To prevent the conferring upon an administrative agency of authority to fix rates for public service from being a mere delegation of legislative power and therefore void the legislature must enjoin upon it a certain course of procedure and certain rules of decision in the performance of its functions, with which the agency must substantially comply to validate its action.

A study of the bill would seem properly to lead to the conclusion that preliminary to its birth the master mind in charge of the matter called one of his satellites and issued the command: "Sketch the skeleton of a bill; luck and the bituminous coal commission will fill in the canvas." This defect of the bill is as injurious in section 5 as anywhere, with particular reference to lines 22 to 24, which read:

Said maximum prices shall be fixed with due regard to fair wages paid for the production of coal and a fair return on the capital invested.

It is noteworthy that no standard is set by the bill for the determination of the manner or of the method in which "fair return" is to be measured, but everything apparently is left to the whims of the commission.

This seems to be recognized by Mr. John L. Lewis in his analysis of the bill, when he says:

It has been repeatedly stated by members of the Senate committee during the hearing that adequate legislation to benefit the bituminous industry should take the form of a Federal commission. This is so, because in the general grant of power the commission could promulgate rules and exercise a supervisory control better than could be accomplished by mere statutory regulations, and authority to stabilize the bituminous industry must be coupled with power to protect the public.

Nothing can be plainer than that Mr. Lewis desires complete delegation of the legislative power to the commission, which accounts for the sketchy character of the bill and which we respectfully state is in direct conflict with the adjudicated cases. By way of contrast as to what a bill should be, we refer to the fair return and the valuation sections of the interstate commerce act, as amended, which sections interlock. Section 15-A, paragraph 2, of the act prescribes that-the commission in the exercise of its power to prescribe just and reasonable rates shall initiate, modify, establish, or adjust such rates so that carriers as a whole * * * will under honest, efficient, and economical management and reasonable expenditures for maintenance of way, structures, and equipment earn an aggregate annual net railway operating income equal, as nearly as may be, to a fair return upon the aggregate value of the railway property of such carriers held for and used in the service of transportation.

The valuation of the common-carrier property is prescribed under section 19-A in the minutest detail and specification. Standards are laid down, measures are set, elements of value are stated, and other factors are prescribed which make the act somewhat workable. With these statutory aids, the Interstate Commerce Commission is in a position to act intelligently; but with all that we have before us the very recent argument before the Supreme Court in the St. Louis and O'Fallon Railway Co. valuation case, participated in by some of the leading legal talent of the country. A question naturally arises under Senate bill No. 4490 whether, without any guide posts, it will be possible for any commission to determine "a fair return on the capital invested."

It is well known to those engaged in the industry and those directly or indirectly identified with it that voluntary mergers have been undertaken from time to time, both in West Virginia and in Pennsyl

vania-on that proposition I speak chiefly from information and belief and not from first-hand knowledge-and the subject of valuation and how it was to be reached in justice to all persons concerned has almost invariably been the rock upon which the coal producers have split. How is it possible, therefore, without any standard of measurement, entirely apart from the illegality which we attribute to this section of the bill, to reach any fair basis of valuation; and does not the very fact that the subject is left in such a nebulous status indicate to any fair mind that the professions of the proponents of the bill that they are trying to work out a fair return to the coal industry, are mere words?

Further considering section 5 of the bill, we refer to the sentence reading:

The scale of maximum prices fixed by commission in any case shall be made with reference to the different grades, kinds, and quality of coals marketed in interstate commerce by said licensee, and should any licensee feel that any such maximum price is unreasonable or confiscatory, it may apply to the district court of the United States in the district in which its mines or a part thereof are located, asserting by its bill of complaint the unreasonable and confiscatory nature of such maximum price.

The further prescriptions of the section point out methods of procedure in the court, concluding with the requirement that if the court finds the maximum prices complained of unreasonable and confiscatory, the commission shall be required to set aside its findings and make further and additional orders with respect to such maximum price or prices.

The confusion that is bound to result from the application of this provision is almost beyond comprehension; and the bill, if enacted, is bound to bring about some of the very conditions which jurists and lawyers throughout the country are bending their best energies toward obviating. For instance, in the State of Pennsylvania there are three United States district courts, with two of which we are concerned in this discussion. The eastern line of Clearfield County marks the eastern boundary of the western district, and the western boundary of the middle district. Coal conditions at the common boundaries of the two districts are substantially the same. It is not only conceivable but not unlikely, that under the bill a district judge whose jurisdiction extended over the western district might determine a certain price confiscatory while the judge whose jurisdiction extended over the middle district would hold it fair and reasonable. The chaos that would result is not hard to vision; and the confusion that has made the bituminous coal industry what it is over the past generation would only be the worse confounded thereby. It is submitted that the whole scheme embodied in section 5 is unconstitutional; and were it constitutional it would be unworkable in any event. Competitive conditions which are already severe would become disastrous, and that under the sanction and through the encouragement of a Federal law.

Under section 7, page 8, lines 14 to 26, of the bill, a duty is enjoined upon licensees and employees to exert every reasonable effort to make and maintain agreements concerning wages and working conditions and to settle disputes. It is further provided that licensees may negotiate through an operators' association and that the employees shall be entitled to deal collectively by representatives of their own.

choosing without interference, influence, or coercion exercised by their employers. It is respectfully submitted that the use of the word "influence" is unlawful, perhaps unconstitutional, and that it is in conflict with the spirit of our Constitution and with the very principles for which the U. M. W. of A. has consistently battled for years past. This results from the fact that thereby the employer is denied the right peacefully to persuade his employees. Surely this anomaly has no place in any modern bill purporting to require employers and employees to use every reasonable effort to make and maintain agreements concerning wages and working conditions. As to the general scope of this section, this witness has nothing to say nor offer. That is an economic problem, involving purely industrial questions as distinguished from legal ones; but the point just made is believed to have a sufficient legal bearing to make it worth while to note.

The concluding sentence of that section is also believed to be offensive from a legal standpoint. I refer to the clause which reads, in part:

No such licensee shall make it a condition of employment that the employee shall not join a labor union.

*

We sincerely believe that the provision just referred to is in conflict with the conclusions heretofore announced by the Supreme Court, more particularly in the Hitchman Coal & Coke Co. case (245 U. S. 229), and that it denies the employer the freedom of contract which is fundamentally guaranteed to him, if not in terms at least by necessary implication and by the construction which the Supreme Court has placed upon the subject of contract rights.

Section 8 of the bill is objectionable. It prescribes summary revocation of license to ship bituminous coal in interstate commerce on proof that the licensee has failed or refused to comply with the provisions of the act and the rules and regulations of the commission. This is clearly denial of due process and violates the fifth amendment to the Federal Constitution. Assuming that the bill were enacted into law and the licensee obtained his certificate of authority from the commission, he has thereby achieved or had thrust upon him a property right; and to take it away in such a manner as is outlined in section 8 would result, to the detriment of coal producers, in violation of fundamental law more glaring than the operators from time immemorial have been charged with by the mine workers. Given such authority it is quite readily conceivable to what lengths the Commission might go in the enjoyment and exercise of the rights granted it by virtue of that authority. It is safe to assume that no charges ever made against the operators in the past could compare with the tyranny to which they would be subjected at the hands of the commission and its aiders and abettors if section 8 were to become the law of the land.

Section 7, in terms, commits to the discretion of the bituminouscoal commission the investigation of the fuel service of railroads engaged in interstate commerce, and provides:

(a) That the commission shall make rules and regulations governing such fuel service to prevent discrimination between coal mines or coal fields, and (b) that it may determine the relative costs of railroad fuel coal by considering commercial traffic rates on such coal over the distance it must be transported from any mine or mines to the fueling point on such railroads.

It is respectfully suggested that this is a study that would be much better left to the experienced hands of the Interstate Commerce Commission. If there still continue instances in which the fuel service of the railroads should be examined and practices obtaining among them should be remedied a tribunal that has been functioning for 42 years is much better qualified to study and to regulate the subject than a new body without any experience whatever.

Similar observations apply with respect to section 11, by virtue of which the building of railroad sidings or switches or cutting the lines for sidings or switches to any bituminous coal mine or tipple must first have the sanction of the proposed bituminous-coal commission. The subject is already in general terms committed to the authority and discretion of the Interstate Commerce Commission; and we spectfully urge that its determination should be the onerelied on for the decision of the particular matter.

The interests that this speaker represents are a unit, as far as he has been able to ascertain in the short time given him to prepare for the hearing, in opposing the bill because of its unconstitutionality, its illegality apart from constitutional objections, its crudeness, its sketchiness, and its tyrannical spirit with respect to property rights. I thank you gentlemen of the committee for your courtesy and patience.

Senator GLENN. I should like to ask you a question or two: On page 12 you say:

It is not only conceivable but not unlikely that under the bill a district judge whose jurisdiction extended over the western district might determine a price confiscatory while the judge whose jurisdiction extended over the middle district would hold it fair and reasonable.

Would there be any particular difference between such a situation as you suggest and the one that applies now with reference to public utilities operating in various Federal districts of a State, or in. various judicial districts of a State, where one judge may hold now that a rate is confiscatory whereas in an adjoining district a different opinion may be rendered?

Mr. LIVERIGHT. I do not know that there would be any real difference between the illustration you have offered and the one I have offered. But that is the situation which the higher courts are trying to obviate, because it gives an obnoxious situation in many particulars, and I think you will agree with me, Senator Glenn, that the disposition of the Supreme Court of the United States latterly has been to take jurisdiction less and less of cases that arise in the lower tribunals, and we would then have conflicting decisions on the statute books and on the decision books, permanently as a matter of law without any recourse to the appellate tribunal. I do not find any place in this bill providing a recourse to an appellate tribunal.

Senator GLENN. I had only this particular point in mind: I have not heard of any unreasonable number of conflicts in jurisdictions in utility matters. It seems to me the situation is analogous at least.

Mr. LIVERIGHT. The situation you have depicted is analogous, but I have heard of a tremendous number of conflicts myself.

Senator WAGNER. Might I pursue that inquiry a little further? You cited the Rent cases, and I believe your contention is that it is

only in a case of supreme emergency that the courts have permitted price fixing in what would involve something which would ordinarily not be regarded as impressed with a public interest. Mr. LIVERIGHT. Yes.

Senator WAGNER. As to your criticism of the possibility of different courts fixing different prices, the Rent legislation provided that the municipal court judges in the city of New York, in cases where there was a resistance by tenants on the ground that rents charged were unreasonable and exorbitant, that a municipal court judge might state the reasonable value of the rent, and that provision was held constitutional by the United States Supreme Court. And as a practical question that has worked out all right, because finally a case went to the highest court, and they stated what they regarded as a reasonable income upon investment. I think they held that 8 per cent was reasonable.

Mr. LIVERIGHT. Yes; Senator Wagner, but

Senator WAGNER (continuing). I happen to know about that case, because I wrote the original opinion in our court holding the law

as constitutional.

Mr. LIVERIGHT. Yes; Senator and former Judge Wagner, that is very true, but you will note that in the text of the decision the Supreme Court of the United States stated that these cases went to the very verge of statutory authority, and they seem to have been backing away from that since.

Senator, WAGNER. We did not base it alone on an emergency, but we held that wherever there was a conflict between private property rights and the public welfare that the public welfare is paramount. Mr. LIVERIGHT. Yes; but that was under the police powers of the State of New York, and there is no Federal police power. I think you will find that the affirmance of the cases by the Supreme Court of the United States rested upon the fact that it was emergency legislation regardless of what reason motivated you when you wrote your opinion.

Senator WAGNER. Well, emergency is another way of saying that it is in the public welfare, and that is the controlling consideration. Mr. LIVERIGHT. Of course, that was an enactment under the police power reserved to the State of New York, was it not?

Senator WAGNER. Yes.

Mr. LIVERIGHT. But there is no Federal police power.
Senator GLENN. On page 13, the last paragraph:

Section 8 of the bill is objectionable. It prescribes summary revocation of license to ship bituminous coal in interstate commerce on proof that the licensee has failed or refused to comply with the provisions of the act and the rules and regulation of the commission.

Is that not very much the same character of legislation which you have now in nearly all the States, wherein a certificate of public convenience and necessity is granted to a public utility subject to revocation upon proof that it has failed or refused to comply with the provisions of the State utility act?

Mr. LIVERIGHT. I think not, Senator Glenn. At one time our Pennsylvania Public Service Commission seemed to be of similar mind to yours, and it acted on its own urgings. A case was taken to the appellate court of Pennsylvania and then to the United States