A large amount of work has already been done on the 13 cases on which auditing is in progress. Nearly half of the total outlay represented by this group relates to the Conowingo project, No. 405. In connection with this immense project, considerable progress has been made during the year in getting the cost statement prepared and filed, fixing the intricate project boundaries, and appraising the nonproject lands. From this point the auditing of the construction cost items may be expected to move forward rapidly.

Most of the project works of the group of eight cases in which the cost statements are still in preparation have been completed only recently. The bulk of the total cost involved in this group is accounted for by the Big Creek project of the Southern California Edison Co., which embraces licenses Nos. 67 and 120. The accounting on this notable project has been well performed and it is not anticipated that the auditing will present many difficulties.

A statement prepared by the chief accountant presenting further details relative to the accounting activities is embraced in Appendix D.1

TABLE NO. 11.-Status of cost accounting, licensed projects constructed

A. ACCOUNTS AUDITED AND CASE SETTLED

TABLE NO. 11.—Status of cost accounting; licensed projects constructed—Con.

LEGAL DIVISION

Effective the 1st of July, 1929, the work of the legal division was divided between two sections, one handled directly by the chief counsel and the other by the solicitor. The legal work theretofore carried on was conducted by the chief counsel. It includes the preparation of letters, memoranda, reports on proposed legislation bearing upon water-power matters, the giving of advice on legal questions arising in the work of the office, reports upon contracts of various kinds proposed by licensees, the examination of applications for preliminary permits and licenses with the view to determining whether legal requirements have been complied with, the examination of drafts of permits and licenses and of the execution of same by applicants, and presiding at hearings and preparation of reports to enable the commission to reach its decision in matters involving accounting, valuation, and determination of net investment relating to licensed projects.

To the office of the solicitor was assigned the duty of conducting the legal investigations, the presentation of the results at hearings, and the rendering of opinions involving matters of accounting, valuation, and ascertainment of net investment. During the fiscal year this office prepared 21 written opinions on legal questions involving those subjects and in addition rendered oral and informal opinions on numerous other questions. Formal hearings were held before an examiner in two cases and a third was submitted on an agreed statement of facts. The formal hearings concerned the prelicense cost of the Saluda project of the Lexington Water Power Co., South Carolina, and the construction cost of the Bartletts Ferry project of the Columbus Electric & Power Co. on the Chattahoochee River in Alabama and Georgia. These proceedings have not yet progressed to a point where the issues are ready for presentation to the commission for final decision.

The suit referred to in the latest annual report by the United States against the Central Stockholders Corporation of Vallejo and a companion suit against Charles S. Howard Co., a corporation, relating to water rights of licensed projects on the San Joaquin River in California, was still before the United States Court for the Southern District of California awaiting decision at the end of the fiscal year, but on October 6, 1930, decision was rendered granting the motion of the defendants for dismissal. This decision will be found in the appendix. No new litigation has been filed by the Government and none is pending in which any official participation has been given.

Maj. Lewis W. Call, who had been chief counsel for the commission from its first organization, was retired at his own request and resigned from the position of chief counsel on September 30, 1929, being suc

1 See p. 157.

ceeded by Col. Thad H. Brown, who in turn tendered his resignation on December 15, 1929; since which date the office of chief counsel has not been filled. Mr. J. F. Lawson, senior attorney, has been serving as acting chief counsel and Mr. C. A. Russell as solicitor.

OPERATIONS DIVISION

The work of the division of operations includes those matters which do not deal with the accounting, engineering, and legal features of administration of the Federal water power act or with matters of general administration or administrative policy. In the division are the technical reference library, the mails and files, and the administration of fiscal and personnel affairs. The commission's publications are prepared for the printer and distributed, equipment and supplies purchased, services of various kinds procured, and miscellaneous duties performed as required.

The total of $476,765.55 in fees was collected from licensees, accounted for and deposited in the Treasury during the fiscal year 1930, representing an increase of nearly $130,000 as compared with the previous year's total. An additional amount of $96,930 came to hand too late to be included in the year's receipts.

This payment made by the Louisville Hydro-Electric Co., licensee for project No. 289, on account of charges for the calendar year 1928, and of which $95,000 was for use of the Government dam in the Ohio River at Louisville, Ky., had been deferred by the company pending action by the commission on review of a decision by the executive secretary adverse to the company's contention that the plant was still in course of construction on January 1, 1928, and on that account charges should not be assessed under the commission's regulations until commencement of the calendar year 1929. In the course of consideration of this matter careful inquiry was made into the merits of the licensee's claims, and several visits to the Louisville plant were made by representatives of the commission. At its meeting of June 20, 1930, the company's petition was considered and a ruling made that the licensee should be required to pay the full amount due.1

As shown in column 4 of Table No. 13 $1,884,648.33 has been collected since the Federal water power act became effective. Beginning with 1922, when slightly less than $9,000 was realized, annual collections have increased at a rapid rate as developments under license came into operation and larger areas of public lands were occupied by licensees, until at the conclusion of the fiscal year 1930 total collections are found to exceed total expenses of administering the act by nearly $200,000.

1 See p. 135.

However, in view of the provision in section 10 (e) of the Federal water power act that licensees shall pay reasonable annual charges in amounts to be fixed by the commission for the express purpose of reimbursing costs of administration of the act, it is proper to offset against such costs administrative fees only, excluding fees for use of public and Indian lands and Government dams.

It is interesting to note in Table No. 12 that while during the first six years of operation under the act, expenses of administration materially exceeded the amounts collected in reimbursement, these expenses were overtaken in the year 1927 and have been exceeded by reimbursement fees in gradually increasing ratio during the succeeding years. In this table appears a statement of the commission's expenditures from its appropriations during the fiscal years 1921-1929, and during the fiscal year 1930 so far as ascertained, together with the other costs, estimated or approximated, of administering the act between 1921 and 1930.

It will be noted also from this table that estimated costs of administration increased by about $37,000 in 1930 as compared with 1929. Practically the whole of this increase is occasioned by salaries and expenses of the augmented force authorized by Congress to expedite determination of the costs of licensed projects.