That is the existing law, and, of course, fields deplete and go down and it is necessary to pull up that pipe and put it to a more productive field and that can be done without the legal expenses and the matter of making a Federal case out of it. Mr. MURPHY. Yes, sir, but one of the reasons we mention that, Senator, is this: That if you certificate the coal slurry movement you do have to give some thought as to whether they can be in service today and abandon it tomorrow at will because once you are in this, it ties in with other types of fuel being furnished. I think the public will need some assurance that they can depend on the service being made on a permanent basis rather than being confronted with the possibility that it can just be suspended at will. Senator MONRONEY. I agree, and that is fine, on the coal bill, if they are going to be billed, I have no quarrel with that. The only thing I do not wish to see is this be a precedent or to come in the back door and regulate every 10-mile pipeline that is built to connect with a new oil or gas field, gathering lines and all the other networks. My State is interlaced about every 10 miles with pipelines. You would have to relocate some oil pipeline, and to put all of that into the ICC for regulation or for abandonment or for construction and in addition would create a morass of regulatory proceedings that would probably delay the production of oil from a new field by 3 or 4 or 10 years. You do grant, under the Natural Gas Act, power of eminent domain in interstate commerce, because of the utility connection at the other end, as I understand it, and that would require another kind of law and another kind of approach to the abandonment or to the rates that are charged. What I am talking about is the gathering lines and the distribution lines that move oil from the fields to the markets located near the refineries, and you are cautioning us, as I understand it, in your testimony here, that this might be a precedent for expanding this to other types of pipelines. Is that correct? Mr. MURPHY. I will have to answer this way. What we have tried to do here, Senator, is raise all the questions and give the different ways these have been answered by court cases, in order to be of help to the committee. We have made no specific recommendations. In fact, we say it is a broad congressional policy matter and that we are not taking any specific position on it. We do raise the different questions which we think we will be confronted with and which the Congress would want to know about and try to straighten out before it becomes a law. Senator MONRONEY. You say again on the bottom of page 4: 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. Mr. MURPHY. That is right. Senator MONRONEY. That is correct, isn't it? Senator MONRONEY. Neither are they required to get a certificate of convenience and necessity for the construction of the line; is that correct? Mr. MURPHY. That is correct. Senator MONRONEY. Excepting in the interstate transportation of gas where the utility is a user at the other end, I think they do have to have a permit then? Mr. MURPHY. I mentioned two different acts, one is dealing with the natural gas and the other deals with the establishment of dams where you have to get certificates. But you do not, on the oil pipelines do not have to have certificates to go into operation. Senator MONRONEY. But this act, the Coal Act deals with interstate commerce, but its application, because of the expansion of the commerce clause, could put Federal control under the Coal Act or under oil and gas pipelines even though it were intrastate under the Interstate Commerce Act, could it not, if they are connected at Mr. MURPHY. I would say, yes, if it interfered with the orderly regulation and control of the interstate movements, yes, sir. Senator MONRONEY. Well, most of this oil is consumed in other States from where it is produced, and a whole network might be intrastate but it would have an interstate connection; therefore, under the normal holding of the commerce clause a purely local pipeline corporation that connects with an interstate major pipeline would be a part of interstate commerce, would it not? Mr. MURPHY. If it was a joint haul; yes, sir, but strictly an intrastate movement you have an entirely different question. Senator MONRONEY. Doesn't it depend on where the goods come to rest? If they do not come to rest within the State and they are moved across the State line by a larger pipeline to an Eastern market it would still bring them under the commerce clause, would it not? Mr. MURPHY. Yes, sir; you would have a joint movement there and I think it is not only a question of where it comes to rest but you also must consider the intent at the time the movement gets underway. Senator MONRONEY. If there is no market for the oil within the State then it must find its market in the centers of population which rarely produce the basic energy sources that are supplied by oil and gas? Mr. MURPHY. Well, my answer would have to be yes on that. It would be an interstate movement, a joint movement by two or more pipelines, or it could be an interstate by an individual or single pipeline. Senator MONRONEY. In other words, there could be a precedent here unless the committee is cognizant of it that in the drafting of the bill there could be some danger of its expansion merely because of the inclusion of this clause of eminent domain in the Coal Slurry Act; is that correct? Mr. MURPHY. We thought we had better raise the question, sir. Senator MONRONEY. I think you have done a good public service in raising it. Mr. MURPHY. I don't want to get myself in a position of trying to place myself in your position. The CHAIRMAN. I would not, because thousands of lawyers might be out of a job if you do that. [Laughter.] Senator MONRONEY. That's all I have, Mr. Chairman. Senator YARBOROUGH. The Senator from Wyoming. Senator MCGEE. To further carry this parallel along for the record, is there anything in the character of the slurried coal process that would foreclose its assuming the characteristics of gas or of the other regulated power sources that we have at the present time? In other words, there was talk here by the Senator from Ohio about converting this into some other kind of control, inquiring questions seeking information. There has been the suggestion that maybe if this had the characteristics of serving many kinds of outlets at one end and serving several kinds of coal producers at the inlet that it would change the picture of the rights being proposed in this bill. Is there anything in the character of slurried coal that would prevent this flexibility in its development? Mr. MURPHY. Senator, I think there are several things you would have to consider in answering that. (1) I assume that you do have to have a very substantial water supply available to initiate this type services as to its flexibility and the type construction and operation I am not in a position to speak on that. I don't know to what extent it could expand and serve more than a few centralized or large consumers. That's something that I am not in a position to say. Senator MCGEE. If we are going to address ourselves to this question and whether this is the only alternative before us that will have to be determined by those in a position to comment on it, whether this can be any more than a bilateral arrangement between a producer and one consumer because of the mechanical limitations or whether the possibility of gathering this for a widespread service at the end, this would have to be clearly determined, you see? Mr. MURPHY. Yes, sir. Senator CASE. Would the Senator yield? Senator McGEE. Yes. Senator CASE. Can the coal that is carried here be stored or does it have to be burned immediately upon its arrival or close to it? Mr. MURPHY. Senator, I am not a technical man in that field and I was going to respond that I believe the pipeline people would be the better ones to answer that question. Senator CASE. Have there been any studies made of the economics and the technical side of this which is available and helpful here? Mr. MURPHY. No, sir; we gave the committee the benefit of what studies and information we had with respect to rates and movements of traffic and what we could prepare in a short time, but we have made no such study. Senator CASE. Thank you. Senator MCGEE. What about your rate studies? For example, under existing circumstances, the railroads carry a great deal of coal at the present time. Would the introduction of this slurried coal conveyance system point up new complications for you in rate cases? Mr. MURPHY. Yes, sir; I think it would definitely raise questions concerning the rates of the rail carriers. Senator MCGEE. The real point of the question is, you expect to have your difficulties, that's why you are in existence. Would this defy a rational assessment of rate structure? Is there anything in it that would be dangerous to your present rate practice? Mr. MURPHY. Well, it's a matter of conjecture at this time. As I pointed out in the statement presented this morning we have made no overall study, but we do point out the rate pattern that's in existence today and which has been developed over a period of many years in the handling of coal traffic. That is, you have a base point and your mines in a given area are very closely related, and a small change in the relationship of those can be disasterous to one group versus another. I think the same would be true, as I stated previously, that it's a matter that must be considered. If your pipeline is established and assuming your costs of handling the slurry is lower than what your rail rates are from the same general territory, I think it is going to require some consideration and study by the carriers. That is by the rail carriers as to what changes they will make or will have to make, and I think at the same time the coal shipper is going to be very much interested in what change has been brought about by one competing line and what effect it will have on his production, and as to whether he will be able to meet it or not. Senator MCGEE. I have here a news story that is a couple of weeks old now from the New York Times, which describes a plan of some of the railroads to provide a new integral train for transporting coal, transporting oil, conceivably, asserted at least, and at a measurable decrease in unit cost. Now, is the introduction of the slurried coal pipeline going to fit into your rate approach on the innovation that the railroads are now talking about? Is it going to pose such an uncertainty until it's tried for a long period of time that you wouldn't be able to make a determination? I'm thinking now of the rate question. Mr. MURPHY. I think you would have an immediate effect on your rates and I don't believe The CHAIRMAN. Can you people hear in the back of the room? Pull that microphone closer to you. I have talked to Mr. Minow about this for months. Mr. MURPHY. I think the effect on the rate structure would be immediate and I think even the discussion of the pending legislation has caused the rail carriers to give some thought of studying the present rate structure, and, under the right of managerial discretion I think they are going to bring about some changes, and undoubtedly they will, of the method of handling in order to reduce their cost of handling per unit or volume of traffic. I don't think it's a thing that can be drawn out over a period of years. You could not afford to drag it out over a period of years. Senator MCGEE. What you have said to us here today, what you have suggested in terms of the record of your experience down there, that in the broad sense of the term such a slurry pipeline cannot be construed as being a common carrier. This is true, right? Mr. MURPHY. No, it may be or it may not. Senator MCGEE. Let's go back again, I want to make sure there is no confusion in the record on this. Under what circumstances could it be construed as being a common carrier? Mr. MURPHY. If he holds himself out to haul for other people he would have to be, I think, classified as a common carrier. If he's hauling his own product Senator MCGEE. And part of the answer to that is whether this system would lend itself to hauling for other people? Mr. MURPHY. Yes, sir; it depends upon what is intended in the operation of the slurry pipeline. Senator LAUSCHE. Mr. Chairman, will the Senator yield? I direct your attention to the definition of carrier in this bill, on line 6, page 1. It envisions private carriers, wholly disassociated from the rendition of public transportation service. Am I correct in that, Mr. Murphy? Mr. MURPHY. Senator Senator LAUSCHE. It doesn't say a public carrier, it just says a carrier-the term "carrier." It doesn't say "public carrier." It's a carrier, a private transportation carrier, a private transporter of his own goods to consignees, whomever he chooses, for shippers, whomever he chooses, if at all. Is that correct? Mr. MURPHY. What page are you reading from? Senator LAUSCHE. Any kind of carrier. So you could be a public carrier or a complete private carrier, fully in control of the persons with whom you will do business. Mr. MURPHY. Yes, sir. Senator MCGEE. The uncertainty that you suggest about whether this would be a common carrier or not, you say maybe yes, maybe no, why the uncertainty in your judgment? Mr. MURPHY. Well, I don't know if you get back to what I have said before if he's going to haul his own property there's no uncertainty about that. If he is going to hold himself out to haul for others he would definitely have there a common carrier type of service being offered. Senator MCGEE. What it comes down to is what we opened with just a few seconds ago, then, for the technicians to determine for us whether this method lends itself to a broader service or whether there is anything in its operation that limits it to private operation; is that correct? Mr. MURPHY. Yes, sir; I think you have to find out what their plan is as to the type of operation that they are going to offer. Senator MCGEE. I want to make it clear here that we have a little coal in Wyoming, probably the largest deposits of bituminous in this part of the world. We would be interested in getting it out of the ground and selling it somewhere, somehow, we are not too fussy how. The railroads won't carry it any more, they don't burn it up in their own gadgets because of diesels, and we are very much concerned in moving that to some place where they can afford to use it, so that in theory we are concerned deeply over any new technique that would make this possible. As I understand it here the issue is not do we encourage the expansion of slurry coal pipelines but rather we are examining the basic |