In the Wall Street Journal of April 20, 1962, there was an announcement that stockholders of Consolidation Coal Co. and TruaxTraer Coal Co. had approved a merger of their companies into what will be the Nation's largest coal producer. According to this article, Mr. George H. Love, chairman of Consolidation Coal Co., explained that the midwestern coal market is more sheltered from residual fuel oil competition and that the acquisition of Truax-Traer Coal Co., a midwestern producing and marketing company, "serves to give us greater diversification in our main business."

I refer to this action by Consolidation Coal Co. and the public statement of its official because it seems to me significant that Consolidation Coal Co. would merge with Truax-Traer Coal Co., in order to enjoy a sheltered midwestern market while at the same time the largest midwestern coal company, namely, Peabody Coal Co., is here urging enactment of S. 3044 because of the vulnerability of the midwestern coal market to competing fuels.

There is one aspect of this matter, the rationale of which I find intriguing. A railroad today is prohibited from transporting commodities, such as coal

manufactured, mined, or produced by it or under its authority, or which it may own in whole or in part, or in which it may have any interest, direct or indirect.

The coal industry was largely responsible for the imposition of such restriction upon the railroads. National Coal Association is the most active and vocal opponent of the railroads' efforts to have such restriction removed. Nevertheless, we have here National Coal Association urging that in the construction of a coal pipeline the coal industry should have the Federal right of eminent domain.

Senator LAUSCHE. What was the reason for the adoption of the law that prohibits a railroad from hauling coal produced in its own mine?

Mr. LOOMIS. Senator, it goes back a long way to the early 1900's. From my reading of this, through that period and having at one time being connected with a company that had some part in it, I think the probably one of the underlying reasons was the control of the anthracite properties in Pennsylvania very heavily by a number of railroads operating out of Pennsylvania.

And whereby it was certainly charged, at least, that the railroads, through the combination of their own mining and the freight rates that they could set, froze out smaller and other producers.

I think that was one of the principal reasons for the enactment of the so-called commodities clause.

Senator LAUSCHE. When was that law passed?

Mr. LOOMIS. It became effective in 1912 and I think it was passed

Senator LAUSCHE. That is all right; when it became effective. Mr. LOOMIS. I have it here. I think it was prohibited after-it became effective May 1, 1908.

Senator LAUSCHE. It is on the books now?

Mr. LOOMIS. Yes, sir.

Senator LAUSCHE. It means that no railroad is allowed to transport coal taken out of mines, out of its own mines?

Mr. LOOMIS. That is right, it prohibits any railroad company from transporting from any State, territory, or the District of Columbia to any other State, territory, or the District of Columbia, or to any foreign country, and article or commodity, other than timber, and the manufactured products thereof, manufactured, mined, or produced by it or under its authority, or which it may own, in whole or in part, or in which it may have any interest, direct or indirect, except such articles or commodities as may be necessary and intended for its use in the conduct of its business as a common carrier.

Senator LAUSCHE. How would it transport the minerals that it mined?

Mr. LOOMIS. Pardon?

Senator LAUSCHE. How would it transport the minerals that it mines?

Mr. LOOMIS. It just could not do it. What actually happened was that most of the railroad companies disposed of their coal properties. The Lackawanna, for example, had very substantial anthracite properties in Pennsylvania.

There were also, later on, some antitrust cases in the courts.

But the Lackawanna created, if I recall correctly, the Delaware Lackawanna & Western Coal Co., and distributed the stock of the coal company to the stockholders of the D.L. & W. Railroad, so it was completely divested from the railroad, and then the D.L. & W. stockholders did whatever they pleased with it after that. That was the general method.

I think the Lehigh Valley did it approximately the same way.

Senator LAUSCHE. Assume a railroad did own a coal mine and it did want to sell its coal; could it do so by having it transported on another railroad or by truck or other mode of transportation?

Mr. LOOMIS. I suppose it could do so by truck. And the problem of another railroad, I don't think has ever arisen, and I don't know there would be another railroad in those mines.

Senator LAUSCHE. Now, then, did the National Coal Association testify here?

Mr. BAYNTON. Yes, sir.

Senator LAUSCHE. It supports this bill?

Mr. LOOMIS. I understand so; yes.

I think one of the officers of the coal companies who appeared stated he also spoke for the National Coal Association.

Mr. BAYNTON. That is right.

Senator LAUSCHE. And they oppose the repeal of the law that you just read?

Mr. LOOMIS. That is correct.

Senator LAUSCHE. In that respect you take the position that they are that it is inconsistent.

Mr. LOOMIS. Exactly.

Senator LAUSCHE. Do you favor the repeal of this law of 1908?
Mr. LOOMIS. Yes, sir.

Senator LAUSCHE. That is, you would want to be permitted to go into the coal business and handle your own coal, with your own equipment?

Mr. LOOMIS. We would.

Senator LAUSCHE. All right; proceed.

Mr. LOOMIS. We have it urging that the coal pipeline will function as a common carrier while at the same time transporting its own coal. If there is any sound reason why a railroad should not be permitted to transport coal mined or produced by it or in which it may have any interest, direct or indirect, then there is equal reason why the so-called common carrier coal slurry pipeline should likewise be prohibited from transporting coal in which it has any such proprietary interest.

So long as the railroads remain subject to the commodities clause, so certainly should any coal pipeline that acts in any capacity other than as a private carrier. If it is a private carrier it obviously should not have the Federal right of eminent domain and be thereby empowered to condemn private property for private use.

All of this discussion about whether the projected coal pipeline to the eastern seaboard will or will not be a common carrier is highly pertinent to any general consideration of the grant of the power of eminent domain.

However, under the provisions of S. 3044 it would not be necessary that such coal pipeline be a common carrier in order to obtain that right. S. 3044 simply uses the term "carrier" and defines it as meaning

any carrier of coal by pipeline that is subject to any of the provisions of this part, the operations of which have been found by the Secretary of the Interior to be required by the public convenience and necessity.

As pointed out by Chairman Murphy of the Interstate Commerce Commission in his statement before this committee, there are numerous pipelines subject to some of the provisions of part I of the Interstate Commerce Act but not subject to other provisions of that part.

Indeed, Chairman Murphy pointed out, some of the pipelines are subject merely to the requirement of filing information returns. Nevertheless, such a pipeline, of course, would fall within the definition of "carrier" as used in S. 3044. The mere fact that S. 3044 authorizes the Secretary of the Interior to find that a coal pipeline subject merely to a single provision of part I, is required by the public convenience and necessity indicates that the term "public convenience and necessity" as used in S. 3044 would not be construed to have its normal meaning; namely, descriptive of a common carrier. Chairman Murphy also called this to the attention of this committee. The Interstate Commerce Commission, through its chairman, pointed to the undesirable situation that would be created by placing in the hands of the Secretary of the Interior the power to make determinations of transportation public convenience and necessity. The Chairman of the Commission presented many sound reasons why such should not be done. We, too, believe it would be a mistake to vest any such power and authority in the Secretary of the Interior, who is not charged with any administration of our transportation laws and policies. We question the desirability of placing such aspects of transportation regulation in an arm of the executive branch rather than an arm of the Congress, in which latter body lies the power to regulate interstate commerce.

But over and beyond this, there are no provisions as to how and in what manner application would be made to the Secretary of the Interior, no provision for notice to affected parties nor opportunity for

them to be heard, no provision for the issuance of a certificate by the Secretary, no authorization for him to attach such terms and conditions as may be required to protect the public interest, no provision for appeal from or review of such finding by the Secretary of the Interior. The bill has so many weaknesses and undesirable implications that it is difficult to treat intelligently of all of them.

Mr. Chairman, that completes my statement and I appreciate having been given the opportunity to express the views of the railroad industry as a whole. I am sure those railroad witnesses who follow me will deal more in detail with some of the matters I have discussed.

Senator LAUSCHE. Senator Case ?

Senator CASE. Mr. Loomis, can you give us any figures about the economics of this integral train concept?

Mr. LOOMIS. No; I cannot, Senator Case. I am not familiar with the experiments that have been conducted.

The president of the Pennsylvania Railroad is to be a witness, and they have done some experimenting and perhaps he can give you some idea. There is this to be said about the integral train as compared with a pipeline. Of course, it can be expanded or contracted to meet whatever the requirements of the transportation may be. It is not like a pipeline, that is static and whose entire capacity can be preempted by one company.

Senator CASE. It would operate as a part of the common carrier

system.

Mr. LOOMIS. Yes, sir.

Senator CASE. To build this coal slurry pipeline, how much land would have to be condemned, do you estimate?

Mr. LOOMIS. I really do not know, Senator. It would only be a very rough guess and I just don't know.

Senator CASE. Do you have any estimate or any knowledge as to who owns the land that would be taken, would have to be taken by it? Mr. LOOMIS. No; I have not yet seen any direct plans. Of course there would be thousands of owners.

Senator CASE. The general facts are, so far, as I understand, only in the State of Delaware is this required, is that right?

Do State laws exist for this sort of thing in other States?
Mr. LOOMIS. The only one I know of is West Virginia.

Senator CASE. I think there is a law in New Jersey now, which is in existence. I may be wrong about that.

Mr. LOOMIS. I think that is wrong, Senator. There is an active fight in the State of New Jersey, at the present time.

Senator CASE. I know the matter is again before the legislature. I thought the issue was whether an existing law should be repealed

or not.

Mr. LOOMIS. No, the coal company is trying to get a law that would give them the right of eminent domain.

Just a minute; I am told, Senator, that I am mistaken about New Jersey, that it is the other way around, you are correct.

Senator CASE. Yes. So it is Delaware, so far as I know.

Mr. LOOMIS. And Maryland also, I believe.

Senator CASE. I have no further questions.

Senator LAUSCHE. Mr. Loomis, No. 1, the gas suppliers do have the right of eminent domain, is that correct?

Mr. LOOMIS. That is correct.

Senator LAUSCHE. And your position that that power

Mr. LOOMIS. As certificated by the Federal Power Commission, of

course.

Senator LAUSCHE. Yes. Your position is that that power of eminent domain was given because of the nature of the gas that had to be transported, and because the ultimate sale of the gas to the public was regulated?

Mr. LOOMIS. That is correct; it was fully and completely regulated. Senator LAUSCHE. Now going to the oil pipelines, do they have the power of eminent domain?

Mr. LOOMIS. No; except, they may have in States, but there is no Federal right.

Senator LAUSCHE. Is the sale of oil, after it has reached its terminal, subject to regulation by any Federal body?

Mr. LOOMIS. My impression is it is not, Senator, but I cannot answer with certainty.

Senator LAUSCHE. Is it, Mr. Baynton?

Mr. BAYNTON. No sir.

Senator LAUSCHE. Now your position is that the sale of coal and its price ultimately is not regulated, as is the sale of gas? Mr. LOOMIS. That is right.

Senator LAUSCHE. And you differentiated the two situations because of these several thoughts that I have just expressed? Mr. LOOMIS. Yes, sir.

In the case of gas you have comprehensive regulation of an industry as such by the Federal Government and with the Federal Power of eminent domain.

In the case of oil, you do not have the Federal power of eminent domain.

Senator LAUSCHE. Do railroads have the power of eminent domain, Federal power?

Mr. LOOMIS. Generally speaking, no. There were some instances in the early days of railroad building.

I think in the transcontinental lines, where there were special rights given such as to go through an Indian reservation or something. But as a broad question, the railroads have never had the Federal power of eminent domain.

Senator LAUSCHE. Let's get the record clear then.

Railroads, oil lines, truck lines, air lines, do not have the power of, the Federal power of eminent domain?

Mr. LOOMIS. No Federal power.

Senator LAUSCHE. Which, other than gaslines, do have the power? Mr. LOOMIS. I believe electric utilities have a form of eminent domain rights, principally, I understand, for reservoir lands, in connection with a licensed hydro project.

Senator LAUSCHE. Then there is no business engaged in what I understand to be general public utility that has the Federal power of eminent domain generally except gaslines?

Mr. LOOMIS. That is correct.

I have the statement of the president of the Louisville & Nashville Railroad, which we would like to have included in the record. Senator LAUSCHE. Without objection, it will be done.