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or assign were the original licensee hereunder: Provided, That a mortgage or trust deed or judicial sales made thereunder or under tax sales shall not be deemed voluntary transfers within the meaning of this section. (41 Stat. 1068; 16 U.S.C. § 801)

Sec. 9. Each applicant for a license hereunder shall submit to the Commission(a) [Applicant to submit plans, specifications, cost estimates, etc.]—Such maps, plans, specifications, and estimates of cost as may be required for a full understanding of the proposed project. Such maps, plans, and specifications when approved by the Commission shall be made a part of the license; and thereafter no change shall be made in said maps, plans, or specifications until such changes shall have been approved and made a part of such license by the Commission.

(b) [Applicant to submit evidence of compliance with State law.]-Satisfactory evidence that the applicant has complied with the requirements of the laws of the State or States within which the proposed project is to be located with. respect to bed and banks and to the appropriation, diversion, and use of water for power purposes and with respect to the right to engage in the business of developing, transmitting, and distributing power, and in any other business necessary to effect the purposes of a license under this Act.

(c) [Additional information.]-Such additional information as the Commission may require. (41 Stat. 1068; 16 U.S.C. § 802)

1. Relation to State laws

NOTE OF OPINION

over legal rights to engage locally in the business of developing, transmitting and distributing power, to the extent not superseded by superior Federal powers. Section 27 of the Act expressly "saves" certain state laws relating to proprietary rights as to the use of water, but section 9(b) does not itself require compliance with any state laws. First Iowa Cooperative v. Federal Power Commission, 328 U.S. 152 (1946).

The Federal Power Act establishes a dual system of control consisting merely of the division of the common enterprise between cooperating Federal and state agencies of Government, each with final authority in its own jurisdiction. The Act leaves to the States their traditional jurisdiction over proprietary rights to beds and banks of streams and to divert or use water, and Sec. 10. [Conditions of licenses.]-All licenses issued under this Part shall be on the following conditions:

(a) [Comprehensive plan.]—The project adopted, including the maps, plans, and specifications, shall be such as in the judgment of the Commission will be best adapted to a comprehensive plan for improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, for the improvement and utilization of water-power development, and for other beneficial public uses, including recreational purposes; and if necessary in order to secure such plan the Commission shall have authority to require the modification of any project and of the plans and specifications of the project works before approval.

(b) [Substantial alterations.]-Except when emergency shall require for the protection of navigation, life, health, or property, no substantial alteration or addition not in conformity with the approved plans shall be made to any dam or other project works constructed hereunder of an installed capacity

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in excess of two thousand horsepower without the prior approval of the Commission; and any emergency alteration or addition so made shall thereafter be subject to such modification and change as the Commission may direct.

(c) [Operation of projects-Liability for damages.]-The licensee shall maintain the project works in a condition of repair adequate for the purposes of navigation and for the efficient operation of said works in the development and transmission of power, shall make all necessary renewals and replacements, shall establish and maintain adequate depreciation reserves for such purposes, shall so maintain and operate said works as not to impair navigation, and shall conform to such rules and regulations as the Commission may from time to time prescribe for the protection of life, health, and property. Each licensee hereunder shall be liable for all damages occasioned to the property of others by the construction, maintenance, or operation of the project works or of the works appurtenant or accessory thereto, constructed under the license, and in no event shall the United States be liable therefor.

(d) [Amortization reserves.]-After the first twenty years of operation, out of surplus earned thereafter, if any, accumulated in excess of a specified reasonable rate of return upon the net investment of a licensee in any project or projects under license, the licensee shall establish and maintain amortization reserves, which reserves shall, in the discretion of the Commission, be held until the termination of the license or be applied from time to time in reduction of the net investment. Such specified rate of return and the proportion of such surplus earnings to be paid into and held in such reserves shall be set forth in the license.

(e) [Annual charges payable by licensees.]-The licensee shall pay to the United States reasonable annual charges in an amount to be fixed by the Commission for the purpose of reimbursing the United States for the costs of the administration of this Part; for recompensing it for the use, occupancy, and enjoyment of its lands or other property; and for the expropriation to the Government of excessive profits until the respective States shall make provision for preventing excessive profits or for the expropriation thereof to themselves, or until the period of amortization as herein provided is reached, and in fixing such charges the Commission shall seek to avoid increasing the price to the consumers of power by such charges, and any such charges may be adjusted from time to time by the Commission as conditions may require: Provided, That when licenses are issued involving the use of Government dams or other structures owned by the United States or tribal lands embraced within Indian reservations the Commission shall, subject to the approval of the Secretary of the Interior in the case of such dams or structures in reclamation projects and, in the case of such tribal lands, subject to the approval of the Indian tribe having jurisdiction of such lands as provided in section 16 of the Act of June 18, 1934 (48 Stat. 984), fix a reasonable annual charge for the use thereof, and such charges may with like approval be readjusted by the Commission at the end of twenty years after the project is available for service and at periods of not less than ten years thereafter upon notice and opportunity for hearing: Provided further, That licenses for the development, transmission, or distribution of power by States or municipalities

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shall be issued and enjoyed without charge to the extent such power is sold to the public without profit or is used by such State or municipality for State or municipal purposes, except that as to projects constructed or to be constructed by States or municipalities primarily designed to provide or improve navigation, licenses therefor shall be issued without charge; and that licenses for the development, transmission, or distribution of power for domestic, mining, or other beneficial use in projects of not more than two thousand horsepower installed capacity may be issued without charge, except on tribal lands within Indian reservations; but in no case shall a license be issued free of charge for the development and utilization of power created by any Government dam and that the amount charged therefor in any license shall be such as determined by the Commission. In the event an overpayment of any charge due under the section shall be made by a licensee, the Commission is authorized to allow a credit for such overpayment when charges are due for any subsequent period.

(f) [Headwater benefits.]-Whenever any licensee hereunder is directly benefited by the construction work of another licensee, a permittee, or of the United States of a storage reservoir or other headwater improvement, the Commission shall require as a condition of the license that the licensee so benefited shall reimburse the owner of such reservoir or other improvements for such part of the annual charges for interest, maintenance, and depreciation thereon as the Commission may deem equitable. The proportion of such charges to be paid by any licensee shall be determined by the Commission. The licensees or permittees affected shall pay to the United States the cost of making such determination as fixed by the Commission.

Whenever such reservoir or other improvement is constructed by the United States the Commission shall assess similar charges against any licensee directly benefited thereby, and any amount so assessed shall be paid into the Treasury of the United States, to be reserved and appropriated as a part of the special fund for headwater improvements as provided in section 17 hereof.

Whenever any power project not under license is benefited by the construction work of a licensee or permittee, the United States or any agency thereof, the Commission, after notice to the owner or owners of such unlicensed project, shall determine and fix a reasonable and equitable annual charge to be paid to the licensee or permittee on account of such benefits, or to the United States if it be the owner of such headwater improvement.

(g) [Other conditions.]-Such other conditions not inconsistent with the provisions of this chapter as the Commission may require.

(h) [Monopolistic combinations prohibited.]-Combinations, agreements, arrangements, or understandings, express or implied, to limit the output of electrical energy, to restrain trade, or to fix, maintain, or increase prices for electrical energy or service, are hereby prohibited.

(i) [Waiver of conditions.]-In issuing licenses for a minor part only of a complete project, or for a complete project of not more than two thousand horsepower installed capacity, the Commission may in its discretion waive such conditions, provisions, and requirements of this Part, except the license period of fifty years, as it may deem to be to the public interest to waive under the

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circumstances: Provided, That the provisions hereof shall not apply to annual charges for use of lands within Indian reservations. (41 Stat. 1068; § 206, Act of August 26, 1935, 49 Stat. 842; Act of September 7, 1962, 76 Stat. 447; 16 U.S.C. § 803)

EXPLANATORY NOTES

1962 Amendment. The Act of September 7, 1962, substituted "two thousand horsepower" for "one hundred horsepower" wherever the latter appeared. For legislative history of the 1962 Act see S. 1606, Public Law 87-647 in the 87th Congress; S. Rept. No. 664; H.R. Rept. No. 2241.

1935 Amendment. Section 206 of the Act of August 26, 1935, (1) elaborated the description of the comprehensive plan in subsection (a); (2) amended subsection (e) by inserting the requirement for approval by the Secretary of the Interior or the Indian

Comprehensive plan 1 Headwater benefits 2 1. Comprehensive plan

tribe in the case of reclamation projects or projects on Indian lands, respectively, and by adding the last sentence relating to overpayment of charges; (3) amended subsection (f) by adding the last sentence of the first paragraph; and (4) made other technical changes.

Reference in the Text. The Act of June 18, 1934, referred to in subsection (e) is the so-called Wheeler-Howard Act. Section 16, 48 Stat. 987, 25 U.S.C. § 476, relates to the constitution and bylaws of a tribe and to the powers of the tribal council.

NOTES OF OPINIONS

In the exercise of its responsibility as guardian of the public domain-waterways and public lands-under sections 4(e), 4 (g) and 10(a) of the Federal Power Act, the Commission might well determine that a license should be granted to a public utility only on condition that it make available its excess transmission capacity to transmit energy generated in power plants of the United States. Federal Power Commis

sion v. Idaho Power Co., 344 U.S. 17 (1952).

2. Headwater benefits

Moneys received from power licenses, under assessments made by the Federal Power Commission pursuant to section 10(f) of the Federal Power Act, for headwater benefits attributable to Reclamation reservoirs, shall be paid into the Reclamation Fund in accordance with the HaydenO'Mahoney Amendment of 1938. Dec. Comp. Gen. B-156498 (May 24, 1966).

Sec. 11. [Dams on navigable waters.]—If the dam or other project works are to be constructed across, along, or in any of the navigable waters of the United States, the Commission may, insofar as it deems the same reasonably necessary to promote the present and future needs of navigation and consistent with a reasonable investment cost to the licensee, include in the license any one or more of the following provisions or requirements:

(a) [Construction of locks, etc., by licensee.]-Such licensee shall, to the extent necessary to preserve and improve navigation facilities, construct, in whole or in part, without expense to the United States, in connection with such dam, a lock or locks, booms, sluices, or other structures for navigation purposes, in accordance with plans and specifications approved by the Chief of Engineers and the Secretary of the Army and made part of such license.

(b) [Conveyance by the licensee to the United States of lands, etc., required for navigation facilities.]-In case such structures for navigation purposes are not made a part of the original construction at the expense of the licensee, then whenever the United States shall desire to complete such navigation facilities the licensee shall convey to the United States, free of cost, such of its land and its rights of way and such right of passage through its dams or other struc

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tures, and permit such control of pools as may be required to complete such navigation facilities.

(c) [Free power to be furnished by licensee for operation of navigation facilities.]-Such licensee shall furnish free of cost to the United States power for the operation of such navigation facilities, whether constructed by the licensee or by the United States. (41 Stat. 1070; 16 U.S.C. § 804)

Sec. 12. [Licensee to install locks, etc., on navigable waters if Government fails to do so-Report to Congress concerning United States share of construction costs.]-Whenever application is filed for a project hereunder involving navigable waters of the United States, and the Commission shall find upon investigation that the needs of navigation require the construction of a lock or locks or other navigation structures, and that such structures cannot, consistent with a reasonable investment cost to the applicant, be provided in the manner specified in section 11, subsection (a) hereof, the Commission may grant the application with the provision to be expressed in the license that the licensee will install the necessary navigation structures if the Government fails to make provision therefor within a time to be fixed in the license and cause a report upon such project to be prepared, with estimates of cost of the power development and of the navigation structures, and shall submit such report to Congress with such recommendations as it deems appropriate concerning the participation of the United States in the cost of construction of such navigation structures. (41 Stat. 1070; 16 U.S.C. § 805)

Sec. 13. [Time limit for construction and operation-Extensions-Termination of license on failure to construct-Proceedings if project is only partially completed in time prescribed.]-The licensee shall commence the construction of the project works within the time fixed in the license, which shall not be more than two years from the date thereof, shall thereafter in good faith and with due diligence prosecute such construction, and shall within the time fixed in the license complete and put into operation such part of the ultimate development as the Commission shall deem necessary to supply the reasonable needs of the then available market, and shall from time to time thereafter construct such portion of the balance of such development as the Commission may direct, so as to supply adequately the reasonable market demands until such development shall have been completed. The periods for the commencement of construction may be extended once but not longer than two additional years and the period for the completion of construction carried on in good faith and with reasonable diligence may be extended by the Commission when not incompatible with the public interests. In case the licensee shall not commence actual construction of the project works, or of any specified part thereof, within the time prescribed in the license or as extended by the Commission, then, after due notice given, the license shall, as to such project works or part thereof, be terminated upon written order of the Commission. In case the construction of the project works, or of any specified part thereof, have been begun but not completed within the time prescribed in the license, or as extended by the Commission, then the Attorney General, upon the request of the Commission, shall institute proceedings in equity in the district court of the United States for the district in which any part of the