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[S. 3044, 87th Cong., 2d sess.) A BILL To amend the Interstate Commerce Act to grant to any carrier of coal by pipeline,

subject to any of the provisions of part 1 of the Act, the right of eminent domain, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That part 1 of the Interstate Commerce Act, as amended, is hereby amended by adding at the end thereof section 27, as follows:

“SEC. 27. (a) The term 'carrier' as used in this section means 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.

“(b) When any such carrier 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 any existing or proposed pipeline or pipelines and the necessary land or other property, in addition to right-of-way, for the location of pumping stations, pressure apparatus, tanks, or other stations, equipment, or appurtenances necessary to the proper operation of such pipeline or pipelines, 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 to the Federal Rules of Civil Procedure : Provided, That the United States district court shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $10,000.".



THE WHITE HOUSE, March 20, 1962. DEAR MR. PRESIDENT: I am transmitting for the consideration of the Congress a draft bill to facilitate the construction of pipelines to transport coal slurry in interstate commerce. The proposed legislation grants the right of eminent domain to the builders of any carrier of coal by pipeline which is subject to any of the provisions of part I of the Interstate Commerce Act and which the Secretary of the Interior has found to be required by public convenience and necessity.

The coal resources of our Nation constitute one of our greatest assets. They launched our industrial development and they provide a great reservoir of energy. They can be a stimulus to our economic growth.

In recent years, however, many of our coal mine communities have suffered from reduced operations flowing from the decline in coal consumption. This new method of transportation offers possibilities for renewed vigor and hope for increased economic strength for the coal industry. If costs can be lowered in this fashion, all segments of the economy will benefit.

I understand that plans have already been made for a pipeline that will carry coal from the West Virginia coal fields to the eastern seaboard. However, unless a right-of-way can be obtained, these plans will be postponed and may ultimately have to be discontinued. The legislation will permit the prompt implementation of those plans.

Pipeline transportation of coal may also play an important role in the economics of areas other than W Virginia. It is being studied in the Rocky Mountain region for use in west coast markets. Already coal is being transported by a 100-mile long pipeline in Ohio. The technical problems are being overcome; the economics of operation are known; private enterprise stands ready to invest the necessary capital. The power to acquire the right-of-way is needed. This legislation will grant to the carrier of coal by pipeline the same privilege of eminent domain that the carrier of natural gas already has. I urge that favorable and prompt consideration be given to this legislation. Sincerely,


Senator YARBOROUGH. Also for the record, a report from the Comptroller General, who, while he finds no objection to the bill, suggests, along with some technical changes, the determination whether public convenience and necessity exists be by the ICC rather than the Secretary of the Interior.


Washington, April 18, 1962. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate.

DEAR MR. CHAIRMAN: We again refer to your letter of March 23, 1962, in which you asked for our comments on S. 3044.

This bill, which you introduced at the request of the President of the United States, proposes to add to part I of the Interstate Commerce Act paragraphs (a) and (b) of section 27 granting the right of eminent domain to carriers of coal in interstate commerce by pipeline. We note that similar specific rights are possessed by pipeline carriers of natural and artificial gas under the Natural Gas Act, 15 U.S.C. 717f (h), and by licensees under the Federal Power Act, 16 U.S.C. 814. This proposal, if enacted would not affect the functions and operations of our Office and we have no objections to its favorable consideration by your committee. However unless the proposed paragraphs contained in S. 3044 are redesignated it may be appropriate to change the numbers of the present section 27 the short-title provision to section 28. Also it would seem desirable to reserve the authority to determine whether public convenience and necessity exist to the Interstate Commerce Commission rather than the Secretary of the Interior in order to associate such authority with that which the Commission already possesses concerning other carriers of coal and to maintain uniformity in regulatory procedures. Sincerely yours,


Comptroller General of the United States. The Secretary of the Interior had planned to be the first witness, but other engagements have detained him, so I believe we will hear first from the Interstate Commerce Commission.

Senator Magnuson planned to open these hearings, but he is at the White House with the President. The chairman of the full committee will arrive later this morning. We will proceed with the witnesses until he arrives.

The first witness will be Mr. Rupert L. Murphy, Chairman of the Interstate Commerce Commission.

Mr. Murphy, I think this is quite a unique measure for the ICC to be the lead-off witness on, and I am reminded that this year is the 75th or diamond anniversary of the creation of the ICC and that it was created by a bill sponsored by one of my predecessors from Texas, Senator John H. Ray. I doubt that he, even with his vision or foresight, thought at that time of this type of operation, though, as has been pointed out earlier, the patent had been applied for and an actual working model set up in Chicago in 1893 for such a pipeline.



Mr. MURPHY. Thank you, Mr. Chairman. May I introduce those who are attending with me. Commissioner Goff, of Idaho; Mr. Jim Murray, Deputy General Counsel; Edward Margolin, Director of our Bureau of Transport Economics and Statistics.

Senator YARBOROUGH. Wouldn't you like for them to sit at the table with you?

Mr. MURPHY. I don't think it is necessary. Hiram Spicer, our legislative counsel, and Dale Hardin, liaison officer.

Mr. Chairman, and members of the committee, my name is Rupert L. Murphy. I am the present Chairman of the Interstate Commerce Commission, and have served in that capacity since January 1 of this year. I am appearing today on the Commission's behalf to testify on S. 3044.

This proposed measure would confer the right of eminent domain upon any carrier of coal by pipeline which is subject to any of the provisions of part I of the Interstate Commerce Act if its operations have been found by the Secretary of the Interior to be required by the public convenience and necessity. This right could be exercised in either a Federal or State court where the amount claimed by the owner of the property to be condemned exceeds $10,000. Otherwise, the action could be maintained only in a State court.

The Commission's jurisdiction over pipelines dates back to 1906 when section 1 of the act was amended to give it certain regulatory authority over pipelines, other than those transporting natural or artificial gas or water. The


of these amendments was to break up the practice of the large pipeline-owning oil companies who, by refusing to allow others to use their pipelines, compelled other producers to sell their oil to them.

The extent to which pipelines are subject to the provisions of the Interstate Commerce Act has been before the courts in a number of cases. These decisions are discussed in some detail in our written report to the committee on this bill, and I shall not, therefore, take up the committee's time to go into them here. I believe, however, that the committee will find them and other matters discussed in our report helpful in its consideration of this proposed measure, and I therefore request that the report be made a part of the record in these hearings, if permissible, Mr. Chairman.

Senator YARBOROUGH. Without objection it is so ordered.

A right of eminent domain now exists under several Federal statutes. The Natural Gas Act, 15 U.S.C.A. 717f(h), for example, confers upon persons who have obtained from the Federal Power Commission a certificate of public convenience and necessity the power of eminent domain to be exercised in Federal courts where the value of the property as claimed by the owner exceeds $3,000. Under the Natural Gas Act the Federal Power Commission regulates not only the movement but also the contract of sale. It is our understanding that typically, a natural gas company enters into a long-term contract to furnish gas to a distributor and the entire contract as well as the means of carrying it out are within the control of the Federal Power Commission. While these natural gas companies are not public utilities in the usual sense, they primarily serve public utilities and are an essential element of the public utilities they do serve. Where these gas companies serve other than public utilities, the regulation of that activity is apparently believed necessary for the protection of the public utilities.

The grant of eminent domain under the Natural Gas Act has been upheld in the courts. A leading case is Thatcher v. Tennessee Gas Transmission Co., 180 F. 2d 644, certiorari denied, 340 U.S. 829. In the course of its opinion, the court referred to the fact that provision was made for the issuance of certificates of public convenience and necessity and on the question of power, stated:

As a court we are called upon to determine only whether the legislative act in question is constitutionally proper as a regulation of interstate commerce, the wisdom of the exercise of such power, if constitutional, being a matter committed solely to the legislative branch of the Government.

The power of eminent domain also has been conferred by the Federal Water Power Act, 16 U.S.C.A. 814, upon persons who have obtained from a commission created for that purpose, a license to build a

a dam across a navigable stream. This right is needed to acquire land that will be flooded by the dam. This grant of power has been upheld. In State of Missouri v. Union Electric Light & Power Co., 42 F. 2d 692 (1930), the Court among other things had this to say:

It is not within the judicial power to question the purpose for which property is to be taken under the power of eminent domain. The necessity for the taking is not a judicial question, but is exclusively within the power of Congress and one which it may determine by direct enactment or by delegating the power to some other officer or board.

Attention is invited to the fact that under both of the above-mentioned statutes, a determination is required to be made by an administrative agency that the particular project is in the public interest, and the right of eminent domain does not exist without such a determination and certification. Under the Interstate Commerce Act, however, there is no requirement, whatever, that a person obtain a certificate, permit, or license before building and operating a pipeline or for the abandonment of service. Section 1(18)-(21), providing for the issuance of certificates of public convenience and necessity for construction and abandonment applies only to railroads. Common carrier for-hire pipelines subject to the Interstate Commerce Act are subject to the rates and service requirements of the act, and to the reporting and accounting requirements after the line is constructed. Many pipelines nominally subject to the act, however, are subject only to reporting requirements. Neither type of pipeline is required to obtain permission of any kind before abandoning service.

We are not aware of any general Federal statute which confers the right of eminent domain upon common carrier railroads. It appears that railroads have, generally, functioned under State statutes.

Under the provisions of S. 3044 the right of eminent domain would be granted to the operators of coal pipelines subject to any of the

provisions of part I of the act upon a finding by the Secretary of the Interior that the operations of such a pipeline are required by the public convenience and necessity. The words "public convenience and necessity," as used in sections 1(18), 207(a), and 309(c) of the act are technical words relating to the granting of common carrier operating authority to rail, motor, and water carriers, respectively. We have some doubt that the words “public convenience and necessity” as used in line 2, page 2, of S. 3044 are intended to have the same technical application.

In its context in the Interstate Commerce Act, the phrase "public convenience and necessity” relates strictly to a regulatory function, running to the service proposed to be instituted by a carrier, rather than to the taking by a carrier of land for use in the conduct of its business, which business may be affected with a public interest. These activities are separate and distinct, one involving a regulatory function and the other being more in the nature of an administrative function. We would, therefore, be opposed to vesting a regulatory function, such as the granting of operating rights, in an executive department, such as the Department of the Interior. We do not, however, see any objection to vesting in an executive department the authority to make a determination as to whether the taking of property, as contemplated under the concept of the right of eminent domain, is for a public purpose.

If, on the other hand, it is the intent of the drafters of the bill that a finding of “public convenience and necessity” is to be required in the regulatory sense, we believe that this would give rise to a number of questions. For example, would a private carrier be eligible for a certificate of “public convenience and necessity” when transporting for itself? Or could a private carrier obtain a certificate of “public convenience and necessity” only when it is providing service to a public utility! Or could only common carriers be certificated by the Secretary of the Interior upon making the necessary finding? It appears that under the Natural Gas Act, a natural gas company transporting gas for itself, which is essentially private carriage, but which in so doing services a public utility, may obtain a certificate of public convenience and necessity from the Federal Power Commission and with it authority to exercise the right of eminent domain. Under the Interstate Commerce Act, certificates of public convenience and necessity may not be granted to private carriers, as such. Therefore, to provide for the granting of such authority to a private carrier of coal by pipeline subject to the act, which appears to be altogether possible under the provisions of the bill, would introduce a wholly new concept into the regulatory scheme of the Interstate Commerce Act. A further question would arise as to whether other carriers by pipeline subject to part 1 of the act should not also be certificated, thus enabling them to exercise the right of eminent domain. There are, of course, other questions involved, such as providing for "grandfather rights,” provisions for holding hearings where an application may be contested, and the related question of whether such carriers should be required to file an application showing, as a condition to the proposed abandonment of operation, that the present or future “public convenience and necessity” permit such abandonment.

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