States and for their ability to administer services in broad areas of government now being chipped away by a central government. We have deep concern for the implications of the trend of centralism that is bearing down upon his country. The power issue in the Northeast is but one part of this all-important fundamental. On the basis of electric power we hope to take one step to restrengthen our intended form of government. This is the tenth time in 20 years that the power authority has appeared before a congressional committee to urge that the St. Lawrence seaway and power project be put under way. The records of Congress are replete with the facts of power requirements in New York and the Northeast and with the New York Power Authority's pledges and plans to cooperate with the Federal Government in carrying out this vitally needed project. I would make the following points without belaboring them in this present record: EXPECTATION OF POWER FACILITY TO REVERT TO NEW YORK 1. Each governor, State administration, and board of trustees of the Power Authority of New York since 1931 has steadfastly supported the dual-purpose St. Lawrence seaway-power project being considered by this committee. Governor Dewey and his administration do so today. This bill provides that the power project is to be built by the Army engineers but we expect the power facility to be turned over to New York State upon the payment of its cost as the bill provides. We do not support this bill as a Federal grab. NEW YORK NEEDS MORE ELECTRIC POWER 2. New York State and its neighbors have an urgent demand for more electric power and for cheaper power. The undeveloped hydroelectric power of the St. Lawrence and Niagara Rivers represents a potential capacity equal to almost one-third of the State's present capacity. That hydroelectric power produced on the St. Lawrence or at Niagara would cost one-quarter what steam-produced power in New York costs today. NEW YORK AND ONTARIO PROPOSED TO BUILD POWER PROJECT 3. After repeated failures of the seaway-power project to gain congressional approval, New York State and the Province of Ontario in 1948 moved before their respective governments to build the power project without the seaway. This could have been done with no injury whatever to the development of the seaway at a later date. FEDERAL POWER COMMISSION REFUSAL OF NEW YORK'S APPLICATION New York's application was denied by the Federal Power Commission in December 1950 and the matter was referred to the Congress with the Commission recommendation that the entire seaway-power project should be federalized. The power authority immediately contested this action in the circuit court of appeals as arbitrary and not in accordance with the evidence. We have asked the court to return our power project application to the Federal Power Commission. But in 1951, when the Federal Administration's efforts were made to start the dual-purpose project through the House, we delayed the argument of our case. We are delaying arguing our case again to permit the present administration effort every opportunity to gain the resolution before your committee. NEED FOR CLARIFICATION OF SECTION 5 New York State's most immediate interest in this matter is in section 5. This section proposes that the power project, after being built by the Federal Government, would be turned over to New York pursuant to an "arrangement" to be negotiated with the President. Much clarification is required in the nature of this "arrangement" and we must look to Congress to provide it. There are absolutely no bench marks set out in this bill to guide the arrangers. This section is predicated upon the Federal-State accord between the Army Corps of Engineers and the power authority dating back to February 7, 1933. It embodies a principle supported by both our major political parties and every governor of our State for many years. Until last year, we of New York accepted the accord in good faith. In good faith we still support it. But we have become convinced, during the last 2 years, that the negotiations of the "arrangement" will be used by the Department of the Interior as a means of defeating the legislation's intended purpose. Not only in the Northeast, but in the Northwest, the Southwest, and the Southeast, the Interior has been out to build its empire-in power, in oil, in other resources it hopes to dominate. We have full faith in the sponosrs of this legislation but we do suspect the Department of the Interior. Under the Federal-State accord the power authority has worked closely with the Federal Power Commission and the Army engineers in the planning of the St. Lawrence project. While we have had very close contact with these two Federal agencies, we have had no direct contact relative to the St. Lawrence project with the Department of the Interior. If the negotiations of the arrangement are to be conducted with the Federal Power Commission and/or the Army engineers, we would know fairly well the direction in which we could move. If the negotiations are to be with the Interior Department, we have no direct experience on which to draw. We have reason to believe that the Interior Department would get into the negotiation of the Federal-State arrangement with both feet. REASON FOR APPREHENSION REGARDING INTERIOR DEPARTMENT Possibly some may wonder why I bring the Department of the Interior into this. It is not mentioned in the bill. But we believe it is in there, just the same, in a very important way. The power authority's apprehension concerning the Interior Department's attempted raid on St. Lawrence and Niagara power has been questioned or made light of. I wish to document for you some of the reasons for our apprehension. 1. In 1945, the advocates of Federal power monopoly tried to have New York thrown out of the St. Lawrence legislation by deleting section 5 from the St. Lawrence bill. It was at that time the President sent his message to Congress saying that all responsible proponents of the St. Lawrence legislation over many years construed that the State of New York should receive and manage the power project and he so recommended to Congress. 2. In June 1950 the power authority signed with the General Services Administration a purchase agreement on the surplus power line from Massena to Taylorville. That is a line 79 miles long running from the site of the St. Lawrence project down into the heart of New York State. Today it carries electricity back from steam plants to run the aluminum plant at Massena. It is carrying coals to Newcastle. Every effort was made in 1950 to block the closing of that sale. 3. In December 1950 the President's Water Resources Policy Commission made its report, recommending Federal priority on all public hydro-power projects and suggesting a Federal wholesale power transmission system for Niagara, St. Lawrence, and New England river projects. 4. This hearing is not on the Niagara project, but the position of the Interior Department relative to that project is relevant to this present hearing. The Interior Department plan is set forth in some detail in the Lehman-Roosevelt Niagara redevelopment bill. The authority plan is expressed in full detail in the Ives-Cole Niagara bill. Yesterday Mr. Chapman testified here that— no department or agency of the Federal Government has sought to obtain control of the marketing of St. Lawrence power or of the transmission lines necessary to deliver such a large block of energy to load centers. Such a move may not be in the record yet as expressly from Interior, but it is for the Niagara River and there is substantial evidence that the Interior Department wants St. Lawrence in its book. CLEAVAGE BETWEEN POWER AUTHORITY AND INTERIOR As far as the power authority is concerned, we have frankly stated that there is a sharp cleavage between us and the Department of Interior on two scores: (1) It is the Interior plan that public transmission of this hydro power shall be required, and (2) that preference of power sales be given to municipal and cooperative systems. While recent years have not produced a license or congressional go-ahead for the St. Lawrence power project, we have at least brought our opposition out in the open. By persistent questioning and attack we have unmasked the Federal Department of Interior's scheme for Federal operation of both the St. Lawrence and Niagara projects, coupled with a Federal wholesale transmission network in the North east. The Power Authority would have no justification to oppose the Interior Department plan if the issue were simply one of competition between the two agencies for the job. The conflict is far from that. Basically, the Interior Department plan means that States are to be superseded in governmental tasks that they are administratively and financially able to carry, either individually or by interstate compact. It is part and parcel of a trend toward unnecessary centralization of government. More particularly, the Interior Department plan does not fit the circumstances of the Northeast. Public transmission and preferential sale to municipal and cooperative customers, as insisted upon by the Interior Department, would slow down, if not virtually block, an integrated Northeast power pool. POWER AUTHORITY OPPOSES PREFERENTIAL SALES Preferential sale of cheap hydro power would tend to create an iron ring of municipally owned electric systems around the projects, greatly restricting the area of public benefit. The Power Authority does not want preferential sales to block the economic advantages of a broadly integrated power pool. INTEGRATED POWER POOL In the same manner an insistence upon public transmission of power will make difficult the attainment of a strongly integrated power pool. The Interior Department plan smacks of wasteful competition, while the New York plan seeks to establish economic cooperation among all facilities in the field. We look for more than just cheap power at the Niagara and St. Lawrence sites. We want that cheap power to encourage strong interconnections of the present transmission and distributing systems in the |