establish regulatory authority over REA cooperatives until the Congress has had an opportunity to consider appropriate legislation, such as the clarifying legislation which has been introduced in both the House and the Senate." We shall, of course, give the utmost consideration to the committee's views, and we are reviewing the present status and future conduct of the proceeding involving cooperatives in the light of the committee's expression.

It may be helpful to you and the committee in further consideration of this matter for us to describe to you the background of the proceeding now underway to determine jurisdiction over electric power cooperatives. As your letter indicated, the whole question of jurisdiction is now being studied by the Commission, de novo and without prejudgment. After preliminary consideration of the jurisdiction question, and after securing an opinion from our General Counsel, we decided that before taking any action, it would be desirable to conduct a public proceeding in which all interested parties may express their views. Such a proceeding was initiated by order of the Commission dated July 22, 1963, a copy of which is enclosed. Pending our reconsideration of the jurisdictional issue, we have deferred classifying any REA cooperatives as public utilities in the list of such persons made public by the Commission on July 1, 1963, or from exercising any other jurisdiction over such entities.

Subsequent to the July order the dates for the filing of evidence by the parties and for holding the oral portion of the hearing were extended to give the parties more adequate opportunity to present their case. Under the present schedule, the oral portion of the hearing is scheduled to commence on December 12, 1963, but the written direct case of the staff (which is limited to a study of the electrical, financial, and operational aspects of the three cooperative systems who are respondents in the proceeding and does not discuss the underlying legal or policy questions) has already been filed with the examiner and served on the parties to the case. It is our understanding that the respondent cooperatives and some of the other interested parties are already far advanced with the preparation of comprehensive testimony for introduction on December 2, 1963. The question of jurisdiction over cooperatives arose as a part of a review by the Commission of it responsibilities under part II of the Federal Power Act. From a variety of causes the Commission's jurisdiction in the electric power field had virtually lapsed when the present Commission took office. No list of companies subject to FPC jurisdiction as public utilities had ever been published and the industry generally did not know with definiteness which of the companies the FPC considered to be under its jurisdiction. Many companies had never even filed their wholesale rate schedules with the Commission. Purchasers of such power from companies operating interstate facilities were unaware of the intended protection afforded by the Federal Power Act.

This has been changed, and the Commission is now engaged in a vigorous regulatory program in the electric power field. As one step the Commission for the first time has compiled and published a list of companies believed to be jurisdictional. The preparation of this list posed, unavoidably, the question of jurisdiction over cooperatives. They are either covered by the statute, and should comply therewith, or they are entitled to a definite ruling that they are not subject to the Federal Power Act. Above all, the public is entitled to assurance that the statute is being administered fairly and impartially. The Commission in the past has never acted to question the operations of cooperatives, but in a number of formal proceedings it held various cooperatives to be public utilities subject to its jurisdiction. This is an ambiguous and unsatisfactory situation which, we believe, should be cleared up for the benefit of all concerned. The present Commission has been attempting to reevaluate the jurisdictional question in a careful and orderly way, based upon a thorough record which will result from the hearings now scheduled.

We wish to assure you that we have never considered that our administrative proceeding would or could prejudice congressional action affecting the Commission's jurisdiction. On the contrary, we have thought that a complete record made before us would be of material assistance to the Congress in evaluating the need for legislation such as that contemplated by H.R. 8023 and S. 2028.

We shall write you further reflecting the changes in our proceedings made necessary by whatever action may be taken in connection with the current appropriation bill.

We are sending a similar reply to Senator Monroney.

Sincerely,

Enclosure: (Order to show cause).

JOSEPH C. SWIDLER, Chairman,

FEDERAL POWER COMMISSION,
Washington, December 6, 1963.

Hon. WARREN G. MAGNUSON,
U.S. Senate,
Washington, D.C.

DEAR SENATOR MAGNUSON: I am transmitting herewith a copy of the Commission's order handed down today in response to a motion filed by the cooperatives seeking an indefinite postponement of the hearing session scheduled for December 12, 1963, in the pending show-cause proceeding, docket No. E-7113. This is the proceeding to determine whether the FPC has jurisdiction over electric power cooperatives who own or operate facilities otherwise subject to our jurisdiction, concerning which I wrote you on November 14, 1963.

The Commission has stated the reasons for its decision in the enclosed order. As we make clear, the Commission is mindful of the Senate committee's feeling that the Commission should not take any affirmative action to exercise authority over the REA cooperatives until the Congress has had an opportunity to consider clarifying legislation and we believe that our action is not inconsistent with this objective.

Sincerely,

Enclosure.

JOSEPH C. SWIDLER, Chairman.

UNITED STATES OF AMERICA

FEDERAL POWER COMMISSION

Before Commissioners: Joseph C. Swidler, Chairman, L. J. O'Connor, Jr., Charles R. Ross, Harold C. Woodward, and David S. Black

(DOCKET NO. E-7113)

Dairyland Power Cooperative, et al.

ORDER DENYING MOTION FOR POSTPONEMENT

(Issued December 6, 1963)

Dairyland Power Cooperative, Minnkota Power Cooperative, Inc., South Central Rural Electric Cooperative, Inc., (Respondents) and the Intervenors in the above-entitled proceeding with the exception of the Secretary of Agriculture and the Public Service Commission of North Dakota, by joint motion filed December 2, 1963, request an indefinite continuance of the public hearing in this proceeding now scheduled to commence December 12, 1963. The motion was accompanied by the prepared written testimony and exhibits of the movants in support of their claims that this Commission is currently without jurisdiction over the Respondents as "public utilities" under Parts II and III of the Federal Power Act. This filing completed the filing of the testimony and exhibits of all parties to the proceeding.

In support of the motion are cited pending legislative proposals dealing with the question at issue in this proceeding. In addition the movants quote from the report of the Senate Committee on Appropriations which accompanied H.R. 8746 and urge that the quoted language is an "interdiction" to continuing this proceeding. The Committee's statement was as follows:

"The committee is advised that the Commission is seeking to assert jurisdiction over rural electric cooperatives. During the 27 years since passage of the REA statute, the Commission has not asserted general jurisdiction over such cooperatives.

"This assertion of jurisdiction has raised a number of questions concerning the responsibilities of the two Federal agencies involved, interpretations of the laws establishing them, and the intent of Congress concerning its actions on these and other related laws. It is the committee's opinion that any new assertion of Federal regulatory authority, especially as it conflicts with, or overlaps the field of another Federal agency, should be a matter for consideration by Congress. "The committee, therefore, feels that no funds should be used by FPC to establish regulatory authority over REA cooperatives until the Congress has had an opportunity to consider appropriate legislation, such as the clarifying legislation which has been introduced in both the House and the Senate."

Considered in the light of the background of this matter, we cannot believe that the statement of the Committee on Approprations was intended to be a

direction to terminate the pending proceeding. Nor do we see how the proper discharge of our statutory responsibilities could be effected were we to suspend an administrative hearing because legislative proposals have been made which, if adopted, might abort the proceeding. Many times in the past, and in at least three other instances during the present Congress, legislation has been introduced which might affect or moot proceedings pending before this Commission. We have many other proceedings pending which the introduction of legislation might affect if we were to adopt such a policy.

As has been made clear in our previous orders, the present proceeding was instituted so that the Commission might reevaluate previous holdings that cooperatives which owned or operated electric facilities for use in interstate commerce were public utilities within the meaning of Section 201(e) of the Federal Power Act. The earliest such holding concerning a particular cooperative was in 1947. In a recent proceeding, however, it was brought to our attention that the issue of our jurisdiction over cooperatives had never been tested in judicial proceedings. We immediately asked our General Counsel for a formal opinion on the subject. In addition we requested the opinion of the Rural Electric Administration and gave opportunity to file an opinion to counsel for a large group of cooperatives which felt they might be affected.

From the time we requested those opinions to the present date we have refrained from asserting any jurisdiction over any rural electric cooperative. It was for this reason that we did not list any cooperatives in our list of Class A public utilities subject to the Commission's jurisdiction made public on July 1, 1963. Moreover, there are presently pending before the Commission several other proceedings in which if the Commission had followed past practice it would have required filings by certain interstate electric cooperative corporations.

The opinions received from the three sources mentioned above were in conflict. That of our General Counsel held that rural electric cooperatives were public utilties within the meaning of Section 201 (e) of the Federal Power Act but concluded that this Commission did not have jurisdiction under the Act over the transactions by which many of the rural electric cooperatives have secured loans from the Rural Electric Administration. The other two opinions held that this Commission has no jurisdiction over any cooperative organization.

It was by reason of this conflict of opinions that the present proceeding was initiated. As we stated in our order of October 14, 1963, after citing numerous instances in which the Commission had held cooperatives to be public utilities: "We wish to make it clear that the purpose of this hearing is to reexamine this question of jurisdiction on the basis of the record in this proceeding and that we do not consider the cited cases as necessarily controlling our decision herein."

It is true that the original order in this proceeding in terms directs the threenamed cooperatives to file certain information or rate schedules with the Commission in the event they are found to be subject to our jurisdiction. This was done, however, solely in order to assure that there would be a case, or controversy, which could be taken on appeal to an appropriate court in the event we concluded that one or more of the cooperatives were in fact subject to our jurisdiction. And we have made clear, and here reiterate, that pending final resolution of the jurisdictional issues here raised, we have no intention of asserting or exercising any jurisdiction over any cooperatives. We believe, for this reason and for the one set forth immediately below, that a continuation of the present hearing to reexamine the jurisdictional question is not inconsistent with the intent of the Senate Committee on Appropriations.

In the ordinary course of our proceedings, which include the hearing now scheduled for December 12, briefs thereafter to the presiding examiner, the initial decision by the presiding examiner, opportunity to file exceptions to the decision of the presiding examiner, oral argument before the Commission, and the Commission's decision, there is no likelihood that our decision in this matter will be arrived at prior to September 1964. Thereafter, in the event we find that interstate cooperatives are public utilities within the meaning of the Federal Power Act, there will, of course be opportunity for court review before our decision can become final. The continuation of the hearing should, therefore, in no way inhibit any consideration which the Congress may choose to give to the matter.

For the foregoing reasons we can find no basis on which to grant the motion for postponement. Full and extensive presentations have been filed on behalf of the Secretary of Agriculture and this Commission's staff, in addition to the

case-in-chief of the cooperatives. Passage of time through an indefinite continuance of the hearing can only result in the outdating of material, possible future unavailability of witnesses and other consequences affecting the probative value of the testimony and exhibits now in the record. Indeed, the motion does not request continuance on any ground other than the pending legislation, recognizing, perhaps, that we have already granted two extensions of time in which to prepare testimony and for the convenience of an intervenor's counsel in order to fully cooperate in building a sound and meaningful record upon which proper conclusions on the underlying legal issues may be reached.

THE COMMISSION ORDERS: The joint motion for postponement filed in the aboveentitled proceeding on December 2, 1963, hereby is denied.

By the Commission. [SEAL]

JOSEPH H. GUTRIDE, Secretary.

INTENT OF COMMITTEE

Senator MONRONEY. Isn't the thrust of this question that kindred and associated public generating bodies were specifically exempt under the act? The reason REA was not exempted was because the bill creating REA was passed just after the Federal Power Commission Act had been enacted. The public utility commissions in the West were all exempt. Yet they are not regulated to the extent that REA is by not only the Secretary of Agriculture, but the REA Administrator, and both Houses of Congress, My interpretation of the committee's intent last year was that it was felt that because of this great uncertainty, both sides would wait until Congress had a chance to act on legislation that was then pending. If Congress says you do not have the power, then you would not need to waste the money, and neither would the REA's, on the legal case to determine your jurisdiction. Congress would set the jurisdiction. That was the purpose of the legislation, as I understood it, that was introduced-to clear up this matter.

But instead of waiting for the Congress to clear up this matter, the hearings have been held just as though we had not said a thing. If that is not disregarding the clear intent of Congress, I do not know what it is.

Mr. SWIDLER. Sir, that is not the way we read this committee expression. It seemed to us that the committee would not have asked an administrative agency, acting in an adjudicatory proceeding, to kill a proceeding that was already underway.

Senator MONRONEY. You expanded what you did.

Mr. SWIDLER. We were already well underway in this proceeding. We have assured you that we will not arrive at any conclusion during this session of Congress. So I really do not see that there can be any question of our respect or compliance with the intent of the committee. We will await the conclusion of this session of Congress before asserting any jurisdiction over cooperatives, assuming that we would otherwise do so.

I do not know what the result of this proceeding will be. But I think it is a rather serious thing to ask an administrative agency to kill an adjudicatory proceeding already underway.

PRESENT STATUS OF PROCEEDINGS

Senator MAGNUSON. I do not think we asked anybody to kill it. I think what we are trying to say is we wanted this suspended until we can do something.

What is the status of it now?

Mr. SwIDLER. The status of it now is that these proceedings are still before the examiner, they have not come

Senator MAGNUSON. Before an examiner of the Federal Power Commission?

Mr. SWIDLER. Of the Federal Power Commission.

Senator MAGNUSON. Is he still holding hearings?

Mr. SWIDLER. No. The hearings are over. It is in the briefing

stage now.

Senator MAGNUSON. So there is an examiner now reviewing the hearings in the briefing stage.

Mr. SWIDLER. I don't think that all the briefs are in. It is in the briefing stage and the examiner has some of them before him.

Senator MAGNUSON. Does he intend to come to a conclusion from the hearings and report to the Commission prior to the end of this Congress?

Mr. SWIDLER. I don't know, sir.

Senator MAGNUSON. Suppose he writes his conclusions. He gives that to the Federal Power Commission; doesn't he?

Mr. SWIDLER. The next step would be, sir, when he should hand down a decision that the parties would have 30 days in which to file their exceptions and briefs to the Commission.

Senator MAGNUSON. Then what?

Mr. SwIDLER. Then they would have a chance to argue before the Commission.

Senator MAGNUSON. Oral argument?

Mr. SWIDLER. Oral argument; yes.

Senator MAGNUSON. Have the REA groups intervened in this? Mr. SWIDLER. Oh, yes.

Senator MAGNUSON. They have?

Mr. SWIDLER. Yes, sir.

QUESTION OF JURISDICTION

Senator MAGNUSON. So the matter is now, as we understand it, in the examiner's hands. Hearings are over. If he should hand down a decision before any legislation was passed or any decision by Congress, then there would be filed within 30 days a petition for oral argument if he should decide you had jurisdiction.

Mr. SWIDLER. Yes, sir.

Senator MAGNUSON. If he should decide you didn't have jurisdiction, then what would happen?

Mr. SWIDLER. Well, the staff could file exceptions and bring it to the Commission, so that then there would be

Senator MAGNUSON. They are going to appeal their case to their own people?

Mr. SWIDLER. They could. Under our rules, the staff would have a right to file exceptions. So ultimately, the question would be decided by the Commission.