Senator MAGNUSON. So the matter, unless Congress acts, the matter will get before the Federal Power Commission no matter what his decision?

Mr. SWIDLER. That is right; sometime in the fall.

SENATE INTENT CLEAR

Senator ALLOTT. Mr. Chairman, I have a little different view about this than some of my colleagues, because REA's are not Government agencies, they are just simply co-ops and no matter how we look at it, they operate at a profit. If a man takes his profit he ought to reduce light rates and I personally feel, on this substantive question, there is no reason why they should be exempted. But that is aside from the thing. What Mr. Swidler is really saying is that despite the language in the Senate report last year, when they said that no funds should be used by FPC to establish regulatory authority, what he is saying is that this does not mean he cannot go ahead and he has not actually established regulatory authority until he has entered an order. Now, I do not think that anybody could read that with that intent in mind. All he is saying is that he is going to hold off with his authority but is going ahead and spending the funds and doing all the work in the meantime. I suppose we are going to have to pay more attention to our language and just lay it out more clearly, because I think the intent of the Senate was clear in this matter.

Mr. SwIDLER. As far as the expenditure of funds is concerned, our engineers had done their work, the witnesses were all ready. Had we construed it otherwise, it would have involved a very serious question of the integrity of the administrative agency.

Senator YOUNG. You mean the commissions before you had no integrity, because they didn't get into this? They had no integrity?

INTEGRITY OF ADMINISTRATIVE PROCESS

Mr. SWIDLER. If we had dismissed an adjudicatory proceeding already underway without any change in the statute, I think this would have involved a serious question of the integrity of the administrative process. Because, remember, a committee report does not change our statute, does not relieve us of our oath to uphold the statute or to administer it.

Senator MAGNUSON. Well, I do not think there was ever any intention to tell you to dismiss the action. I think what we were trying to say this is at least what I thought we were saying-was you hold everything in abeyance until something happened in Congress. Now, in effect, as a practical matter, it is in abeyance now, isn't it? Mr. SWIDLER. No, sir.

Senator MAGNUSON. Well, what I mean is it is just in the examiner's hands.

Mr. SWIDLER. It is in the examiner's hands. Our briefs are in. We are spending no money on it, we will spend no more money through this fiscal year from the money point of view. If we had abandoned the proceeding, we would have to do the work all over again, with new investigations. We have done it in a most prudent way.

Senator MAGNUSON. But you don't expect, as a practical matter, that the examiner will be making any report for some time?

Mr. SWIDLER. I don't expect as a practical matter that the examiner will report for several months.

STATUS OF LEGISLATION

Senator MAGNUSON. The proposed legislation is in the Commerce Committee, but we have sent it to a subcommittee and I do not think that the subcommittee has held any hearings on it yet. I doubt it. I will check.

Senator MONRONEY. Could I ask a question?

Senator MAGNUSON. Go right ahead.

Senator MONRONEY. Has the provision, contained in the appropriation report last year, in any way delayed what you would have done without the provision having been written? In other words, are you not moving at exactly the same rate and under the same plan in building up your case for jurisdiction over REA co-ops that heretofore had been thought to be exempt by all previous Federal Power Commissions?

Mr. SWIDLER. Yes, sir; I think there has been a difference, because we might otherwise have moved that case on an accelerated schedule. There is a variation in the amount of energy and push you can give to a case. I might say we are giving this case the minimum push so that we can assure you, as we have, that there will be no decision during this session of Congress.

Senator MONRONEY. Despite what has been written by the Congress, your regular pattern without rush or without expedition has been carried out?

NO CONCLUSION ANTICIPATED DURING PRESENT SESSION OF CONGRESS

Mr. SWIDLER. What we have said and we have so construed your language is that we hope we would not arrive at a conclusion during this session of Congress and we are able to assure you we shall not.

Senator MAGNUSON. In your letter to the committee, you said that the Commission felt that acting as you have acted, this was not inconsistent with the language.

Mr. SWIDLER. So we said.

Senator MAGNUSON. That was your conclusion?

Mr. SWIDLER. That was our interpretation. I am sure we were led to that by our feeling that you would not ask us to dismiss a proceeding.

Senator MAGNUSON. I think it was inconsistent-if the language can be interpreted that way, that may be one thing, but I think it is inconsistent, surely, with the intent that we had.

Senator YOUNG. It certainly is.

Senator MAGNUSON. It is inconsistent with that.

Well, of course, you did not get the language until December.
Mr. SWIDLER. No, sir.

Senator MAGNUSON. Late December you got the language. So that there has been January, February, March, and April-you have had actually 4 months that have been under the language.

Mr. SWIDLER. Yes, sir.

Senator MAGNUSON. Whatever the interpretation might be.
Mr. SWIDLER. Yes, sir.

Senator MAGNUSON. Any further questions on this matter?

Senator YOUNG. Mr. Swidler indicates they may have slowed up a little, but they have been spending the money we told them they shouldn't spend.

Senator MAGNUSON. Any further questions on this?

PERSONNEL SITUATION

All right. Back to page 3. I think we ought to break down there-you have "To provide a full year's salary for 48 positions filled in the first half of 1964 but unfilled in the second half due to force reduction." Are they new?

Mr. SWIDLER. No, sir; those are the positions made available by a reduction in force, the addition to the staff to get back to the level we had at the beginning of this fiscal year. In other words, come back

Senator MAGNUSON. How can you do that when the appropriation cuts you down? I don't understand your statement here "To provide a full year's salary for 48 positions filled in the first half of 1964 but unfilled in the second half-and you are asking for additional money for that?

Mr. SWIDLER. Yes, sir.

Senator MAGNUSON. $219,000.

Mr. SWIDLER. That is right, sir.

Senator MAGNUSON. So you would go back then under the budget estimate of this year to the 48 people that you could not employ the last half of this year due to the reduction?

Mr. SWIDLER. Yes, sir.

Senator MAGNUSON. That would amount to $219,000? In other words, if we kept you where you were last year, we would cut out the $219,000, and you would be just where you are now?

Mr. SWIDLER. Yes, sir.

Senator MAGNUSON. Then the pay raise amounts to $373,000 for this coming year?

Mr. SWIDLER. Yes, sir.

Senator MAGNUSON. And increased cost of rent, supplies-I suppose the details are in your justification?

Mr. SWIDLER. Yes, sir.

TOTAL NEW POSITIONS REQUESTED

Senator MAGNUSON. Then for 86 new positions, $510,000, so in effect, what you are asking for is $729,000 for 86 plus 48; is that right? Mr. SWIDLER. That is right.

Senator MONRONEY. That is 134 new positions.

Mr. SWIDLER. Above what we have now.

Senator MAGNUSON. So that involves appropriating $729,000 for this year's budget more than last year; is that right?

Mr. SwIDLER. Yes, sir; for people.

Senator MAGNUSON. The other two items amounting to about $709,000 are for pay raise and increased costs?

Senator SALTONSTALL. About $750,000, isn't it?

Senator MAGNUSON. Yes, sir; about half of that is for the pay raise for existing personnel.

Senator SALTONSTALL. May I ask a question there, Mr. Chairman? Senator MAGNUSON. Surely.

NEED FOR NEW POSITIONS IN NATURAL GAS INDUSTRY

Senator SALTONSTALL. If you look at appendix A, Mr. Chairman, over half of all the positions you require are in the natural gas industry and you are asking for 26 new positions in that. In other words, more of the 86 new positions than for any other division. Why do you need so many more? Over half of your whole job is in natural gas? Why do you need so many as opposed to electric power and hydroelectric projects, and so forth?

Mr. SwIDLER. The natural gas industry, sir, is predominantly an interstate industry. The pipelines which bring the gas up from the production areas in Louisiana and Texas and the Southwest generally, up to the metropolitan centers, the East and New England, the Midwest and the west coast, are all interstate lines. The Federal Power Commission regulates the construction of the facilities, regulates the price at the well, and it regulates the amount that is charged for transportation service, with the result of regulating the price at the city gate.

Because of the different nature of the natural gas industry, which is 75 percent interstate, as compared with the electric power industry, which is only 10 percent interstate, there is a much more comprehensive scheme of regulation. We have a certificating authority over natural gas companies, for example, that we do not have on the power side. Senator SALTONSTALL. How much of the natural gas is regulated? You say 90 percent of the electric power is regulated intrastate. Mr. SWIDLER. Yes, sir.

INTERSTATE REGULATION OF NATURAL GAS

Senator SALTONSTALL. How much of the natural gas is regulated interstate?

Mr. SWIDLER. I think about three-quarters of all the gas produced enters these interstate facilities. That would leave about a quarter of it, as I recall, which never becomes subject to Federal Power Commission regulation.

(NOTE. Computations using Bureau of Mines figures for 1961 and 1962 revealed that approximately 60 percent of all natural gas sold was transported through interstate pipeline facilities and subject to the Commission's jurisdiction.)

Then there is another fraction-I do not know how large it iswhich is regulated by the State commissions under the Hinshaw amendment of the Natural Gas Act, where if a company buys at the State line, even from an interstate carrier, and resells entirely within one State, it is exempt from our jurisdiction if it is regulated by a State commission.

Senator SALTONSTALL. So what you are telling us, Mr. Chairman, is that 75 percent of the natural gas business is interstate, whereas only 10 percent of the electric power is interstate?

Mr. SWIDLER. Yes, sir; speaking of wholesale transactions.

Senator SALTONSTALL. Therefore, over half of your whole responsibility in manpower, anyway, is in the natural gas business as opposed to the electric power business?

Mr. SWIDLER. Yes, sir.

To illustrate, in specific terms, the New England Electric System and the Boston Edison Co. are not dependent upon interstate connections for most of the electric power they sell. They receive some of it over their interstate lines, but they undertake responsibility for their own bulk supply of electricity. On the gas side, local gas companies are entirely dependent upon these natural gas transmission lines which come up from such States as Texas, Louisiana, New Mexico, and Oklahoma.

Senator SALTONSTALL. Am I correct, then, in saying also that out of your expenditures of $13 million, if we give it all to you, $13,335,000, there is a compensation coming back to the Government in the General Treasury of $2.8 million? Is that a correct figure? I read that. I wondered if I had it all.

Mr. SWIDLER. The amount coming back into the Treasury would be about double that, as I recall; about $5.5 million.

NET COST OF COMMISSION

Senator SALTONSTALL. So the net cost of your Commission is about $8 million?

Mr. SWIDLER. About $7.5 million. We bring back two categories of money into the Treasury, the reimbursement of the costs of administering our Federal licensing program, and also the headwater benefits payments that are due by downstream beneficiaries of the water regulation by upstream Federal hydroelectric structures.

Senator SALTONSTALL. May I ask one more question which has occurred to me?

How much of the gas industry today that comes into our houses is natural gas as opposed to manufactured gas?

Mr. SWIDLER. I should say that the gas industry today is 99 percent natural gas, sir.

(See table below:)

1 More than 90 percent of mixed gas used today is natural gas, therefore, approximately 99 percent of ga consumed by residential customers is natural gas.

MANUFACTURED GAS INDUSTRY ALMOST EXTINCT

Senator SALTONSTALL. Throughout the country as a whole?

Mr. SWIDLER. Throughout the country as a whole. There is very, very little left of the manufactured gas industry. This does not include the butane, the bottled gas business; but the manufactured gas industry is almost extinct, sir.