(1) 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; 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 bill 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 project. 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. 717 f), to require 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 reguiated 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 Shield, 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 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 public use, 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). 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). Nichols on Eminent Domain (2d edition, vol. 1, sec. 29, p. 97). Columbia Water Works Co. v. Long (121 Ala. 245, 25 Sou. 702). Thus, an interstate natural-gas pipe line which is constructed across several States for the purpose of transporting gas in interstate commerce and distributing it in a particular area authorized by the 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 64758-47 1 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, article 12, section 11). The State of Wisconsin grants the right of eminent domain to only those gas companies which are Wisconsin corporations. (Wisconsin Statutes, 1945, chapter 32.02 (6).) Nebraska grants the right of eminent domain to gas pipe-line companies distributing gas within the State. (Nebraska, Rev. Stat., 1934-.) 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 S. 1028 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. I believe the Federal Power Commission is agreeable that that bill should be reported. Mr. NELSON L. SMITH (Chairman, Federal Power Commission). Our position is as stated in the report filed with you, sir. We raise no objection to that proposed legislation. Senator MOORE. All right. We will open the hearings first with Mr. Rizley, summarizing the testimony that has been taken before the House. Will you proceed, Mr. Rizley. STATEMENT OF HON. ROSS RIZLEY, A REPRESENTATIVE IN Representative RIZLEY. Mr. Chairman, it is certainly with a complete feeling of humility that I wish to present this matter before the subcommittee as it is presently constituted, because I realize that the chairman of the subcommittee, who happens to be the sole member of the subcommittee present, knows much more about the oil and gas business and has forgotten much more about it than most of us know, but I do appreciate the opportunity of appearing over here for the purpose of presenting my views in connection with what I deem to be one of the most important pieces of legislation that will be considered by the Congress. This bill, Senate bill 734, is identical with my House bill, H. R. 2185, and is identical with bills introduced by two of my colleagues in the House, Congressman Davis from Tennessee and Congressman Carson from Ohio. The problem involved is serious to the public interest and to the industries involved. The following witnesses either appeared or filed statements before the House committee in support of identical bills: Earnest O. Thompson, B. A. Hardey, Maston Nixon, John Siggins, Jr., Edward Buddrus, William J. Harper, Warren Henry, Gov. Frank Carlson, John H. Murrell, R. C. Kay, Hines H. Baker, William A. Dougherty, Thomas H. Allen, D. W. K. Lewis, Richard Wagner, Harold W. Wright, Jr., French Robinson, Gov. Beauford H. Jester, Governor Meadows, Robert Hendee, Joseph Bowes, Richard J. Gonzales, Edward Falck, and Governor Willis. I have attempted to summarize as briefly as I can the statements and the testimony that were given by these various and sundry witnesses, and these witnesses, I may say, attempted to cover every phase of the amendments that the bills propose, and the witnesses spoke not only from the standpoint of producers and gatherers but from the standpoint of pipe-line transporters as well as consumers. In my opinion there is the utmost reason for a remedial statute. The Federal Power Commission admits that there is great unrest, apprehension, dissatisfaction, and fears in the industry that should be corrected. The disagreement between the Federal Power Commission and me is in the choice of the remedy. I say the remedy is by statute. The Federal Power Commission says a part of the evils can be corrected by an administrative rule but has suggested no solution for other evils. Administrative rules are abhorrent to the American public. They can be changed at the will of their promulgators, the administrative bodies. The Natural Gas Act of 1938 is a comparatively new statute. Experience under its administration has been unsatisfactory. The Federal Power Commission has had 9 years to correct certain difficulties it concedes to exist. This is a late date for the Commission to offer to correct by its own rules a portion of these difficulties, which I may say in passing, are largely of its own creation. I repeat, the interpretation and administration of the existing Natural Gas Act by the Commission is the basis of most of the litigation, complaints, fears, and apprehensions of the industry. It is believed that the evils existing under the Commission's interpretation and administration of the Natural Gas Act which the proposed bill is intended to remedy, can be more quickly explained if we first discuss the nature of the gas business. The furnishing of gas to the burner-tip consumer is brought about by the exercise of three functions. |