pany and 55 percent of the total revenue received from its operation in that

year.

In addition to those I have mentioned, I also have been retained to represent operators in the anthracite industry producing approximately 80 percent of the commercial anthracite mined in the State of Pennsylvania.

The CHAIRMAN. Mr. McGrath, will you hold the statement for just a moment?

It is necessary for Mr. Lea and myself to appear before the Rules Committee for the next half hour or so. In the meantime I will ask Mr. Bennett, of Missouri, to preside in my absence.

I regret the necessity to leave for that purpose, but it is a very important matter.

Mr. McGRATH. This committee in recent months has had a rather complete disclosure of the effect natural gas has had on the anthracite industry and the potential devastating effect that further expansion would have on this industry, when you were considering Mr. Walter's resolution, House Resolution No. 2.

Now, it is customary, of course, in appearances before this and other committees for a witness to outline to some extent his experience and background in matters under consideration.

Since the passage of the Natural Gas Act in 1938, and more particularly since it was amended in February 1942, I have specialized in matters involving applications for certificates of public convenience and necessity to the Federal Power Commission. In this work, I have represented various clients connected with the bituminous coal industry as well as certain railroad operating unions.

Representatives of my clients have met in recent days with representatives of the anthracite producers, railroads, and the solid fuel dealers of the country for the purpose of analyzing and discussing the provisions of the Rizley and Dolliver bills.

I have not overlooked the fact that Congressmen Carson and Davis have also introduced identical bills, but for convenience, and because it was the first one introduced, and it is the one most generally referred to, I am referring to those three bills, you might say, by reference to the Rizley bill.

In order to conserve the time of the committee and to avoid undue repetition, the coal and railroad group has asked me to present to the committee our analysis of the bills and some of the reasons why we believe that the Dolliver bill should be passed, and certain features of the Rizley bill rejected. Representatives of these industries or some of them are here and will desire to be heard briefly in support of the Dolliver bill, and to explain how their particular interests are affected.

Now, having in mind the chairman's suggestion that in the interest of conserving time that statements should, and ought to be condensed, a suggestion that I heartily agree with, there are certain portions of my prepared statement that I will merely summarize briefly with the hope that the entire statement may appear in the record when it is published.

With respect to one feature of the Rizley bill, that is to say, the divorcement of the authority of the Federal Power Commission, insofar as it may extend to the production and gathering of natural gas, we are in accord.

We favor the purpose of the Rizley bill, insofar as it is intended to clarify the law so as to exclude the Federal Power Commission from "control over or regulation of, rates, returns, or practices incident to the production and gathering of natural gas.

"

Subsection (C) (8) of the Dolliver bill embodies the declaration of policy consistent with those objects of the Rizley bill as we understand them to be, authough we have not undertaken to analyze carefully the language of that portion of the Rizley bill to determine whether it is the language that would embody our ultimate ideas, if we were to make a careful and detailed study of the subject.

Our views on this subject are so expressed in subsection (C) (8) of the Dolliver bill. You have heard this subject discussed in all of its phases by supporters of the Rizley bill. I merely want to say that if natural gas were sold at a price more nearly commensurate with its intrinsic value as a fuel, I believe that it would tend strongly to, if not entirely, eliminate the existing competitive conflict between fuels.

We are most emphatically opposed to the provisions of the Rizley bill appearing in lines 12 to 16 of section 1 (b), which would deprive the Commission of the power to consider and give effect to the purposes for which natural gas is to be used, when it passes upon applications for certificates of public convenience and necessity.

To adopt this provision we believe would be in effect emasculating the Natural Gas Act. The act presently provides, insofar as it is pertinent to this discussion, that certificates shall be issued when it is found "that the proposed service, sale, operation, construction, extension, or acquisition, to the extent authorized by the certificate, is or will be required by the present or future public convenience and necessity." This language which is found in section 7 (e) of the act is not changed by the Rizley bill.

In the very nature of things the Commission must know the character of use to which a proposed natural-gas facility is to be put. Having acquired that knowledge, unless it can apply it to the matter under consideration it will be powerless to protect the public interest.

Certain of the provisions of the Dolliver bill are directly in conflict with this provision of the Rizley bill, and I shall discuss the subject more fully in a few minutes, but before leaving it here, I want to call attention to one of the early decisions of the Federal Power Commission to illustrate my point.

In 1939 the Louisiana-Nevada Transit Co. applied for authority to construct a pipe line from the Cotton Valley field in Louisiana to Okay and Hope, Ark., for the principal purpose of providing fuel for a large cement plant. The Arkansas-Louisiana Gas Co. opposed the application on the grounds that the applicant was attempting to encroach upon its service area and that the project as contemplated was not in the public interest.

After hearing the evidence and argument in rather extended proceedings, the Commission issued what they called a limited certificate and in doing so imposed a condition to the effect that LouisianaNevada must also render general natural-gas service to several Arkansas communities located in the area through and into which the line was built. Thus the general public in those communities bene fited to the extent indicated.

If Mr. Rizley's proposal had been a part of the law at that time, the Commission would have been required to issue a certificate with

out regard to its effect upon the general public in the area and with no right to condition the certificate so as to benefit the public.

Parenthetically, I might say that cement can be manufactured with coal as well as with gas, and great quantities are made in areas where natural-gas service is not available.

Further than that, there is a practice under which the cement companies receive natural gas during the summer and revert to coal during the cold winter months, by the calendar, in certain areas of the country. The decision to which I refer is found in 2 F. P. C. 546. It was appealed to the fifth circuit court of appeals, which upheld the Commission. This decision is reported in 113 F. 2d 281.

A further objection to the Rizley bill is found in section 6 of that bill. There has been very limited discussion of section 6 during the course of the last 3 days' proceedings, but that is a very important one, representing a very important departure from the practice and procedure now followed by the Federal Power Commission.

Now the provision in substance is that the Federal Power Commission shall promptly serve a 30-day notice upon the general public by publication of notice of the filing of an application and that unless certain steps are taken by the Commission within 30 days following that hearing shall commence.

Now, almost invariably, when an application is filed for a certificate of public convenience and necessity, information essential to intelligently prepare for a hearing on the application is absent. This results in issuance of a so-called deficiency letter by the Commission requiring the applicant to file additional information.

This information is frequently voluminous in character and sometimes requires several weeks to prepare. The Commission at the present time, with reasonable promptness, gives public notice of the filing of the application. There is, therefore, no necessity for this requirement being written into the law.

The present act requires the Commission to

give such reasonable notice of the hearing thereon to all interested parties as in its judgment may be necessary.

I think this discretion should be left with the Commission. It has a limited staff of attorneys, examiners, and engineers and in many instances, I am sure that the Commission could not move as promptly as this section contemplates and still adequately protect the public

interest.

Section 5 (a) of the Administrative Procedure Act provides, in part, that

Persons entitled to notice of an agency hearing are to be duly and timely informed of the (1) time, place, and nature of the hearing, (2) the legal authority and jurisdiction under which it is to be held, and (3) the matters of fact and law asserted.

The report of the House Judiciary Committee submitting the Administrative Procedure Act during the Seventy-ninth Congress, second session, explained the purpose of this part of the section quoted above as follows:

A party must be given ample notice of the legal and factual issues with due time to examine, consider, and prepare for them. To make that possible, the issues must be specified with reasonable particularity for which purpose the statement it issues in general statutory language of delegations of authority to the Commission would not be sufficient.

As I have pointed out, frequently the applications contain insufficient information. It is not always possible for a party to know within the 30-day period whether the application will affect its interests in such a manner as to require the filing of a protest.

The provision of the section which requires that the matter be set for hearing upon a day certain within 30 days following the expiration of such notice period is even more objectionable from the standpoint of impracticality, partially for the reasons set forth above, but principally because in a major case, it is not possible either for the Commission or other interested parties to prepare for hearing in 60 days.

Applications are frequently accompanied by dozens of exhibits which must be studied and analyzed, both by the Commission staff and by opposing counsel in preparation for the hearing.

In my statement I refer to a case that had just been completed before the Federal Power Commission. As a matter of fact, the case is still pending. It was adjourned for 1 week, last week, and will be resumed, I believe, next Monday.

Now, in that case after filing the application, the applicant followed it up several weeks after by 53 exhibits which bound together contained several hundred pages of a volume 211⁄2 inches thick.

The application in that case was filed on November 8, 1946. The exhibits were not filed with the Commission until February 24, 1947; an amendment to the application was filed on March 7. 1947, and the hearing set for and commenced on March 31. Now, that experience is typical of those we have in the major cases before the Federal Power Commission and I think clearly illustrates the lack of necessity as well as the impracticability of trying to rush the Commission into hearing within a specified short time.

Now, there is another feature that is perhaps as important, if not more so, than those that I have mentioned, that indicates that this feature of the bill should not be adopted and that has to do with the consolidation of applications for hearing. Frequently competing pipe-line companies file applications to serve the same territory or they obtain their gas from the same common source of supply. In those cases, while applications are not filed simultaneously or even with reference to the filing date to each other, the Commission, because of the necessity in those large cases, of making adequate preparation, is frequently confronted with an application filed by other companies which requires consolidation for the consideration of the two applications together.

I can give you my views best by using an illustration that has occurred within the past year. The Natural Gas Pipeline Co. of America, which serves Chicago and which had had under consideration for a long time building a pipe line to Wisconsin, had an application pending, applications pending, one to build a pipe line to Wisconsin and another to increase capacity in order to serve Chicago and to provide supplies for its proposed Wisconsin market.

The Michigan-Wisconsin Pipeline Co. came along and filed an application to build a new line to Detroit with laterals into Wisconsin. The Panhandle Eastern Pipeline was already serving Detroit. It had made no proposal to go into Wisconsin.

In the Michigan-Wisconsin case they proposed to take some of the existing markets away from the Northern Natural Gas Co. and from the Natural Gas Pipeline Co. of America.

In the course of these preparations to build these lines Panhandle Eastern made an arrangement by which they would operate a storage field in Michigan under a newly formed corporation of which they were to be a part owner, known as the Michigan Gas Storage Co.

Well, with all of those applications pending, none of which would be susceptible to the treatment that the Rizley bill provides for, the Commission properly consolidated them all for hearing and that required the lapse of several months before they were all put into the same case and hearing was commenced.

Now, I do not care to labor this matter particularly. I think perhaps the Commission will present its views on it. But, I have no hesitancy in expressing the belief that there has been no unwarranted delay on the part of the Commission in bringing applications on for hearing. During the war, when the Commission was short-handed, what appeared to be unusual delay frequently occurred, but normally, the Commission can be trusted to set hearings at as early a date as circumstances

warrant.

The Commission has very recently in carrying out its duties under the Administrative Act proposed a new rule; in fact, adopted a new rule relating to these matters and I would like to quote it for the record and also to call it to your attention.

Section 6 (a) of the Administrative Procedure Act requires the Commission to proceed in the disposition of applications "with reasonable dispatch" and "with due regard for the convenience and necessity of the parties." Pursuant to these requirements, the Commission has adopted rule 14 (c) (2), which reads as follows:

(2) In the absence of cause requiring otherwise, and insofar as time, the nature of the proceedings, and the proper execution of the Commission's functions permit, matters required to be determined upon the record after opportunity for hearing will be placed upon the calendar in the order the proceedings are initiated and recorded upon the Commission's docket. Proceedings pending upon this calendar will in their order of assignment, insofar as practicable, be heard at the times and places fixed by the Commission, giving due regard to the convenience and necessity of the parties or their attorneys; however, in its discretion with or without motion, the Commission for cause may at any time with due notice to the parties advance or postpone any proceeding on the hearing calendar.

Now, that would seem to meet all reasonable requirements that might be demanded of the Commission.

If this section were adopted, it would probably prove to be an idle gesture. It certainly would be in many cases. It does not prevent the Commission from postponing cases even after they have been set and that likely would be the result in most of the cases. It would merely require additional work on the part of the Commission and interested parties and lead to unnecessary and unwarranted confusion. While the law would require the Commission to set a case for hearing, there would be nothing to prevent a continuance and that is about how it would work out in most cases.

Now, there is a provision attached to section 6 of the bill which would tend largely to vitiate the purpose of the Natural Gas Act as originally conceived and without any reasonable justification therefor. One of the principles inherent in the Natural Gas Act, as found in