areas of authority. For example, three panels might be assigned broadcast licenses, special radio licenses, and common carrier regulation, respectively.

In our general discussion (ch. V), we have considered the use of panels and pointed out their value and disadvantages. There is serious risk that the Commissioners would develop parochial points of view which would affect their approach to problems requiring action by the full Commission. Moreover, if panels should require a larger Commission in order to staff them, that would be most undesirable. On the other hand, if the panels were able to dispose of a large part of the work of the Commission without appeals to the whole body, they would relieve the members of much of the present pressure of work load and leave time for planning and broader issues.

The balancing of these factors can be best done by the Commission. Thus, the use of panels should be left to its discretion but their use should not be required by statute.

The Commission might find it advisable to postpone the adoption of panels until the other recommendations have been given an adequate trial. These may well alleviate the present work load sufficiently to enable all the Commissioners to act on matters which require attention at the Commission level. Further delegation to Commissioners and the staff may leave the Commission with a manageable work load.

Chapter X

FEDERAL POWER COMMISSION

The Federal Power Commission was established by the Federal Water Power Act of 1920 as a means of centralizing control of power development in the Nation's waterways. Responsibility for power projects have been divided among the War Department (whose permission was required for structures impairing navigation), the Interior Department (which had authority to grant and revoke permits through public lands), and the Agriculture Department (which controlled the national forests). Due to conflicts between the departments, and fears of private capital concerning the revocability of permits at will, hydroelectric development was stifled.

The 1920 statute established a Water Power Commission, an ex officio body composed of the Secretaries of War, Interior, and Agriculture, to centralize functions previously performed in the three departments. The Commission's experience from 1920 to 1930 was unsatisfactory, in part because of the inadequacy of staff, and in part because the three Secretaries were too busy with departmental affairs to give much attention to the Commission. They met twice a month for the purpose of taking official action, but could do little more than rubber stamp the action of the executive secretary. President Hoover, referring to the drain on the Cabinet members, recommended the establishment of a full-time independent power commission. Such a law was passed in 1930.

Under the 1930 law, the Commission consists of five members appointed for 5-year staggered terms. The Commission elects its own. Chairman, who acts as such until the expiration of his term. No more than three of the Commissioners may be members of the same political party.

A. Functions of Federal Power Commission

The duties of the Power Commission are derived mainly from the Power Act of 1920, the Power Act of 1935, and the Natural Gas Act of 1938.

Licensed Projects

The 1920 act authorized the Federal Power Commission to grant licenses for private power projects on navigable waters or other streams

subject to Federal jurisdiction. The license is to be granted only upon a showing that the project is adapted to a comprehensive plan for developing the waterway for use of water power, development of navigation and interstate commerce, recreation, and other beneficial

uses.

Each license is for a period not exceeding 50 years; thereafter the Government can purchase the project by payment of the net investment, not to exceed the fair value of the project. The Commission determines the net investment made by the licensee; prescribes the accounts kept by the licensee; and has authority to fix just and reasonable rates and control security issues, where a State commission does not do so.

Interstate Electric Utilities

Under the Federal Power Act of 1935, the Commission has jurisdiction over all public utilities engaged in wholesaling or transmission of electric energy in interstate commerce. The Commission is authorized to fix just and reasonable rates and to prescribe the keeping of uniform accounts. Its approval is required for any disposition or merger of facilities or purchase or sale of securities. It is also authorized to encourage voluntary interconnection of power facilities, and to disapprove, and in some cases to require, such interconnection.

Government Power Projects

The Federal Government's own power projects, constructed and operated by various Federal agencies, are multiple-purpose projects, involving typically the purposes of flood control or irrigation or both as well as power production. The recommendation of the Federal Power Commission as to power development facilities is required, under the flood-control statutes, for the projects constructed by the Army. Generally all Federal projects are subject to the Power Commission's accounting regulations. The Commission must also approve the rate schedules and amendments for Bonneville, Fort Peck, and the flood-control projects constructed by the Army. It has express authority to allocate the cost of facilities among power purposes and other purposes at Bonneville and Fort Peck, and claims. similar authority at the flood-control projects.

Natural Gas Companies

Under the Natural Gas Act of 1938, amended in 1942, natural-gas companies, engaging in the sale of natural gas in interstate commerce, must obtain certificates of convenience and necessity from the Commission. The Commission is authorized to fix reasonable rates and schedules, and to prescribe a uniform system of accounts.

INDEPENDENCE

B. Status and Organization

For the reasons stated in the general recommendations, the Federal Power Commission should be retained as an independent regulatory commission with respect to most of its present functions. Most of its work requires wide perspective and consultative judgment, filling in the broad standards stated by Congress, using staff experts, and determining matters of great significance to the companies involved, such as whether the issuance of a hydroelectric license or natural gas pipe-line certificate is in the public interest; or whether rates and practices are reasonable and nondiscriminatory. Certain power planning functions now performed by the Federal Power Commission are in a different category and are discussed separately below.

TENURE AND COMPENSATION

To protect the members' security of tenure, we recommend that the act be amended to provide that the President may remove only for cause, as do most of the statutes creating such agencies. To maintain the Commission at full strength pending appointments on expiration of the term, we recommend the act provide for continuance in office until a new appointee is named.

Finally, in conformity with our general recommendations, we urge that the salary of the Commissioners and the principal staff members be substantially increased.

CHAIRMAN

The Chairman is now elected by the members, but serves for the remainder of his term. For the reasons stated in our general discussion we recommend that the President appoint the Chairman from among the members.

Our general recommendation with respect to the administrative responsibilities of the chairman of the independent regulatory commissions is considered to apply with full vigor to the Federal Power Commission. By statute the Chairman of this Commission is denominated the principal executive officer of the Commission. But in practice, due partly to the strong collective tradition of this agency, and partly to the faulty organization of the Chairman's office, he has not exercised this role in any real sense. It is our specific recommendation that the so-called Bureau of Administration be organized, be placed under the supervision of a chief experienced in Government administration, and that the Chairman of the Commission be held responsible for the proper functioning of this Bureau.

STAFF ORGANIZATION

The Federal Power Commission is organized, in considerable part, along professional lines. The organization was criticized by a Bureau of the Budget survey made in 1940. Our staff finds that, on this Commission, the disadvantages of this type of organization are partly offset by the small size of the Commission, but does suggest the possibility of speeding up administrative action by including within. the principal operating divisions all the professional skills, including legal, necessary to the processing of normal regulatory actions. Our staff also suggests certain advantages in the establishment of a separate gas bureau. These suggestions are in conformity with our general conclusions on staff organization in chapter V.

SUPERVISING COMMISSIONERS

The lack of centralized responsibility inherent in the professional type of organization has led to the adoption of a supervising commissioner system. Cases when docketed are assigned to acommissioners to coordinate the work of the several bureaus and assure reasonable despatch in performance. For the reasons stated in chapter V, we recommend that the supervising commissioner be discarded as a general technique of administration. In order to avoid delays, the Chairman should develop effective administrative reporting to highlight the causes of delay and to assist in the most productive allocation of the agency's resources.

If the supervising commissioner device is retained, its use should not be automatic but should be dependent upon a determination by the Chairman that the matter is of sufficient importance to warrant the designation of a supervising commissioner. In that event the supervising commissioner should serve as a point of contact not only for the different bureaus of the staff, but also for the interested private companies during the significant administrative and procedural steps prior to the formal hearing and determination. Accordingly any such designation of a supervising commissioner should be made public.

C. Recommendations Concerning Power Planning Functions

River basin development is now carried on by several Federal agencies: Corps of Engineers, Tennessee Valley Authority, and three units in the Interior Department, linked loosely by the Bureau of Power (Bureau of Reclamation, Bonneville Power Administration, Southwestern Power Administration).

The Federal Power Commission now performs various functions for these river development agencies. In particular, it makes river basin