that can certainly be said truthfully, I think, as a whole. Judge MacLane spoke on some of those sections.

When you come to title II, the first significant point on page 104, right at the bottom of that page, is the scope of the jurisdiction (reading):

The provisions of this title shall apply to the transmission and sale of electric energy in interstate commerce and to the production of energy for such transmission and sale, but shall not apply to the retail sale of energy in local distribution. The Commission shall have jurisdiction over all facilities for such transmission, sale, and/or production of energy by any means and over all facilities connected therewith as parts of a system of power transmission situated in more than one State, except facilities for the retail distribution of electric energy,

* *

Let me point out again that this does not say that the Federal Power Commission is to have jurisdiction just over these wholesale contracts, and yet that is the basis on which title II is proposed. It says that the Federal Power Commission has jurisdiction over all facilities for transmission, sale, and/or production, not only over the facilities that are so engaged, but over all those connected. That includes the great majority of the properties of all these companies under this jurisdiction.

The CHAIRMAN. It has been suggested that the connected facilities have to be for interstate commerce, however.

Mr. MOORE. That is the actual fact, though, Senator, that in the ordinary situation the facilities are connected with those power plants and transmission lines. The map that Judge MacLane filed illustrates perfectly the actual condition.

The CHAIRMAN. I appreciate that, but all these transmission lines, for instance, for the purely intrastate business are connected with the interstate transmission lines, as I understand it.

Mr. MOORE. That is right.

The CHAIRMAN. But, as you read this bill, do you understand that it gives them the power to regulate the intrastate lines that are simply used for intrastate business?

Mr. MOORE. It gives the right to regulate, under this part of title II, all facilities of production or transmission that are in any way connected with interstate commerce, and that covers practically all those facilities. It excludes only the local distribution facilities, as a practical matter. I understand that that would cover probably much over 50 percent of all the property, actually.

The importance of that section is the scope of that definition, when the only gap that exists is the wholesale contract between unconnected companies.

In that connection, let me remind you of these two decisions very recently announced, but which have had a great effect on this whole problem involved under this title. I refer to Smith v. Illinois Bell Telephone Co., and the Western Distributing Co. case, decided by the Supreme Court in the last 3 or 4 years. Under those two cases the State commission has the power to deal with these contracts and situations that exist between affiliated interests in a very effective way, if the commission really functions. If the company comes in and asks for a rate increase, and there is power being purchased from an affiliated interest, or if the power is coming from another State, under the doctrine of those cases the commission has the complete power to require a break-down and allocation of the property, and a

real analysis of costs. The result is that there is only from 1 to 3 percent not subject to regulation now--we are not entirely in agreement with Mr. DeVane. We say that our figures show that there is about 1 percent of the power that is sold at arm's length, and he thinks there is about 3 or 4 percent.

The CHAIRMAN. That is, sold at arm's length, sold by one company to another.

Mr. MOORE. Yes. That is the only gap that there is.

The CHAIRMAN. Do you think, for instance, that the Federal Government should not have anything to say about the regulation of power that is transmitted in interstate commerce, if it is transmitted by the company?

Mr. MOORE. The decisions are perfectly clear, Senator, that all rates affected in those transactions are subject to State regulation. The problem is whether or not Congress desires to undertake to oust State jurisdiction to any extent there. It is perfectly clear that all rates involved in that sort of a situation are subject to local regulation.

May I pass to what is commonly called here the common carrier section. That is on page 105, section 202. This is one of the vital and most controversial points in this whole bill. If I had to list the most controversial points, I would say, of course, no. 1 is whether there is to be a policy of regulation or elimination. I would say no. 2 is whether there is to be just one integrated system permitted, or how many, or whether there should be any restriction on that. No. 3 would be as to how many stories are reasonable and should be permitted in the holding company system, as I say, with reasonable regulation encouraging simplification; or whether there is to be a fixed limit. I would say that no. 4 would be the extension of the jurisdiction in title II, in taking in all these facilities in production and transmission. I would say no. 5 is this common-carrier provision. I was very much interested in this memorandum which Mr. DeVane filed with you, in which he entitled it "Illustrations of CommonCarrier Principles in Electric Transmission." I am not going to take your time to read that, but there are five situations described there, where all that has happened is that one company has connected with another company, and is transmitting some energy and is charging a price for transmitting that energy. There is not a word in his memorandum in regard to those transactions that would support the view that any one of those companies was holding itself out as a common carrier, or was acting any differently from the ordinary case where the owner of a truck goes out and hires that truck on a special contract. Senator MINTON. Did not the Supreme Court hold that they could make a gas line company take the gas of another company, even though it may be a competing company?

Mr. MOORE. They recognized the principle, particularly in those pipe-line cases.

Senator MINTON. And have they not required the interchange of service and facilities between railroads under the Interstate Čommerce Act?

Mr. MOORE. Oh, yes. That is perfectly true.

Senator MINTON. Even though there was a showing that it might lose money to the railroad interested in the transaction?

Mr. MOORE. There you have real common carriers involved. Senator MINTON. The pipe line was not a common carrier until the Supreme Court said that when it went across State lines its facilities should be made available.

Mr. MOORE. In that very case, let me remind you of the situation of the Uncle Sam Oil Co. The Uncle Sam Oil Co. had its refinery in one State, and its own fields in another State. The Chief Justice said, in discussing that particular company, that he was satisfied, as to that company, that there was a very different situation from the other companies. Why? Because these other companies were, in fact, acting as common carriers.

There is a very interesting discussion of that problem in the Frost Trucking Co. case, I believe, from California, in the Supreme Court. There the State of California undertook to say that these truck haulers who were hauling by special contract had to act as common carriers. The Supreme Court said that that could not be lawfully done, that there had to be, first, a holding out as a common carrier, and that by fiat you could not make them common carriers if they were not in fact such. That is not the situation that exists as to the railroads, the telephone companies, or in the pipe line cases.

Senator MINTON. They are exercising certain attributes of sovereignty that are granted to them by the States. They are exercising the right of eminent domain. They are occupying the State highways and the streets and alleys for the erection of their facilities.

Mr. MOORE. That is true; but in the pipe-line cases that point was involved, and the reasoning that the Court adopted there showed that that was not an important factor. The important thing is whether or not, in fact, the particular company is holding itself out and is functioning as a common carrier. I say that there is a fundamental constitutional question there, but I am not going to undertake to argue the constitutional point here at all. I do want to bring up just two further points in that connection, though.

In the first place, so far as we know, there is no situation existing in this country where a transmission line is actually being held out as a common carrier, and in the absence of that sort of thing we do not think it can, by fiat, be made such.

Senator MINTON. Notwithstanding the fact that the Government under which they operate has granted to these companies certain attributes of sovereignty?

Mr. MOORE. I do not think that that gives it the right to declare that they are common carriers. If you will take the trouble, Senator, to read those pipe-line cases, you will find a very interesting and helpful discussion right on that point.

There are two other objections to this proposal. The first one is that the way it is set up here, you will notice how complete is this requirement at the bottom of page 105:

It shall be the duty of every public utility to furnish energy to, exchange energy with, and transmit energy for any person upon reasonable request therefor; and to furnish and maintain such services and facilities as shall promote the safety, comfort, and convenience of all its customers, employees, and the public, and shall be in all respects adequate, efficient, and reasonable.

We point out two very obvious objections to it. As I understood, Mr. DeVane was inclined to view favorably our criticisms on two of these points. First, we said that that would permit a company that

had surplus power to compel the transmission of its power to a competing market, which is certainly true. As we understand his position, he thought that was unfair.

Senator BONE. Would it not have to go into that competing market, as you term it, and build up a body of customers? It would not do them any good to deliver a bundle of power into a city with no customers, and no distribution system.

Mr. MOORE. It all depends on the price at which they could sell this surplus power.

Senator BONE. In the first place, they run into a series of difficulties. Check me and see if I am right. I do not want to misstate this. In the first place, in practically all the States, if not all the States of the Union, they have certificate of convenience and necessity acts which forbid the intrusion of a competing company. I am correct up to that point, am I not?

Mr. MOORE. Many of them do.

Senator BONE. Many of them do, and more and more are going in that direction, except in States like my own, where that has twice been referred to the people and has been defeated, establishing a certificate of convenience and necessity law for utility and power companies. Second they would have to get a franchise from the community, be it a city, county, or whatever political subdivision it might be, in order to distribute the power.

Mr. MOORE. Unless they could stay on private property and serve some big industries.

Senator BONE. But they would still have to have a franchise. They would still have to run the gauntlet of criticism of the company that was in the city objecting to the intrusion of the competing company into that city. They could not make the hurdle of the necessity and convenience act to get into that market. I am wondering if you are not conjuring up a demon here that, in practice, could not possibly exist in most American communities, because of these practical obstacles that would have to be overcome.

Mr. MOORE. I appreciate that in some situations the local company would have sufficient goodwill, and could set up other practical difficulties.

Senator BONE. There are practical barriers there that eliminate much of this objection.

Mr. MOORE. It would eliminate some of it, but I think it is a very real thing. Certainly these executives all think it is.

Senator BONE. Since these laws exist in most States, and these franchise conditions exist, it ceases to have much practical value as a point of objection.

Mr. MOORE. There is another thing in that same connection, Senator, that I would like to point out. The second objection that has been urged so strenuously is that the effect of that would be to practically compel these companies to transport power from these Federal projects. It is answered, in reply to that "Well, if the language is not sufficiently clear to cover that, we will amend the language." But that still does not meet the point.

I have no desire to enter into a discussion as to the merits of T. V. A. and that sort of thing, because I know that that would take up a lot of time. But here is what would happen if those provisions were kept in this bill.

You have these large pools of Federal power on these projects that are just like ponds, as you might say. The influence of those pools is very wide. In effect they mean that the private companies in that vicinity have either to take that power and sell it, leaving them with a surplus on their hands, or these pools of power are going to be pressed on the market directly in competition. Take the average situation that exists

Senator BONE. What is the answer to that? You will probably explain it in your answer.

Mr. MOORE. The average situation that will develop will be this, if any such provision as this is kept in the bill. This pool of power is pressing for a market. The normal thing to happen is for the local companies in that vicinity to take the punishment and buy it the best way they can. They have that power on their hands as a surplus, and it is still seeking its market. It has to find a market. With this requirement, including the common-carrier requirement, that power is just going to spread in all directions, just as though you dropped a stone in a pond of water, if you keep in these common-carrier provisions, until it ultimately spends its force.

The CHAIRMAN. You think that the most objectionable feature of title II is this common-carrier provision?

Mr. MOORE. No, sir. The most objectionable feature is the jurisdictional point. We think that there is no occasion whatever to do anything as to title II except to fill the gap. The only gap that exists is the gap that is recognized in the Attleboro case, namely, the wholesale power contract. Insofar as there is any accounting necessary in connection with filling that gap, or any reasonable regulation with respect to that, these companies have no objection. They recognize that there is a gap there, just as there is a gap in the holdingcompany regulation. There has been a gap. It is just like every other error. There has always to be some truth involved to have a

real good error.

Senator BONE. Suppose the common-carrier feature of this were eliminated, and one of these great pools of power, such as is being developed at Muscle Shoals, were distributed, then, on lines that are owned or built by the Government. You would still run into the same situation, would you not?

Mr. MOORE. It would be very much minimized. We think that it is very unfair to include this sort of a provision, hooking it up with these pools of power.

Senator BONE. How do you think it would be minimized by eliminating that requirement?

Mr. MOORE. The trouble with this requirement is that this section compels every company to connect up and carry the power that is there. In my State, for instance, Senator, we have a provision in our law in Virginia that protects a company from having to serve a competitor as a matter of State policy. This would absolutely break that down.

The CHAIRMAN. Under the cases which you cited a moment ago, is not this the fact, that the State commission can disallow the wholesale contract, but they cannot prevent the utility—

Mr. MOORE. It all depends on the law.

The CHAIRMAN. Let me finish.

Mr. MOORE. Excuse me.