Withdrawals.

The table following gives information in regard to the withdrawal of public lands and reservations affected by proposed power projects, applications for which were filed with the commission during the year.

TABLE NO. 8.-Lands withdrawn under section 24 of the act in connection with applications for permits and licenses up to July 1, 1930

The following table summarizes the action of the commission on applications for restoration to entry of lands in power-site reserves in accordance with section 24 of the act which provides that lands of the United States in such reserves may be opened to location, entry, or selection whenever the commission determines that such action will not result in injury or destruction of the value of the lands for power purposes.

TABLE NO. 9.-—Applications for location, entry, or selection

Declarations of Intention.

No declarations of intention were filed during the year, the total number on file being 116. A finding was reached in 1 case, 1 case was closed without action, 1 declaration was withdrawn, and 1 case was pending at the close of the year.

TABLE NO. 10. Declarations of intention passed upon by the commission during the year ended June 30, 1930

The primary activity of this division consists of checking the statements filed by licensees relative to the cost of project works constructed under license. These figures, together with those relating to any equipment subsequently added to or subtracted from the operating property, are required for possible use in the event that the Government is unwilling to renew the license upon the expiration of the 50-year period. In order to encourage the development and use of the water-power resources, the law guarantees the licensee undisturbed possession for 50 years and reimbursement for the net investment, or the fair value if such is lower, of the project works existing at the end of that period if it is then found desirable for the Government to take over the project or to transfer the lease to some other agency rather than to grant a renewal to the original holder. The law provides that any such reimbursement transaction, including severance damages, shall be determined by court proceedings in case agreement may not be reached. It is possible, as noted above, that the compensation may be based on fair value rather than net investment, but, nevertheless, it is apparent that the cost record maintained. throughout the license period may be important in the eventual settlement.

In order to avoid controversy over items obscured with the passage of time, it is desirable to reach agreement with the licensee as soon as practicable after the completion of original construction, but this activity had been permitted to fall somewhat in arrears. During the past fiscal year measures have been taken to correct this situation. Licensees have been required to file formal cost statements of completed works, the headquarters force for checking these statements was practically doubled, considerable accounting work has been assigned to the three executive departments as provided by

the act, and steps were taken to determine contested items systematically and promptly. As a result the status of the activity has been very much improved.

Of the 107 major projects under license authorization at the close of the fiscal year, construction had been completed to the stage where all or a part of the works were in operation in 82 cases. Three of these included small plants partly dismantled and not operating, while two others were in process of change to a minor classification. There remained a total of 77 projects in regard to which the cost determinations were in order. The accounts have been examined and final agreement on the cost reached with the licensee in 28 of these cases. In 28 additional cases the auditing of investment accounts has been completed and proceedings are under way for the adjustment of contested items. The examination of accounts is under way in 13 cases and for the 8 remaining projects the licensees. are preparing the cost statements for filing at an early date.

Table No. 11 accompanying presents the status of each of the 77 cases and shows the claimed construction cost for each project. It will be observed that most of the cases in which final agreement has been effected involve modest amounts, but among those for which the auditing has been finished and proceedings for final determination gotten under way there are a number of large projects. One case in this group deserving of special mention is No. 16, The Niagara Falls Power Co., which alone represents more than half of the total amount involved in the 28 projects. This case presents some very complex questions. The cost of the works constructed under the license has been audited, but the appraisal of the older property and water rights offers difficult legal and engineering problems which may require extensive litigation for settlement.

In clearing up the determination of cost in a good many cases during the year the field representatives of the departments have rendered valuable assistance. For example, a field board was formed of an accountant from the commission and the local engineering representatives of the Forest Service (Department of Agriculture) and the Geological Survey (Department of the Interior) to investigate and determine the cost involved in eight licensed projects in Utah where the records of original cost were fragmentary and uncertain. The board accomplished its assignment promptly and thoroughly and these cases are now well on the way toward final settlement. A program has been inaugurated under which in the future full advantage will be taken of the close contact of the departmental field offices with the current construction work under license by having them also inspect accounting activities of the licensee while the work is progressing and thus facilitating the final cost checking.