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On page 1, line 7, after the word “any”, delete the words "carrier of coal by pipeline that is subject to any of the provisions of this part, the” and insert the following: "common carrier that is engaged in or intends to engage in the interstate transportation of coal by pipeline the proposed".
The suggested amendment would correct a possible difficulty that was disclosed in the hearings. This was to the effect that perhaps only those companies already engaged in transporting coal by pipeline would be entitled to use the new power of eminent domain to acquire lands upon which to build a coal pipeline.
We do not agree with this interpretation. The bill is intended to apply to those common carriers engaged in the transportation of coal by pipeline and to those who intend to construct interstate pipelines, as common carriers, for the transportation of coal. The suggested amendment will make this intention clear.
If the suggested amendment is adopted, the title of the bill should be amended to conform to the operating features of the bill. We again recommend enactment of the bill. Sincerely yours,
(S) JOHN M. KELLY, Assistant Secretary of the Interior.
DEPARTMENT OF THE NAVY,
OFFICE OF THE SECRETARY,
Washington, D.C., June 14, 1962. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C.
MY DEAR MR. CHAIRMAN : Your request for comment on S. 3044, 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, has been assigned to this Department by the Secretary of Defense for the preparation of a report thereon expressing the views of the Department of Defense.
The bill would grant to certain carriers of coal by pipeline, whose operations have been found by the Secretary of the Interior to be required by the public convenience and necessity a right to acquire, by eminent domain, necessary right-of-way to construct, operate, and maintain any existing or proposed pipeline or pipelines and such other necessary land or other property in addition to the 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. Jurisdiction under these proceedings is granted to the U.S. district court located in the district in which such roperty may be located or in the State courts. However, in order to proceed in district court, the amount claimed by the owner of any property to be condemned must exceed $10,000. The bill also specifies that the practice and procedure in these actions, when brought in Federal court, shall conform to the Federal Rules of Civil Procedure. The right of eminent domain is authorized under the bill when a carrier cannot acquire by contract or is unable to agree with the owner of the property as to the compensation to be paid for the property in question.
The Department of Defense does not have a vital interest in and is not vitally affected by this legislation. Accordingly, the Department of the Navy, on behalf of the Department of Defense, defers to the views of the other Government agencies who are more directly concerned.
This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense.
The Bureau of the Budget advises that, from the standpoint of the administration's program, there is no objection to the presentation of this report for the consideration of the committee. Sincerely yours,
C. R. KEAR, Jr.,
(For the Secretary of the Navy).
GENERAL SERVICES ADMINISTRATION,
Washington, D.C., May 22, 1962. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN : Your letter of March 23, 1962, requests comments concerning S. 3044, 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.
This legislative proposal is designed to assist carriers of coal by pipeline in the acquisition of necessary rights-of-way and land or other property deemed essential to the construction and operation of pipelines. Such acquisition may be accomplished by 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.
Under the Federal Property and Administrative Services Act of 1949, as amended (63 Stat. 383 ; 40 U.S.C. 481), GSA is interested in transportation and traffic management on behalf of executive agencies from the viewpoint of a user of available transportation services. S. 3044 is identical with the draft bill transmitted by the President on March 20, 1962, to carry out the recommendation contained in his message to the Congress on natural resources.
The General Services Administration recommends the enactment of the proposed legislation.
The Bureau of the Budget has advised that there is no objection to the submission of this report to your committee. Sincerely yours,
(S) BERNARD L. BOUTIN, Administrator.
INTERSTATE COMMERCE COMMISSION,
OFFICE OF THE CHAIRMAN,
Washington, D.C., April 16, 1962. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C.
DEAR CHAIRMAN MAGNUSON : Your letter of April 3, 1962, addressed to the Chairman of the Commission and requesting comments on a bill, S. 3044, introduced by you, to amend the Interstate Commerce Act to grant to any carrier of coal by pipeline, subject to any of the provisions of part I of the act, the right of eminent domain, and for other purposes, has been considered by the Commission and I am authorized to submit the following comments:
S. 3044 would amend part I of the Interstate Commerce Act by adding thereto a new section 27 which would confer the right of eminent domain upon any carrier of coal by pipeline that is subject to any of the provisions of part I of the Interstate Commerce Act and whose operations have been found by the Secretary of the Interior to be required by the public convenience and necessity. This right would be exercised in a State court unless the amount claimed by the owner of the property to be condemned exceeded $10,000, in which case the action could be brought in either a State court or a Federal district court.
Since the extent to which pipelines are subject to the Interstate Commerce Act has not always been clear, we believe that a review of some of the judicial developments in this field would be helpful in the consideration of this proposed measure. The amendments to section 1 giving the Commission jurisdiction over pipelines, other than those transporting natural or artificial gas or water, were added to the act in 1906. The purpose thereof was to reach the largepipeline-owning oil companies who, by refusing to allow their use by others, compelled other producers to sell their oil to these companies. The Supreme Court upheld this policy in the Pipe Line cases, United States v. Ohio Oil Company (234 U.S. 548 (1914) ), stating:
“The control of Congress over commerce among the States cannot be made a means of exercising powers not entrusted to it by the Constitution, but it may require those who are common carriers in substance to become so in form. So far as the statute contemplates future pipelines and prescribes the conditions upon which they may be established there can be no doubt that it is valid. So the objection is narrowed to the fact that it applies to lines already engaged in transportation. But, as we already have intimated, those lines that we are considering are common carriers now in everything but form. They carry everybody's oil to a market, although they compel outsiders to sell it before taking it into their pipes. The answer to their objection is not that they may give up the business, but that as applied to them, the statute practically means no more than they must give up requiring a sale to themselves before carrying the oil that they now receive. The whole case is that the appellees, if they carry, must do it in a way that they do not like. There is no taking and it does not become necessary to consider how far Congress could subject them to pecuniary loss without compensation in order to accomplish the end in view."
The Court, however, held the operations of one pipeline company not to be subject to the act:
“There remains to be considered only the Uncle Sam Oil Co. This company has a refinery in Kansas and oil wells in Oklahoma, with a pipeline connecting the two which it has used for the sole purpose of conducting oil from its own wells to its own refinery. It would be a perversion of language, considering the sense in which it is used in the statute, to say that a man was engaged in transportation of water whenever he pumped a pail of water from his well to his house. So as to oil. When, as in this case, a company is simply drawing oil from its own wells across a State line to its own refinery, for its own use, and that is all, we do not regard it as falling within the description of the act, the transportation being merely an incident to use at the end."
In Valvoline Oil Co. v. United States (308 U.S. 141 (1939)) the Commission ordered the company to file reports necessary for a valuation of the properties of the company under section 19 of the act. The Court found that Valvoline was transporting oil which it purchased from others at the wells, principally to its refineries but at times selling surplus oil to others, and that it was a common carrier within the meaning of the act and that it must file the required reports with the Commission.
The first Champlin case, Champlin Refining Co. v. United States (329 U.S. 29 (1946)), also involved the filing of information for determining the value of the carrier's properties under section 19. The Court found that the company used its pipeline only to convey the company's own refinery products to its own terminal storage stations from which deliveries to purchasers were made. The company strongly contended that it was not subject to the act under the doctrine of the Uncle Sam Oil Co, aspect of the Pipe Line cases, supra. The company also contended that if it were a common carrier under section 19, it necessarily would be regarded as a common carrier for purposes of section 6, requiring the filing and observance of rates, serving the public, and other requirements applicable to common carriers. It contended that it could not constitutionally be compelled to become a common carrier. The Court, however, held that Champlin was within the act and must file the required information. The Court said :
"Admittedly Champlin is not a common carrier in the sense of the common law carrier for hire. However, the act does not stop at this but goes on to say that its use of the term 'common carrier' is to include all pipeline companiesa meaningless addition if it thereby included only what the term without more always had included. While Champlin technically is transporting its own oil, manufacturing processes have been completed; the oil is not being moved for Champlin's own use. These interstate facilities are operated to put its finished products in the market in interstate commerce at the greatest economic advantage.”
In regard to the contention that such a decision would be in violation of the fifth amendment because it would compel the oil company to become a common carrier, the Court said:
“But our conclusion rests on no such basis and affords no such implication. The power of Congress to regulate interstate commerce is not dependent on the technical common carrier status but is quite as extensive over a private carrier. This power has yet been invoked only to the extent of requiring Champlin to furnish certain information as to facilities being used in interstate marketing of its products. The commerce power is adequate to support this requirement whether appellant be considered a private carrier or a common carrier."
Regarding the assumption of the functions of a common carrier, the Court said :
"The contention that the statute as so construed violates the due process clause by imposing upon a private carrier the obligations of a conventional common carrier for hire is too premature and hypothetical to warrant consideration on this record. The appellant in its entire period of operation has never been asked to carry the products of another and may never be. So far, the Commission has made no order which changes the applicant's obligations to any other company or person. If it does, it will be timely to consider concrete requirements and their specific effects on appellant. At present, appellant is asked only to provide information about a subject within the power possessed by Congress and delegated to the Commission, and it cannot be considered a taking of property even if it arouses appellant's premonitions."
Four members of the Court strongly dissented from this decision. They contended that the company could not be held subject to section 19 and not to the other provisions of the act applicable to for-hire carriers, including the rate-filing requirements and the duty to transport for the general public.
The second Champlin case, United States v. Champlin Refining Co. (341 U.S. 290 (1951)), arose out of orders issued by the Commission requiring Champlin to file annual reports as a carrier under section 20 of the act, and to file tariffs of rates in compliance with section 6.
The Court held that the Commission might require the filing of annual and special reports under section 20 and that it might impose some requirements as to a system of accounts, but it seems to balk at the idea of the Commission's imposing a complete accounting system:
“The requirement that Champlin maintain a uniform system of accounts is somewhat more burdensome, but we think its independent value as a measuring rod for companies fully regulated under the act is clearly sufficient to justify the Commission's requesting so much as is pertinent.”.
Concerning the filing of tariffs, the Court said, in part:
“But it would be strange to suppose that Congress, in adopting a term broad enough to cover all competitive imbalances which might arise, intended that the Commission should make common carriers for hire out of private pipelines whose services were unused ught after, and unneeded by independent producers, and whose presence fosters competition in markets heavily blanketed by large 'majors.' Such a step would at best be pointless; it might well subvert the chief purpose of the act.
“Yet on the record before us, this is precisely what the Commission is attempting to do. * * *»
"* * * We hold that on this record the Commission's order, insofar as it concerns section 6, goes beyond what Congress contemplated when it passed the act.”
The Natural Gas Act (15 U.S.C.A. 717f(h)) 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 move ment but also the contract of sale. 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 serve. Where these gas companies serve other than public utilities, the regulation of that activity is 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, of course, 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 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 (State of Missouri v. Union Electric Light & Power Co., # F. 2d 692 (1930)). In the course of its opinion, the Court said:
"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 ited 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.
"Eminent domain is, by commonly accepted definition, the right or power to take private property for public use; the right of the sovereign, or of those to whom the power has been delegated, to condemn private property for public use, and to appropriate the ownership and possession thereof for such use upon paying the owner a due compensation' (29 C.J.S. 776).”
As stated by the Court in Campbell v. Chase National Bank (5 F. Supp. 156, 171) (with numerous citations):
“Under the Constitution the power of eminent domain means the right to take property for public use on payment, under the provisions of the fifth amendment, of just compensation for its value determined as of the time and place of its taking.”
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 that are 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,