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granted a franchise with the implied understanding that it would supply the community with gas, the citizens of Jamestown should be treated as all other gas-consuming communities are treated as long as there is gas available. If there is a shortage of gas, we are perfectly willing to have a pro rata reduction made in the amount that each consumer is supplied with, and that reduction should apply to all communities alike. It would not be fair to discriminate against the city of Jamestown simply because there is a greater demand for gas within a shorter radius of the gas fields, which I understand is the case at the present time.
The CHAIRMAN. Is Jamestown the farthest point of supply for this company?
Mr. ČARLSON. No; the city of Erie is supplied by this company. There are other companies which we understand are connected with this Pennsylvania Gas Co. who supply Buffalo, but this particular company does not supply any other community in the State of New York except Jamestown and Falconer, and Falconer is a suburb of Jamestown.
Mr. HAMILTON. Is there any controversy with the company as to rates?
Mr. CARLSON. Yes; that is what has led up to this situation.
Mr. HAMILTON. And since there is a controversy, they are proposing to settle the controversy by cutting off the supply.
Mr. CARLSON. That seems to be the attitude of the gas company. Mr. HAMILTON. Have you not a legal remedy against them?
Mr. CARLSON. Well, that is a problem and that is one of the matters I want our legal advisers to explain to this committee.
Mr. DEWALT. Are they discriminating against Jamestown alone as to price or are they raising the price for their gas all along the territory?
Mr. Čarlson. They are raising the price for Jamestown only, and they have threatened to shut off Jamestown, which is the only city against which they are discriminating. Mr. DEWALT. How far is Erie from these gas wells? Mr. Carlson. Erie, I think, is about 100 miles from the gas wells. Mr. Dewalt. And you are 60 miles away? Mr. Carlson. Yes.
Mr. DEWALT. Is it a fact in the case, or will it be a fact in the case, that they charge more in Jamestown for gas than they do in the city of Erie'
Mr. Carlson. Yes, sir; I might say, Mr. Chairman, in this connection
Mr. Dewalt (interposing). Just one moment. Is there substantive proof of that fact or will there be substantive proof of that fact?
Mr. CARLSON. Yes. Mr. Dewalt. Do you know anything about the provisionMr. CARLSON (interposing). Just a moment. The last advanced rate will begin this next month, so that Jamestown has not yet paid this advance.
Mr. DEWALT. I understand. Mr. Carlson. But will pay the new rate. Mr. DEWALT. What I want to know is whether it will be a substantive fact in the case that they are discriminating against Jamestown alone and whether or not the rate in Jamestown is higher than the rate in Erie.
Mr. CARLSON. Yes; that is the situation.
Mr. DEWALT. Do you know anything about the provisions of the charter granted by the State of Pennsylvania to this gas company!
Mr. CARLSON. You mean the franchise granted by the city!
Mr. CARLSON. I do not know anything about that. You mean the charter creating the corporation in the State of Pennsylvania?
Mr. DEWALT. Yes.
Mr. Dewalt. Now, undoubtedly, if they carry gas to New York, by the provisions of their Pennsylvania charter they must have the right to go beyond the confines of the State of Pennsylvania. That must be so primarily. Now, you say you have no remedy?
Mr. Carlson. Apparently we have no remedy, unless it is provided by the Federal Government. I would say, Mr. Chairman, there is a movement on foot in the State of Pennsylvania to place an embargo on all gas going out of the State. The matter is now before the Public Service Commission of the State of Pennsylvania.
Mr. DEWALT. And there is where your remedy is.
Mr. Carlson. But it is beyond our control. We are in the State of New York. We may regulate their methods of doing business in New York State, but how can we regulate their mechanical operations at the wells?
Mr. DEWALT. You can be heard in the State of Pennsylvania if they make a discrimination against you. If they have a right to carry gas to New York by their charter-which they undoubtedly have, or else they would not carry it there—and if they are making a discrimination against Jamestown in favor of any town in the State of Pennsylvania, and they have cut off your supply of gas, they are violating the provisions of their charter.
Mr. Carlson. Then you think we could get redress in Pennsylvania courts?
Mr. DEWALT (continuing). And you would have your remedy before the State commission of the State of Pennsylvania; there is no doubt about that.
The CHAIRMAN. Possibly Mr. Cawcroft can give us the legal phases of the situation as your corporation counsel.
Mr. CARLSON. Yes,
STATEMENT OF MR. ERNEST CAWCROFT, CORPORATION COUNSEL
OF JAMESTOWN, N. Y.
Mr. CAWCROFT. Mr. Chairman, perhaps I can explain the foundation of this peculiar situation in which the city of Jamestown, in common with many other cities in that region, finds itself. Jamestown has been built up on the natural-gas industry for the past years. The Pennsylvania Gas Co. has brought gas in there through an 8-inch main. An 8-inch main was adequate for a town of 10,000 The city has grown to 40,000, and in addition there are 10,000 people
engaged in the metal industry in the surrounding region, which is tapped by this Pennsylvania Gas Co.
The gas company sought to raise the rate. The city believes it can pay any price that is just under the coal rates, but it takes the ground that whatever price it does pay should be determined by due process of law before its public service commission after a full examination of the facts. To that end it brought a proceeding before the Public Service Commission of the State of New York under the publicservice law, which authorized it to bring such a petition, to review its rate. The gas company sought a writ of prohibition to prevent the review of the rate by the courts and commissions of the State of New York. The city took the position that when gas got over the State line it became the subject of local control; that it was a sort of local package or consignment of produce or goods. The city lost its contention on that theory in the State court, but it did win the practical features of the decision in this sense: Judge Cordoza, in the court of appeals, took the ground that the sale of gas is Jamestown, where it was over the State line, was not the sale of a product in a package or like passing something over the counter, but that it was interstate commerce, and that the commissions and courts of the State of New York could continue to regulate the price and quantity of gas until the Congress of the United States placed this interstate gas company under the control of the Federal courts or the Federal Interstate Commerce Commission. So down to date the courts of New York have held that we have full authority to review the rates and the quantity of gas sold in Jamestown under our publicservice commission; in other words, while we lost on points of doctrine, we won the practical decision in every court of the State of New York.
The CHAIRMAN. That is to say, if Congress did take jurisdiction, then the public-service commission could not act.
Mr. CAWCROFT. Yes; in that case we lose our lawsuit the moment the Congress of the United States takes that exception clause out of this act. Now, we have won our lawsuit in every court to which we have gone, but we are still in this dilemma: Having won our lawsuit in every court, the Pennsylvania Gas Co. now proposes to take direct action, as the phrase goes, and shut off the gas on May 1. Now, that is why we are here. We take the ground that if the Pennsylvania Gas Co. has been brought into the courts of the State of New York and under of the commissions of the State of New York and has lost in every legal proceeding, then if by the mechanical control of the gas within the State of Pennsylvania it is going to overturn the courts and the commissions of the State of New York, then we contend we are entitled to relief at the hands of your committee by a suitable amendment to the interstate-commerce act, so that this matter will pass under the administrative control of the Interstate Commerce Commission.
On the point raised by the gentleman here (Mr. Dewalt), of course we shall advise the common council of the city of Jamestown that it is entitled to injunctive relief in the Federal courts to prevent the Pennsylvania Gas Co. from shutting off mechanically the supply of gas passing over the State line into Jamestown.
Mr. DEWALT. What do you say to this idea : The Pennsylvania Gas Co. having acquired its rights under a charter from the State of Pennsylvania, which charter gives them the privilege to carry gas from Pennsylvania over the line into the State of New York, and in pursuance of the privileges and rights granted by that franchise the Pennsylvania corporation does actually carry the gas into the State of New York and receives emoluments therefor-those are the facts?
Mr. CAWCROFT. Yes.
Mr. DEWALT. Do you now say as a legal proposition that having once assumed that liability and having once exercised that right and having received emoluments therefor it can now arbitrarily, because of a dispute as to price, shut off the supply of gas without violating the provisions of their charter?
Mr. CAWCROFT. We shall contend in the Federal courts that it can not, but for fear that under some circumstances we might be beaten, either in the legal proceedings or in a mechanical sense, because the company has the physical control of the gas supply, we want to establish a sort of second line of defense here and take this exception out of the act, so that if the corporation finally wins out on that proposition, it will pass under the control of the Federal Government.
Mr. DEWALT. Do you not agree with me, however, that you have a remedy at law against these people?
Mr. CAW CROFT. We contend we have, very strongly.
Mr. DENISON. Let me ask Judge Dewalt this question: Do you not make an error in assuming that the State of Pennsylvania issued a charter granting the right to transport this gas over into another State?
Mr. CAWCROFT. He does. I can give you an interesting sidelight on the physical side of the situation, which I think you want. The Pennsylvania Gas Co. in its display advertisements in the city of Jamestown to force the withdrawal of these proceedings before the public service commission was creating the belief that it in the final analysis would shut off the gas no matter how many lawsuits we won, taking the ground that under the constitution and the statutes of the State of Pennsylvania relating to the conservation of the natural resources of the State it could shut off the exportation of natural gas from beyond it boundaries. It took that position for a year. The present litigation has been on for 30 months. Some years prior to that the Pennsylvania Gas Co., in order to maintain its supply of gas, started to buy gas in West Virginia, and within the past year the State of West Virginia, having some similar provision in its constitution, has sought to shut off the exportation of natural gas as a natural resource into the State of Pennsylvania. Notwithstanding that the Pennsylvania Gas Co. had said in its display advertisements that the State of Pennsylvania could shut off the exportation of gas into New York, that compelled the Pennsylvania Gas Co. to reverse itself in the legal proceeding and it contended before the courts of the State of West Virginia that the State of West Virginia could not shut off the exportation of gas into Pennsylvania. So the company reversed its proposition in the courts.
The CHARMAN. A similar problem has developed in the transmission of waterpower. I am not sure whether that proposition has ever reached the Supreme Court?
Mr. Cawcroft. I think the West Virginia case is pending in the Supreme Court and I think the gas companies in Pennsylvania are seeking the defeat of the State of West Virginia on that proposition.
Mr. DEWALT. As a basic proposition the State of Pennsylvania or any other State would have the right to say that under the police powers of the State a commodity like gas could be restricted in its transport to service within the State. I think that is true, except for this, that the State of Pennsylvania having granted a charter, which may or may not have been a charter definite in its terms as to the length of time, can not violate that contract afterwards by saying that the gas should be restricted simply to the confines of the country if the charter gives the company thë privilege of carrying it from the State?
Mr. CAWCROFT. It does. Of course, the company says it has the right. It looks as though we would win every lawsuit and then lose the gas. That is why I am here. That is why we want the interstate gas companies placed under the control of the Interstate Commerce Commission, so that we can get from it direct relief, just as from the public service commission we have gotten relief, but what does it amount to if the gas is shut off?
The CHAIRMAN. You view this from your standpoint, which is proper. but there must be other sections of the United States where a like situation probably exists?
Mr. CAWCROFT. There are.
The CHAIRMAN. Where there is gradual but certain failure of the gas supply. Do you know of like situations?
Mr. CAWCROFT, I am familiar with the pamphlets issued by the Smithsonian Institute on the subject of natural gas situation from a physical standpoint, and, of course, the gas if it comes out of the well is naturally exhausting the well, but in the record before the public service commission it was shown that the Pennsylvania Gas Co., as you say, has collateral contracts with companies in West Virginia and Virginia and in Pennsylvania and in other States and that its supply of natural gas is, in fact, increasing.
The CHAIRMAN. Is it making new contracts and extending its lines?
Mr. CAWCROFT. Yes, sir. Erie was one of the war cities of the country and increased from 40,000 to 120,000. There were about 2,000 Government houses erected by the housing commission, and they were not supplied for a long time. The city of Erie wants the gas diverted to Erie.
The CHAIRMAN. Has it been done?
Mr. CAWCROFT. Not entirely, because there is a contest as to the price. New York State wants the gas diverted to it to supply them, and it does not want to pay the arbitrary price fixed by the gas company; it wants it reviewed by a proper commission or judicial body. In the same way the city of Buffalo has a contest on as to gas. It is a unique situation as to Buffalo. The gas company has given notice that the price must go up; that there will be a cut of 20 per cent in the available supply; and then the comptroller of the two companies that make that announcement says that there will be an artificial gas company at Buffalo, and announces that it will make up the 20 per cent in supply of the natural gas which is shut off at $1.30 a thousand.
The CHAIRMAN. Five or six years ago there was a very elaborate hearing before this committee on a bill seeking to extend the powers of the Interstate Commerce Commission over pipe lines, including