Mr. PAGÁN. An amendment to this bill?

Mr. CRAWFORD. To this bill?

Mr. PAGÁN. Well, I don't want to contemplate now any amendments to a bill which I am opposed as a whole, based on the ground of principle.

Mr. CRAWFORD. I see. In other words, you don't want to start out by agreeing to amendments to make the bill more acceptable? Mr. PAGÁN. That is the fact.

Mr. CRAWFORD. I was going to ask you with reference to several other amendments.

Mr. PAGAN. That is not of importance. That is a detail. I stand on behalf of my people as a whole against that measure because really it curtails the vested rights given to them by our local constitution, by Republican as well as by Democratic administrations.

We want to have in Puerto Rico the chance to go ahead and help our people to stand on their feet and exercise all the rights they should exercise as American citizens in Puerto Rico. That is what we want. The CHAIRMAN. Any other questions?

Mr. CRAWFORD. I was going to ask the Commissioner if he would accept an amendment limiting the term of the Executive Director and also providing that the Executive Director's appointment be confirmed by the Insular Government, and you can answer this question: Do you know how H. R. 8239 would infringe on or take away from the duties of the Public Service Commission of Puerto Rico as defined under section 38 of the Organic Act?

Mr. PAGÁN. Well, I was going to say something about that. We have in Puerto Rico what we call the Insular Public Service Commission, of which I, myself, happened to be a member of that Commission for several years.

The Organic Act and the local Public Service Commission Act empowers this Commission to fix the rates and tariffs of all public utilities. They have the power to force the companies to reduce their their rates so that they will have just a certain reasonable profit.

This Public Service Commission controls all public service companies in Puerto Rico. According to this H. R. 8239 the Authority created would not have any check or control in any way to do what this Authority may do in matter of rates, tariffs, and so forth to be applied in Puerto Rico. They don't have any control or any check at all. They have absolute power to put any rates in Puerto Rico to everyone.

Mr. CRAWFORD. What is your opinion with reference to the concessions made by the Public Service Commission and approved by the Governor and the United States Congress and the concessions I referred to are the ones mentioned in section 38 of the Organic Act, if H. R. 8239 is enacted into law?

Mr. PAGÁN. Which specific one?

Mr. CRAWFORD. Refer there to section 38 of the Organic Act.

Mr. PAGÁN. Well, the provisions of this H. R. 8239 would practically repeal this section 38 as a whole in the matter concerning water

resources.

Mr. ROBINSON. Hasn't he already testified to that? That was gone into quite carefully in his main statement, wasn't it?

I

Mr. CRAWFORD. I did not think so. Maybe I overlooked that. asked for the record. It is not back yet; so I cannot check it. But if it is in the record, let us not go any further into that.

Would the effect of this bill, H. R. 8239, be to waive the Puerto Rican civil-service laws?

Mr. PAGÁN. Absolutely. It would practically repeal this law. It would give up over to the Authority created all the powers to control and to make grants of franchises, privileges, and concessions of public or quasi-public nature and so forth.

Mr. CRAWFORD. Now, the additional questions which I was going to ask you there are only three of them and if the committee has no objection, I will just insert them in the record at this point so we will have them before us when we go to consider the bill.

The CHAIRMAN. Without objection they will be inserted.
(The questions referred to by Mr. Crawford are as follows:)

1. Would you have any objection if we amended this bill so as to preclude acceptance of grants from any Federal agency as defined in this bill? I ask you this question in view of the fact that under the bill the Government and people of Puerto Rico will not be liable on the bonds. Therefore, I see no reason why the continental taxpayers should be burdened with any issue if the people of Puerto Rico are not willing to assume the burden.

2. Would you have any objection if we amended this bill so as to preclude the purchase of any bond issue of the Authority by any Federal agency as defined in this bill?

3. Would you have any objection if we limited the amount of bonds that could be issued and fixed the maturity date of such bonds?

4. Would you have any objection if we amended this law so the Authority will not in any way have the power to impair water concessions already made and write provisions into this law that such concessions cannot be disturbed, either directly by the Authority or by request of the Authority through the Insular Government?

The CHAIRMAN. Any other questions?

Mr. ROBINSON. I have just one or two questions. I would like to get away from this bill for a minute. We appreciate your attitude toward that. But I am rather startled at your statements with reference to the attitude of this administration toward Puerto Rico.

Mr. PAGÁN. In reference to what?

Mr. ROBINSON. With reference to the treatment that you feel that you are receiving from this administration.

Mr. PAGÁN. Well, I have not made any particular remark about the feeling of Puerto Rico about the present administration. We really are grateful. I should say that. And it is known everywhere and throughout the world that we should be grateful of the endeavors made by the officers and the present administration to help our people. I should have made that statement, to be fair, but what I have objected to is this proposed legislation as a matter of principle.

Mr. ROBINSON. We haven't passed this bill yet, have we?

Mr. PAGÁN. No, of course, and I hope it will remain just a bill, and never a law.

Mr. ROBINSON. This is simply here for consideration so you must eliminate that. From Mr. Crawford's remarks I get the idea that the Puerto Rican people are almost up in arms down there against this administration for the bad treatment they have received at our hands? Is that a fact?

Mr. PAGÁN. Well, I will tell you that question could be answered better by Mr. Crawford. He made the statement.

Mr. CRAWFORD. If I may say, Mr. Chairman, I will let the record that has already been printed speak for itself. I based all of my remarks and my direct approach on the action taken by some 40 or 50 of your organizations down there where the matter was gone into and

where they presented a formal memorial or supplication to the President of the United States, Mr. Roosevelt, and it is one of the strongest statements that you can find in our history since we made our complaints against the English Government.

Mr. PAGÁN. And the fact is that certain Federal legislation, for example, restrictions in the production and the manufacture of sugar, which is our basic industry there, which supports we can say directly or indirectly about one of each two inhabitants of Puerto Rico, has affected very gravely the economy of Puerto Rico. This quota restriction has taken out from their jobs more than one hundred thousand workers.

Mr. ROBINSON. Have your troubles been confined to the last 6 or 7 years or did you have some troubles before that time?

Mr. PAGÁN. Well, all the world have had troubles since the beginning of life always there will be troubles.

Mr. ROBINSON. So you did have some economic and other troubles in Puerto Rico even before the present administration took over?

Mr. PAGÁN. Well, we have had troubles, sure, of course, before. Mr. ROBINSON. Hasn't this administration, as a matter of fact, always taken a very sympathetic view toward the Puerto Rican people and tried to help them in every way it could?

Mr. PAGÁN. I think so, and I want very sincerely to make plain my statement that I realize that, and that the people of Puerto Rico are grateful for the endeavors made by this administration to help our people, especially in relief and certain grants for public works. However, at the same time we are gravely concerned about unfavorable effects of certain Federal legislation, such as the sugar control plan and others, which have affected our principal industries.

Mr. ROBINSON. That is all.

The CHAIRMAN. Any other questions?

Mr. CRAWFORD. Mr. Chairman.

The CHAIRMAN. Mr. Crawford.

Mr. CRAWFORD. Just as the administration has attempted to help the 48 States?

Mr. PAGÁN. Of course.

The CHAIRMAN. Any other questions?

Mr. CRAWFORD. That is all.

The CHAIRMAN. Mr. Speck is here and has a statement to insert in the record. Will you please state your name and address?

STATEMENT OF DAVID SPECK, ASSISTANT TO THE SOLICITOR, DEPARTMENT OF THE INTERIOR

Mr. SPECK. David Speck, Assistant to the Solicitor, Department of the Interior.

The CHAIRMAN. In what capacity do you appear before the committee?

Mr. SPECK. Representing the Department as to legal matters.

Testimony given this morning has somewhat disturbed my approach to this question. I think possibly while it is fresh in your minds it might be well to clarify first, certain statements which have been made, with respect to the draftsmanship of this bill.

It was drafted substantially in its present form in about 1938 at the request of the Governor. It was drafted for the purpose of being submitted to the insular legislature. It was drafted by attorneys in

the Interior Department in cooperation with attorneys in the Public Works Administration.

Primarily it is a bond law and for that reason the assistance of the Public Works Administration was sought. When the bill was first submitted to the insular legislature it passed one house in substantially the form submitted.

Mr. CRAWFORD. Mr. Chairman, may I interrupt?

The CHAIRMAN. Yes; Mr. Crawford.

Mr. CRAWFORD. I am going to try to be somewhat technical on this. When you say that this bill, H. R. 8239, was passed by the Puerto Rican Legislature substantially in its present form, I am going to ask you if you will set forth categorically what you mean by "substantially in its present form." We have had a bill sent up here which this committee refused to consider a bill went to the Senate.

The Department of the Interior, I assume, was responsible for a mimeographed statement that came up here which certainly mislead me because when a department of government presents an explanation along with a bill I assume that they are carrying out sufficient good faith to me as a Member of Congress that it explains the bill that was presented with the memorandum. In this case that did not happen and for that reason I am now going to try to be very specific in interrogating you with reference to this bill.

So when you say "substantially in the form in which this bill is written," will you make that very clear to me so I will understand it? Mr. SPECK. Well, perhaps the best way to get at that is to distinguish the present bill from the bill S. 166 as it recently passed.

This bill grants powers to the Authority which is composed of several members of the executive council. Those powers throughout are exercised with perhaps one or two exceptions without intervention or approval of the insular legislature, as has been brought out. I don't remember the bill in detail but I am trying to hit the main points. S. 166, on the other hand, provides for legislative supervision of nearly all the activities of the Authority-all of its administrative activities. It contracts, it purchases, it is employing personnel. In other respects the two bills are different. This bill attempts to carry forward the existing relationship between that system operated by the commissioner of the interior, which is known as the Utilization of Water Resources, and the hydroelectric aspects of the south coast irrigation system. The act S. 166 would divorce the relationship. The present bill provides for the establishment of rates by the board of the Authority under the present law. The public service commission has nothing to do with the fixing of rates.

The rates are fixed tentatively until the legislature otherwise directs and it hasn't in 15 years otherwise directed by the Executive Council. S. 166 will change that. There are other differences which I don't think are material.

There are also some parts of S. 166 that we think are perhaps an improvement over the bill as we have drafted it. Frankly, I have learned as a result of these extended discussions as well as you haveI haven't been connected with the bill from the beginning and am not a specialist in matters pertaining to the Insular Government.

One such change would be to substitute the commissioner of agriculture and commissioner for, I believe, the attorney general.

Now, the fact that two-thirds of the board are members appointed by the President has loomed large in the discussion here. I am afraid

the impression has been created that we have some Machiavellian intention in setting it up that way.

I think if you will glance at the Organic Act you will see that the officers of the Executive Council start with the attorney general and treasurer and commissioner of the interior.

Frankly, I don't know why those officers were chosen. Possibly because lawyers drafted the bill. That is possibly why the attorney general was made a member. We don't think he necessarily needs to be made a member. The Governor will get his advice in any case. Another amendment we are willing not to just approve but to suggest, and I think it is a sound one, is that the bonds in excess of a fixed amount, $500,000-the issuance of bonds in excess of $500,000, would be subject to the approval of the Insular Legislature. If the Insular Legislature saw fit to authorize this Authority to issue $1,000,000, $2,000,000, or $10,000,000 worth of bonds it could. We don't think it is advisable to take each specific bond issue to the legislature. You know what that would be like here if you had to pass upon Federal bond issues in all proceedings. But the legislature should have the power to control broad questions of policy.

Mr. CRAWFORD. May I ask you a question there?

The CHAIRMAN. Mr. Crawford.

Mr. SPECK. Certainly.

Mr. CRAWFORD. Assuming for instance that the Authority recommends projects 1, 2, and 3, to be built at dissimilar periods and maybe costing $3,000,000-an average of $1,000,000 each. Your thought then would be to insert an amendment which would let those three projects calling for $3,000,000 or bond issue, to be issued at dissimilar times, to come before the legislature and be approved in block, we will say?

Mr. SPECK. Yes, I should think so. I think that would be the orderly way to handle it.

Mr. CRAWFORD. Now, my only approach to this thing is through a study of the history of what has gone before. Here is a case where five projects were outlined. This is all in the record-one, two, three, four, and five. It was estimated the total cost would be about $2,700,000. The total cost winds up in excess of $11,000,000 and apparently every project of any importance whatsoever in connection with this program, that has been recommended and has been put into the works, winds up with a cost anywhere from 30 to 300 percent greater than the estimate.

Now, you know and I know that such procedure would bankrupt any private concern that has ever been put in operation, because private concerns do not have the power to tax to recover losses incurred by such mistakes.

Mr. SPECK. Nor would this Authority.

Mr. CRAWFORD. Nor would this Authority? Now, that thing startles me when I make this approach because eventually somebody is going to have to pay the bill.

Now, in your legal approach, how can an amendment be drafted that will prevent the very error being made which has historically been made and which I am now briefly referring to?

Mr. SPECK. There are only two ways to my knowledge that you can prevent that one is through having competent men operating the agency and the other, which is related in my mind, is through the fact that the bonds are sold to investors who are going to scrutinize