At the present time it is often necessary for the Commission to make such allocations during the course of rate proceedings. However, natural-gas companies have waived such allocation when they would be relatively unimportant, thereby affecting substantial savings of time and cost. It would seem inadvisable, therefore, to require such formal determinations in every instance. The "Common Carrier" Provision * Since the close of the hearings before this committee and a Senate subcommittee, section 6 of the Rizley bill, which was obviously objectionable because it virtually eliminated the certificate requirements of the act, has been withdrawn. A new section 6 has been added. It would amend subparagraph (b) of paragraph (1) of section 1 of the Interstate Commerce Act to make some provisions of that act apply to common carriers engaged in "* * the transportation of natural gas by pipe line solely for others for hire, and not engaged in the selling of natural gas * Subparagraph (3) (a) of section 1 of that act is also to be amended to make the term "common carrier" include all pipeline_companies "subject to the provisions of this part." Such pipe lines would henceforth be exempt from all provisions of the Natural Gas Act by virtue of the language of section 3 of the committee print. At first glance, this apparent transfer of jurisdiction from one Federal regulatory statute to another would seem to have little significance, particularly since no existing natural-gas pipe-line company is known to operate "solely for others for hire" or "solely as a common carrier." But the provisions of the Interstate Commerce Act do not permit the regulation of any pipe-line matters except with respect to transportation charges. Most importantly, no certificate of public convenience and necessity is required for the construction and operation of such pipe lines. Hence, it is plain that anyone in a position to take advantage of this situation could build and operate pipe lines at will-unlimited by any regulatory authority, State or Federal. Owners of substantial gas reserves in, say, Texas or Oklahoma, could then arrange for its transportation through the carrier facilities of others to reach markets anywhere in the United States. Deliveries and sales of gas at the destinations would not be subject to regulation under any existing Federal statute and, being in interstate commerce, it is doubtful that these transactions could be regulated by the States. Such operations by those free from any obligations to comply with just and reasonable regulations of their rates and service, might seriously disrupt the natural-gas markets of established pipe-line and distribution systems rendering a general utility service. OMISSION OF SERVICE OBLIGATION Although the National Association of Railroad and Utilities Commissioners neither sponsored nor sought the enactment of H. R. 2185, it did recommend further proposals in the event that the Natural Gas Act is now to be amended. Important among these were amendments, originally advanced by the Illinois Commerce Commission, which would add to section 7 of the existing statute two new subsections (h) and (i). Subsection (h) would declare it to be the duty of natural-gas companies to supply adequate, just and reasonable service—an obligation that the Commission could require the companies to perform. Subsection (i) would provide that a natural-gas company shall not make delivery to a customer not a distributing company, where such delivery would impair the ability of the natural-gas company to render adequate service to its existing customers. This subsection would mean that, if a natural-gas company sells gas to a customer and such sale is not regulated by the States, then sales to distributing companies would be entitled to priority in delivery. The inclusion of these proposals, which do not appear in the committee print, would have ensured adequate protection of those dependent upon natural-gas service by strengthening the utility status and service obligation of natural-gas companies. Other amendments offered on behalf of the National Association of Railroad and Utilities Commissioners, which are not included in the committee print, were intended to prevent any widening of the so-called "regulatory job," by declaring that matters over which Congress has not asserted or exercised jurisdiction should be subject to State control. In support of this proposal, Mr. Benton emphasized that cases are now pending wherein the authority of the State Commissions of Indiana and Michigan to regulate rates on direct sales in interstate commerce by pipe-line companies to industries have been challenged in the courts. CONCLUSION It seems clear that the provisions of the committee print would permit pipeline companies to escape to a very considerable extent the regulation which the Congress intended when it passed the Natural Gas Act. That some seek to minimize regulation, Federal or State, is plainly demonstrated by a letter dated May 28, 1947, submitted for this record by Mr. J. S. L. Yost, general attorney for one of the large pipe lines, referring specifically to the proposals made by the National Association of Railroad and Utilities Commissioners. Commenting on this letter, under date of June 6, 1947, Mr. Benton said: "Mr. Yost's letter serves a very useful purpose. It establishes clearly that the pipe-line companies (notwithstanding they are an integral part of the gas utility industry upon which the local distributing companies must depend for their natural-gas supplies) deny their public utility status, and claim the right to act like private contractors operating in a private field. Mr. Yost openly claims that they ought to be free from any regulation of their rates or service, as to gas sold to industrial consumers. The following is quoted from his letter: 'A full survey of the subject of the use of natural gas by industries should convince any person so informed that the price and terms of service of natural gas for use by industries should not be subject to governmental regulation (Italics supplied.) * ** "We submit that the Congress cannot properly be asked to legislate upon the theory that a regulatory agency created by the Congress is so worthy that the public will be served by withholding from 'it the power to require reasonable service, and by confirming the natural-gas companies in the claim, made in substance in Mr. Yost's letter, that such companies are not public utilities at all and owe no duty to the public, but may measure the extent of the service they will give to distributing companies by such contracts as they see fit to make, without any obligation to regard the public need, or what is reasonable under all the circumstances." In presenting this analysis of the committee print, it has been our purpose to be helpful to the committee by pointing out ambiguities and conflicts in the proposed legislation. We fear that its enactment in this form would not clarify the congressional intent but, by introducing many uncertain terms and concepts, would add greatly to the difficulties of determining and carrying out the legislative purposes. Respectfully submitted. NELSON LEE SMITH, Chairman. [Revision-No language of Natural Gas Act deleted-Only changes are additions, which are italic]. A BILL To amend the Natural Gas Act approved June 21, 1938, as amended, in order to make clear the exemption of the independent production or gathering of natural gas from the provisions of the Natural Gas Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (b) of section 1 of the Natural Gas Act, approved June 21, 1938, is hereby amended to read as follows: "(b) The provisions of this act shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas; or, as to those engaged only in production and gathering, to the sale of such gas at arm's length prior to its transportation in interstate commerce, all as hereinafter defined.” Section 2 of the act is amended by adding thereto subsections (10), (11), (12), and (13) as follows: "(10) Production' means the extraction of natural gas from reservoirs by means of wells, including any operations incident to production for the separation of casinghead gas from oil or of residue gas from other hydrocarbons, and the delivery of such natural or residue gas by the producer to one engaged in gathering or transportation within the meaning of this act. "(11) 'Gathering' means the collecting of natural gas from wells of the gatherer or other producers by its movement to central points through pipe lines and other facilities, including those for further processing and compression as a part of gathering, and only such incidental transportation by the gotherer as may be necessary for delivery of such gas into the transmission facilities used for the subsequent transportation of natural gas in interstate commerce within the meaning of this act. “(12) "Transportation of natural gas in interstate commerce within the meaning of this act' is limited to the movement of natural gas in interstate commerce through pipe lines and related facilities (including facilities for surface or underground storage as a part of transportation operations) after the completion of production or gathering as above defined, but before the beginning of local distribution. "(13) 'Sale at arm's length' to a natural-gas company means a sale by any individual, partnership, association, or corporation not standing in such relation to such natural-gas company, by reason of voting-stock interest, common officers or directors, or other evidence of affiliation, that there is liable to be such an absence of independent bargaining in transactions between them as to be contrary to the public interest." Mr. SMITH. May I say, Senator, that your courtesy in permitting us to bring this up to date is very deeply appreciated. Senator MoORE. Thank you. At this time, we will adjourn. (Whereupon, at 11 a. m., the hearing was adjourned.) THE CENTRAL RAILROAD COMPANY OF NEW JERSEY. Mr. EDWARD JARRETT, Clerk, Washington, D. C. DEAR MR. JARRETT: I am attaching for filing with your subcommittee a statement in opposition to S. 1028, the so-called Natural Gas Lines eminent domain bill. This statement is filed on behalf of the Associated Railroads of New Jersey, and specifically on behalf of the following railroads: Baltimore & Ohio Railroad System; the Central Railroad Company of New Jersey; the Delaware, Lackawanna & Western Railroad Co.; Erie Railroad Co.; Lehigh Valley Railroad Co.; New York Central System; New York, Susquehanna & Western Railroad Co.; Reading Co. Yours very truly, WM. WYER. P. S.-Three copies of the statement are attached. If the regulations require that additional copies be filed, we will forward them promptly on receipt of advice as to the number necessary. MEMORANDUM IN OPPOSITION TO THE ENACTMENT OF S. 1028 W. W. The bill introduced into the Senate on April 2, 1947 by the Honorable E. H. Moore of Oklahoma constitutes a proposed amendment to section 7 of the Natural Gas Act, approved June 21, 1938, as amended, by adding thereto a new section (h) which will confer upon natural-gas companies the right of eminent domain exercisable throughout the United States irrespective of the provisions of State laws. The pipe-line companies which fall within the purview of the Natural Gas Act constitute one of an extended group of transportation companies whose activities of necessity are competitive one with the other. In enacting the Transportation Act of 1940 the Congress adopted in clear and unequivocal terms a national transportation policy providing for fair and impartial regulation of all modes of transportation, so administered as to recognize and preserve the inherent advantages of each and foster sound economic conditions in transportation and among the several carriers, all to the end of developing, coordinating, and preserving a national transportation system adequate to meet the needs of the country. The railroads of the United States are, by virtue of the Interstate Commerce Act, largely regulated and supervised by the Interstate Commerce Commission; the air lines, by virtue of the Civil Aeronautics Act, are subject to the regulation and control of the Civil Aeronautics Board; the shipping lines, by virtue of the Shipping Act of 1916, are subject to the regulation and control of the United States Maritime Commission and the pipe-line companies, by virtue of the Natural Gas Act, are subject to the regulation and control of the Federal Power Commission. It will be noted that neither the Interstate Commerce Act, the Civil Aeronautics Act nor the Shipping Act of 1916 contains any provision conferring upon the companies subject to the respective provisions of those statutes the right to exercise the power of eminent domain. It is submitted that it is inequitable to pick out from among the group of competitive carriers the pipe-line carriers and confer upon that group the right of eminent domain which is not possessed by any of the other types of carriers. It is further submitted that so to do rather than being in furtherance of the national transportation policy as enunciated by the Congress would constitute a flagrant disregard of that policy and in effect grant an unwarranted preference to one type of trans"portation. Further objection to the enactment of this proposed legislation lies in the fact that the problem of whether or not a particular industry should by law be empowered to acquire title to real property through the exercise of eminent domain is one which historically and properly has been regarded as a problem peculiarly within the domain of State legislation. Practically universally questions involving title to real property and the exercise of rights therein are resolved under the laws of the State wherein the land in question lies. Most of the States of the Union have enacted legislation conferring upon various types of corporations whose activities are deemed to be imbued with the public interest the right to exercise the power of eminent domain under appropriate restrictions and safeguards. The Congress has heretofore generally regarded this subject as one which should properly be handled by State legislation and it is submitted that there exist no circumstances peculiar to either the natural gas or the pipe-line industry which would warrant a departure from that well established policy. It is fair to assume that support for S. 1028 has and will continue to come principally from those engaged in the collection, transportation and distribution of natural gas. It will be recalled that at the recently concluded hearings before the House Committee on Interstate and Foreign Commerce upon the Rizley bill, H. R. 2185, which is similar to the Moore bill, S. 734, those same interests appeared in support of that legislation. We understand that a summary of the record of the House hearings is before you. The effect of the Moore bill, if enacted, would be to relieve the natural-gas industry in large measure from the control of the Federal Power Commission under the Natural Gas Act as presently in effect. During the course of the hearings upon the Rizley bill, it was apparent that the natural-gas interests were seeking to throw that industry back into the hands of State control. In short, they advocated application of the States' rights theory. In the present case, however, those same interests advocate the entry by the Federal Government into a field-that of conferring the power of eminent domain upon a carrier-which the Federal Government has never heretofore invaded. It will thus be seen that the position of the gas industry on these two bills is wholly inconsistent. When the Rizley bill was being considered by the House committee they argued in favor of States' rights and a lessening of Federal control. When S. 1028 comes before your committee they advocate legislation which disregards the theory of States' rights and constitutes an invasion by the Federal Government of an area which has always been regarded as solely within the province of State legislation. For the reasons above suggested, it is respectfully submitted that S. 1028 should not be enacted. KOPPERS CO., INC., Pittsburgh 19, Pa., May 9, 1947. Mr. Chairman and members of the committee, my name is John M. Crimmins. My address is Koppers Building, Pittsburgh, Pa. I am a member of the law department of Koppers Co., Inc. Pursuant to the authority granted by the committee, I desire to file with you certain views in opposition to the enactment of S. 1028. My company is engaged in the manufacture of gas on the Eastern seaboard which is sold for domestic, commercial, and industrial purposes in northern New Jersey. If this bill is enacted, it will probably help the purchasers of Big Inch and Little Big Inch lines to acquire certain easements from the Commonwealth of Pennsylvania which would facilitate the transmission of natural gas to the eastern seaboard. I state these facts to the committee to show the interest which my company has in this bill. I want to state, however, that I am not urging the committee to recommend the defeat of this bill because of the interest that my company has in its manufactured-gas operations on the eastern coast. I propose to urge upon the committee certain views as to the public desirability of this bill. If those views are sound, I urge the committee to adopt them because they are sound, not because of the effect their adóption will have on my company. If those views are unsound, I urge the committee to repudiate them, not because of the effect that that repudiation will have upon my company but because they are unsound. This statement has been reviewed by representatives of approximately SO percent of the anthracite producers in the Commonwealth of Pennsylvania, by representatives of the National Coal Association, and by representatives of Eastern Gas and Fuel Associates. All of those individuals have approved this statement and I am authorized to state to this committee that I am speaking in this statement not only on behalf of Koppers Co., Inc., but on behalf of those other interests which I have named. Our views are: 1. The Chairman of the Federal Power Commission has urged upon this committee the desirability of postponing considerations of two other bills which are now pending before this committee and which affect the administration of the Natural Gas Act until after the Federal Power Commission has completed its report in the general natural gas investigation, with which it has been occupied for many months. The Chairman based his recommendation on the ground that amendments to the Natural Gas Act of a controversial nature should not be hastily made. He stated that the Commission had taken many thousands of pages of testimony over many months, and that its report to the Congress predicated on this investigation should be helpful in arriving at an informed judgment as to the desirability of amending the Natural Gas Act. The scope of the general natural gas investigation was broad enough to include all phases of the natural gas business, including the transmission phase. One of the participants in that investigation, in its statement of position filed at the conclusion, urged upon the Commission the desirability of recommending to the Congress as a part of the report a change in the act to give natural gas pipe line companies the right of eminent domain. If the Commission adopts the recommendation of this participant in its tentative report which it will submit to the parties, there will undoubtedly be objections filed by certain other of the parties and the matter can be argued in the first instance before the Commission on the basis of the light shed on the problem by the extensive evidence taken by the Commission on all phases of the natural gas business in the general natural gas investigation. This is a controversial matter which is within the scope of that investigation. If the Chairman of the Commission was right in urging upon this committee that it defer consideration of the other bills until the Commission's report had been filed in the general natural gas investigation, it is only logical that the same reasoning and the same recommendation should apply to this bill. 2. This bill is probably unconstitutional. It is, of course, almost impossible to express a categorical opinion on the constitutionality or unconstitutionality of proposed legislation, particularly in a field as nebulous as that of the Government power in connection with eminent domain. It would serve no useful purpose to examine at length the individual cases which approach most nearly to the present situation, since there is no authoritative case construing other legislation identical with this bill, and the translation of general principles as they are applied by the courts to one factual situation to other different factual situations is at best argument only by analogy and at worst argument by misdirection. The general principle applicable to eminent domain is that the Federal Government has power to condemn private property for public use, and it has the authority to delegate that power to condemn for public use to private companies. Thus, the Federal Government has authority to condemn the instrumentalities of commerce themselves which are used by the public, such as dam sites for purposes of navigation and flood control, the condemnation of bridge sites which are to be used upon completion of the bridge by the general public, etc. However, the Federal Government has no authority to condemn property for private use, nor to delegate to private companies the authority to condemn property for private use. The property which is here sought to be condemned would be used in most cases by one company and one company only for the purpose of transmitting gas which it owns from the points where it either produced or acquired it to the points where it sells it for private profit to others. Such a use is not a public use, even though such a business is affected with a public interest in that the prices charged are ultimately reflected in the price the public pays for the gas sold. The fact, however, that the business of transmitting the |