situation. Referring once again to the 1955 hearings on S. 2373, it was pointed out in answer to the TVA contention that the provision in question would contemplate the providing of only those engineering services necessary to permit the right kind of plant to be built on the right schedule and in an economical way, that TVA was abrogating to its own engineering staff something superior by implying that no one else in the profession could perform those engineering functions. The implication which results from those discussions is, of course, that the situation which would necessitate the rendition of engineering services by TVA, does not in actuality exist, and thus there could be no justification for the renedition of services by the Federal Government when private firms were available and competent to perform the identical work. This problem of the Federal Government engaging in business-type operations in competition with private enterprise has received the attention of Senator McClellan and others who have sponsored Senate bill 1539, the Anti-Government Competition Act. Senator McClellan has stated that the bill declares it to be the policy of Congress that the Federal Government should not engage in business-type activities, except in the public interest or in furtherance of national programs and objectives established by statute. It further provides, to the maximum extent possible, for the termination of all business-type activities engaged in by the Federal Government to the detriment of private-business enterprise. The term "business-type activity" of the Federal Government, to which this bill refers, is defined as any activity involving the production of goods and the rendition of services commercially available from private business. [Emphasis added.] Thus, to maintain and strengthen the private enterprise system which has made this country so powerful and prosperous requires that we keep the Federal Government out of pursuits which are provided normally by private organizations or individuals; particularly with respect to the independent practice of the professions. A further reason for not granting TVA the authority to render engineering services to outside parties is that the offer and furnishing of professional engineering services is subject to the State engineering registration laws which are in existence in every State of the United States and its Territories and possessions, as well as the District of Columbia. These State laws provide for the registration of qualified professional engineers under strict standards in order to protect the public health, safety, and welfare, and they make it unlawful for any person to offer and perform professional engineering services who has not complied with and registered under the appropriate State law. While TVA could perform engineering services for itself, and the Federal Government, as a superior entity to State laws, could perform engineering services for itself, a completely different situation is presented when there is an undertaking to perform services for third parties. The grant of authority, as contained in S. 1869, would conflict with the State engineering registration laws, as it is certain that TVA as a Government corporation is not licensed under any of the State laws to offer and perform professional engineering services for others. It has been claimed that the reference to engineering services in S. 1869 is confined to the facilities which would become a part of the TVA power system as a result of the increased revenue from bond financing. This, however, does not tend to lessen or detract from the fact that TVA still would be rendering engineering services to outside parties whose only connection with TVA is that TVA might purchase the output from such plant or other facility. At the 1955 hearings which this subcommittee conducted on S. 2373, to which I previously called your attention, the provision authorizing TVA to perform engineering services was thoroughly discussed in a colloquy between Senator Kerr, Senator Hruska, and Mr. G. O. Wessenauer, Manager of Power, TVA. In the course of the discussion it was stated by Mr. Wessenauer that TVA would be given the authority to provide engineer services in connection with a generating plant or facility under the arrangement of a lease, lease-purchase, or a purchase of the output. Regarding TVA's interest where the only connection would be the purchase of the output, Senator Hruska had this to say: If you are going to contract for the purchase of an output of a plant at X mills, it just seems to me that in the normal contractual situation that the purchaser of power under that kind of a situation isn't concerned too much with the engineering and planning department to the extent that it will produce the quantity of merchandise which he contracts to buy. The implication is obvious that authority to offer and perform engineering services is not warranted where TVA has entered into an arrangement where TVA's sole interest would be in acquiring the output of a plant or facility. Senator Hruska further suggested that TV would be getting on tenuous ground *** when you are buying the output of a plant and use that as a vehicle for saying that you are sufficiently interested in it so you can override and, in effect, nullify State laws which govern engineers and the practice of engineering. At page 215 of the published 1955 hearings on S. 2373, Senator Kerr suggested the phrase "or for the purchase of the output thereof” be eliminated from the grant of authority as contained in the bill. The sentence then would read: In connection with the construction of a generating plant or other facilities under an agreement providing for lease or purchase of said facilities or any interest therein by or on behalf of the Corporation, the Corporation may *** And so forth. However, there would still remain the phrase: "or any interest therein by or on behalf of the Corporation," which establishes a very broad test to determine the degree of TVA connection with any plant or facility so as to justify the rendition of engineering services by TVA as authorized in the bill. The National Society of Professional Engineers questions the necessity of this grant of authority to TVA in view of the practice of other Federal agencies which permits parties with whom these agencies contract to procure their own private engineering services in connection with contemplated projects. We refer specifically to the present lease-purchase program whereby private groups finance and construct buildings which the Federal Government occupies under a long-term, lease-purchase arrangement. In these situations, the groups constructing these buildings engage the services of private engineering firms, without Federal interfer ence. These operations occur in connection with an arrangement which involves a closer tie-in to the Federal Government than merely the purchase of the output or a plant or other facility. If the Federal Government does not deem it necessary or indispensable to provide engineering services in connection with the lease-purchase of Federal buildings, we fail to recognize the absolute necessity for TVA to impose its engineering services on those plants or facilities from which TVA merely contemplates the purchase of the output. Questions along this line were asked of Mr. Wessenauer by Senator Hruska at the 1955 hearings. The Senator inquired: ** what would you thing of this letter of the National Society of Professional Engineers if the situation was one in which you agreed to buy the output of some generating plant? You would then go in there and do all the planning, engineering, and designing for that company that was going to build that plant. Would that not be invading the province of the professional engineer and the planners who are represented in the National Society of Professional Engineers? If we may interject a reply to the Senator's query, our emphatic answer would be that such activities of TVA would definitely be invading and interfering with private professional engineers who are competent to render services identical with those offered by TVA. The National Society of Professional Engineers does not wish to indicate any opinion on other aspects of S. 1869, but it is felt that the authorization for TVA to provide engineering services outside of its own organization would be a serious intrusion by a Federal agency into private professional practice and would be at variance with the letter and spirit of existing State laws. We urge that the subcommittee delete the authorization discussed here today, and thus indicate its faithful adherence to the principles of noninterference by the Federal Government into private professional pursuits, and compliance with existing State law, designed to protect the public's life, health, and property. We want to thank the committee for allowing us an opportunity to present our view on this subject, and we stand ready to render whatever assistance the committee may desire. Senator GORE. Thank you very much for your appearance. Senator COOPER. I have no questions. Senator GORE. I will have inserted in the record at this point the statement of Mr. Louis V. Sutton, of the United States Chamber of Commerce. (The statement referred to is as follows:) STATEMENT OF LOUIS V. SUTTON FOR THE CHAMBER OF COMMERCE OF THE UNITED STATES My name is Louis V. Sutton. I live in Raleigh, N. C., and am president and chairman of the board of Carolina Power & Light Co. This company is an investor-owned utility, the stock of which is presently held by 34,400 owners. Our stockholders are located in every State in the Union, and their average holding is 165 shares. I am an engineer by profession and have spent most of my business life in the Southeastern States. I have had business and professional experience in dealing with the Tennessee Valley Authority from its inception and am familiar with its development and operations. The company with which I am associated is a member of the Chamber of Commerce of the United States of America, a federation of 3,300 business organizations with an underlying membership of more than 2,500,000. I had the honor of serving on its natural resources committee from 1952 to 1955. I am filing this statement on behalf of the Chamber of Commerce of the United States. I would have preferred to appear in person to testify on this important matter, as I did before your committee on July 22, 1955, and before a House Public Works subcommittee on May 7, 1957. Your short notice of a 1-day hearing prevents me from so doing because of previous commitments. I urge that you not approve either S. 1855 or S. 1869, to allow TVA to finance further electric power expansion through the use of revenue bonds. The proposed amendments in these bills are unsound and against the public interest, and would not solve the basic problems of the situation. S. 2145, on the other hand, while it would allow TVA to issue $750 million of revenue bonds, would place the electric power part of TVA under the jurisdiction of the Federal Power Commission like any other electric power utility, and require it to operate on sound business principles. The chamber urges your committee to approve S. 2145 except for section 1, authorizing revenue bonds. S. 1986 is not a revenue-bond bill but would simply amend the Government Corporations Appropriation Act of 1948 to require that none of the power revenues of TVA "shall be used for construction or acquisition of any power-producing units, installations, facilities, or projects (except for replacement purposes) except as may be approved by the Congress after consideration of budget programs transmitted by the President, pursuant to the Government Corporations Control Act." This is excellent, as far as it goes, in allowing Congress to regain its control over TVA's use of power revenues for building additional power units at existing steam plants. It would not, however, remove the basic inequity of TVA continuing to supply subsidized electric power at the expense of the taxpayers of the rest of the Nation. TVA is in a dilemma and some solution must be found. This solution, in our opinion, must be sound and reasonable. It must be fair to the Government, to the taxpayer-investor in TVA, and to the people of the TVA area. The chamber proposes such a solution-a 10-point legislative program—which I will present to you after giving our reasons for opposing revenue bonds. Until these 10 proposals are enacted into law, however, there is a way by which TVA could, over the next few years, continue to meet the power needs of its preference customers. The TVA Act instructs TVA to sell surplus power to local public and private agencies with preference to the former, and to give primary attention to the needs of domestic and rural customers. Much of this original act was a major departure from previous national policies. TVA has been in operation for nearly 25 years, and has gone far beyond the definition of "surplus power" in the act. The 1956 Annual Report of TVA shows that less than one-fifth of TVA's total energy supply was generated by hydro plants at multipurpose dams. In addition, it has ceased to give primary attention to domestic and rural customers. Its Annual Report for 1956 shows that less than 15 percent of the total retail sales of TVA power was to domestic and rural customers. Obviously, both the preference and nonpreference customers have come to depend on TVA for power. If, however, the large nonpreference power users were to furnish their own needs or buy power elsewhere, TVA's present power supply plus the generating capacity under construction would be sufficient to take care of the rural and domestic needs for many years in the future. Our opposition to the proposed legislation is based on four major factors: 1. Loss of congressional control over TVA activities; 2. Unsound fiscal procedure of Federal revenue bonds; 3. Continued imposition on the Nation's taxpayers; and Loss of congressional control The major objection to S. 1855 and S. 1869 is that Congress would lose vital elements of control if either bill is enacted. The bills are far more than simple measures to allow TVA to issue revenue bonds. Their most important consequence would be to remove the strict congressional regulation now possible in the interest of the Federal taxpayer. We need more, not less, control by the Congress of Government operations, especially of the business and industries being conducted by Federal agencies and financed by the taxpayers. It is axiomatic that Government cannot, or will not, effectively police itself. A stockholder of a corporation can obtain a court hearing on his complaints of mismanagement by the officers of his corporation, and the court will enforce its judgment rectifying the stockholders' grievances. The Federal taxpayer, whose money is invested in Federal business undertakings, has no such protection. He cannot get a hearing in a court to present any complaints that he may have about mismanagement on the part of those in charge of the Federal project. His only protection is a vigilant Congress holding a tight rein on the various agencies, and examing and weighing all their proposals with the utmost care and good judgment. In his 1955 audit report and again in his 1956 report on TVA the Comptroller General of the United States had this to say about congressional control over TVA: "Because the present law, in our opinion does not result in effective control by the Congress over important expenditures of public funds by TVA, and because of changed conditions resulting in the present-day predominance in the TVA system of steam-electric facilities over hydroelectric facilities, we recommend that legislation be enacted requiring TVA to obtain specific and prior authorization from the Congress to construct or acquire new steam-electric generating units." S. 1855 and S. 1869 run directly contrary to the above recommendation. Other provisions of the two bills would result in further loss of congressional control over TVA, and would lead to steps that would be adverse to the welfare of this country. S. 1869 (page 4, lines 1 through 11) requires that, except with the approval of the President during a time of national defense emergency, no bond proceeds or power revenues "shall be used to initiate the construction of an additional power-producing project until (1) the corporation notifies the President and the Congress of its plan to construct such additional project, and (2) following such notification, a period of 60 days of a single session of Congress elapses without the enactment of legislation disapproving such construction." It is extremely doubtful that hearings could be held and Congress could consider the plans wtihin such a short period as 60 days. It should be noted also that this does not apply to additional units at existing projects, which is TVA's present method of adding to its power facilities without approval of Congress. S. 1986, on the other hand, would require direct action by the Congress in an appropriation bill of a budget item transmitted by the President pursuant to the Government Corporation Control Act, before TVA could use its power revenues for the construction or acquisition of any power-producing unit of any new or existing project. This bill should be passed as an interim measure, pending enactment of more specific legislation dealing with the future of TVA. Unsoundness of revenue bonds Another important objection to S. 1855 and S. 1869 is that the issuance of revenue bonds by any agency of the Federal Government constitutes unsound fiscal procedure. The questions raised by such an extraordinary financing plan are entirely separate from the issue of whether TVA should expand its power facilities. The Comptroller General of the United States examined the revenue bond plan at the time it was originally proposed in bills before the 84th Congress. In a letter dated July 26, 1955, to Senator Chavez, chairman of the Senate Committee on Public Works, he made the following pertinent statement: "We do not think that agencies of the Government, other than the Treasury Department, should be authorized to borrow from the public for purposes of the character involved in this legislation, nor de we believe that the fiscal and debt management responsibilities of the Department should be weakened by authorizing other Government agencies to enter a field which is a normal function of the Treasury Department." One of the arguments that has been offered in favor of revenue bonds is that they would relieve the general taxpayer of the financial burden of annual appropriations and would shift the burden to others. The Comptroller General commented on the claim that revenue bonds would not have the same effect on the budget as direct appropriations and therefore are a desirable method of financing at a time when budget deficits are mounting or economy should be practiced. His letter to Senator Chavez states: "To our mind this reasoning alone does not justify the financing of a Government activity by the sale of bonds to the public. In effect, such action would accomplish indirectly what Congress and the executive branch might be reluctant to do directly." Further, the Comptroller General points out the effect of such financing on the debt ceiling in these words: |