gas is affected with a public interest does not make the use of the pipe line itself a public use, since it is used by one company alone for private profit. It would seem, therefore, very probable that the use for which the private property of others is proposed by this bill to be taken under power of eminent domain would not be a public use, and the assertion of the governmental power to acquire property for a private company for a private use even though the use is affected with a public interest, would be unconstitutional.

3. The bill, if it would have the effect its proponents urge, would place an impossible burden upon the Federal Power Commission. In their statements before this committee, the proponents of this legislation have stated that the landowner whose property is to be condemned has a day in court in the Federal Power Commission to argue the merits of condemning his land, since the condemnation cannot be instituted until the pipe-line owner has a certificate of public convenience and necessity from the Federal Power Commission. If this contention is correct, the Federal Power Commission is going to have to broaden enormously the scope of its hearings upon which it predicates the issuance or nonissuance of a certificate of public convenience and necessity. In its past practice the Commission has considered only the interests of the general public in the area proposed to be served by the new pipe line in determining whether the issuance of the certificate is in the interest of public convenience and necessity. It has not even gone into how the interests of the general public in the area from which the pipe line will draw its supplies will be affected by the issuance of the certificate. It certainly has not considered the interests of the landowners among the thousands of miles of right-of-way to see whether the public interest in having the pipe line go over their lands is sufficiently urgent to overcome the particular landowner's right in his own property, or, on the other hand, whether the public convenience and necessity could not be just as adequately served by having the pipe line go over adjacent property where the landowner was willing to sell. If the property owner is really to have a forum in which that question is to be determined in the Federal Power Commission, there will be almost insuperable questions of giving notice to the landowners whose property is to be affected, since if the Federal Power Commission is to be the forum in which they are to be heard, they must have adequate notice. If they are to be heard before the Federal Power Commission, the hearings which the natural-gas companies have objected so strenuously are too long drawn out will be enormously broadened. Either result-that is, that the landowner get no notice or no opportunity for a hearing on the question of his interest as opposed to the public interest in having his lands taken from him, or that the Federal Power Commission in certificate hearings be required to hold a formal hearing on this question to all of the landowners whose property is to be taken by eminent domain— would be equally inconsistent with the public interest.

4. The proposed legislation is an unjustified invasion of the governmental powers of the States, in that it permits the taking of State-owned lands used for State purposes by a private company at the discretion of the private company. The Federal Governmen has the power to condemn State and municipally owned property for Federal purposes where the property is to be acquired for a public use. (See State of Oklahoma ex rel. Phillips, Governor, v. Guy F. Atkinson Co., et al. (313 U. S. 508, 61 S. Ct. 1050).) That power, however, should be exercised by the Congress only where important governmental functions of the Federal Government are involved and only where its exercise would not cause serious interference with the governmental functions of the several States. The proposed legislation would not further the strictly governmental functions of the Federal Government. The exercise of the authority proposed to be delegated might seriously interfere with the governmental functions of the several States. There is nothing, for instance, in the proposed legislation (assuming for the moment that it is constitutional) which would prevent a natural-gas company, if it so desired, from condemning a right-of-way for a natural-gas pipe line through the middle of the statehouse of the Commonwealth of Pennsylvania. To place such power in the hands of the privately owned and operated natural-gas companies would serve no strictly governmental purpose of the Federal Government and might seriously interfere with strictly governmental functions of the several State governments. The Congress should not lightly use its power to put within the power of private, companies the right to so disturb State governmental functions.

5. The proposed legislation is not parallel to nor comparable with the provisions in the Federal Power Act giving the right of eminent domain to certain Government licensees in connection with the construction of power projects. The provi

sions of the Federal Power Act (title 16, U. S. C. A., sec. 814) are confined to "an unimproved dam site or the right to use or damage the lands or property of others necessary to the construction, maintenance, or operation of any dam, reservoir, diversion structure, or the works appurtenant or accessory thereto.". This proposed legislation would be more nearly parallel to that provision of the Federal Power Act if it gave the natural gas companies the right of eminent domain to acquire the gas wells which were necessary to provide the supply of gas which is to be transported in interstate commerce. The location of the projects which can be condemned under the Federal Power Act cannot by their very nature seriously interfere with the governmental processes of the various States, since they are confined to the sites upon rivers which can be adapted to the generation of electricity. That power of condemnation is confined to the source of the power and not the means of distribution of the power. There is no power of eminent domain given to private companies in the Federal Power Act authorizing them to acquire rights-of-way for lines to distribute the power which is generated at the sites which have been condemned. What this bill proposes to do is to give natural-gas companies the power to condemn rights-of-way not at isolated spots where the gas to be transported is produced but anywhere in the United States that the natural-gas lines propose to go in order to distribute and sell their gas. Such a delegation of Federal governmental power to private companies which could so seriously interfere with strict governmental functions of State governments has no parallel in the Federal Power Act or other Federal legislation, and it should not be enacted by the Congress.

6. The bill would place it beyond the power of the States to require a naturalgas pipe line to serve the inhabitants of that State. As set out in cases cited by the proponents of the measure, this is one of the purposes motivating the introduction of this bill. The cases cited deny the right of a pipe line which goes through but does not serve the inhabitants of a particular State to use the right of eminent domain given by the State's authority to acquire property within the States. If the interstate pipe line proposed to render any service to the citizens of the State through which it proposes to go, this objection would not arise. It would seem that this is an argument against rather than for this bill. The States themselves should have the power to require a pipe line which acquires rights to cross it by eminent domain to give some service to the citizens of the State. A recent example of this was the case of the interstate natural-gas pipe line in Michigan which sought to condemn a gas storage field under the laws of Michigan. The condemnation was successful, but, as a condition of the acquisition, the State was able to require a stipulation by the company that certain specified service would be rendered to its citizens. Such control by the States for the benefit of the citizens of the States would seem to be desirable in the public interest. The enactment of this bill would take away from the States the right to require the pipe line to render service to its citizens as a condition of condemning land within its borders. We urge that the continuation of that control is desirable, and that the enactment of this bill which eliminates that control is undesirable.

Sincerely,

JOHN M. CRIMMINS,

Pittsburgh 19, Pa.

STATEMENT OF JOHN SCHREIBER TO THE SUBCOMMITTEE OF THE SENATE INTERSTATE AND FOREIGN COMMERCE COMMITTEE RE S. 1028

EASTERN STATES RETAIL SOLID FUEL CONFERENCE,

May 9, 1947.

Mr. Chairman, members of the committee, my name is John Schreiber. My address is 41 East Forty-second Street, New York City. I am the secretary of the Eastern States Retail Solid Fuel Conference, an association of associations that represents 20,000 retail fuel dealers in New England and in the States of New York, New Jersey, Pennsylvania, Delaware, and Maryland. These retail dealers are small businessmen, in many instances one-man concerns.

These 20,000 small businessmen and their 75,000 employees are vitally interested in the question before you. They are interested because they handle about 90 percent of the fifty-odd million tons of anthracite produced annually in this Nation, in addition to the bituminous coal, coke, and fuel oil which many of them also handle. The combined value of the real and personal property used in connection with the business of the equipped dealers alone, that is, dealers

equipped with storage facilities and scales, in this area exceeds $168,000,000. The total wages and salaries paid by these small dealers in 1945 was close to $72,000,000. The total taxes paid by them in 1945 approximated $14,500,000. You can readily see that the people I represent are an important part of the business life of this Eastern States area.

My interest in S. 1028 is as a special pleader for the people I represent but I sincerely believe that in this case their interest coincides with the public interest. This bill to grant the right of eminent domain to pipe-line companies receiving certificates of convenience and necessity under the Natural Gas Act must be considered along with and in the light of the treatment to be given to S. 734 which also, as does this bill, provides for amendments to the Natural Gas Act.

The amendments to the Natural Gas Act provided for in S. 734 are designed to permit the oil and gas people to sell their natural gas when, where, and how they please and without consideration for the economy of these 20,000 small businessmen and the effect upon the jobs of their 75,000 employees. Familiar with the problems of the coal dealers as we are, and able to visualize the devastating impact of the displacement by gas of the fuel the coal dealers sell, it is only natural that we are opposed, selfishly it is true, to this attempt by the oil and gas interests to be given carte blanche in their plans for uncontrolled expansion. But there is the larger public interest to be considered in so tremendously vital a matter as the granting of this sovereign right of eminent domain to a private corporation. Such a step would be bad enough in itself without considering the possibility of the passage of the pending bills designed to cripple the Natural Gas Act. But if by any chance the Natural Gas Act is amended as the oil and gas interests want it to be amended, then granting the natural gas pipe-line companies the closely guarded right of eminent domain, would under those circumstances, be as wrong as Teapot Dome.

As that act stands today, and on this I quote Mr. Nelson Lee Smith, chairman of the Federal Power Commission, in his statement to this committee, it "provides for substantially less than the usual public utility obligations and responsibilities of regulated companies" and the Federal Power Commission-again I quote Mr. Smith-"has only very limited power to deal with the adequacy of pipe-line servicę.”

So that even if the gas industry were willing to stand behind the Natural Gas Act in its present form, the very limited duties and obligations required to be assumed by them and the limited extent of the regulation imposed upon them by the act would certainly be very much less warrant for giving them this right of eminent domain, than exists in the case of the average public utility company given that right and which in return for that right must submit to rigid regulation and control. That most important right to take private property for public use which is inherent in the Government, must not and cannot be given away by the Government without adequate quid pro quo. It is quite evident from Mr. Smith's remarks, and his remarks must be given their proper weight since as chairman of the Federal Power Commission he is as close to the situation as any man in this country, that the Natural Gas Act does not at present impose the usual obligations and responsibilities of regulated companies, and if it does not, then any handingover of the right of eminent domain would not only be contrary to the long-established policy of the individual States and the Federal Government, but would be an act distinctly inimical to the best interests of the people of this country.

But the natural-gas industry is not content to remain even under that limited regulation provided by the Natural Gas Act. Right now they are bending every effort to emasculate it so thoroughly, that with respect to the issuance of certificates of public convenience and necessity the only right that would be left to the Federal Power Commission would be the mere ministerial function, the rubber-stamp function, of issuing those certificates, and then, only in new areas. And the thought has occurred to me that if it were not for the fact that the natural-gas people considered that only through the device of the Natural Gas Act could they hope to obtain the right of eminent domain, they would have preferred, not the mere emasculation of the powers of the Federal Power Commission but the actual repeal of the act. They seek to butter their bread on both sides. They purpose to retain the skeleton framework of the Natural, Gas Act only so that there will be in being an instrumentality, the Federal Power Commission, to issue routinely upon request certificates of convenience and necessity, each carrying with it the right of eminent domain.

The natural-gas people have been spending a lot of time recently at congressional committee hearings talking about the right of free enterprise and

State's right, both of which they claim, have been placed in jeopardy by the present Natural Gas Act. Our laws, our customs, our way of thinking were evolved from a system of free enterprise and free enterprise is still the basic tenet of our people. But all of us, the people of this country, have long accepted the corollary; that free enterprise does not mean a license to special privileges; that special privileges, when they are granted, must be regulated, whether it be by an Interstate Commerce Commission Act, a Motor Carrier Act or all the laws of the Federal Government and the individual States and municipalities controlling and regulating public utilities. Since the granting of a franchise or certificate of public convenience to a public utility is a special privilege, generally carrying with it the right of eminent domain, controls and conditions were imposed by the sovereign State granting that right. That has not been considered a blow to the system of free enterprise. Not only do the gas interests not come in and say, we will do so and so if you give us this jealously guarded privilege, this right of eminent domain, but they have the presumption— yes, even the audacity to say-for this favor to us, the pipe-line companies, now, in the name of free enterprise we want you also to give up your controls over If this is still their idea of free enterprise, they belong back in the 1890's. The sovereign, be it the State or the Federal Government, actually has no right to make a gift of eminent domain, without a great deal more in the way of duties, obligations and responsibilities than the natural-gas people appear to want to offer or even appear to want to continue to assume under the present provisions of the Natural Gas Act.

us.

Coming to their protestations about States' rights. If you give the pipe-line companies the right of eminent domain and emasculate the powers of the Federal Power Commission in the form sought in S. 734, now before you, you will be giving the pipe-line companies, without regard to the wishes of a State concerned or its citizens, and if need be, in spite of the right to cross through that entire State with its pipe lines, compelling easements for that purpose through private and public property, and yet not serve a single consumer in that State. That is what the natural-gas industry wants to be able to do at the same time that it talks about States' rights being invaded by the present innocuous Natural Gas Act, as the reason why the Federal controls contained in the act should be relaxed or destroyed.

I do not propose at this time to go into the merits, or to put it more accurately, the demerits, of what the gas and oil interests are trying to do through S. 734, since that is being considered separately, but I do want to highlight one provision of that bill because it is of extreme importance in considering whether eminent domain should be granted. That bill provides 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." What is proposed is that natural gas companies should be authorized without any limitation whatsoever to enlarge or extend their facilities for transmitting increasing amounts of gas into areas which they now serve and with the extremely likely possibility of their continuously moving into contiguous areas as being part of their service area. This is what Chairman Smith, in his restrained and conservative statement to this committee, had to say about that point:

"I wonder whether this is really what the interstate pipe-line companies want to accomplish, or whether they have considered the full implications of this proposal. If such a provision were to be enacted there would seem to be no need for a certificate except when a pipe line proposed to enter a new market. Once in such a market, it would be free to expand as it wished, but its corresponding obligation to the public might be by no means so clear."

And being the privileged possessor of a certificate of convenience and necessity, the pipe-line company would not only be able to expand as it wishes without regulations but would have the right of eminent domain to assist it in implementing that expansion.

Since the Federal Power Commission has not the power to exercise at least the same close control and right to regulate the activities of the pipe-line companies under its jurisdiction that other public utility regulatory bodies now possess, and since the Federal Power Commission has not the right to impose upon these pipe-line companies corresponding duties and obligations in return for the grant of the right of eminent domain, we therefore urge that this most important right within the gift of the sovereign, the right of eminent domain, should be withheld and S. 1028 should be defeated.

BEFORE THE

Federal Power Commission

Washington 25, D. C.

DOCKET NO. G-580.

IN THE MATTER OF

NATURAL GAS INVESTIGATION.

STATEMENT OF

POSITION AND RECOMMENDATIONS

of

INDEPENDENT PETROLEUM ASSOCIATION
OF AMERICA

I. PRELIMINARY STATEMENT.

a. Corporate Nature of Independent Petroleum Association of America.

The Independent Petroleum Association of America, hereinafter referred to as IPAA, incorporated under the laws of the State of Oklahoma, is a national association of independent producers of crude petroleum and natural gas, independent refiners of petroleum, independent transpor

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