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and determine the cost of things which according to the very paragraph are not under the jurisdiction of the Federal department.
It is a question, of course, whether the Congress can confer upon a Federal administrative department any powers which the Federal Constitution has not reserved to the Federal Government, and certainly traffic in natural gas or artificial gas, when that is made wholly intrastate, cannot be regulated by the Federal Government. Now, it might be said that if you grant authority to a Federal department which cannot be exercised by that department, it would be invalid, but our experience is that, when there is apparent conference of a power on a Federal department, that department is prone to exercise it and let the matter go to the courts and be decided or litigated, and, of course, such a thing ought not to be left to litigation, if possible, and if that plan is not to be followed, section 5 (b) would either have to come out or be seriously modified.
Mr. WADSWORTH. Mr. Maltbie, would it correct the situation in whole or in part if the words in line 8, "upon its own motion, or”, were eliminated ?
Mr. MALTBIE. I do not think so, because that would leave it to the Commission, upon the request of any State commission. Now, a State commission cannot confer_power on a Federal department, and it cannot, by requesting the Federal department to make an investigation, authorize it to do so. The only source of authority that the Federal department can get is from the Congress, and the Congress can only confer authority reserved under the Constitution or given to the Federal Government under the Federal Constitution.
Mr. MARTIN. I do not know whether I quite understood you or not. Your position is that where the Commission would have no authority to establish a rate, then it would have no authority to investigate and determine the cost factors; is that correct?
Mr. MALTBIE. That is the point. But this attempt to confer some power to investigate and determine certain things upon the Federal Government regarding matters that are not under the jurisdiction of the Federal Government.
Mr. BOREN. May I ask you a question?
Mr. MALTBIE. And the power in the other provisions in the act confer power upon the Federal Government regarding interstate commerce I think quite fully.
Mr. BOREN. May I ask a question?
Mr. BOREN. You are referring to subsection (b) of section 5 that authorizes the Federal Government to make certain investigations where they have no authority for action?
Mr. MALTBIE. It seems to authorize the Federal Government to make investigations.
Mr. "BOREN. Yes.
Mr. MALTBIE. And I do not think you have the authority to confer upon the Federal Government
Mr. BOREN (interposing). You are specifically referring to section 5, subsection (b).
Mr. MALTBIE. Yes; that is the subsection that I am talking about. I am coming to section 6 in a moment but I am speaking now about subsection (b) in section 5.
Mr. BOREN. I am particularly interested in that subsection and I want to get your point. Your contention is simply that it is attempting to give an authorization to the Federal Government that does not rightfully belong to it?
Mr. MALTBIE. To the Federal department.
Mr. MALTBIE. There are two things, so far as interstate commerce is concerned, the facts regarding the mention in subsection (b) are covered elsewhere in the act, and so far as intrastate commerce is concerned the Congress has no authority, no power to confer that upon the Federal Government.
Mr. COLE. I would like to make this statement at this time, Mr. Maltbie, concerning that particular section. In the hearings last year, before a subcommittee of the committee on H. R. 11662, page 30, the reasons for it were given by Mr. De Vane of the Federal Power Commission in this statement :
Section 5 (b) of this bill authorizes the Commission to determine the cost of production or transmission in cases where the Commission has no authority to establish the rates. That section is simply in aid of State regulation. There are some of these companies that supply the gas locally and do not sell it at the city gates. The gas that is furnished by them to the local communities is taken from interstate pipe-lines, and the purpose of this subsection is to enable the Commission to determine for the State commission what would be a reasonable gate rate for that gas so that the local commission may be in a position to fix a reasonable consumer's rate in the locality. That is the only purpose of section 5 (b).
If this language is clarified so as to accomplish only that purpose, you would have no objection, I assume?
Mr. MALTBIE. Let me see. So far as interstate commerce is concerned, assuming this gas crosses State lines somewhere, the Congress has authority to confer upon the Federal Government the full power to regulate it. There is no question about that. And if that gas is taken off of the interstate line, let us assume for the moment that that gas flows from another State so there is no question of it originating in the State itself, but if that gas flows off an interstate line, Congress has the power to confer upon a Federal department the regulation of that business to the end of the interstate commerce, which we may say is the sale of it in the first instance without attempting to go into the minutiate, or defining just where that ends, so that if I understand your statement the Congress has the power to confer and has conferred that power in other sections. Now, if the act is an attempt, as I have stated, to help the States, if it is only a function of the State, to regulate intrastate commerce. I do not think there is any authority in the Congress to confer upon a Federal department the power to spend money to assist a State in the performance of its own functions, that is, the regulation of intrastate commerce.
Mr. COLE. As I remember it, Mr. Chairman, in the report last year on the bill, which bill contained language substantially the same as in this bill, the clear intention was stated just as Mr. De Vane expressed it. But I agree with you that the language should be perfectly clear so there would be no conflict with the State commissions.
Mr. EICHER. May I ask a question?
The CHAIRMAN. Mr. Eicher.
Mr. EICHER. How could that paragraph be so construed, when it contains the words “whenever it can do so without prejudice to the efficient and proper conduct of its affairs.” Those seem to be adequate limiting words, I should say.
Mr. MALTBIE. I did not construe those words that way. I understood those words to mean that if the Commission had a staff, had funds to do the work, and could do it without interfering with the regulations of interstate commerce, then it could go on to something else. Now, if those words write into this section an absolute limitation upon the Commission that it cannot go beyond the interstate commerce in the section, it is not necessary, because all of those powers are conferred, or are attempted to be conferred, over interstate commerce in other sections of the bill.
Mr. MARTIN. May I ask a question?
Mr. Martin. I would like to ask a question. Assuming that the language goes beyond the powers of the Commission, but that the Commission exercised the power, made an investigation, determined the cost, and acquired this information, and its action in so doing was not questioned. What difficulties would you encounter in a rate case under the State law in endeavoring to get that information into the record? Could you get that information into the record and have it used as a part of the legal evidence in the case, over objection, over legal objection?
Mr. MALTBIE. If I understand your question, yes; because the way you would do it would be this: Assume the Federal Power Commission has made an investigation, presumably it has made it through men who have qualified to testify as experts and if called to the witness stand could qualify. They would be called to the stand. Now, if there were objections made that these men could not testify because as agents of the Federal Government they have gone beyond the jurisdiction which can be conferred upon the Federal Government
Mr. MARTIN. That is what I had in mind.
Mr. MALTBIE. That is what I thought. It seems to me-I skirted the legal profession. I am not part of it.
Mr. MARTIN. A lot of us lawyers are in the same boat.
Mr. MALTBIE. Sometimes it is an advantage not to be a lawyer; sometimes it is a disadvantage.
But, I would say that the witness would be allowed to testify. We are not limited to the strict rules of evidence. He would be allowed to testify as to facts and as to opinions, if he could qualify. It could not be introduced as the opinion of the Federal Power Commission, as a commission, because there is no witness to be called. The opponents have not had their day in court. You have to have a man there who would testify as to the facts and be prepared to stand cross-examination on the facts; but it could be gotten in that way.
I do not think that the objection that it had been done beyond the powers which the Congress can confer would prevent that man from testifying
Mr. MARTIN. That is, testifying before your State commission?
Mr. MALTBIE. That is right.
Mr. MARTIN. But if exceptions were taken there and the action of your commission got into court, you are not certain what the result would be there, are you? Mr. MALTBIE. Weil
, I am pretty certain. We are not bound by the technical rules of evidence. Of course, we always give exceptions. That is just a way of saying that they disagree with the Commission; but they do not amount to anything, because they do not have to take exceptions. They can object to anything later whether they take exceptions or not.
Mr. MARTIN. All right.
Mr. EICHER. I construe that paragraph merely as giving the Commission power to spend some money to get intrastate information if in their judgment that information might be of help to them in determining interstate questions before them for decision.
Mr. MALTBIE. Well, we are skirting a bigger question just now, too, but it does not seem to me that the Congress can confer power upon a Federal Government to do something the Federal department has no jurisdiction over and which the Federal Government has no jurisdiction over.
Mr. EICHER. Of course, that would involve the question of whether there was a sufficiently direct relationship between the two so as to enable the Federal Power Commission to go into the intrastate field.
Mr. MALTBIE. Then, you come to the question of implied powers. And, of course, I am not attempting to dispose of the question raised in the Shreveport case, either, as to whether the regulation of the rates of interstate commerce in natural gas might not carry with it the regulation of intrastate rates under the conditions described in the Shreveport and Wisconsin cases. There is nothing of that in the bill as yet.
Mr. EICHER. It is not in the bill?
Mr. MALTBIE. Not at all in the bill as yet; nothing about that which those cases imply.
Now, passing on to sections 6 (a), 6 (b), 7 (a), and 7 (b), and 7 (c), I have in my mind a somewhat similar objection. You will notice that in section 7 (b), there is a limitation in the second line of the paragraph:
No natural-gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commission.
Now, that limits that paragraph to facilities under the jurisdiction of the Commission. That is facilities that are a part of the interstate gas business. But, in sections 6 (a), 6 (b), and 7 (a), there is no such limitation, and unless that is read in by inference, which is stretching it a good deal, unless that limitation were read into those sections, there is in those sections a conference of authority on the Federal Power Commission over intrastate business and intrastate facilities.
Now, possibly the person who drew this bill did not have in mind that a company may be engaged both in interstate commerce and in intrastate commerce, and that the facilities used for interstate commerce may be entirely separate from the facilities used in intrastate commerce; but that is a fact. There are cases where a company
'has developed a natural-gas field and the facilities, connecting with that field, and the distribution of the gas is in interstate commerce. It crosses a State line, but the company also has wells in other territory connected with pipe lines going to a local distributing company, and that is not interstate commerce. That is intrastate commerce, and over which the State has control.
Now, if sections 6 (a), 6 (b), and 7 (a) were so modified as to carry into the law the language used in 7 (b), it would remove the objections that I am speaking about, but inasmuch as it is put in 7 (b), the inference would be, ordinary construction of the statute, would be that 6 (a), 6 (b), and 7 (a), not having it, are not bound by it.
Mr. COLE. Mr. Chairman
Mr. COLE. May I ask a question there? In 7 (b) are you not dealing with facilities, and when you read sections 6 (a), 6 (b), and 7 (a) .you naturally go back to the definition of what a natural-gas company is before the provision applies?
Mr. MALTBIE. Yes.
Mr. COLE. And are limited absolutely in this case to what we define as natural-gas companies. Does that not cure your objection?
Mr. MALTBIE. I think not. I tried to make the point, without spending too much time on it, that power is not conferred by a company. The Federal Constitution gives power over a thing. That is interstate commerce. And, a company that is engaged in interstate commerce is not completely, in all of its business that it does, necessarily under the regulation and administration of the Federal Government.
So as I said, a company comes under the jurisdiction of the Federal Power Commission for the business of interstate commerce, but if it does interstate commerce, the mere fact that one company does both things, does not place the intrastate commerce under the jurisdiction of the Federal Government.
The CHAIRMAN. Your view is that for investigative purposes where it is confined to that, this carries the investigating power, I take it.
Mr. MALTBIE. I think unquestionably it does, because the property is used, let us say, in part, like an office building where the offices are for the part of the company that is engaged in interstate commerce and the part for intrastate commerce. Undoubtedly the natural construction either for the Federal Government or for the State would permit either one to investigate the operations of that property that was used in part in intrastate commerce on one hand and interstate commerce on the other.
I am raising no question about that. I am raising the question about property that is not, by any reasonable construction of interstate commerce, under the jurisdiction of the Federal department.
Mr. WADSWORTH. Mr. Chairman-
Mr. WADSWORTH. Have you suggested any amendments or corrections to those sections, Mr. Maltbie?
Mr. MALTBIE. I have not.
wish. Mr. WADSWORTH. As one member, I would like to have them.