We find it necessary to adjourn for today. Before doing so, however, I wish to submit for the record these communications which have come to me as chairman of the committee with requests that they be made a part of the record. I will have them introduced at this point. (The statements are as follows:) Hon. CHARLES A. WOLVERTON, CLEVELAND, OHIO, April 16, 1947. Chairman, Interstate and Foreign Commerce Committee, House Office Building, Washington, D. C.: Reference H. R. 2185, in your telegram of 15th, we join fully in support of the testimony and argument against the proposal before your committee by the Conference of Mayors. Under present law the interstate companies have full protection. Rates cannot be fixed that are not just and reasonable, and the courts protect them to that end against arbitrary action. They want, apparently, the law changed only because they desire more than that. Cleveland is vitally dependent upon natural gas, and its or the State's power to regulate local rates cannot be well exercised without the interstate supply being effectively regulated both as to supply and cost up to city gates. Bill has proposed what we believe paralyzes and makes ineffective interstate regulation in that it would permit companies to control supplies through affiliates or concert most difficult to uncover for their own immediate advantage, and create conditions as to market prices for supply upon which rates would be claimed to the point of all the traffic would bear and much more than just and reasonable. Companies, after creating the consumers' dependency upon continued supply, have impressed their businesses with a public interest so that now they are not mere private affairs. The abandonment of the present Commission's basis for determination of rates would permit companies under guise of depletion and depreciation reserves to thereby accumulate capital funds at expense of rate payers. This is being avoided by action of the Commission under its present powers and the bill's proposals would send regulations back to obsolete and practically unworkable rules. Consumers are vitally interested in the conservation of supply rather than quick consumption thereof. We hope the bill will not be approved, and appreciate your suggestion for the incorporation of this telegram in the record, indicating our opposition. THOMAS A. BURKE, Mayor, Cleveland, Ohio. HON. CHARLES A. WOLVERTON, ST. LOUIS, Mo., April 16, 1947. Chairman, House Interstate and Foreign Commerce Committee, New House Office Building, Washington, D. C.: DEAR MR. WOLVERTON: City of St. Louis is very much opposed to House bill 2185 in its entirety. Will greatly weaken present Natural Gas Act and tend to lessen authority and jurisdiction of Federal Power Commission. Particularly object to section 52, subsections A2 and A3, which will result in increased cost of gas to the public by permitting natural gas companies to elect whether their production and gathering facilities shall come under or be excluded from commission regulation whichever is to the companies own advantage. And section 5B which will hinder effective regulation by establishing rigid allocations procedure by statutes rather than by the Commission. Our experience with Federal Power Commission and regulations under present statute has been very satisfactory, resulting in large rate reductions and authorizations for distribution of straight natural gas in our city, and we respectfully urge that your committee do not favorably recommend this bill. Unable to be present, so will you be kind enough to consider this wire a statement of the city's position and put same in the record. GEORGE L. STEMMLER, City Councilor, City of St. Louis. ILLINOIS MANUFACTURERS' ASSOCIATION, Legislation to Define and Restrict Power of Federal Power Commission Over Natural Gas Hon. CHARLES A. WOLVERTON, Chairman, Interstate and Foreign Commercie Committee, House of Representatives, Washington, D. C. DEAR MR. WOLVERTON: We are submitting herewith a statement in relation to the above-described legislation. We shall be deeply grateful if you will arrange to have this statement included in the records of any hearings that may be held on this legislation before your committee or any subcommittee. With assurance of our gratitude for your cooperation on this important matter, I am Cordially yours, JAMES L. DONNELLY, Executive Vice President. STATEMENT BY ILLINOIS MANUFACTURERS' ASSOCIATION, CHICAGO, ILL., URGING ADOPTION OF LEGISLATION DEFINING AND LIMITING JURISDICTION OF FEDERAL POWER COMMISSION OVER THE PRODUCTION, GATHERING, AND DISTRIBUTION OF NATURAL GAS The Illinois Manufacturers' Association embraces approximately 4,400 members and includes industries of all sizes-large, small, and middlle-sized-engaged in practically all types of industrial production. The I. M. A. is deeply concerned over the recent court decision construing the Federal Natural Gas Act in such manner as to empower the Federal Power Commission to control the price at which producers of natural gas may sell their product in interstate commerce. Such power to control inherently involves power to control production facilities in the natural gas industry. We believe that Federal encroachment into the control of production of materials and products is contrary to, and is destructive of, the competitive system of free enterprise upon which this country depends. for its stability and prosperity. The nature of the natural gas production industry is such that such power to control, and its exercise, will destroy incentive for, and hinder development of, the conservation and supply for use in industry of a fuel that is highly essential to efficiency in operation of industries in Illinois. The continued welfare of Illinois industry is dependent upon the availability of natural gas in the largest possible volume and at the lowest possible cost. It is entirely clear that the efforts of the Federal Power Commission to control the production, the gathering, and the distribution of natural gas will, unless checked by Congress, bring about a chaotic condition in the production and distribution of natural gas, including particularly serious and unwarranted curtailment in the supply of natural gas available for Illinois industry. The I. M. A. accordingly urges Congress to adopt legislation which will deny to the Federal Power Commission any jurisdiction over production and gathering of natural gas, over natural gas production and gathering facilities, and over the price at which the producer and gatherer may sell natural gas at or to any pipe line. April 15, 1947. Hon. CHARLES WOLVERTON, STATE OF MISSISSIPPI, DEPARTMENT OF JUSTICE, Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR SIR: The New Orleans Times-Picayune, on March 23, 1947, contained a Washington release in connection with "identical bills introduced in the Senate by Senators Moore of Oklahoma and Ferguson of Michigan and in the House by Representatives Rizley of Oklahoma and Carson of Ohio." These bills propose to settle definitely the points that the Federal Power Commission has no authority to regulate (1) the production or gathering of natural gas at the scource, (2) or controlling the "end use" or sale by interstate pipe lines of natural gas. They also propose that the sale of natural gas to a manufacturing company or other user likewise shall be exempt from the regulation of the FPC. This news release also states that hearings on the House bills are scheduled to begin April 14 before your committee. We have carefully reviewed a copy of Mr. Rizley's bill (H. R. 2185) to amend the Natural Gas Act of 1938, and this opportunity is taken to strongly urge favorable action by you and your committee on this urgently needed legislation. Natural gas has only recently been discovered in large quantities in Mississippi and the proper development of this important natural resource is so closely related to the future progress and prosperity of our people that we cannot intrust the FPC, or any other Federal authority, with regulation over its production, gathering, end use, price, or sale to manufacturing companies or other users. In this connection, we wish to respectfully call your attention to a statement of the Hon. Thomas L. Bailey, former Governor of Mississippi, (now deceased) before the Federal Power Commission in Biloxi, Mississippi, February 11, 1946, in which he defined and announced explicitly Mississippi's "policy with regard to natural gas in order that there may be no basis for Federal interference within a sphere that is properly the subject of State control." Governor Bailey forcefully pointed out that the regulation of the oil and natural gas industry including production, gathering, end use, and price "are the proper functions of the State and should be left to the State." He further stated: “Jurisdiction over the production, processing, gathering, compressing, sale, and delivery of natural gas at the point where its interstate movement commences must remain with the State regulatory agencies; and no jurisdiction over such matters should be conferred upon the FPC or other Federal agencies * * the jurisdiction of Federal agencies such as the FPC should be clearly and rigorously limited to the interstate transportation of gas such agencies should not attempt to reach forward and regulate the local sale or distribution of gas, or reach backward and control either directly or indirectly the production, processing, gathering, compressing, or the price of gas prior to its sale for resale from the main transportation line as an interstate carrier the Natural Gas Act should be so amended as definitely to accomplish these objectives * * * * * ** * We are attaching the official stenographic report covering the Biloxi, Mississippi, hearing containing former Governor Bailey's complete statement. See pages 5063 through 5086. (Filed with House Committee on Interstate and Foreign Commerce.) We keep in constant touch with natural gas development in Mississippi, and we are carrying out the policies so clearly defined in Governor Bailey's statement. We are, therefore, convinced that the authority of the FPC over the natural gas industry should be definitely defined and limited to interstate transmission. We feel that the development and use of natural gas in Mississippi and other States will be encouraged by such clarification of FPC authority and that Mississippi and other States are thoroughly competent to and will regulate, when and where necessary, the production, processing, gathering, local transmission and distribution, end use, and price of natural gas without outside interference. We are confident that the Congress which created the Natural Gas Act of 1938 had no intention of delegating the degree of power and control over natural gas that has been, on numerous occasions, assumed by the FPC. Representative Rizley's bill, we believe, provides for the definitions and limitation of authority of the Federal Power Commission as suggested in Governor Bailey's statement and that it will effectively limit the jurisdiction of the FPC to its reasonable and original purpose and provide the clarification of FPC authority so urgently needed. We respectfully urge your approval of Mr. Rizley's bill so that the development and conservation of natural gas may go forward in an orderly manner under proper State supervision and control. Sincerely yours, FIELDING L. WRIGHT, Governor. STATEMENT OF RAILWAY LABOR EXECUTIVES' ASSOCIATION TO HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE ON H. R. 2185 AND H. R. 2569 The Railway Labor Executives' Association is composed of the chief executive officers of 20 national and international railroad labor organizations representing substantially more than 1,000,000 actively employed railroad workers throughout the United States. More than 80 percent of the railway employees of this country are members of these 20 organizations. The employees whom we represent are interested in natural gas from two points of view. First, from the standpoint of its effect upon the displacement of coal and fuel oil which might otherwise be transported as railroad traffic. Second, many of our members reside in communities where natural gas is the principal fuel for domestic uses and they are, therefore, interested as consumers. During the past 15 years, there has been a tremendous expansion of natural gas service as the result of the construction of long distance transportation pipe lines to midwestern and central eastern territory where coal formerly, and to a very large extent, currently represents the principal domestic, commercial and industrial fuel. In addition to the displacement of coal by natural gas in the areas referred to, there has been a substantial displacement in the Southern coal-consuming States of Alabama, Tennessee, and Georgia. While railroad revenue from petroleum traffic constitutes slightly less than one-third of the revenue obtained from coal freight traffic, we have made no attempt to distinguish between that portion of petroleum products that would be competitive with natural gas and that which would be used for the generation of motive power, or for lubricants and similar purposes. As bituminous coal may be efficiently used for substantially all purposes for which natural gas is utilized, except possibly, domestic cooking, water-heating, and refrigeration and for the manufacture of carbon black, we have assumed for purposes of illustration, that natural gas has, in the instances to which we will hereafter refer, displaced or will displace bituminous coal or anthracite as a fuel. From 1930 to and including 1944, according to calculations based upon the Mineral Year Books of the Bureau of Mines, is 13,621,937 million cubic feet of natural gas was used as a fuel for industrial purposes for which coal had previously represented substantially the equivalent fuel and for which coal could, and no doubt would, have been used in the future, were it not for its displacement by natural gas. This does not take into account the substitution of natural gas as a fuel for domestic purposes or for so-called city gas that was manufactured from coal. The use of this natural gas for fuel purposes made serious and lasting inroads into railroad employment, resulting in the loss of thousands of jobs. What we are principally interested in at this time is analyzing the potential effect that further expansion of natural-gas service would have upon railroad employment. For simplicity in appraising the future probable effect of natural gas on railroad employment, we have assumed that the fuel to be displaced by proposed and potential expansion of natural-gas sales will be bituminous coal, while conceding that relatively small amounts of fuel oil and probably larger amounts of anthracite coal will be displaced, unless, of course, there is a radical departure from the policy heretofore followed by the Federal Power Commission. During the hearings before the Federal Power Commission in the natural-gas investigation in Washington, last July, an exhibit, No. 360, was introduced. It showed that 43 applications for certificates of public convenience and necessity were pending before the Commission on May 31, 1946, for additions to pipe-line facilities which would have added 1,174,162 million cubic feet of designed capacity. Since that time, 33 of these cases have been disposed of, 1 was dismissed by the Commission, and another on the motion of the applicant. One of the remaining 10 cases is pending a rehearing which has been granted. The 31 applications which were granted since that time have added 640 billion cubic feet of pipe-line capacity to the lines then in existence. Since May 31, 1946, and up to and including April 8, 1947, 29 additional applications have been filed with designed capacity of 913 billion cubic feet per year. On the latter date, there were 49 applications pending with a total designed capacity of 1,316,820 million cubic feet. The applications that were pending on May 31, 1946, if granted, would have displaced approximately 50,000,000 tons of coal. This would have made a loss in railroad revenue of $112,000,000 and a loss in railroad wages at the then existing rates of approximately $45,100,000 a year, or the equivalent of about 16,500 railroad jobs. The additional displacement of coal which would result from the granting of the applications that have been filed since May 31, 1946, would eliminate the equivalent of about 11,300 railroad jobs. It will, therefore, be seen that if in addition to the applications which have been allowed since June 1, 1946, the applications now pending were to be granted, it would cause the loss of approximately 27,800 railroad jobs. You can, therefore, readily appreciate why the railroad employees view with extreme alarm the rapidly expanding use of natural gas. There are two phases of natural-gas pipe-line operations which, in our judgment, merit careful consideration. The first is, that in the light of the fact that the remaining reserves of natural gas are unquestionably limited in quantity, are irreplaceable, and that they are being rapidly depleted, their continued unbridled use for purposes which may be as well served by coal, which will last for thousands of years, is not justified. While we concede that our interest in the curbing of natural-gas pipe-line expansion and sales is prompted by motives of self-protection, we insist that our attitude is entirely consistent with the broad public interest. Natural gas spreads its greatest benefits to the public when used as a fuel in homes. Recent technological developments indicate that it may be converted to gasoline or oil to augment our diminishing supplies of petroleum. It may be used in a great many chemical processes for the manufacture of commodities which will greatly benefit the public as a whole. There are probably other uses for which natural gas is especially adapted in commercial and industrial fields and we believe that the public interest requires that remaining reserves be conserved for these purposes rather than that they be thrown upon the market without restraint to drive coal miners and railroad employees out of jobs. . It is frequently and truthfully said that the railroads constitute the backbone of our transportation system. They are not only essential in peacetime but indispensable in national emergencies. The employees constitute an essential segment of the machinery which makes this transportation agency function. We feel that they have a reasonable call upon the public and its official representatives for fair consideration in matters relating to protection of their employment. If, as we believe it has been thoroughly demonstrated, it is contrary to the public interest to permit continuation of uncontrolled pipe-line expansion, we are fully justified in urging that in considering the public welfare, the interest of the railroad employees should not be overlooked. As consumers of natural gas, we believe that we are justified in urging that the limited supplies of that resource be reasonably safeguarded against unwise exploitation and dissipation so that railroad men and their families may be assured of continued availability of natural-gas service for longer periods in the future than will otherwise be possible if its uneconomic use for industrial purposes is permitted to continue without abatement. The railroads, by whom our members are employed, are subject to many types of regulations by the Interstate Commerce Commission. The natural-gas pipe-line companies should be subject to the same type of regulation insofar as their operations as public servants are susceptible to regulation. We are, therefore, opposed to that provision of section 1 (b) of the Rizley bill, H. R. 2185, which would deprive the Federal Power Commission in certificate cases of the authority to consider the uses for which natural gas is to be used when passing upon applications for certificates of public convenience and necessity. While it is our understanding that the Federal Power Commission has sufficient authority under existing law to properly safeguard the interest of the public, their actions in the administration of the Natural Gas Act have not up to the present gone far enough to achieve adequate protection of the public interest. We believe that the Dolliver bill, H. R. 2569, which will establish a policy for the guidance of the Federal Power Commission will, if enacted into law, provide standards which if followed by the Commission will go a long way toward promoting the public welfare and protecting the interests of the men whom I represent. Respectfully submitted. A. E. LYON, Railway Labor Executives' Association. |