boards may have some jurisdiction. The lack of a comprehensive regulatory scheme may itself give rise to unduly protracted negotiations and a multiplicity of proceedings. The existing mechanisms for reconciling these conflicts deserve our serious attention.

Existing State regulation of interstate EHV transmission

Public utility commissions in 37 of the states have jurisdiction over construction of at least some transmission lines by at least some utility systems but some populous states such as Texas and Ohio exercise no regulation. The state-bystate details appear in Appendix A attached to my testimony.

The limitations on the jurisdiction of the state commissions are numerous and some states permit broad exceptions and exemptions. Of the 37 with some sort of certificate authority, 13 state statutes exempt extensions of facilities in territories already served when the extension is in the "ordinary course of business". Under such a provision, the California PUC has held that it lacks jurisdiction to require a certificate application by one of the participants in the Pacific NW-SW Intertie which plans to construct 500-kv lines aggregating 274 route miles (at a cost of $41 million) as part of the Interie but all within the utility's own service area." Moreover, only 13 of the 37 states with some regulatory jurisdiction over transmission lines have clear authority over lines constructed by municipally-owned systems and only 17 have clear authority over lines constructed by cooperatively-owned systems.

The unequal application of the state regulatory statutes to different classes of transmission lines suggests, at the risk of oversimplification, that the state provisions were often designed to meet the kind of questions which arose when the industry was more fragmented than it is today. They seem oriented toward assuring the stability of the privately-owned utility enterprise by insuring that they do not construct wasteful or unnecessary facilities, or suffer harm from invasions of service areas. The state statutes do not appear to focus sharply on the technical problems of interconnection or utility aesthetics.

As technology makes the electric utility industry increasingly interstate in character it seems inevitable that state regulation alone is inadequate. State law cannot accomplish the coordination of electric generation and transmission on a regional and interregional scale. For example, consider a mine mouth generating plant in New Mexico transmitting to load centers in California by means of transmission lines crossing Arizona (and also, doubtless, interconnected with additional states). The assorted interests at stake in this project, including mining, generation, land use and consumption, may raise interstate conflicts which can only be resolved satisfactorily at a federal level.

On the other hand, many of the land use issues such as aesthetics include a peculiarly local dimension although they also carry larger, even national implications. This Committee examined some of these factors as they involve the choice between overhead and underground transmission during the recent hearings on S. 2507 and S. 2508.

In recent years, there have been several attempts by local zoning boardssome of them successful--to compel utilities to place their lines underground. Thus despite a determination by the Public Service Commission that underground construction was not necessary, the town of Huntington, New York, succeeded in requiring such construction of several miles of 138-kv line, by use of its zoning authority. The Marly and Court of Appeals has also held that local zoning authorities may require underground construction." On the other hand, some zoning authorities have been forbidden to add requirements of underground routing of lines by New Jersey and Pennsylvania cases holding that the state utility commission is the body properly charged with resolving all such issues.

The recent major case before the California Public Utilities Commission, previously cited, serves as an illustration of some of the land use complexities that can arise in the planning and construction of an EHV line. The utility proposed to strengthen its system by means of 500 kilovolt lines. A group of

5 Duncan v. Pacific Gas & Electric Co., 61 PUR 3d 388 (1965).

In re Long Island Lighting Co., 268 N.Y.S. 2d 366 (S. Ct., Suffolk County, 1964), affirmed sub nom. Long Island Lighting Co. v. Horn, 17 N.Y. 2d 652, 269 N.Y.S. 2d 432 (1966).

7 Deen v. Baltimore Gas & Electric Co., 240 Md. 317, 214 A. 2d 146 (1965).

In re Public Service Electric & Gas Co., 35 N.J. 358, 173 A. 2d 233 (1961) and Duquesne Light Co. v. Upper St. Clair Tp., 377 Pa. 323, 105 A. 2d 287 (1954). Duncan v. Pacific Gas & E. Co., 61 PUR 3d 388 (September 14, 1965).

complainants, mainly rice farmers over whose lands the lines were to be constructed, began a proceeding before the California Commission, contending that the utility should obtain a certificate of public convenience and necessity, that the lines would seriously interfere with their agricultural pursuits and particularly with the aerial dusting and spraying of their crops, and that the Commission should order the lines rerouted. The proceeding was a long one, involving over 175 individual parties; the complaint was filed in September 1964; hearings were held in December 1964 through March 1964; the PUC decided the case in September 1965. Rehearing was denied by the PUC in November 1965; and the Supreme Court of California denied a petition to review in March 1966. We understand that construction of other segments of the Intertie proceeded while this case was being tried. The California Commission concluded that the utility was not required to obtain a certificate, since the lines were extensions within territory already served, necessary in the ordinary course of business, and such projects, by California law, need not be certificated. Nevertheless, the Commission took pains to examine the complainants' contentions, much as it would in an actual certificate case, and in particular the alternative route they proposed.

As I shall later explain, we believe that a local evaluation of land use issues should be given great weight in a federal regulatory scheme. It would be unthinkable, however, for a state agency to block altogether the construction of an EHV interstate transmission line for reasons of state policy alone. As a corollary, in the absence of national policy, opponents of a project may well question on the power of a state forum to fully consider their claims.

Existing departmental right-of-way regulations

Where an EHV project is to cross federally-managed lands, rights-of-way must be secured from the appropriate land management agency in the Interior or Agriculture Departments. In the absence of any statute such as the bills we are studying to formulate national transmission policy, these departments have promulgated regulations which go beyond strict land use regulation into matters of electric power transmission. These regulations require that each application be reviewed by the Secretary of the Interior to assure that the proposed facility will not conflict with the power-marketing program of the United States.1 In case of conflict, changes may be required as a condition to granting the rightof-way permit "upon equitable contract arrangements covering costs and other appropriate factors." Moreover, the regulations require that surplus capacity of the transmission facilities be made available for transmission of federal power.

Existing antitrust factors

As this Committee has developed in the hearings on S. 3136, potential antitrust litigation may be a formidable planning factor when two or more utilities wish to join in an EHV project. We understand that the possibility of such litigation has lead to renegotiations of EHV plans. The record of the hearing held by this Committee July 12 and 13, 1966, on S. 3136 sets forth the nature of these problems and the competing views of the public interest involved. Existing restrictions on non-Federal right-of-way

Where EHV lines are not to cross federally-managed lands, rights-of-way must be secured from many owners either by negotiation or by exercise of the right of eminent domain. All but three states grant electric utilities the right of eminent domain in at least some circumstances, but this right is often circumscribed. Several state statutes limit the width of the right-of-way which may be secured through eminent domain; others include a specialized prohibition such as that against taking land owned by a railroad.

Perhaps the most serious of the difficulties in this field arises from the unavailability of the eminent domain privilege in some states to out-of-state corporations. Even if the line is being built jointly with a local untility corporation, the problem of joint ownership remains.

The adequacy of existing statutes to facilitate the construction of EHV transmission lines was studied by the Legal Advisory Committee to the National Power Survey. The Legal Advisory Committee, which consisted of attorneys associated with all segments of the electric utility industry, concluded: "

10 36 Code of Federal Regulations 251.50-251.52. 43 Code of Federal Regulations 2234.4-1. 11 National Power Survey Report (1964), vol. II, p. 386.

"In some states, existing statutes could not be used to condemn a right of way to be owned in common if one owner were a foreign corporation." The Legal Advisory Committee recommended:

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"Consideration should be given to amending the Federal Power Act to provide that an entity desiring to participate in the construction of an interstate transmission line for the purposes of power pooling, or interchange, could secure a license for such a line from the Federal Power Commission which would permit such an entity to condemn the necessary rights of way in a manner similar to that provided in Section 21."

THE NEED FOR FEDERAL REVIEW

All the economic, social and engineering factors indicate that EHV transmission should, and will, become an increasingly important part of our electric industry's planning and building. The question with which we are faced here today is whether this EHV planning and building should be under governmental review.

It

I believe, as I think most of us do, that a pluralistic power industry, with independent yet cooperating units under many types of control-private, cooperative, municipal, and federal-is the best type of system we could have. But such a coordinated pluralistic system can grow and function to its full potential only if it does so in an orderly way. The nationwide coordination of our electric power systems must develop gradually from local interconnection through larger and larger regional and interregional interconnections. will do so under the aegis of numerous different entities, private and governmental. The task facing the power industry is to assure that this development proceeds in such a way that each new addition is as useful as possible to the interconnections of which it is or will be a part; that facilities are not needlessly duplicated; that new construction is planned with an eye to future coordination as well as to the needs of the present; that the benefits of our increasing technological capability are realized as widely as possible throughout the industry; and that systems which by economic and engineering logic should be coordinated are not excluded by their neighbors. With foresight of this kind, our power industry can continue to improve in economy, reliability, and social responsibility.

One of the traditional functions of a regulatory commission-state or federalis to prevent duplication of facilities where it would be economically wasteful. Indeed, the whole concept of a public utility as a business somehow different from the ordinary competitive industrial concern depends primarily on the idea that the grant of a regulated monopoly can, by avoiding the construction of two or more plants to perform identical functions, result in better and cheaper service for the community. The electric industry has, for many years, had particular difficulty in avoiding duplication not justified by economic realities, caused in part by the rivalry between its public and private and cooperative sectors and, in some instances, by ignorance of the plans or capabilities of neighboring systems. In either case, the result is excessive expense-in money, labor, and land-which could have been avoided and which, once incurred, may not result in the best possible service. If, on the other hand, certification of EHV projects were the rule, there would be a forum where the intra-industry differences which may prevent adoption of the best plan could be resolved. The knowledge that a procedure of this kind would be required might itself provide the impetus for systems to consider possibilities for cooperation that previously seemed impossible. The same forum would act as a clearinghouse for information, and so assist the industry in its planning by making clear to its members what their neighbor utilities intend for the future. These functions are, of course, of particular importance with the growth of interconnection.

If each local electric system were still isolated from its neighbors, a certificate of public convenience and necessity could rest on the relatively simple findings that there was a need for service and that the proposal was adequate and feasible. But with 97 percent of the industry interconnected to some degree, and with more and stronger interties being built and planned each year, the effect of a particular transmission line project may be felt over much of the nation. In addition, each project must be considered from the point of view of its impact on our nation's power system as it will be five, ten, or twenty years in the future. Under such circumstances, it is not too much to say that a

12 Id., p. 386.

national forum for the bringing together of affected parties, the discovery of all the relevant facts, and the development of the project best suited to the present and future public interest is a practical necessity.

The idea of a forum, where all aspects of a new transmission line proposal can be thoroughly explored, has another attractive feature. It can stimulate the company, city, or government agency planning the project to itself consider every phase of its design and construction, and it can heighten for the top echelons in management their sense of a direct responsibility for justifying every aspect of the proposal in the public interest. Focusing public attention on EHV projects can help promote these desirable results. For example, the public is entitled to assurance that stability studies have been made of the potential impact of credible, if unlikely, events on the proposed transmission systems and that a professional judgment vouches for the stability of the design. The requirement of an agency proceeding, where those responsible for a proposal must justify each aspect of it on its own merits, is in my view the best way to insure this kind of thoughtful and well-coordinated planning.

We have spoken so far of the benefits of economy and reliable service which we believe the proposed legislation would bring about. These have always been primary concerns in any utility service, but there is another consideration, which has more recently become a matter of major importance to the public, that is, the social issue of land use. The problem most frequently arises, at least when the electric industry is under discussion, as a question of preserving the natural beauty of the landscape; but it has other important implications as well. Conservationists are concerned to preserve natural beauty or wildlife habitats while property owners may present a case against the invasion of residential areas by transmission lines. Some projects might threaten areas of historic interest or special recreational attractiveness. The utility industry has, to its credit, made outstanding efforts to reconcile its own needs for more land and new plant with the demands of the public at large for preservation of the landscape. But here, as in the case of electric service itself, we ought not to be satisfied with less than the best solution available. Congress has, in a different sector of the electric industry, recognized the problem and given the Commission power to deal with it. Section 10 (a) of the Federal Power Act was amended in 1935 to make the recreational possibilities of hydroelectric sites an explicit issue in licensing proceedings. The Commission has accepted that responsibility and in my opinion, is discharging it well.

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While it has actually denied licensing of a project, though feasible and beneficial, on this ground, the Commission has generally taken pains to reconcile the need for water power with the myriad demands of recreation, environmental beauty, and wildlife conservation, which the statute directs it to consider. Many of these same considerations are as valid for transmission line projects as for hydroelectric dams, and the Commission has early used it power under Part I of the Act (limited to primary project lines) to require aesthetic treatment of transmission lines. Such factors are as much a part of the public convenience and necessity as is the need for ample supplies of power at reasonable cost. Why review by the Federal Power Commission?

It is appropriate that the review function contemplated by these bills be performed by the Federal Power Commission, the federal agency entrusted by the Congress with federal regulatory and informational responsibilities for the elec tric utility industry. The FPC is an independent regulatory commission. We manage no power lines or electric systems. The Commission is in no sense a competitor of the systems it would be asked to review under these bills.

One of the important byproducts of the Commission's National Power Survey was that it brought together on a joint project all of the diverse segments of the industry in an atmosphere which was conducive to cooperation. I believe it is fair to say that the Commission presently enjoys a high degree of confidence of all sectors of the industry. Moreover, our increasing attention to the aesthetic quality of the environment should also reassure those who are concerned with the protection of our natural resources and the promotion of a higher quality of living. The FPC would appear to be the logical agency to which to entrust the certification of EHV transmission lines.

13 Namekagon Hydro Co. v. F.P.C., 216 F. 2d 509 (CA 7 (1954)).

14 In licensing Project No. 1854 (Priest River), an early case, the Commission required location of all transmission lines "with due regard for the recreational and aesthetic values of the locality" and to "preserve to the maximum degree warranted, the natural environ ment features." 2 FPC 1037, 1040 (1941).

WHY CERTIFICATE REGULATION RATHER THAN VOLUNTARY CONSULTATION?

The central difference between S. 2139 and S. 2140 is the incorporation in the latter bill of the principle shared with S. 1472 that no jurisdictional facility may be constructed without a certificate of public convenience and necessity. I would like to explain, therefore, why the Commission feels that this provision, admittedly more stringent than the "voluntary" approach of S. 2139, will protect the public interest more effectively.

First, it cannot be overemphasized that today every system depends not only on its own facilities but on those of its interconnected neighbors. It would probably cause no surprise if one were to point out that a single poorly designed or inadequate line on a large utility system can cause the collapse of service over its entire service area. And the fact that the same area might be served by the interconnected systems of several independent utilities would not change the physical phenomena of transient instability: the outage would be as extensive whether the lines involved were under one ownership or a dozen. When it comes to reliability of service, the public should not have to rely exclusively upon independent managements-regardless of their efficiency and their desire to provide their own customers the best possible service-to voluntarily consider the needs of neighboring systems, particularly when these systems are part of a different segment of the industry. By the same token, it is appropriate that the public through its government should assume a share of the responsibility for the safety and reliability of interstate EHV electric transmission systems.

Anotehr important benefit to be gained from the grant of compulsory powers such as are contemplated by S. 2140 is the assurance that small systems, regardless of the nature of their ownership, will be able to share in the benefits of interconnection. Under S. 2139, the Commission would have no real control over the design, capacity and routing of the line, and it would be unable to help small systems, some of which may be in active competition with the entity proposing to build the new line, to share in the benefits possible from the new technology.

The Commission's experience under the voluntary, consultative coordination provisions of section 202(a) demonstrates that some systems-though fortunately not industry as a whole-are apt to decline coordination proposals for strong relations with their neighbors. The pending legislation, however, would give these systems an opportunity to make their case for inclusion in the project from the very beginning—not as appendages, attaches as an afterthought, and very likely at greater cost than if they had been designed into the original plans. In the matter of aesthetics the consultative approach could well prove particularly ineffective. Utilities are under a public obligation to minimize their costs and properly take great pride in their having done so. It is understandable, therefore, that they might sometimes resist proposals to spend funds on undergrounding or other appearance improvements. Under S. 2139, some applicants might consult for the statutory period, but go ahead as originally planned thereafter rather than submit to costly aesthetic conditions.

In my judgment, it would be often unfair to the managements of the utilities to expect them to undergo substantial outlays at their customers' or stockholders' expense on the basis of informal consultations and voluntary response to public counsels. Settlements arrived at in formal proceedings can be justified to the customers and the board of directors. But it is somewhat more difficult to explain the basis for altering plans if a two-year wait is all that is necessary to let it go on.

Finally, I seriously question whether the Congress-as a matter of fundamental policy-would consider undertaking measures to promote and facilitate EHV constructions unless accompanied by a realistic and comprehensive regulatory program. In our view, the most effective way of accomplishing this is through compulsory certification. The consultative approach would merely give the appearance of regulation without providing sufficient means for enforcing the public interest once it is determined.

Precedents for the proposed certificate legislation

Regulation of the type proposed in this bill is not a new idea. Not only has the experience of many states shown that it can work successfully without undue interference with the industry, but the Federal Power Act itself was, as originally introduced, to have included a certificating power very similar to that we now propose. The original Wheeler-Rayburn bill, Title II of which became Parts II and III of the present Federal Power Act, included certificate jurisdiction over construction and abandonment of utility facilities. This pro