allocation made in accordance with the use to which the property and facilities are devoted; (2) segregate from all the revenues of such natural-gas company the revenues received from its operations and activities subject to the Commission's jurisdiction under this Act; (3) segregate from all the expenses of such natural-gas company the expenses incurred or expended in the operations and activities subject to the Commission's jurisdiction under this Act by proper allocation made in accordance with the use to which the property and facilities of such natural-gas company are devoted; and (4) in making such segregations and allocations of property, revenues, and expenses, the Commission shall not assign to the jurisdictional class of property, operations, and activities any of the properties, revenues, or expenses of a nonjurisdictional class of properties, operations, and activities." SEC. 6. Subsection (c) of section 7 of the Natural Gas Act approved June 21, 1938, as amended February 7, 1942, is amended by striking out the words "In all other cases the Commission shall set the matter for hearing" and substituting in lieu thereof the words: "Promptly following the filing of each application for a certificate, the Commission shall give public notice thereof, and if no protest against such certificate is filed within thirty days following the giving of such notice, the Commission may at the expiration of said thirty-day period issue such certificate without hearing upon such application. In any case when protest against such certificate is filed within such thirty-day period or if, in the absence of such protest, the Commission fails so to issue the certificate applied for, the Commission shall set the matter for hearing upon a day certain within thirty days following the expiration of such notice period, and"; and by adding at the end of said subsection (c) the following: "Provided further, That any natural-gas company may, without obtaining such certificate, maintain, extend, or enlarge those facilities for any transportation or sale of natural gas for which a certificate has been issued, for the purpose of maintaining continuity of service, or of supplying increased demands in its existing markets." [H. R. 2292, 80th Cong., 1st sess.] A BILL To amend the Natural Gas Act, approved June 21, 1938, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress asembled, That subsection (b) of section 1 of the Natural Gas Act, approved June 21, 1938, as amended, is amended to read as follows: "(b) The provisions of this chapter shall apply, to the extent hereafter provided, to the transportation of natural gas in interstate commerce, to the sale, after such transportation, 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 its transportation between the well or wells where produced and the point of its delivery to or reception in the interstate trunk transmission facilities of a naturalgas company or to any sale thereof at or prior to such point of delivery or reception or to the production or gathering of natural gas, or to the producing, gathering, treating, or processing facilities utilized or operations conducted in handling or preparing such gas for delivery or reception at such point, or to the local distribution of natural gas or to local distribution facilities; and nothing in this chapter shall be construed as authorizing the Commission to prohibit or restrict the transportation or sale in interstate commerce of gas for utilization for any purpose for which such gas may lawfully be used. "(c) The jurisdiction of the Commission under this Act, including but not limited to rate regulatory authority and supervisory control, shall not extend to or over any transportation or sale or facility or operation to which, under the provisions of subdivision (b) of this section, the provisions of this chapter shall not apply. This limitation of jurisdiction shall control all other provisions of this Act." SEC. 2. Subsection (5) of section 2 of said Natural Gas Act is amended to read as follows: "Natural gas' means either gas in its natural state as produced from the well, or residue gas from gas in its natural state, from casinghead gas, or from any other gaseous substance after extraction of hydrocarbon liquids, or any mixture of natural and artificial gas." SEC. 3. Subsection (6) of section 2 of said Natural Gas Act is amended to read as follows: "(6) 'Natural-gas company' means a person engaged in the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission as in this Act defined, or the sale in interstate commerce after the commencement of such transportation of natural gas for resale subject to the jurisdiction of the Commission, as in this Act defined, but to the extent only that such person is engaged in such transportation and sale." SEC. 4. Section (2) of said Natural Gas Act is further amended by adding thereto the following definitions: "(10) 'Production' means the recovery of natural gas from reservoirs where naturally found and also the recovery of residue gas from natural gas, casinghead gas, or other gaseous substance by any method or treatment or processing through removal of natural gasoline, butanes, and other hydrocarbons, or other chemicals or substances of commercial value, whether such recovery be made prior to, during, or incident to the transportation of natural gas in interstate commerce, and includes the delivery and sale of natural gas from production facilities, at any point thereon, whether such delivery and sale be in interstate or intrastate commerce. 'Production facilities' means the land, leaseholds, wells, separators, extraction plants, and other facilities used for or incident to such production. "(11) 'Gathering' means the operation of gathering facilities and includes the delivery and sale of natural gas from such facilities, at any point thereon, whether such delivery and sale be in interstate or intrastate commerce; and 'gathering facilities' means facilities used for or incident to moving, by natural or mechanical pressure, natural gas produced or purchased in the production and gathering area to the point or points of delivery into inlets of the trunk transmission facilities used for the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission. "(12) "Transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission' means and is limited to the operation of moving natural gas in interstate commerce through the whole or a portion of the trunk transmission facilities of a natural-gas company (including facilities or properties for surface or underground storage) which commence at the trunk pipeline compressor station or stations of such company or main receiving point or points established by such company for the purpose of receiving gas from gathering facilities or from processing plants for transportation, and extend therefrom to the point or points in the State of local distribution or on the boundary of such State, at which such natural gas moves from the trunk transmission facilities of a person into the local distribution or trunk transmission facilities of another person who sells such natural gas in local distribution. If, before local distribution occurs, natural gas is transported across a State boundary line in trunk transmission facilities of the person who sells such natural gas to consumers in local distribution, then the transportation of such natural gas by such person, up to, but not beyond, the point at which it enters the pressure reducing, or measuring station or local distribution facilities of such person, shall be transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission. "(13) 'Sale in interstate commerce of natural gas for resale subject to the jurisdiction of the Commission' means and is limited to such sale when made after the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission. "(14) Local distribution' means the operation of local distribution facilities and includes the delivery or sale of gas therefrom; and 'local distribution facilities' means pipe lines and other facilities used for or incident to the distribution of natural gas to the general public within a community or distribution area for ultimate public consumption for domestic, commercial, industrial, and any other purpose." SEC. 5. Said Natural Gas Act is amended by adding thereto the following section: "SEC. 52. The Commission in its regulation of rates and charges of a naturalgas company for the transportation and sale of natural gas subject to its juris diction and in the exercise of all its other functions under this chapter shall be governed and controlled by the following provisions: "(a) It shall allow to a natural-gas company as an operating expense an amount determined as follows: (1) The actual prices paid for gas purchased if the purchase is made by a natural-gas company from nonaffiliates and nonsubsidiaries; (2) if the gas is produced by a natural-gas company or purchased from a subsidiary or affiliate, the prevailing current market price in the field or fields where produced for natural gas of comparable quality, volume, and pressure, delivered under similar conditions, if such market price exists in said field; or, if there is no prevailing current market price for such natural gas in said field or fields in which produced, the fair and reasonable value of such gas, taking into consideration prevailing current prices for natural gas of a comparable quality, volume, and pressure delivered under similar conditions in the general vicinity, and other pertinent factors, provided such value shall exclude a calculated value for such gas based upon the producer's investment in and cost of the properties from which such gas is produced and shall be restricted to the purposes of this section; and (3) reasonable compensation for gathering all of such gas produced by such natural-gas company or purchased by a subsidiary or affiliate of such natural-gas company, and for delivering the same to the inlet or inlets of the transmission facilities of such natural-gas company: Provided, That a natural-gas company owning production facilities or gathering facilities, or both, upon the date when this subsection takes effect may elect, by filing a written statement with the Commission not later than ninety days after such date, that its production and gathering faciliies then owned and thereafter acquired shall be included with its facilities used for the transportation of natural gas in interstate commerce in any determination by the Commission of the rates and charges of such company subject to the jurisdiction of the Commission; and after the exercise of such election, the provisions of clauses numbered (2) and (3) of this subsection shall not be applied by the Commission in determining such rates and charges. "(b) If a natural-gas company is engaged in operations and activities which are not within the Commission's jurisdiction, the Commission, prior to the fixation and determination of the rate base and the rates subject to the jurisdiction of the Commission, shall (1) segregate from all the property and facilities of such natural-gas company the property and facilities used in the operations and activities subject to the Commission's jurisdiction under this Act by proper allocation made in accordance with the use to which the property and facilities are devoted; (2) segregate from all the revenues of such natural-gas company the revenues received from its operations and activities subject to the Commission's jurisdiction under this Act; (3) segregate from all the expenses of such natural-gas company the expenses incurred or expended in the operations and activities subject to the Commission's jurisdiction under this Act by proper allocation made in accordance with the use to which the property and facilities of such natural-gas company are devoted; and (4) in making such segregations and allocations of property, revenues, and expenses, the Commission shall not assign to the jurisdictional class of property, operations, and activities any of the properties, revenues, or expenses of a nonjurisdictional class of properties, operations, and activities." SEC. 6. Subsection (c) of section 7 of the Natural Gas Act approved June 21, 1938, as amended February 7, 1942, is amended by striking out the words "In all other cases the Commission shall set the matter for hearing" and substituting iu lieu thereof the words: "Promptly following the filing of each application for a certificate, the Commission shall give public notice thereof, and if no protest against such certificate is filed within thirty days following the giving of such notice, the Commission may at the expiration of said thirty-day period issue such certificate without hearing upon such application. In any case when protest against such certificate is filed within such thirty-day period or if, in the absence of such protest, the Commission fails so to issue the certificate applied for, the Commission shall set the matter for hearing upon a day certain within thirty days following the expiration of such notice period, and" and by adding at the end of said subsection (c) the following: "Provided further, That any naturalgas company may, without obtaining such certificate, maintain, extend, or enlarge those facilities for any transportation or sale of natural gas for which a certificate has been issued, for the purpose of maintaining continuity of service, or of supplying increased demands in its existing markets." [H. R. 2569, 80th Cong., 1st sess.] A BILL To amend the Natural Gas Act, as amended, by establishing a policy for the administration of such Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 1 of the Natural Gas Act, approved June 21, 1938, as amended (U. S. C. 1940 edition, title 15, sec. 717), as amended by adding at the end thereof the following new subsection: "(c) It is hereby declared that the public interest requires the establishment of, and adherence to, a policy with respect to the transportation of natural gas and the sale thereof in interstate commerce, which will— "(1) promote and safeguard, so far as possible the national defense; "(2) conserve the reserves of natural gas for utilization which affords the highest social benefits to the public, consistent with reasonable rates and adequate service; "(3) assure to the fullest extent possible, proper distribution of the remaining reserves of natural gas by giving first consideration to the use thereof by persons located in municipalities already served by such gas; "(4) promote, consistently with the authority conferred by this Act and to the extent that it is economically feasible, the utilization of natural gas for maintaining pressure or for the restoration of reservoir energy in oil and gas fields for the secondary recovery of petroleum and liquid hydrocarbons; “(5) preserve, so far as possible, a sound economic balance between reserves of fuel and energy resources which will best serve the future public welfare; "(6) mitigate, insofar as the public interest may permit, any adverse effect that the transportation and sale of natural gas subject to regulation under this Act may have upon industries that are not so regulated; "(7) provided just and reasonable rates for the transportation and sale of natural gas in interstate commerce; "(8) avoid control over, or regulation of, rates, returns, or practices incident to the production and gathering of natural gas; "(9) avoid undue preference or advantage between persons, localities or classes of customers receiving natural gas; and "(10) assist States which have formed compacts for dealing with conservation, production, transportation, or distribution of natural gas, by assembling pertinent information relative to matters covered by such compacts. In administering this Act, the Federal Power Commission shall consider and give effect to the provisions of this subsection, insofar as the same may be applicable to such administration, but not to the exclusion of other relevent matters." [H. R. 2956, 80th Cong., 1st sess.] A BILL To amend the Natural Gas Act approved June 21, 1938, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 7 of the Natural Gas Act, approved June 21, 1938, as amended by H. R. 5249, approved February 7, 1942, is hereby amended by adding after subsection (g) the following new subsection: "(h) When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipe line or pipe lines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.” 61167-47- -2 The CHAIRMAN. At this point I desire to insert in the record reports which the committee has received on these bills from the Federal Power Commission, Federal Trade Commission, and Interstate Commerce Commission. Hon. CHARLES A. WOLVERTON, FEDERAL POWER COMMISSION, Chairman, Committee on Interstate and Foreign Commerce, United States House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: Pursuant to your recent request there is transmitted herewith the report of this Commission on H. R. 2185, H. R. 2235, H. R. 2292, and H. R. 2569, bills to amend the Natural Gas Act. As previously indicated to you in conference, an opportunity for the Commission to appear near the conclusion of the hearings on these bills before your committee will be appreciated Sincerely yours, NELSON LEE SMITH, Chairman. FEDERAL POWER COMMISSION REPORT ON S. 734, H. R. 2185, H. R. 2235, H. R. 2292 AND H. R. 2569 BILLS TO AMEND THE NATURAL GAS ACT There is respectfully submitted herewith a report on H. R. 2185, H. R. 2235, and H. R. 2292, which are identical bills sponsored by certain oil and gas industry groups and trade associations to amend the Natural Gas Act. A Senate bill, S. 734, identical with these bills has also been introduced and referred to the Senate Committee on Interstate and Foreign Commerce. Reference is made also to H. R. 2569, which is a different but somewhat related bill, intended to establish various standards to govern the use of natural gas. Since it is our view for the reasons given below, that the enactment of the proposed amendatory legislation at this time would be premature, we have not undertaken to present a detailed analysis of these bills in this report. It is our considered judgment that it would be a mistake and contrary to the public interest to enact any of the proposed legislation in the existing stimulated atmosphere of unwarranted haste and concerted pressure. In now opposing this proposed legislation as premature, we do not assert that all of the suggested amendatory provisions are wholly without merit; some of them, after mature and balanced consideration, may prove to be desirable. But prior to the completion and filing with the Congress of our report on the Natural Gas Investigation (Docket No. G-580), an adequate basis for sound evaluation of the various proposals contained in these bills will be lacking. Our experience in administering the Natural Gas Act since its enactment in 1938, as amended in 1942, demonstrated the need for conducting a comprehensive investigation into all aspects of the natural-gas industry in relation to the provisions of the act and their administration. In its order of September 22, 1944, instituting this investigation in Docket G-580, the Commission found it appropriate in the public interest to investigate: "the extent and probable life of natural-gas reserves; present and prospective measures for preventing waste and prolonging the life of such reserves; the present and probable future utilization of natural gas for domestic, commercial, and industrial purposes; the extent, character, and results of the competition of natural gas with other fuels; and such related matters as may be helpful in the administration of the Natural Gas Act or in determining what additional legislation, if any, should be recommended." The comprehensive scope of the investigation grew out of the conflicting views on broad questions of public policy which had been expressed by representatives of the gas producers, pipe-line companies, gas-producing States, and competing fuel and transportation groups in proceedings before the Commission since the enactment of the Natural Gas Act in 1938, and more particularly following its amendment in 1942. Consideration of the soundness of our interpretations of legislative declarations of policy, and the evaluation of those policies, together with an appraisal of the Commission's practices regarding "field prices" and other aspects of rate making, also were in view. At the time the Commission was considering the necessity for such an investigation, substantial expressions of interest in Congress were evidenced resulting |