Foreign Commerce directing the Commission to “inquire into and report to the Congress on various matters with respect to natural gas."

Necessary investigations such as that in Docket No. G-580 were clearly within the contemplation of the Congress when it enacted the Natural Gas Act. Section 11 (b) of the act makes it the duty of the Commission to assemble and keep current pertinent information relative to the effect and operation of any interstate compact dealing with the conservation, production, transportation, or distribution of natural gas, and to report to the Congress from time to time the information thus obtained, together with such recommendations as may appear to be appropriate or necessary. Still more broadly, section 14 (a) authorizes the Commission to conduct investigations which may be necessary "to aid in the enforcement of the provisions of this act or in prescribing rules or regulations thereunder, or in obtaining information to serve as a basis for recommending further legislation to the Congress."

The investigation was not-and because of the close interrelationship involved could not appropriately be limited strictly to those matters of interstate transportation and commerce with which the regulatory duties of the Federal Power Commission are directly concerned. It was emphasized from the very beginning, however, that the scope of the investigation should not give rise to wholly unfounded fears that the purpose was to extend unduly the regulatory jurisdiction of the Commission to matters properly coming within State regulation under our system of government or to embrace control over the oil industry. The investigation was conducted in a cooperative manner-regarding which there has been much favorable comment-between the Commission, the State regulatory bodies, the natural-gas industry, and the coal, railroad, and labor interests, providing all these and other interested parties an opportunity to present their views so that the Commission could inform the Congress and the public of the issues involved, and, if necessary, recommend to the Congress amendatory legislation if the need for any such legislation should develop.

The procedure adopted and announced at the outset of the hearings, which was received favorably by all concerned, provided for submitting the conclusions of the staff report for consideration and comment by all interested parties prior to submitting to the Congress the report embodying our principal findings and recommendations. Under these circumstances, we believe that enactment of any piecemeal legislation before that procedure has been carried out would be clearly inappropriate. Up to this time, five sections constituting approximately half of the staff report have been so released for comments, and other parts will be made available to the parties for comment as soon as they have been completed.

Although there was general accord between the Commission and industry regarding this cooperative procedure, the several bills above referred to have been introduced and their passage urged, without any regard for the fact that the investigation is approaching completion in accordance with the above-described procedure. It is our intention, of course, to present our conclusions in the forthcoming report regarding the matters presented in the proposed bills, as well as other matters which we believe should be brought to the attention of Congress. The present efforts to amend the Natural Gas Act, prior to the filing of our report with the Congress, are designed to prevent the Commission from proceeding in an orderly manner to present to the Congress its comprehensive report on the entire subject matter of the investigation. Furthermore, the case of Interstate Natural Gas Co., Inc. v. Federal Power Commission, which has been referred to as the principal reason for the demand of oil and gas producers for an amendment of section 1 (b) of the act, is presently pending before the Supreme Court of the United States. Argument in this case is scheduled to be heard about May 1. The amendment of section 1 (b) prior to a decision by the Supreme Court in the Interstate case appears to us to be an unsound procedure. Clearly, the Court should have an opportunity to express its views concerning the statutory questions which have been presented to it, in order that the Congress, the Commission, and all interested parties may have the benefit of the Court's authoritative pronouncement concerning the meaning of the statutory provisions which have been in dispute. Until the Supreme Court has decided this pending matter, there is no certainty that there is any need for considering an amendment of section 1 (b) with reference to production and gathering. There can be no valid objection to following an orderly procedure in settling this matter concerning which there has been so much agitation and misunderstanding.

For the reasons above stated, we believe that the amendments to the Natural Gas Act as proposed in the pending bills should not be adopted at this time, in

advance of the completion by the Commission of its consideration of all of the matters under consideration in the natural-gas investigation and the filing of our report with the Congress. We earnestly suggest that any consideration of amendments to the act should be dealt with comprehensively and deliberately in terms of the broad public interest, without undue haste and pressure, and not merely with reference to certain matters which are urged by those who have a special interest in securing particular changes which would be of advantage to them.

The public interest will be better served if the procedure originally contemplated by the Commission is continued to completion, so that the conclusions and recommendations in our report will receive such attention and consideration as they merit. This report will be before the Congress within a few months. There is no emergency requiring immediate action on these bills. No one will be harmed if the Congress defers its consideration of amendments until there can be before it the Commission's forthcoming comprehensive report on the problems as a whole. This report has been cleared with the Bureau of the Budget in accordance with the provisions of Budget Circular A-19. In this connection, a letter from the President, dated April 9, 1947, a copy of which is appended hereto, states that "It seems to me that the position of the Federal Power Commission, with respect to this proposed legislation is an appropriate one."

FEDERAL POWER COMMISSION,
By NELSON LEE SMITH, Chairman.

Hon. NELSON LEE SMITH,

Chairman, Federal Power Commission,

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Washington, D. C.

THE WHITE HOUSE, Washington, April 9, 1947.

MY DEAR MR. CHAIRMAN: I have your letter of April 3, 1947, transmitting a proposed report of the Federal Power Commission on certain bills (S. 734, H. R. 2185, H. R. 2235, H. R. 2292, and H. R. 2569) to amend the Natural Gas Act of 1938.

The proposed report calls attention to a comprehensive investigation of the natural gas industry, now well under way by the Federal Power Commission, and expresses the view that until the completion and filing with Congress of the results of this investigation, there will be no adequate basis for a sound evaluation of the various proposals contained in the above-mentioned bills. The proposed report on these bills also calls attention to a case (Interstate Natural Gas Company, Inc. v. Federal Power Commission) now pending in the United States Supreme Court, with hearing set for about May 1, the determination of which by the Court will supply an answer as to the meaning of certain provisions of the Natural Gas Act which have been in dispute. For the reasons thus set forth, the Commission recommends against the enacment of any of these bills at this time. It seems to me that the position of the Federal Power Commission, with respect to this proposed legislation, is an appropriate one.

Sincerely yours,

(S.) HARRY TRUMAN.

Mr. SMITH. This bill is a companion to three bills (H. R. 2185, 2235, and 2292) which were introduced in the House during February. They are all identical, and incorporate various specific changes in several sections of the Natural Gas Act which have been advocated by certain trade-association groups within the oil and gas industries. As we now understand it, it is your plan to make the hearings held on those bills very recently before the House Committee on Interstate and Foreign Commerce a part of the record before this subcommittee. I believe you stated that earlier.

Senator MOORE. That is correct.

Mr. SMITH. A fourth bill, H. R. 2569, which was introduced more recently and is supported by their competitors in the coal business and allied interests, was also before the House committee for considera

tion at that time. Therefore, I shall refer to it here to clarify the record.

Senator MOORE. Yes.

Mr. SMITH. It is a related measure, in the sense that it deals with some of the same subject matter, but its objectives are, for the most part, diametrically opposite; and its approach is that of a general statement of policy, rather than that of amending individual provisions of the present statute. For convenience I shall refer to these proposals from here on, as there may be occasion to do so, as the “gas bill" and the "coal bill," respectively.

As you know, those hearings have not been concluded, and time has not yet permitted the receipt of testimony from the Federal Power Commission by the House Committee, although we expect to have an opportunity to appear when the hearings are resumed. As you also stated, Mr. Chairman, those hearings, up to this point, however, have developed a good bit of conflicting and confusing testimony from those advocating amendments designed to serve the purposes of one special interest or another. In a matter of such high importance to the public interest as this is it is essential the misunderstanding be avoided to the extent possible. Therefore, while I shall try to be brief, it will be necessary to take enough time to make clear both the situation and the Commission's position regarding it.

GENERAL POSITION STATED

As stated in the legislative report filed with your committee, it is the position of the Commission that it would be unwise for the Congress at this time, in an atmosphere of seeming haste and urgency, to enact the proposed legislation, which is designed to serve certain limited special purposes, by reason of the fact that the Commission has not yet completed and submitted to the Congress its forthcoming comprehensive report on the natural gas investigation, to which Congressman Rizley referred as Docket G-580, and also in view of the pendency before the United States Supreme Court of the very important Interstate case, on which argument is scheduled to be heard by the Court on May 1.

Before going on to discuss these matters, however, I want to point out that the Commission, in taking the position that these bills are premature, is not asserting that all of their provisions are wholly without merit. Some of them may, after mature and balanced consideration, be found to be necessary or desirable. But, until the Commission has completed its analysis of the entire range of interrelated problems encompassed by the natural gas investigation, has submitted its tentative conclusions, in accordance with the predetermined procedure, to all those interested for their criticism and comment, and has transmitted its final report and recommendations to the Congress, it is our view that an adequate basis for a sound, over-all evaluation of the various proposals contained in these bills from the standpoint of the broad public interest will be lacking.

It is not our position that the present statute is in all respects a perfect instrument. Certainly we do not assert that the Federal Power Commission has been composed of "supermen" who have never been shown by subsequent developments to have made a mistake or an

error of judgment in their efforts to administer the act in accordance with the congressional intent. On the contrary, the Natural Gas Act in its present form being only a little over 5 years old, it would be strange indeed if difficulties had not arisen in connection with the initial application and interpretation of the statute. During much of this time, too, the problems of both the Commission and the industry have been made more difficult due to their setting in wartime and reconversion conditions.

That more serious complications have not developed is a tribute to the wisdom of the Congress in framing the Natural Gas Act as it did on the basis of a very careful, deliberate, and thorough study of the proposed regulatory legislation. The Natural Gas Act was proposed as a result of the Federal Trade Commission's exhaustive survey, made pursuant to joint resolution, and was supported by resolutions of the National Association of Railroad and Utilities Commissioners. Between the introduction of the first bills-by Congressmen Rayburn in 1935 and Lea in 1936, and by Senator Wheeler in 1936-and the approval of the Natural Gas Act in 1938, as well as in connection with the extensive amendments of 1942, much of the time and thought of the Senate Committee on Interstate and Foreign Commerce, and of the corresponding committee in the House, has been devoted to this important and complicated subject. It would be unfortunate, indeed, if the substantial changes in the act represented by these bills were now hastily to be made under the pressure of alleged emergency and without mature consideration of all phases of the public interest.

As stated previously, however, the Commission is not here suggesting that all consideration of the act and its administration be avoided or killed off through indefinite postponement. If we had not recognized the existence of problems and the need for their thorough and impartial examination, it should be taken for granted that we would never have undertaken the natural-gas investigation, which has as its essential purpose this very thing for the information and assistance of the Commission and the Congress, as well as the public at large.

We seek simply an opportunity to complete our report on that investigation-a matter of a few months-and to lay the results and our recommendations as a whole before you for what they may be worth prior to your taking any action on these particular bills. We think that is a reasonable proposal to make; we fail to see how anyone can properly complain if you see fit to follow it.

NO URGENT NEED FOR HASTY ACTION

In making this suggestion we are aware that opportunists have sought to take advantage of conditions of shortage which exist, and are likely to continue for some time, within the natural-gas industry as, unfortunately, with respect to a good many other commodities and services, largely as an aftermath of the war. The Commission is fully conscious of the hardships which have been occasioned by interruptions of gas service occurring during the past winter, and of the virtual certainty of their recurrence next year, as well as of the misunderstandings concerning their causes which have been engendered. It has, as I shall show, been doing, and it will continue to do, what it can-under its rather limited powers and in cooperation with the

State regulatory commission, the pipe-line companies, and the distributors and consumers of natural gas-to alleviate these conditions. With the true facts in mind, as to both the underlying causes and the efforts of the Commission, it is nothing short of astonishing to see so many statements and news releases and so much congressional mail, trying, in some vague way or other, to lay the blame for recent naturalgas shortages on the doorstep of the Federal Power Commission through unsupported charges that by red tape and bureaucratic confusion it has prevented the natural-gas industry from properly developing and serving its markets.

Similarly, it has been alleged that through willful deviations from the law the Commission has sought to extend its jurisdiction, notwithstanding the plain intent of Congress as expressed in section 1 (b) of the act, to include the independent gas producer and perhaps even to undertake the regulation of the oil industry as wellwith the result that such producers are afraid to sell their gas in interstate commerce lest they subject themselves to Federal regulation, that gas which might otherwise be used is wasted, and that all this has something to do, too, with recent gas shortages.

This is not so. I do not deny that there has been apprehensionsome no doubt genuine and much that has been stimulated by extravagant "viewing with alarm" by those interested in securing this proposed legislation-among independent gas producers and oil producers, particularly since the decision of the circuit court of appeals in the Interstate case, to which I shall refer at greater length later. It is also true that natural gas independently produced and sold to pipe-line companies is tending, perhaps in part through the action of State agencies and particularly by reason of increased demand for pipe line and other uses, to bring higher prices in the field. It is true, furthermore, that arm's length gas purchase prices are invariably allowed by the Federal Power Commission as operating expenses in rate proceedings, and that there is no rule or policy of the Commission which prevents the payment of such reasonable field prices for independently produced gas if pipe-line companies are ready and willing to do so.

Perhaps some gas therefore is now being held in anticipation of better future prices,, just as some is being reinjected into the ground for essential use in maintaining pressures for raising oil, while large amounts are still being vented-partly, it is asserted, because recovery costs at scattered locations do not make its capture in available volumes and at present freely determined prices economically feasible, but due no doubt also to pipe and equipment shortages, as well as the inertia of established industry practices.

There is nothing whatever to indicate, however, that a lack of available gas in the fields has in any way contributed to the recent shortages. In rare instances where State proration orders might otherwise have interfered with the full utilization of pipe-line capacity to meet emergency needs, there has been notable cooperation to avoid such an unfortunate result as in the case of the Texas Railroad Commission with respect to gas going into the Big and, Little Big Inch pipe lines to help out in the Midwest and Appalachian areas last winter. Nor do plentiful reserves appear to be lacking to back up the numerous applications to construct additional pipe-line facilities which have been filed with the Commission in recent months.