AMENDMENTS TO THE NATURAL GAS ACT

THURSDAY, APRIL 17, 1947

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C. The Committee met, pursuant to adjournment, in room 1334, New House Office Building, Hon. Charles A. Wolverton (chairman) presiding.

The CHAIRMAN. The committee will come to order.

The first witness this morning will be Congressman George Schwabe, of Oklahoma, who will make a statement with reference to H. R. 2956 introduced by him, a bill which provides for the amendment of the Natural Gas Act with relation to the rights of imminent domain. STATEMENT OF HON. GEORGE B. SCHWABE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF OKLAHOMA

Mr. SCHWABE. Mr. Chairman and gentlemen of the committee, I am pleased indeed to be afforded this courtesy and I shall be happy to present at this time, if I may, a memorandum or a statement by myself as to the general outline or purposes of the bill and to show in that a number of citations, of court decisions, including the Supreme Court of the United States. I think I have copies sufficient for the members of the committee here.

I shall take only just a very few minutes to state that when the Natural Gas Act was passed, Congress methinks inadvertently failed to include the power of eminent domain to obtain rights-of-way for pipe lines as they had done in the Power Act. In other words, all this bill seeks to do is to amend the Natural Gas Act by implementing the power given the Federal Power Commission to obtain rights-ofway for the construction of pipe lines where the Commission has granted an application and where the pipe-line company cannot get together amicably and privately with the landowner as to a price for the damages that should be awarded or paid for going through his property.

I understand that no report has been filed and that no adverse report will be filed and that the Commission has no objection to this bill, for the reason that it merely, as I said awhile ago, implements the power already conferred, and I might suggest that the person or company must be a concern which will be a qualified natural gas company under the Natural Gas Act and must be the holder of a certificate of public convenience and necessity granted by the Federal Power Commission before this act, if adopted, can be put into operation.

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The bill says that the person or company must be unable to acquire by contract or agree with the owner on the compensation for the necessary right-of-way over the property.

And, with that very brief statement, if the committee please, I believe that there is nothing further that need be said, unless the committee has some questions they would like to ask.

The CHAIRMAN. Is it your desire that this more complete memorandum or statement shall be included in the record as a part of your remarks?

Mr. SCHWABE. I would appreciate that, very much, Mr. Chairman. The CHAIRMAN. It will be included.

Mr. SCHWABE. I would like for that to be done because it contains a number of court decisions and references which I think are pertinent. The CHAIRMAN. Are there any other wittnesses that you wish to present?

Mr. SCHWABE. I do not believe so, unless the committee cares for further evidence; I do not believe it is necessary to present further witnesses.

The CHAIRMAN. Very well. In case any questions should develop with reference to this bill, H. R. 2956, which you have introduced, I will call it to your attention and you will be permitted to make a further statement if you so desire.

Mr. SCHWABE. Would you like to have additional copies of this statement?

The CHAIRMAN. We would like to have several copies for the use of our staff.

It has just been called to my attention, if I may be permitted to suggest, that the jurisdiction of the State courts may be invoked as is always the case in such instances, but the jurisdiction of the Federal courts are invoked where the amount exceeds $3,000. That is just the usual jurisdictional provisions.

Mr. SCHWABE. I will leave this statement with you then, if I may. (The statement referred to is as follows:)

MEMORANDUM OF STATEMENT BY GEORGE B. SCHWABE, MEMBER OF CONGRESS, BEFORE THE HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE WITH RESPECT TO H. R. 2956

This bill, H. R. 2956, amends section 7 of the Natural Gas Act by the addition of a new subsection which provides that 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-ofway for the construction and operation of a pipe line for the transportation of natural gas and the necessary land for the location of compressor stations or other equipment, it may acquire the same by the exercise of the right of eminent domain in the State courts or in the district court of the United States for the district in which the property may be located, provided the amount claimed by the owner of the property to be condemned exceeds the jurisdictional amount of $3,000. The bill further provides that the practice and procedure in any condemnation suit shall conform as nearly as may be with the practice and procedure in a similar action in the State courts where the property is located.

There are two conditions to the exercise of the right of eminent domain under this bill:

(1) The person or company must be a concern which will be a qualified naturalgas company under the Natural Gas Act and must be the holder of a certificate of public convenience and necessity granted by the Federal Power Commission; and

(2) The person or company must be unable to acquire by contract or to agree with the owner on the compensation for the necessary right of way or property.

This bil! follows substantially the wording of the eminent-domain provision of the Federal Power Act (U. S. C. A., title 16, sec. 814) which confers upon concerns that have acquired licenses from the Federal Power Commission to operate certain power projects the right to condemn the necessary property for the location and operation of the projects. When the Congress passed the Natural Gas Act, it failed to include a similar provision of eminent domain for those concerns which qualified as natural-gas companies under the act and obtained certificates of public convenience and necessity for the acquisition, construction, or operation of natural-gas pipe lines. It is obvious that it was just as necessary for the Congress to embody an eminent domain provision in the Natural Gas Act as in the Federal Power Act. Under each of the acts the Federal Power Commission is vested with authority to determine whether the right shall be granted to a concern for the construction and operation of a project which is for the benefit of the people and is affected with a public interest. Under one act Congress has provided the tools for carrying out the rights granted by the Commission, but under the Natural Gas Act the Congress has overlooked furnishing the necessary tools to make effective the orders and certificates of the Commission. It is then clearly apparent that the legislative intent of the Congress and the orders of the Federal Power Commission can be readily and flippantly thwarted at the caprice of a recalcitrant or selfish private concern and thereby defeat a project which has been determined by the Commission to be for the convenience and necessity. of thousands of the people of the United States.

Congress has empowered the Federal Power Commission in section 7 of the act, as amended (U. S. C. A., title 15, sec. 717f), to acquire a natural gas company to extend and improve its transportation facilities in certain instances and also to determine whether the public convenience and necessity require the issuance of a certificate authorizing a natural gas company to engage in the transportation and sale of natural gas or to acquire or operate any facilities for such purpose. The act is deficient in that it fails to provide for the necessary means of carrying out the orders and certificates of public convenience and necessity which are issued by the Commission and this may have the effect in many cases of defeating the very purpose of the Congress in passing the Natural Gas Act. After the Commission has decided that a natural-gas company should extend or improve its facilities or be granted a certificate of public convenience and necessity, no person or corporation should be allowed to defeat the order or certificate of the Commission by refusing to grant a right-of-way for a reasonable compensation for the operation of the pipe line. If such person or corporation desires to oppose the issuance of the order or the granting of a certificate, the law and regulations of the Commission provide that he may intervene in the proceeding and have his day in court, but after there has been a hearing and the Commission has rendered a final decision in regard to the matter he should not then be allowed to defeat the Commission's order or certificate to the detriment of the general public.

In some States the statutes are broad enough to grant the right of eminent domain to interstate natural-gas companies which are regulated under the Natural Gas Act but in many of the States, such as Missouri, Illinois, Indiana, West Virginia, and others, the constitutions and statutes of such States, which confer the right of eminent domain, provide that property may be taken for public use. The term "public use" has been construed by the courts to mean for the use of the public of the particular State conferring the right of eminent domain.

In Shedd et al., v. Northern Indiana Public Service Co. (188 N. E. 322, 90 A. L. R. 1020), the Supreme Court of Indiana said:

"The State of Indiana has no power of eminent domain for uses constituting: interstate commerce over which the United States alone has the sovereign right of control and regulation." And

"The test must be, is the use of a public use within this State, and does it serve the interests of the people within this State? If it does so, the fact that it incidentally or in connection therewith likewise serves the interest of a neighboring State and the people of such State, will not render it any the less a publicuse, or the service any the less a public service, subject to the regulation and control of the State."

"The proper view of the right of eminent domain seems to be that it is a right belonging to the sovereignty to take property for its own public uses, and not for those of another" Mary R. Kohl v. United States (91 U. S. 367, 23 L. Ed. 449). [Italics ours.]

Other authorities to the same effect are: Carnegie Natural Gas Co. v. Swiger (79 S. E. 3, 46 LRA, (NS) p. 1074, Am. Cas., 1915D, 1207); Gover Irrigation & Land Co. v. Lovella Ditch R. & Irrigation Co. (21 Wyo. 204, 131 Pac. 43); Wooster v. Great Falls Manufacturing Co. (39 Me. 246); Salisbury Mills v. Forsaith (57 N. H. 124); Nichols on Eminent Domain 2d ed., vol. 1, sec. 29, p. 97); Kohl v. U. S. (91 U. S. 367, 23 L. Ed. 449); Columbia Water Works Co. v. Long (121 Ala. 245, 25 Sou. 702); Washington Water Power Co. v. Waters (19 Idaho 595).

Thus an interstate natural-gas pipe line, which is constructed across several States for the purpose of transporting natural gas in interstate commerce and distributing it in a particular area authorized b ythe Federal Power Commission and which does not distribute natural gas in each of the States crossed, would not have the right of eminent domain under the constitutions and statutes of such States authorizing the taking of property for a public use. The operation of the pipe line would not be for the benefit of the public in those States crossed by the pipe line but in which there is no distribution of natural gas by such line. However, it is necessary to cross those States in carrying out the certificate granted by the Federal Power Commission authorizing the operation of a pipe line in interstate commerce.

In some States the right of eminent domain is expressly denied to companies which may have qualified under the Natural Gas Act. For instance, in the State of Arkansas the State constitution provides that a foreign corporation shall not have the power to condemn private property (Constitution of Arkansas 1874, as amended, art. 12, sec. 11). The State of Wisconsin grants the right of eminent domain to only those gas companies which are Wisconsin corporations (Wisconsin Statutes 1945, ch. 32.02 (6)), Nebraska grants the right of eminent domain to gas pipe-line companies distributing gas within the State (Nebraska Rev. Stat. 1943).

I therefore respectfully submit to this committee that the Congress has already invoked its constitutional authority to regulate interstate commerce with respect to interstate natural-gas pipe lines by the passage of the Natural Gas Act, and that it should now protect this commerce between the States from any interference or obstruction by private interests for selfish reasons to the detriment of the general public by correcting this deficiency and omission in the Natural Gas Act through the passage of H. R. 2956, which confers the right of eminent domain upon those natural-gas companies which will qualify under the Natural Gas Act and which have acquired a certificate of public convenience and necessity from the Federal Power Commission.

STATEMENT OF TOM J. McGRATH, WASHINGTON, D. C.

The CHAIRMAN. The committee will now hear statements on the Dolliver bill, H. R. 2569; also with reference to H. R. 2185. The first witness will be Mr. Tom McGrath,

Mr. McGrath, will you give your name, the position you hold, and for whom you speak?

Mr. MCGRATH. Mr. Chairman and members of the committee, my name is Tom J. McGrath. I am a lawyer with offices at 729 Fifteenth Street NW., Washington, D. C.

On this occasion, I appear for the National Coal Association, which represents approximately 85 percent of bituminous-coal production in the country, Eastern Gas & Fuel Associates, which is the second largest bituminous-coal producer, and the Chesapeake & Ohio Railway Co., which is the largest transporter of bituminous coal in the

country.

Future natural-gas expansion is a matter of vital importance to the Chesapeake & Ohio Railway, because bituminous coal is virtually the lifeblood of that company.

In 1946 it hauled 73,000,000 tons of revenue coal at an average rate of return of $1.54 per ton for a total of $112,000,000. This represented 76 percent of all of the revenue tonnage hauled by that com

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