other gaseous substance after extraction of hydrocarbon liquids, or any mixture of natural and artificial gas."

SEC. 3. Subsection (6) of section 2 of said Natural Gas Act is amended to read as follows:

"(6) 'Natural-gas company' means a person engaged in the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission as in this Act defined, or the sale in interstate commerce after the commencement of such transportation of natural gas for resale subject to the jurisdiction of the Commission, as in this Act defined, but to the extent only that such person is engaged in such transportation and sale."

SEC. 4. Section (2) of said Natural Gas Act is further amended by adding thereto the following definitions:

"(10) 'Production' means the recovery of natural gas from reservoirs where naturally found and also the recovery of residue gas from natural gas, casinghead gas, or other gaseous substance by any method or treatment or processing through removal of natural gasoline, butanes, and other hydrocarbons or other chemicals or substances of commercial value, whether such recovery be made prior to, during, or incident to the transportation of natural gas in interstate commerce, and includes the delivery and sale of natural gas from production facilities, at any point thereon, whether such delivery and sale be in interstate or intrastate commerce. 'Production facilities' means the land, leaseholds, wells, separators, extraction plants, and other facilities used for or incident to such production.

"(11) 'Gathering' means the operation of gathering facilities and includes the delivery and sale of natural gas from such facilities, at any point thereon, whether such delivery and sale be in interstate or intrastate commerce; and 'gathering facilities' means facilities used for or incident to moving, by natural or mechanical pressure, natural gas produced or purchased in the production and gathering area to the point or points of delivery into inlets of the trunk transmission facilities used for the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission.

"(12) "Transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission' means and is limited to the operation of moving natural gas in interstate commerce through the whole or a portion of the trunk transmission facilities of a natural-gas company (including facilities or properties for surface or underground storage) which commence at the trunk pipeline compressor station or stations of such company or main receiving point or points established by such company for the purpose of receiving gas from gathering facilities or from processing plants for transportation, and extend therefrom to the point or points in the State of local distribution or on the boundary of such State, at which such natural gas moves from the trunk transmission facilities of a person into the local distribution or trunk transmission facilities of another person who sells such natural gas in local distribution. If, before local distribution occurs, natural gas is transported across a State boundary line in trunk transmission facilities of the person who sells such natural gas to consumers in local distribution, then the transportation of such natural gas by such person, up to, but not beyond, the point at which it enters the pressure reducing, or measuring station or local distribution facilities of such person, shall be transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission.

"(13) 'Sale in interstate commerce of natural gas for resale subject to the jurisdiction of the Commission' means and is limited to such sale when made after the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission.

"(14) Local distribution' means the operation of local distribution facilities and includes the delivery or sale of gas therefrom; and 'local distribution facilities' means pipe lines and other facilities used for or incident to the distribution of natural gas to the general public within a community or distribution area for ultimate public consumption for domestic, commercial, industrial, and any other purpose.'

SEC. 5. Said Natural Gas Act is amended by adding thereto the following section:

"SEC. 52. The Commission in its regulation of rates and charges of a naturalgas company for the transportation and sale of natural gas subject to its jurisdiction and in the exercise of all its other functions under this chapter shall be governed and controlled by the following provisions:

"(a) It shall allow to a natural-gas company as an operating expense an amount determined as follows: (1) The actual prices paid for gas purchased if the purchase is made by a natural-gas company from nonaffiliates and nonsubsidiaries; (2) if the gas is produced by a natural-gas company or purchased from a subsidiary or affiliates, the prevailing current market price in the field or fields where produced for natural gas of comparable quality, volume, and pressure, delivered under similar conditions, if such market price exists in said field; or, if there is no prevailing current market price for such natural gas in said field or fields in which produced, the fair and reasonable value of such gas, taking into consideration prevailing current prices for natural gas of a comparable quality, volume, and pressure delivered under similar conditions in the general vicinity, and other pertinent factors: Provided, That such value shall exclude a calculated value for such gas based upon the producer's investment in and cost of the properties from which such gas is produced and shall be restricted to the purposes of this section; and (3) reasonable compensation for gathering all of such gas produced by such natural-gas company or purchased by a subsidiary or affiliate of such natural-gas company, and for delivering the same to the inlet or inlets of the transmission facilities of such natural-gas company: Provided further, That a natural-gas company owning production facilities or gathering facilities, or both, upon the date when this subsection, takes effect may elect, by filing a written statement with the Commission not later than ninety days after such date, that its production and gathering faciliies then owned and thereafter acquired shall be included with its facilities used for the transportation of natural gas in interstate commerce in any determination by the Commission of the rates and charges of such company subject to the jurisdiction of the Commission; and after the exercise of such election, the provisions of clauses numbered (2) and (3) of this subsection shall not be applied by the Commission in determining such rates and charges.

“(b) If a natural-gas company is engaged in operations and activities which are not within the Commission's jurisdiction, the Commission, prior to the fixation and determination of the rate base and the rates subject to the jurisdiction of the Commission, shall (1) segregate from all the property and facilities of such natural-gas company the property and facilities used in the operations and activities subject to the Commission's jurisdiction under this Act by proper allocation made in accordance with the use to which the property and facilities are devoted; (2) segregate from all the revenues of such natural-gas company the revenues received from its operations and activities subject to the Commission's jurisdiction under this Act; (3) segregate from all the éxpenses of such natural-gas company the expenses incurred or expended in the operations and activities subject to the Commission's jurisdiction under this Act by proper allocation made in accordance with the use to which the property and facilities of such natural-gas company are devoted; and (4) in making such segregations and allocations of property, revenues, and expenses, the Commission shall not assign to the jurisdictional class of property, operations, and activities any of the properties, revenues, or expenses of a nonjurisdictional class of properties, operations, and activities."

SEC. 6. Subsection (c) of section 7 of the Natural Gas Act approved June 21, 1938, as amended February 7, 1942, is amended by striking out the words "In all other cases the Commission shall set the matter for hearing" and substituting in lieu thereof the words:

"Promptly following the filing of each application for a certificate, the Commission shall give public notice thereof, and if no protest against such certificate is filed within thirty days following the giving of such notice, the Commission may at the expiration of said thirty-day period issue such certificate without hearing upon such application. In any case when protest against such certificate is filed within such thirty-day period or if, in the absence of such protest, the Commission fails so to issue the certificate applied for, the Commission shall set the matter for hearing upon a day certain within thirty days following the expiration of such notice period, and"; and by adding at the end of said subsection (c) the following: "Provided further, 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".

1

[S. 1028, 80th Cong., 1st sess.]

A BILL To amend the Natural Gas Act, approved June 21, 1938, as amended

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 7 of the Natural Gas Act, approved June 21, 1938, as amended February 7, 1942, is hereby amended by adding after subsection (g) the following new subsection:

"(h) 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-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operration of such pipe line or pipe lines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000."

[S. Rept. No. 429, 80th Cong., 1st sess.]

The Committee on Interstate and Foreign Commerce, to whom was referred the bill (S. 1028) to amend the Natural Gas Act approved June 21, 1938, as amended February 7, 1942, with respect to the exercise of the right of eminent domain by any holder of a certificate of public convenience and necessity for the construction and operation of a pipe line for the transportation of natural gas in interstate commerce, report favorably thereon and recommend that the bill do pass.

The bill would amend section 7 of the Natural Gas Act by adding after subsection (g) the following new section:

"(h) 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 as to the compensation to be paid for the necessary right-of-way to construct, operate, and maintain a pipe line or pine lines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipe line or pipe lines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000."

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 projects. When the Congress passed the Natural Gas Act, it failed to include a similar provision of eminent domain to 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.

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 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, L. R. A. (N. S.), 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 distributing natural gas 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 by the pipe line but in which there is no distribution of natural gas by such line. But it is necessary to cross those States in carrying out the certificate granted by the Federal Power Commission. 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 Stat. 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, ).

Therefore, the Congress of the United States in carrying out its constitutional authority to regulate interstate commerce should correct this deficiency and omission in the Natural Gas Act by the passage of Senate bill 1028 which confers the right of eminent domain upon those natural gas companies which have qualified under the Natural Gas Act to carry out and perform the terms of any certificate of public convenience and necessity acquired from the Federal Power Commission under the act.

It has been argued that railroads, ship lines, and air lines have not been given the right of eminent domain as an aid to their interstate operations by the Federal Government, although they, like interstate natural gas companies, are subject to regulation under Federal laws as interstate operators. Therefore, the enactment of S. 1028 constitutes class legislation giving preferential treatment to interstate natural gas pipe lines and discriminates against railroads, ship lines, and air lines.

Rail, water, and air carriers, under the law are required to operate as common carriers, and as such, are required to serve the public in the several States through which such carriers operate. By reason of this factual situation, this class of common carriers may, as a consequence thereof, rely upon the eminent domain laws of the respective States. Interstate gas pipe lines constructed by right of license under certificates of convenience and necessity from the Federal Power Commission, are not required to operate as "common carrier pipe lines." The usual and ordinary service of an interstate natural gas company is the movement of gas which has been either produced by the natural gas company or purchased from others from the source of supply in one State to specified and

limited markets of the natural gas company in another State. Thus, the right of an interstate natural gas pipe line to cross intervening States in which no service is performed is a necessary protection of the free flow of commerce among the States and which can only be furnished by the Congress under its paramount jurisdiction to regulate interstate commerce.

If it should ever become necessary or desirable to do so, the Congress can, and undoubtedly will, furnish to rail, water, and air interstate common carriers, similar rights to protect the free operation of their interstate activities.

It has also been suggested that the granting of the right of eminent domain is a matter peculiarly within the legislative and constitutional purview of the States and that it is proper that such rights should rest with the States in order that the States may therefore be in a position to require a natural-gas pipe-line company entering the State to serve the people of that State as a condition to obtaining the right of eminent domain. This argument defeats the very objectives of the Natural Gas Act. Under the Natural Gas Act, the Federal Power Commission is given exclusive jurisdiction to regulate the transportation of natural gas in interstate commerce, the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and natural-gas companies engaged in such transportation or sale. The Commission, through its certificate power, is authorized to grant certificates of convenience and necessity for the construction of interstate natural-gas pipe lines from points of supply to certain defined and limited markets. If a State may require such interstate natural-gas pipe lines to serve markets within that State as a condition to exercising the right of eminent domain, then it is obvious that the orders of the Federal Power Commission may be nullified.

As stated above, it is within the constitutional authority of Congress to regulate interstate commerce. In the performance of that constitutional authority, it is proper for the Congress to furnish proper and necessary protection of the free flow of interstate commerce. S. 1028 is designed for that purpose with respect to the movement of natural gas in interstate commerce and the sale in interstate commerce of natural gas for resale for ultimate public consumption, and is identical to congressional protection granted under the Federal Power Act with respect to licensees under that act for the construction, maintenance, or operation of any dam, reservoir, diversion structure, or the works appurtenant or necessary thereto.

S. 1028 does not invade or interfere with the right of the States to impose any proper regulation upon intrastate activities, since its application is limited to exclusive interstate operations with respect to which the States may not constitutionally legislate.

[H. R. 4051, 80th Cong., 1st sess.]

AN ACT To amend the Natural Gas Act approved June 21, 1938, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (b) of section 1 of the Natural Gas Act, approved June 21, 1938, is amended to read as follows:

"(b) The provisions of this Act shall apply, to the extent hereinafter provided, to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to its transportation between the well or wells where produced and the point of its delivery to or reception in the interstate trunk transmission facilities of a natural-gas company or to any sale thereof at or prior to such point of delivery or reception or to the production or gathering of natural gas, or to the producing, gathering, treating, or processing facilities utilized or operations conducted in handling or preparing such gas for delivery or reception at such point, or to the local distribution of natural gas or to local distribution facilities.

"(c) The jurisdiction of the Commission under this Act, including but not limited to rate regulatory authority and supervisory control, shall not extend to or over any transportation or sale or facility or operation to which, under the povisions of subdivision (b) of this section, the provisions of this Act shall not apply. This limitation of jurisdiction shall control all other provisions of this Act."