Page 45

45 PUBLIC WORKS APPROPRIATIONS, 1962 The increase over the 1961 appropriation level is the result of a change in the method of financing general administrative and technical direction costs in the Reclamation Program. In prior years part of these costs were charged to project accounts and were reimbursable as part of the cost to beneficiaries of Reclamation Projects. Since beneficiaries of water resources projects constructed by other agencies are not required to carry similar costs, the Committee believes that it is equitable to relieve the beneficiaries of projects of such costs. For this reason the Committee has endorsed the budget proposal, recognizing further that it will result in simplified accounting within the bureau and provide a more accurate picture of overhead costs. BONNEVILLE POWER ADMINISTRATION CONSTRUCTION Appropriation, 1961 $18,720,000 Budget, 1962 21,875,000 Recommended, 1962 20,875,000 Comparison: Appropriation, 1961 +2,155,000 Estimate, 1962 -1,000,000 Changes in budget estimate.- The budget estimate contemplated no unobligated balance at the end of fiscal year 1961. However, a balance of $1,909,023 existed on June 30,1961. The Committee has made a $1,000,000 reduction which is offset by this unobligated carryover into fiscal year 1962. The additional $909,023 of the carryover will be required for program adjustments for which the Committee recommends approval. These adjustments include the use of $120,000 for the Odessa Substation and $264,000 for the Tillamook County Service Facilities. Power sales contracts.- During the course of the hearings the Committee examined in some detail the provisions of certain of the Bonneville Administration contracts for the delivery of power which involve the subsequent construction of transmission lines budgeted in part for fiscal year 1962. It has been the practice of the Bonneville Administration not to carry a "subject to availability of appropriation" clause in contracts for sale of power to industries. In some cases such contracts have been made before the financing of the new private industry plant to be served has been fully secured. A firm contract for sale and delivery of power under such circumstances is a commitment of the Federal Government in advance of appropriations for implementing it, and to take any other action than follow later with appropriations for the necessary Federal construction of transmission lines creates a liability on the part of the Federal Government from a legal standpoint. There has been at least one instance of a legal action wherein the Congress failed to appropriate for construction of necessary transmission lines, contemplated in such a sales contract. The federal government paid substantial damages for breach of contract. While there may be some valid arguments for drawing such tight contracts in periods when the production of materials of certain industries is a matter of national defense or emergency circumstances it is not believed appropriate that such contracts should be the security for loans or financial transactions necessary for the construction of industry facilities. The committee expects the Secretary and the Administrator of the Bonneville Power Administration to reconsider the practice of makingEpson Perfection 4870 Photo, 400 dpi, 8 bit, 8,718,336 byte