AMENDING THE TENNESSEE VALLEY AUTHORITY ACT WEDNESDAY, JUNE 18, 1941 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met at 10:30 a. m., Hon. Andrew J. May (chairman) presiding. The CHAIRMAN. The committee will please be in order. While we do not have a full committee present, I think they will be in shortly. I would like to make a very brief statement of what I understand the issue here this morning is, for the benefit of those members of the committee who have not been on the committee from the beginning of the organization of the Tennessee Valley Authority. We have for consideration this morning H. R. 4961, a bill which I introduced in pursuance to the request of the Comptroller General of the United States to further amend section 9 (b) of the Tennessee Valley Authority Act. The question arises as to whether or not the T. V. A. is subject to the supervision and control by the Comptroller General's office. As I understand the situation, there is some question about it. The Comptroller General wants to be advised exactly as to the intent of Congress, so that in the disbursement of public funds he will know exactly what his responsibility is. And, in order that the matter be definitely and unquestionably settled, I have introduced this bill so that the committee might have a hearing on it and determine just what they want to do about it. I have asked the Comptroller General to appear here today for that purpose, and he is here with a number of witnesses; and representatives of the T. V. A. are also here. Mr. Fitts, the General Counsel of the T. V. A., and others are here. And at their request I have set tomorrow for a hearing of their testimony in opposition to the bill if they oppose it. We will start the hearing this morning. I shall call at this time the Honorable Lindsay C. Warren, Comptroller General of the United States and former Member of the House, whom we all know. We will be glad to have a statement from you, Mr. Warren, as to your position in this matter. You may proceed as you prefer. (The bill referred to reads as follows:) [H. R. 4961, 77th Cong., 1st sess.] A BILL To amend section 9 (b) of the Tennessee Valley Authority Act, as amended by section 14 of the Act of August 31, 1935 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 9 (b) of the original Tennessee Valley Authority Act, as amended by section 14 of the Act of August 31, 1935 (49 Stat. 1080), be, and the same is hereby, further amended by adding at the end of 1 section 14 thereof the following: “Nothing in this Act shall be construed to relieve the Treasurer or other accountable officers or employees of the Corporation from compliance with the provisions of existing law requiring the rendition of accounts for adjustment and settlement pursuant to section 236, Revised Statutes, as amended by section 305 of the Budget and Accounting Act, 1921 (42 Stat. 24), and accounts for all receipts and disbursements by or for the Corporation shall be rendered accordingly." STATEMENT OF HON. LINDSAY C. WARREN, COMPTROLLER GENERAL OF THE UNITED STATES OF AMERICA Mr. WARREN. Mr. Chairman and gentlemen of the committee, the record in this case consists of a decision rendered by me on December 21, 1940, and my report to Congress on June 2, 1941. Since then the T. V. A. has also addressed a communication to the Congress; and they also have an opinion of the Attorney General. I do not come before this committee today seeking any additional power whatsoever. There is no desire on my part to increase the corporate limits of the General Accounting Office or of the Comptroller General. We have all the work we can possibly attend to, and the authority to do it. And I am sure that you gentlemen can visualize what a tremendous task we have when you look back over the appropriations that have been made in the last few years. On the pending bill there will be no lobby or influence brought to bear either on my part or on the part of any employee of the General Accounting Office, although we will always be available to answer any inquiry from the Congress about it. I wish to keep the controversy on a high plane; to see it disassociated from collateral matters; to have it acted upon solely on its merits; and then to accept your decision, whatever it may be. I will correct the chairman just to this extent: I think probably that he was in error when he said that I asked him to introduce this bill. He saw the alternate drafts that I sent up here; and later I was informed that he agreed with our view of it and offered it at that time. The CHAIRMAN. That is a proper correction, Mr. Warren. Mr. WARREN. In my report of June 2 I impartially submitted two drafts of legislation, one upholding the view of the Tennessee Valley Authority and the other that of the General Accounting Office. I am, however, wholeheartedly in favor of the bill offered by the chairman of this committee, believing it carries out the intent and purpose of Congress; that it is conducive to responsible and effective accounting of public funds; and that it is highly in the interest of the public welfare. Now, at the outset, gentlemen, I wish to dispose of finally, if possible, the old familiar red herring. It seems that whenever any question ever arises between the Tennessee Valley Authority and the General Accounting Office a phony issue of prejudice and animus is injected. I do not know what may have happened in the past, But I can speak with absolute authority of what has happened since November 1, 1940. If there ever was any prejudice there has certainly been none since that time. Why, I have been one of the most consistent friends that the T. V. A. has had in Congress during all these years. My friendship for it dates back to the old Muscle Shoals days, and I actively supported it through many of those stormy battles in the House. I have not looked it up, but just within the last 18 months there was a question, I believe, on some dam in Kentucky that I cast my first vote against it, and it was defeated in the House, as I now recall, by a 4 or 5 majority. Later on, about 2 weeks after it came back again for another vote. I was so satisfied at that time that my position was wrong that I changed my vote; and it was passed then by a 5 or 6 majority. Some of the very strong advocates of it were kind enough to say on account of expressions I had made to many Members it had greatly aided them in overcoming that unfavorable vote. I merely say that to show there could be no possible feeling whatever on my part. But no matter how friendly I may feel, gentlemen, I cannot condone its attempt to evade responsibility and effective accounting of its expenditures. Nor can I acquiesce in its desire that I say such accounting shall not be made. Within a day or so after I was appointed, and that was on July 31, 1940, although I only took office on November 1, 1940, a conference was sought by the T. V. A. and there was a series of letters prior to my assuming office on November 1. I replied I would be delighted to discuss their problems as soon as I took office, and within a week after I did assume office the first conference was held. While I knew nothing whatever of past differences I tried to impress the officials of the T. V. A. of my sympathetic interest_and of my very earnest desire to adjust those differences so far as I was legally empowered to do it. There were, I believe, two conferences, both of which were attended by Senator Pope, one of the directors of the Authority. And I would like to say here and now that on account of the high esteem that I formed for Senator Pope when he was a member of the Senate, which today goes on unabated, if he had been let alone in this matter there is no doubt whatever in my mind but the whole thing could have been satisfactorily adjusted. In the midst of the second conference there was handed to me across the table a memorandum challenging the jurisdiction of the General Accounting Office-right at the point where we were sitting down and trying to adjust differences and to work out a harmonious relationship. I will never believe that it was intended for me to get that memorandum; but that it was handed to me in error. I am fortified in saying that on account of a paragraph in a letter to me from Senator Pope dated August 23, 1940, which I quote: I think it would be helpful for us to talk with you about these matters and to leave with you at the time a very carefully prepared memorandum covering briefly the history of our relations with the General Accounting Office, the matters that have already been adjusted, and the few matters that remain to be adjusted. Then we, of course, told the T. V. A. that before any decision could be made it must be submitted to us in writing. And this they did, in a letter to me dated November 23, 1940. Well, of course, with this challenge of jurisdiction, this put an entirely new phase on the matter, and after several weeks of study and discussion and collaboration I rendered my decision of December 21, 1940. The first 262 pages of it dealt with the question of jurisdiction upon which I had fully satisfied myself. That I consider to be both basic and fundamental. After disposing of that question I then told my associates that while I personally made no pretense of knowing anything about the technical details of auditing and accounting, that I desired them to work out a future procedure for the T. V. A. that would take into full account the nature of its work; and that it should have much of the freedom and flexibility of a private corporation. I told them we must not impose any burden or restriction that would retard the work of the T. V. A. or unduly hamper or circumscribe it; that the whole attitude of the General Accounting Office must be strictly cooperative; and that we should assist the T. V. A. in every way possible within the limitations imposed on us by law. Such a procedure was set out in that decision. And I went so far as to say if what we outlined did not prove workable that we were open to further conferences so that an amicable relationship might be established. Why, I even agreed to personally review any disallowance upon the request of the T. V. A. And yet this proposed procedure we offered was never even dignified by an answer or a discussion from them. So, gentlemen, you can see that I have done nothing to the Tennessee Valley Authority. I have never even been given an opportunity-they certainly have had no chance to test my attitude because they immediately came in when I was trying to adjust things and flaunted the power and authority that the Congress gave me. Now, the crux of this matter is simply this and nothing more; and we should not permit extraneous matters to enter into it. In that decision I held that the T. V. A. was subject to section 305 of the Budget and Accounting Act as amended. And that reads as follows: All claims and demands whatever by the Government of the United States or against it, and all accounts whatever in which the Government of the United States is concerned, either as debtor or creditor, shall be settled and adjusted in the General Accounting Office. That is the authority we have to question the legality of the expenditures of the several departments, boards, agencies, and so forth, of the Government, unless they should be specifically exempt by law in the audit and settlement of the accounts of accountable officers. Now, the Tennessee Valley Authority says that does not apply to it. They say the only accounting or audit they are required to have is what is provided for in section 9 (b) of the Tennessee Valley Authority Act. We say the audit they rely on is merely in addition to the audit under the Budget and Accounting Act. Now, what kind of audit is this, that they say is all we can make and all that they will permit us to make? Well, it is nothing more than what is known as a commercial audit. Under that they can go ahead, if they please, and make every kind of illegal expenditure on the face of the earth, and there is nothing that we can do about it but report it. The horse is then out of the stable. Mind you, I do not say they have or would. But the opportunity to do so is always present. Under the audit we give other agencies and departments we question the legality of the expenditure, which the Congress tells us to do. And if it is not satisfactorily explained we hold the disbursing officer accountable. The audit the T. V. A. desires does not afford the check on the legality of the expenditures as contemplated by Congress when it created the General Accounting Office. It is simply a mere balance sheet. They suggest and put in writing that the Comptroller General, the authority vested by law to audit and settle the accounts of agencies of this Government, should appoint a firm of certified public accountants of national reputation to make an aundit of the accounts of the Authority; the expenses of the audit to be borne by the Authority. That is what they suggest. The CHAIRMAN. Will the gentleman pardon me for an interruption? Mr. WARREN. Certainly. The CHAIRMAN. They also make a suggestion just before that, and one of their recommendations is the General Accounting Office should discontinue its exceptions and procedure. Mr. WARREN. Oh, that is their position. And that is what they are relying on. They say they are out from that entirely. So after being informed of the T. V. A.'s position I sent a communication to Congress on June 2, 1941. Now, no matter what view you gentlemen may have about this question I think you will agree if you have read it, I have learned backward to be fair in that letter. I accurately stated both contentions. And I placed in legislative language the two views and have left the decision to your own good judgment. I thought that communication would be highly pleasing to the Tennessee Valley Authority. I thought that they would come here and join hands with me and would welcome the opportunity of having the matter settled once and for all. But they do not take that attitude. So we come to the fountainhead, the legislative body, for legislative intent and clarification. They fall back on statutory construction. We ask the Congress to guide us and tell us what it wants. They say, "Congress has nothing to do with us, for we are armed with an opinion of the Attorney General." We say, "Why should you be exempt?" They say, "We are sacrosanct." We say, "We are a great independent agency answerable and responsible only to the Congress, our creator, and that the Comptroller General is your agent. They say they would circumvent the independence of the Comptroller General with an advisory opinion. Now, they rest their case, gentlemen, on that opinion. They say there is nothing for the legislative body to consider. Well, perhaps I am too fresh from the field for me not to seek and desire the wellconsidered judgment of the legislative body. Well, they have this opinion. In the first place, certainly, an opinion from the Attorney General, while always treated with respect and in some cases followed, is not conclusive upon me, nor would you want it to be. A complete answer is found in the very first sentence of title 3 of the Budget and Accounting Act, which reads as follows: There is created an establishment of the Government to be known as the General Accounting Office, which shall be independent of the executive departments, and under the control and direction of the Comptroller General of the United States. |