STABILIZATION OF BITUMINOUS COAL MINING

INDUSTRY

TUESDAY, FEBRUARY 19, 1935

UNITED STATES SENATE,

SUBCOMMITTEE OF THE

COMMITTEE ON INTERSTATE COMMERCE,

Washington, D. C. The subcommittee met pursuant to call at 10: 45 a. m. in the caucus room, 318 Senate Office Building, Senator M. M. Neely presiding. Present: Senators Neely (chairman), Moore, and Davis.

Present also: Hon. Joseph F. Guffey, a Senator from the State of Pennsylvania.

The subcommittee had under consideration S. 1417, a bill to stabilize the bituminous coal mining industry and promote its interstate commerce, and for other purposes, which follows:

[S. 1417, 74th Cong., 1st sess.]

A BILL To stabilize the bituminous coal mining industry and promote its interstate commerce; to provide for cooperative marketing of bituminous coal; to levy a tax on bituminous coal and provide for a drawback under certain conditions; to declare the production, distribution, and use of bituminous coal to be affected with a national public interest; to conserve the bituminous-coal resources of the United States and to establish a national bituminous-coal reserve; to provide for the general welfare, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I-THE BITUMINOUS-COAL INDUSTRY

SECTION 1. It is hereby recognized and declared that the production and distribution of bituminous coal in and throughout the United States are affected with a national public interest, and that the right of the public to constant and ample supplies of coal at reasonable prices, the conservation of all remaining bituminous-coal deposits in the United States by scientific and economical mining and marketing of bituminous coal, the maintenance of just and rational relations between the public, owners, producers, and employees, the right of owners and producers to fair returns upon their investments and of employees to just wages and working conditions, and the general welfare of the Nation require that the bituminous-coal industry be regulated as a public utility. It is further recognized and declared that all production and distribution of bituminous coal directly bear upon and affect its interstate commerce and national public service; and that the elimination of unfair trade practices which have tended to destroy the bituminous-coal industry and its interstate commerce is dependent upon the elimination of unfair practices in relation to hours of labor, wages, and conditions of employment.

NATIONAL BITUMINOUS COAL COMMISSION

SEC. 2. There is hereby established in the Department of the Interior a National Bituminous Coal Commission (herein referred to as "Commission ") which shall be composed of five members appointed by the President, by and

with the advice and consent of the Senate. The Commission shall annually designate its chairman, and shall have a seal which shall be judicially recognized. The first member shall be appointed for terms of two, three, four, and five years, respectively, the term of each to be designated by the President; but their successors shall be appointed for terms of five years, except that any person appointed to fill the vacancy shall be appointed only for the unexpired term of his predecessor in office. The Commission shall have an office in the city of Washington, District of Columbia, and shall convene at such times and places as the majority of the Commission shall determine. Three members shall have no financial interest in the mining, transportation, or sale of coal, oil, or gas; one member shall be a representative of the producers; and one member shall be a representative of the employees. The Commission shall, without regard to the provisions of the civil-service laws, appoint a secretary and necessary clerical and other assistants. The members shall each receive compensation at the rate of $12,000 per year and expenses. Such Commission shall have the power to make and promulgate all reasonable rules and regulations for carrying out the provisions of this Act, and shall annually make full report of its activities to the Secretary of the Interior for transmission to Congress. Upon all matters within its jurisdiction coming before it for determination, it shall have the power and duty of hearing evidence and finding facts upon which its orders and action may be predicated, and its findings of facts supported by any proper evidence shall be conclusive upon review thereof by any court of the United States.

TAX ON BITUMINOUS COAL

SEC. 3. There is hereby imposed upon the sale of all bituminous coal produced within the continental United States a tax of 25 per centum on the sale price of such coal at the mine, such tax to be paid the United States by the producers of such coal, and to be payable monthly for each calendar month, on or before the first business day of the second succeeding month, and under such regulations, and in such manner, as shall be prescribed by the Commissioner of Internal Revenue: Provided, That in the case of captive coal produced as aforesaid or coal coked or processed by the producers, and for which no sale price is ascertainable, the Commissioner of Internal Revenue shall fix a price therefor at the current market price for the same quality of coals in the locality where the same is produced: Provided further, That any such coal producer who has filed with the National Bituminous Coal Commission his acceptance of the Code provided for in section 4 of this Act, and who acts in full compliance with the provisions of such Code, shall be entitled to a drawback equivalent to 90 per centum of the amount of such tax, to be allowed and credited thereon in such manner as shall be prescribed by the Commissioner of Internal Revenue. Such right or benefit of drawback shall begin upon the producer's filing with the Commission his acceptance of said Code in such form of agreement as the Commission may prescribe.

BITUMINOUS COAL CODE

SEC. 4. The provisions of the antitrust laws of the United States shall not apply to any producer of bituminous coal who have accepted and obligated himself to comply, and who complies with the provisions of this section, or to any marketing agency or board created under or operating in compliance with this section. The provisions of this section shall be formulated by the Commission into a working agreement, to be known as the "Bituminous Coal Code", and herein referred to as the "Code." Producers accepting and operating under its provisions are herein referred to as Code Members."

For the purpose of carrying out the declared policy of this Act, the Code shall contain the following conditions and obligations:

PART I. PRODUCTION.-(a) A national coal-producers' board and twenty-four district boards of coal producers shall be organized. The national board shall consist of representatives appointed for the term of two years by the various district boards, on the basis of one representative for each district for the first fifteen million tons or fractional part thereof and an additional representative for each additional fifteen million tons or major fraction thereof of annual output of coal in the district during the preceding calendar year, as shown by the records of the United States Bureau of Mines; and, in addition, five

members selected by the national organization of employees representing the preponderant number of employees in the industry. Each district board shall consist of six members, five of whom shall be producers elected for a term of two years by the coal producers of such district voting in the proportion of their annual tonnage output for the preceding calendar year, and one of whom shall be a member selected by the national organization of employees, above mentioned in such district.

The national and district boards shall each have power to adopt bylaws and rules of procedure, subject to approval by the Commission, and to appoint officers from their own membership, to fix their terms and compensation, to provide for reports, and to employ such committees, employees, arbitrators, and other persons necessary to effectuate their purposes. The territorial boundaries or limits of such twenty-four districts are set forth in the schedule entitled "District" and annexed to this Act: Provided, That the territorial boundaries or limits of any district or districts may be changed or districts may be divided or consolidated, after hearing, by the Commission.

(b) The national board shall determine the standard maximum tonnage to be allotted the various districts, in doing which equal consideration_shall be given the production history of the district as shown by its average annual output since 1918 and its current service as shown by its output for 1934. The mean average thus determined shall be combined and the proportions thereof for the respective districts shall fix the maximum district tonnage and be employed in fixing subsequent periodic district allotments. District allocations may thus be made by the national board, if reasonably necessary, to cover coals of distinct natural character or use, if suggested by any district board or boards.

(c) The national board shall from time to time as directed by the Commission allocate to each district a periodic maximum output marketable for the district after the district board is given an opportunity to submit its own estimate of the tonnage which the owners in the district believe they will be able to dispose of during the period contemplated and all such estimates shall be laid before the other district boards. Such periodic allotments to the various districts shall maintain the relative proportions fixed by the standard allocation. Should any district board be dissatisfied with the periodic allocation, it may refer the matter to the Commission which may increase such periodic maximum allocation upon finding that the current market requirements for the coal or coals of such district and/or the current market service of the coal or coals of such district warrant such increase in the public interest.

(d) The district boards shall determine the proportions of the standard quotas of tonnage for each mine within the respective districts, to be based on the average annual output of the mine since the year 1929 in its relation to the standard maximum allotted such districts: Provided, That in the first allotment of quotas to mines, if it appear that the mine or mines of any producer has been closed during said years and its or their market service has been transferred to another mine or mines of such producer in such district, the quota assignable to such closed mine or mines shall, on application of the producer, be added to the quota or quotas of the mines of said producer remaining in operation. Separate mine quotas may thus be made by the district boards, if reasonably necessary, to cover coals of distinct character, if approved by the national board.

(e) The district board shall determine, for such periods as the Commission may direct, periodic quotas in proportion of the standard tonnage, which each of the coal mines in the district is allowed to produce: Provided, (1) That in any district in which a standard tonnage has been determined for any class of coal, a separate quota may be fixed as respects that class; and (2) that the quota as respects coal or any class of coal shall be according to the proportion of the standard tonnage of coal, or of the class of coal, as the case may be, found for the coal mines in the district.

(f) If any producer is aggrieved by the decision of the board as to the periodic quota allotted a mine, he may submit his grievance to the Commission which shall give notice to the district board and grant a hearing thereon. Upon finding that the current market requirements for any coal or grades of coal produced at such mine and/or the current market service of the product of such mine, reasonably warrants an increase in the quota therefor in the public interest, the Commission may so order.

(g) Upon the failure or refusal of the national or district boards to make the allocation or to allot quotas as herein provided, such allocations or quota allotments shall be made by the Commission.

(h) No code member may transfer his quota or any part thereof from one mine to another except upon express approval by the Commission, after hearing, with due notice given the district board and representatives of the employees affected.

(i) Every second year after the passage of this Act new standard maximum allocations to districts and new standard quotas to mines shall be made in accordance with the provisions hereof, but upon the basis of the output during the preceding period of operation under the Act. In its first annual report to the Secretary of the Interior for transmission to Congress, the Commission shall report fully upon the system of allocation herein set up with such recommendations concerning the same as may be deemed proper.

(j) Any Code member desiring to open a new or abandoned mine, for which no quota has previously been allotted and any person, firm, or corporation desiring to become a member of the Code and to open a mine, and to receive a quota for such new operation, shall file with the Commission his application therefor. The request for a quota assignment to such new operation shall be referred to the national and district boards which shall within thirty days report to the Commission all the facts thereon, and the Commission shall hear the parties in interest, and, if it finds that increased demand for such coal or a market shortage therein requires such quota assignment in the public interest, it may so order.

(k) The expense of administering the Code by the national and district boards shall be borne by those subject to such boards, each paying his proportionate share, as assessed, computed on a tonnage basis, in accordance with regulations proscribed by such boards with the approval of the Commission, PART II. MARKETING.-The national, district board, and code members shall accept the jurisdiction of the Commission to approve or to fix minimum and maximum prices as follows:

(a) The Commission shall ascertain the cost of production free on board the mines, including the cost of labor, supplies, power, workmen's compensation, taxes, insurance, administration, and all other direct expenses of production, but not including depreciation or depletion, in each of the producing districts as defined herein. The average cost free on board the mines thus ascertained for the period for each district taken to the next highest even cent per ton, shall be announced by the Commission not later than March 1 of each year as the fair minimum market price in each such district during the ensuing twelve months beginning April 1. The determination of cost for each year beginning April 1 shall be based on the actual costs for the preceding calendar year, adjusted, if necessary, to compensate for any changes in wage rates, hours, or other basic cost factors.

(b) With the adoption of the Code the several district boards shall respectively submit for the approval of the Commission a list of maximum prices free on board the mine for coal and grades of coal produced within the district. Upon failure of a district board on demand of the Commission to submit such lists and the information upon which the prices predicated, or upon the refusal of the district board to modify any such maximum price or prices, the Commission is authorized to fix the same at not less above the minimum prices as will provide a fair return upon the investment and with the view of permitting competition within the bracket of minimum and maximum prices. Twenty days' notice in writing shall be given to any Code member to be affected by the order of the Commission, and at such hearing anyone in interest may be heard. Upon approval of prices submitted or order fixing the same, notice thereof shall be mailed to each Code member in the district and no coal shall be sold free on board the mine by any Code member within the district at less than the minimum or more than the maximum price so found: Provided, That such price bracket shall be for periods of six months ending the last day of March and September of each year: And provided further, That a Code member may sell coal for less than the minimum prices for the use of persons employed in and about the mines.

(c) The Commission may require reports from producers and may use such other sources of information available as it deems advisable: Provided, That no information obtained from a producer disclosing costs of production or sales realization shall be made public without the consent of the producer