actly what Mr. Doherty in his statement indicated that companies will do if his amendment shall be adopted. The purpose of the provision is to prevent companies from contending that by the passage of Federal legislation State commissions have been deprived of the power to inquire into the true depreciation of utility properties for the service of which the State commissions are fixing rates. A given utility property may be used partly in interstate and partly in intrastate service. In any rate case, whether before a Federal or a State tribunal the Commission fixing the rates involved must have the power to determine the extent of depreciation actually involved. It was only by determining the actual depreciation accruing in the Chicago Telephone case that the Illinois Commission was enabled to make the reduction in rates which was sustained by the United States Supreme Court in Lindheimer v. Illinois Bell Telephone Company (292 U. S. 150). In that case the telephone company accounted for its excessive depreciation in accordance with an accounting order fixed by the Interstate Commerce Commission, but the actual depreciation incurred was greatly less than the amount claimed. And in that case the United States Supreme Court sustained the order of the Commission. Yours very truly, JOHN E. BENTON, WASHINGTON GAS LIGHT CO., Washington, D. C., March 29, 1937. DEAR CONGRESSMAN LEA: There has been introduced by you and is pending before the Interstate and Foreign Commerce Committee (H. R. 4008) a bill "To regulate the transportation and sale of natural gas in interstate commerce, and for other purposes." It is our understanding that the purpose of this bill is to regulate those natural-gas companies now unregulated who are in the business of transporting and selling natural gas for ultimate distribution to the public. This company is not concerned with the policy of the bill nor its merits. It does desire, however, to point out a possible result affecting this company which undoubtedly was not intended by the framers of the bill. The Washington Gas Light Co. manufactures gas and it purchases from a natural-gas company; namely, the Atlantic Seaboard Corporation, natural gas which it uses in conjunction with the manufactured gas and which combined product is retailed to consumers in the District of Columbia. There is, however, a territory adjacent to the District of Columbia in both Maryland and Virginia, such as Chevy Chase, Md., Rockville, Rosslyn, Aanacostia, and Alexandria, where consumers use gas. To meet this demand, Maryland and Virginia retail utilities companies purchase at wholesale, gas from the Washington Gas Light Co., and retail to such consumers. It would seem, therefore, that the definition of “natural-gas company" as set forth in section 2, paragraph (5) on page 3, lines 1 to 4, of the bill reading “(5) 'Natural-gas company' means a person engaged in the transportation of natural gas in interstate commerce, or the sale of such gas for resale to the public whether or not such gas is mixed with artificial gas." would bring the Washington Gas Light Co. within the category of a naturalgas company where in fact it is merely a purchaser of natural gas for use in manufacturing its own product for sale, the natural gas comprising but approximately one-third of the product, except approximately 1.4 percent of natural gas which is sold from its own pipe line to the Washington Suburban Gas Co., serving Hyattsville and adjoining towns, which gas is used in conjunction with the manufactured gas of the latter company for retail sale. It should be borne in mind that the Washington Gas Light Co. operates under charter powers granted by acts of Congress and is under the close supervision of a regulatory body created by Congress, the Public Utilities Commission of the District of Columbia. The powers granted to the Commission and the duty placed upon it by law with respect to rates and charges, schedules, valuation, discrimination, accounts, records, hearings, rates of depreciation, complaints, investigations, etc., are parallel to those enumerated in the proposed bill and in some instances are broader and more exact. (See section 8 of the act approved March 4, 1913, as amended, 37 U. S. Stats., p. 974.) Therefore, if the proposed bill should become law in its present form it would result in this company being under the jurisdiction of two different Federal supervisory authorities with substantially the same powers, resulting in possible conflicts and possible heavy burdens on the company. It is hoped that since it is apparently not the intention of the bill to create such a situation that the definition may be so amended as to eliminate any question. In this connection, it is suggested that the following amendment be made: (5) “Natural-gas company” means a person engaged in the transportation of natural gas in interstate commerce or the sale in interstate commerce of such gas or a mixture of such gas and artificial gas for resale to the public (whether or not such gas is mixed with artificial gas) except that this term does not mean a “gas utility company.” (6) A "gas utility company" means any person who owns or operates facilities used for the production, manufacture, transmission, or distribution of natural gas or a mixture of natural and artificial gas and whose principal business is the supplying of services directly to the public for light, heat, or power and such person is subject to the jurisdiction of a State commission' although a part of such gas may be sold to any other person for resale provided the principal business of such other person is the supplying of services directly to the public for light, heat, or power, and such person is subject to the jurisdiction of a State commission. Changing the numbering of the present paragraphs (6), (7), and (8) to (7), (8), and (9) respectively. The words in italics in (5) are new-the words in parentheses are to be eliminated, all of (6) being new. Very truly yours, Hon. CLARENCE F. LEA, House of Representatives, Washington, D. C. DARCY L. SPERRY, President. CITY OF PORTSMOUTH, Portsmouth, Ohio, March 27, 1937. COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, House of Representatives, Washington, D. C'. GENTLEMEN: When I appeared before your honorable body on March 18, 1937, in support of H. R. 4008, which was referred to your joint committee, I requested permission to file with your committee a written report of matters that I discussed on that day. This permission was granted, and I am forwarding to you a brief outline of the conditions existing in Portsmouth, Ohio, and involving the question of interstate commerce in gas. In the year of 1932, the city of Portsmouth passed a rate ordinance, fixing the rates to be charged for gas distributed in the city of Portsmouth at 45 cents per thousand, gross, or 40 cents net. The net price was the price which the consumer would pay if bills were paid within a certain time. The Portsmouth Gas Co. appealed from said ordinance to the Utilities Commission of Ohio. The Portsmouth Gas Co. purchases its gas from the United Fuel Gas Co. under a written contract, paying therefor 37 cents per thousand cubic feet. The United Fuel Gas Co. crosses the Ohio River a short distance east of Portsmouth and again at Portsmouth and claims to be exempt from the jurisdiction of the Ohio Utilities Commission by reason of distributing an interstate commodity from West Virginia and Kentucky into Ohio. This gate rate charge of 37 cents forces the city of Portsmouth to pay to the Portsmouth Gas Co. 85 cents for the first thousand cubic feet of gas and 60 cents for the remainder of gas distributed. Both of these figures are subject to a 5-cent discount if paid within a certain specified time. Later we had passed by the Legislature of Ohio legislation placing all gas companies supplying natural gas to other gas companies for distribution under the jurisdiction of the Utilities Commission of Ohio. The Utilities Commission of Ohio, under authority given by this legislation, ordered the United Fuel Gas Co. to show the reasonableness of its gate rate at the city of Portsmouth. From this decision the United Fuel Gas Co. appealed to the United States district 1 The bill defines "State commission" to mean "the regulatory body of the State or municipality having jurisdiction to regulate rates and charges for the sale of natural gas to consumers within the State or municipality." court, where it is now pending, on the question of jurisdiction of the Ohio Utilities Commission over companies claiming to be engaged only in interstate commerce. The United Fuel Gas Co. distributes to the city of New Boston, which is surrounded by Portsmouth, charging for gas 40 cents per thousand cubic feet. They also distribute at Ironton, 35 miles east, at the same rate, and distribute to cities across the Ohio River-Huntington, Ashland, and Russell—at a rate of 29 or 30 cents. When the Columbus (Ohio) rate case was heard, the cost of gas at the Ohio River was fixed from 18 to 24 cents per thousand. They obtained jurisdiction over these companies by reason of them being associated with distributing companies and were not dealing at arm's length. Our present Federal laws exclude pipe lines engaged in interstate commerce carrying gas from the jurisdiction of the Interstate Commerce Commission. This is made specific in legislation or laws governing other utilities engaged in interstate commerce, and if they are not within the jurisdiction of State laws through which they operate, they are not subject to any regulation, either State or National. It is for these reasons that we are heartily in favor of the passage of bill H. R. 4008. Our objection to (c) of section 7 of this bill was due to the fact that naturalgas companies already established and operating in a certain community could go before the Interstate Commerce Commission in an attempt to keep out any other pipe line when it attempted to secure a certificate of necessity, require the political subdivision that it was serving to engage in what would practically be a rate case before the Commission. This would involve a great deal of time and much delay in securing gas from other companies, and in a measure would eliminate competition. However, we are very much in need of this bill and will not interpose any further objections, leaving the matter to the good judgment of your committee, and hopeful that the bill will be reported out favorably and passed as soon as possible by Congress. Thanking you for your consideration when I appeared before the committee, and hoping that this communication explains our position in this matter, I am, Yours respectfully, W. L. DICKEY, Director of Law. STATEMENT OF HON. EUGENE I. VAN ANTWERP, MEMBER OF THE COMMON COUNCIL OF THE CITY OF DETROIT AND OF THE CITIES ALLIANCE Mr. Chairman and gentlemen, I concur in the statements made by the mayor of Cleveland, Mr. Burton, my colleague, Mr. Smith, and the other city officials, who for years have been endeavoring to secure Federal legislation to correct the abuse of pipe-line monopolists. The staggering difference in gate rates for natural gas in the country plainly indicates that the only solution to the consuming public is through Federal legislation. We favor, of course, the Lee bill with amendments submitted by the Cities' Alliance. These amendments have the approval of the Federal Trade Commission and the Federal Power Commission. We earnestly trust this committee will promptly and favorably report out this bill, so that the local communities, their local representatives, may have the protection that this great industry needs. EUGENE I. VAN ANTWERP. STATE OF NEW YORK DEPARTMENT OF PUBLIC SERVICE, Hon. CLARENCE F. LEA, Chairman, Interstate and Foreign Commerce Committee, House of Representatives, Washington, D. Ơ. DEAR MR. CHAIRMAN: Enclosed you will please find a copy of the amendments we suggest should be made to H. R. 4008. I have tried to limit the changes to essential points. I am thoroughly convinced that any attempt to mix Federal and State functions is unwise and will only lead to litigation and confusion. The Federal Commission and the State commissions should stay in their respective spheres. Page 2, line 4: After the word "transportation", insert “and sale”. Page 2, lines 4 and 5: Omit the words "to the sale of such natural gas for resale to the public". Page 3, line 2: After the word “transportation”, insert “and sale”. Page 3, line 3: Omit the words "or the sale of such gas for resale to the public". Comment. The purpose of these amendments is to provide that this bill relates to interstate commerce in the transportation and sale of natural gas. There are instances where interstate commerce would not include under the interpretations given to that term by the courts, the resale of gas to the public. This bill should not undertake to confer upon any Federal department power which is not conferred upon the Federal Government by the Constitution. Interstate commerce is not synonymous with the sale of gas at wholesale as pointed out by Mr. Hunt in the case of the Syracuse Lighting Co., and there should be no attempt to give the Federal Power Commission control over such business. The language suggested is clearly authorized by the Federal Constitution and the decisions of the courts. Page 6, line 17: Change "five" to "twelve”. Comment.-A 12-month period may prove to be too short in the case of a long system; 5 months is certainly inadequate. Page 7, line 20: Omit "(a)". Page 8, lines 8-14: Omit entire paragraph. Comment. This is clearly an attempt to confer upon a Federal department power to do certain things over which the Federal Government has been given no authority whatever by the Federal Constitution. There should be no mixture of power and responsibilities. The theory of the Federal Constitution is clear. It provides that the regulation of interstate commerce is a Federal function and that the regulation of intrastate commerce is a State function. Why attempt to provide even for investigations by one authority into the field reserved for the other? This paragraph will promote litigation, but it will not aid in efficient regulation. Page 8, line 17: After the word "property", insert "used and useful in whole or in part in interstate commerce". Page 8, line 24: After the word "property" insert "used and useful in whole or in part in interstate commerce". Page 8, line 26: After the word "construction", insert "of such property". Comment. The purpose of these suggested changes is to clearly give the Federal Power Commission jurisdiction over matters relating to property which is involved in interstate commerce over which the Federal Government has jurisdiction. It does not attempt to confer upon the Federal Commission powers or functions in relation to property which is used exclusively in intrastate commerce. The act as it now reads covers all property whether used in interstate commerce or in intrastate commerce. As in the case of the preceding section, there is an attempt to confer authority which the Congress has no power to confer; and the suggested words cover all property relating to interstate commerce. Page 9, line 6: After the word "facilities", insert "used in interstate commerce". Page 9, line 6: Change "its" to "such". Page 9, lines 9 and 10: Change "its" to "such". Comment. This section as it now reads also confers power upon a Federal department which the Congress has no power to confer. The proposed changes clearly limit the powers of the Commission to facilities used in interstate commerce, and the department should have no powers over the facilities not used in interstate commerce. Page 9, line 20: After the word "abandon", insert "service to any of its customers without the consent of such customer useless". Page 9, lines 20-23: Omit the words "all or any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without". Page 9, line 20: Insert, after the word "commission", "shall". Page 9, line 24: Change "had and" to "have been". Comment. This paragraph as drawn is entirely too broad and impracticable. If a company were using à compressor in aid of transporting gas from one State to another, it could not abandon such station, although providing another at a different point without the consent of the Federal Power Commission. A length of pipe similarly could not be abandoned without such approval. Indeed, the language is so broad that the ordinary things which are done almost daily by public utilities could not be done until approval had been obtained. Further, there is no public purpose which would be served by such restriction of ordinary procedure. The important thing is that service shall not be abandoned without approval of the commission having jurisdiction, and the proposed amendment protects the consumer and the public in this regard, leaving the companies free to conduct such details of their business as do not interfere with service. Page 10, lines 6, 10, 15, and 16: Substitute for the word "market", the words "local area". Page 10, line 17: Omit "market". Comment. The word "market" is new to the terminology of regulation. It is indefinite and there is seldom if ever such a thing as a "market" in the natural gas business. "Local area" is a more common term and more easily under stood. Page 11, lines 15-18: Omit "The Commission, after notice and opportunity for hearing, may determine by order the accounts in which particular outlays or receipts shall be entered, charged, or credited." Page 11, lines 20-22: Omit "and the Commission may suspend a charge or credit pending submission of satisfactory proof in support thereof." Comment. The bill again attempts in this section to confer authority upon a Federal commission which the Congress has no power to confer. Further, it will produce inevitable conflict between the Federal Power Commission and State commissioners. In the interest of effective regulation and harmony, the words given above should be stricken from the bill. Page 12, line 25: "and" should be changed to "or." Page 13, line 4: "and" should be changed to "or." Comment. The bill provides for depreciation and amortization. Both are not necessary. If adequate provision is made for depreciation, there does not need to be provision for amortization. In order to keep a company in sound financial condition, provision should be made for depreciation in all its forms or provision should be made for the amortization of the securities outstanding, but it is not necessary to provide a depreciation reserve for the property and also to amortize the securities outstanding. If the bill remains as it is, it will give an excuse for the companies to claim that they may maintain depreciation and amortization reserves. If there is any objection to the change of "and" to "or", the phrase "and amortization" should be stricken from the bill. As stated by Mr. Justice Hughes in a recent opinion, depreciation covers the loss in worth or value (not restored by current repairs) which is due to all causes such as wear and tear, decay, obsolescence, changes in the art and public requirements. Depreciation covers depletion of gas wells and there is in essence no difference between the extraction of gas from a well and the using up of the capacity for rendering service in anything. Page 12, line 25: After the word "accounts", insert "for their property used in interstate commerce". Comment.--The purpose of this change is to limit the powers of the Commission on to the property used in interstate commerce. The act is so broad as to cover all property and the Commission cannot have any jurisdiction over property used entirely in intrastate commerce. Page 13, lines 7-9: Omit the words "Each natural-gas company shall conform its depreciation and amortization accounts to the rates so ascertained, determined, and fixed." Page 13, line 10: After the word "commission", insert "and not subject to the jurisdiction of any State commission". Comment. The purpose of these changes is to eliminate conflict between the Federal Power Commission and the State commissions. As the bill now reads. jurisdiction has been given to the Federal commission over accounting and depreciation charges which relate to property used in intrastate commerce even though exclusively so used. Of course, the Congress has no power to make such a grant to a Federal commission and it should not undertake to exercise any power that it does not have. If the law remains as it is, there will certainly be litiga |