Deep South Oil Company of Texas v. Federal Power Commission

BROWN, BORAH, Bеfore RIVES and Judges. Circuit Judge. BORAH, Circuit petition This case comes to us on the Deep Oil South of Texas review, pursuant 19(b) to Section Act,1 an the Natural order determining Power Commission Federal Deep “natural-gas South is a com pany” as that term is defined in the 2Act. company” “natural-gas 717r(b). defined to 1. 15 U.S.C.A. person engaged 2(6) By “a of the National Gas mean the trans- Section 884' unintegrated small, South is ters which are located the leases near

corporation engaged exploration pro- wellheads from which gas. for and duced. is the of oil and There it and deliv- measured properties passes Its ered and title in the State thereto Texas are located gas gas Texas, Thereupon Gas. and con- moves its oil and facilities the then gas metering points equipment, sist including from of oil and these a well separa- converging lines, pro- pipelines network flow heaters and larger tors, together tanks, gressively valves, purchaser’s with such size the op- processing plant required Winnie, Texas, and meters as are which the is eration of re- located the its and As about seven miles from wells .lines. by us, Deep Deep During vealed South record leases. the course the before movement, gas purchased this South and owns or has an the from pipe- interest Big Deep commingled operates Hill South is fourteen wells in the gas pur- County, lines Field with located Jefferson Texas. which Texas Gas has "casinghead produce operators chased Five of from the area. these wells other gas”3 processing plant the produce At the and Winnie all of nine “full stream” casinghead “gas gas gas gas gas pur- gas,”4 or well the and well all of and by from processed chased for re- these wells used in Texas Gas is which is not hy- drilling vapor Deep liquefiable moval purposes and South water field gas operators processing, drocarbons. Texas Gas After other is sold to discharged pursuant is Corporation a common sales head- to a contract into February 15, pursuant to a between er and contract which was executed on Transmis- twenty years. Texas Gas and Texas Eastern This for a term of gas Corporation portion agreement a sion such provides terms trans- flows into the latter’s interstate Deep owns leases and lands which South transportation Big mission lines for and acquires are Hill area sale in interstate commerce. This performance “dedicated” to the pipe- Gas and thе tract between Texas gas contract, de- and shall be company fifteen is for minimum of a Deep wells lo- at each of South’s livered gas years purchase and its terms the full dedicated leases in a cated stream, and Texas between South contract state, in its natural without gas may pro- and the which Gas any gasoline or extraction therefrom and leaseholds cov- from the lands duced hydrocarbons.5 liquefiable Prior other per- thereby “dedicated” ered are contract, delivery “cas- under to inghead gas” Texas between of the contract formance separated oil is from the Texas and Eastern. Gas sep- produced a field with it is gas” arator, proceeding is treat- and “full stream before the Commis- gave petition for so- rise to this removal of water at a ed for the sion by Deep was initiated South “freewater knockout.” Within review called conformity 1.7(c) when, point Rule at which the with few feet and Rules of Practice aforementioned mechanical the Commission’s Procedure, leaves the petition devices, for a decla- passes me- it filed into Texas Gas’ dioxide, fair- portation in addition to otber com- carbon in interstate nitrogen, ly mercе, sucli common diluents in interstate com- or the sale compounds, sulphur helium, and various such for resale.” merce of mud, drilling rust, impurities 717a(6). such as §O.A. and dirt. sand pro- gas” “Casinghead is is “straight gas gas wells,” “Full stream along oil from an oil well duced “gas wells,” wells” are distillate gases, ordinarily of fixed consists and principally produced synonymous terms bulk, with other methane “gas gas,” well which con- therefrom tains fewer gas lighter ranging hydrocarbons from the hydrocarbons Iiquifiable than heavy quite ones. to the down ones Mixed produced with oil. association hydrocarbons are water with those sulphide gases, hydrogen All italics herein ours. vapor, acid requested completion “production ratory order6 which before the gathering” petitioner’s exempt declare that from the Nat- Commission to are not ural to Texas Gas Gas the exclu- sales of natural reason of sionary provision subject 1(b) under the of Section 717-717w, Act, resolving question In Act. 15 U.S.C.A. §§ “natural-gas rejected petitioner petitioners’ claims meaning “casinghead gas” company” the Act not “natural within gas” meaning provisions Act, the Com- within the pro- expressly This mission’s ceeding, No. 174-A.7 examiner’s con- Order affirmed the nothing clusion No. G- Nat- Commission’s Docket that there is in the purposes supports petitioners’ ural for was consolidated the Act which hearing regulation proceedings sim- of on two assertion the Act under that petitions by gas ilar filed confined consists Shell Oil to fuel which Refining entirely Company, and Oil & “almost of ethane.” Humble methane and Likewise, Nos. and that Commissioner’s G-4671 the Commission concluded Docket hearing G-5261, respectively. After a there was that no merit in the contention presid- upon record, question the facts of sales in “manu- the the are for petitioners’ And, examiner decided that facture” on and not for “resale.” gas, them, finding sales the of and each were basis of its of that the entire gas gas in of producing interstate commerce movement of the from the purview for resale the processing plants within the wells to the by Act, Natural Gas reasons of that consumers in other rupted is an uninter- states sales, petitioners such each of the flow, Commis- and continuous the “natural-gas regu- subject company” gas sion which is determined that the provisions lation under the Act. by the petitioners sold “in interstate sold respective Accordingly, petitioners’ Finally, commerce.” the Commission prayers declaratory de- for relief were concluded empt is ex- that nonе of the sales nied. from for under the Shell, language exemptive Deep South, the reason that the and Humble Oil 1(b) nullify thereupon exceptions Section does the clear not filed decision to the presiding grant jurisdiction specific examiner and Com- and over the argument hearing mission, gas after oral “sales com- of natural in interstate thereon, September 9, 1955, on issued its merce for resale.” Thereafter Opinion accompanying agreeable No. 284 order provisions Section to the affirming the 19(a) Act, petitioners decision the examiner appli- filed the for the reasons In rehearing order, therein stated. its cations for of this which opinion the Commission noticed applications 4, 1955, the fact were November proceedings pre- that these consolidated denied order of the Commission. ques- sented to it for South, the first time the Whereupon, Deep Shell, and Hum- tion whether sales of natural made Oil, review,8 petition each filed ble for supplemental peti- 6. In its amended and Deep and are not referred South’s sought declaratory South petition for review or discussed its respect from lief the Oommission with brief. single gas ato sale made from a well in Magnolia 7. See Refugio Cоmity, Subsequent Texas. Cir., Federal Power hearing presiding before the exam- F.2d certiorari denied exhausted, iner this well became 1 L.Ed.2d for a discus- equipment was all dismantled and de- sion No. Order 174-A. liveries of from the well discontinued. reason, Deep Company’s petition For South withdrew for Shell Oil review request respect 15,900 its for relief with to this been docketed as cause No. being well, company’s Refining the withdrawal made Oil Humble & argument petition time before the Commis- has been docketed as cause No. opinion 15,884. sion. The Commission’s and or- The three cases were consoli- well, purposes argument der contain references to this but dated and sub- questions relating are now moot mission order of Court entered June prices at September nizant of praying the fact orders distributing companies can 4, 1955, set aside which local be and November very large part entirety fur- sell deter- are that this Court their required petition- prices mined ther determine and declare pipe- pay “natural-gas company” with- the same to interstate er is not a urged strongly companies. meaning It was and that the Act public cannot sales are not to the protected prices exploitation of the Commission. chаrged for natural unless Govern- proceeding as In this review ment shall control not charged by proceeding was had before companies which deliver Commission, Deep two is raises South consumer, also to the but urged point principal sues. first prices cooperate companies of all made it are is that the sales bringing wells from the grant specific affirmative within the utimate jurisdiction over to consumer distribution.9 in the state of for “in” commerce sales interstate reports on bill Committee circum reason all the relevant specifically became Act in are “local” stances establish that resale, stated that or so-called “sales for agree. our not In We do character. opinion wholesale in commerce sales interstate leg statutory language, (for example, by producing com- sales history prior decisions islative panies distributing companies) to contrary Supreme compel a Court * * * [by the have been considered passed conclusion. the Act was When character, and to not in be courts] local Congress the national in declared Congressional even in the absence doing policy in so as follows: regulation.” not action State to (a) 1. As disclosed “Section Congress Accordingly, provided in Sec- reports Trade Com- the Federal 1(b) following: of the Act the pursuant made to S.R. mission provisions “The this act shall session) Congress, (Seventieth first apply transportation to nat- reports pursuant to made and other commerce, ural in interstate to authority Congress, here- it is the by the sale in interstate commerce of business declared that natural resale ultimate for selling transporting and natural ** public consumption pub- ultimate distribution to the natural-gas engaged companies public inter- lic is affected with a transportation sale, such or but shall regulation est, Federal and that apply any transporta- other relating transporta- to the matters * * * tion or sale of natural sale natural and the tion of gathering or to foreign in interstate and thereof gas.” natural necessary public commerce gas” is “Natural defined in Section interest.” (5) of the Act to mean “either natural hearings which were had before In the gas unmixed, any mixture of natural Committee on Interstate the House gas,” 2(7) and artificial and in Section adoption Foreign prior to the Commerce “interstate commerce” is defined as com- Congress fully Act, informed was any point merce between in a State regulation and need for such as among any point thereof, outside or between cog- it was considerations other points within the same State but separate opinions 1956, however, H.R.Rep. Cong., Sess., No. 75th 1st judgments filed and entered will be 1-2; S.Rep.No. Cong., 75th 1st See F.2d case. each Sess., 1-2. Hearings on House Committee before Foreign Commerce Interstate Cong., p. 142. 1st Sess. 75th H.R. Having any place thereof, purpose in- in mind but the obvious outside place with- there sofar such takes which was to as commerce see regulation was effective all United States.” gas, wholesale would sales of natural Supreme decisions, In numerous incongruous exceedingly be an if a result recognized Act Court has primarily planned to statute so motivated and designed protect consumer bring regulation about con- such were against exploitation at interests opposite strued so as to result. obtain the gas companies, private hands natural do, hold, petitioner To us have would particular reference may up that it complete set interests its own Court, independent producers the freedom from Wis- v. State Co. price of its wholesale sales would consin, permit it, inclined, if it were so to en- said: gage every exploitation “ * * * we believe designed prevent. Act was We cannot legislative history indicates therefore subscribe to the view that the gressional give Com- intent to contemplates petitioner rates over the mission independent other producer should be gas in natural of all wholesales of engaged free of regulation, if it is commerce, whether in the sale in interstate commerce of company pipeline or not and wheth- for resale. occurring during, before, or after er pipe- by an interstate transmission petitioner’s As to claim that company.” its character, sales are “local” in we purpose emphasizing inAnd plain think it that “in are sales consumers, protect Act to Natural Gas interstate commerce” for the obvious U.S., page at at 685 of 347 the Court gas originating reason that the of sale page that: S.Ct. observed 800 of 74 in one state and its transmission and “Regulation delivery in inter- sales to distributors other by made for resale commerce state constitutes interstate commerce. natural-gas independent so-called Federal Power Commission v. National essentially producer different is not Pipeline Company America, Gas 315 such sales when from 62 by of an interstate an affiliate made 1037. Cf. Federal Power Commission cases, company. pipeline In both Co., v. East Ohio Gas 338 U.S. charged may direct have a the rates 94 L.Ed. 268. The fact on the effect and substantial that the sales are made at the wellhead ultimate consumers. paid particular point is immaterial for the at against custody gas ex- of consumers which the title and pass Protection arresting purchaser, hands of natural- ploitation at the without primary gas companies was the aim its movement to the ultimate interstate lation ulation from federal ral-gas producers page Power [88 protection Co., exempting Natural Gas have supra, 64 S.Ct. 333]. repeatedly failed, by amendatory Attempts independent ^[281] U.S. [591] Act. Federal Hope to weaken page Natural legis- natu- reg- petitioner’s titioner nois gas ly destination, Public Service to the continuous movement of which it sells at the wellhead. Pe admits, as, nature of the business. own brief testifies does Gas Co. v. Co., not affect the essential L.Ed. 371. course, must, Central Illinois eloquent it Here, 503- Illi gas achieve the same result “that there is a refuse continuous flow we interpretation Deep gath a strаined from the ering South wells into language.” existing statutory system Gas; of Texas that Deep gas Ed.2d 48. Cf. Cities South Service Gas mass of which the Co. continuously Cir.,, gas Commission, 10 part Federal Power moves becomes a through gathering system a F.2d denied into certiorari processing plant; movement L.Ed. 664. that plant processing continu- also Petitioner insists ous; move- is a continuous there casinghead gas which sells is not gas the outlet ment natural meaning gas” “natural within the processing plant to both the Act. For answer we deem it suffi ”* * * and intrastate destinations. say nothing in the cient to that there is light Accordingly, all and in the general ‍‌​‌‌​‌‌‌​​​​‌​​‌​​‌‌​‌‌​‌​‌​​‌‌‌‌​‌​‌‌​‌‌‌‌​‌‌​‌‍language used in the definition facts, hold we uneontroverted gas,” quoted above, of “natural petitioner when the was sold suggest special un that a or narrow or journey had in interstate commencedits natural was definition of “natural” commerce. Dictionary meant. Boone’s Petroleum more im no We are likewise (1952) defines natural as a mixture pressed with than was the Commission gaseous hydrocarbons na found petitioner’s were the claim many places de ture in connected “re “manufacture”, made gas posits petroleum, which the notwith is made sale.” This contention standing compounds closely eous are related. parties all of the fact that prin record in this case shows that South to the contract between cipal constituents of natural fully understood that Texas Gas fuel is used as a or industrial domestic quantities wholesale be resold in casinghead ethane; are methane and buyer. busi conduct of its In the ethane, as well contains methane petitioner ness, in bulk sells valuable, as other constituents that and at Texas Gas. Texas Gas turn butane, propane, heavier such as and the tailgate plant processing re of its gaso comprise components that gas purchases from it sells the economically line; and is desira that it petitioner an interstate transmission compon ble to remove these additional resale, company to intra for as well as gas for sold ents their value. The inescapable fact customers. The petitioner methane and' contains the portion some then is that at least here fuel ethane which constitutes bulk of gas by petitioner is resold of the sold gas domestic, distributed to commercial Texas. State of outside the consumers consumers. And the ex industrial question no Consequently, can be there gas process is traction jected to which the sub making for resale petitioner is that delivery under the sales con after meaning Act. Nor of the within prod tract does not create or add to the gas significance that it of any uct of those com amount either transmission of its course casing- ponents. Thus, plain it is processing passes Texas Gas’ any is not the less “natural”" head processing involved plant. herein The variable amounts- because it contains interruption of the an is not of other constituents. On “manufacture.” journey and is not alternatively petitioner above, process con contrary, as noted the ing regardless tends, however, wheth interrupt continuous does question in in er the sales are sales the wellhead from movement merely commerce, tips terstate the transactions fall’ and is burner to consumer 1(b) of the- transporting and within the clause of Section part of the business specifically excepts marketing from Act which the- commerce. in interstate regulation, jurisdiction Commission’s Detroit, Pow City Mich. v.Federal “ * * * gath production U.S.App.D.C. Commission, of ering er gas.” of natural do not at all Pan We denied certiorari F.2d contrary City agree, our Pipe but on the think that Line Co. v. Eastern handle observations in Interstate Natural Gas- 1 L. Dеtroit, Federal Power interstate commerce which are con- ready 949, 951, supply gath- answer 156 F.2d summated before the has been speaking There, processed regarded ered or to this contention. should not be 1(b), we said: as sales in Section such commerce over which granted the Commission was exclusive very simply and Act] “[The jurisdiction regulate. stating plainly what written. After apply to, it what it shall then states however, Petitioner argues, that what apply fa- shall not to. Under merely it is involved here is “more than nega- construction, miliar rules of sales,” for reason exception a statute will give our decision herein will rise to cer- nullify- hypothetical so as to avoid be construed tain upon predicated situations restricting prin- apparent assumed future actions the Com- purpose positive pro- cipal mission, viz., certificates of should carry public visions made to them out. necessity convenience and * * petitioner Here the statute apply refused, will for be regulate, picked out drawn to South suspend must close its wells and in interstate com- inclusion ‘sale operations, petitioner and that must ob- resale merce of tain permission the Commission’s before consumption’ public for ultimate discontinuing sales from a well which * * * Unnecessarily perhaps but juris- been found to Federal making clear that the interest of presented diction. No such issues are gave the act over case, in the instant and it will be time transportation kind sales and enough pass upon those issues if and language it, described it used properly presented. when moving doubt light foregoing In the juris- Commission was not to have follows that the order of the Commis pro- properties diction over used for declaring Deep sion South Oil duction and local distribution or the “natural-gas of Texas company” to be a gather- activities of ing. meaning within the of the Natural Gas by expressly pro- It did this Act should hereby be and the same viding ap- that the act should not affirmed. ply ‘to the facilities used for such Affirmed. distribution or [i. e. local] gathering production or of natural ” Judge. BROWN, JOHN R. Circuit gas.’ I dissent for reasons hereafter to be gather- exemption production The filed. ing merely physical ac- means that the Judge BROWN, JOHN R. Circuit tivities, properties used facilities and (dissenting).* by gath- petitioner production in the Again, my differences, ering while substan- of natural not within the are and, approach, tial are regulation. basic this power commission’s How- Magnolia before, nothing ever, Co. v. Fed- there is the Act which Commission, Cir., eral Power 5 by impli- suggests, expressly 236 F.2d either 785, by pages 811, cation, exemption produc- accept 793 to I Congress gathering, tion and intended Court’s fair and faithful outline of the present wholesale sales of natural cases. Since these cases1 y. Company Editorial note: tinental Oil Federal Row- opinion prepared Commission, This and filed as er 247 F.2d 904. separate opinion in each of the fol- y. 16,130, Company In lowing 15800, 1. Continental Oil cases: No. Shell Oil Com- Commission, pany Commission, Cir., Power Federal v. Federal Power 5 247 247 904, procedural T/00; 15884, problems F.2d No. Humble Oil & Re- F.2d arise and fining agreement am in v. Federal Power discussed. I Com- are with mission, 903; disposition 16130, these, 247 F.2d No. Con- the Court’s 890 472, 268, 266, 270, of the problem 70 94 L.Ed.

common first over Federal Power Commission oil-gas-well producer made sale an refers, course, This oft re- gathering end- before peated legislated history Congress despite together minor ed, I treat them gap by specific to fill the deci- created

variations in details. factual Supreme sions4 of the Panhandle Court. simplifies Pipe Likewise, and em Eastern Line Service it both Co. v. Public Commission, 507, 517-519, problem 68 phasizes 332 this U.S. the nature of 190, 128, primarily upon most S.Ct. 92 L.Ed. 137-139. concentrate casing- cоmmon sale transaction2 —the significance. This has at least a dual processor sells who turn to a head just First, terribly important it makes pipe line. to an interstate residue decided, what it was those cases because might gap. way And decisions which what created the In to see this we come Congressional second, preoccupa- problem as 1938 The otherwise be obscured. test, juris- Congress gap really 1938 with the is: What did 1(b).3 parts language be viewed dictional must mean of Section outlook, purposefully emphasize 1938. For 1938 lenses. With that knowingly Congress can Nat- passage of it be said that circumstances consequences set flow that, in train the unique we ural Act were so Gas “* * * from these decisions? told, prior constitutional tended to East ural measure 250, * * 384, 388, Service cided or would decide Parker v. decisions, Gas Co. v. Central Ohio Gas */’ Co., close Motor Boat Federal not what we L.Ed. Company, 338 U.S. gap Power Commission Sales, 314 U.S. 86 L.Ed. 184 Act. 498, today, [377]; have since Illinois 508, Illinois form the 62 S.Ct. Public ^[191] Nat- see de- in- fact field cases, analysis, the conclusion 672, South rests The first becomes of some the Court’s view is, the decision 74 S.Ct. note processor v. sale course, State upon a supra, 794, that neither who 98 L.Ed. because, Wisconsin, dеait producer Phillips Petroleum Committee reached turn even importance of the two sold to an remotely report5 an Deep U.S. final oil my 1027, 1031; case relate to that differences as solely to the basic issue. Public Utilities of Rhode v. Attleboro Steam & Electric Island Texas Gas to Texas South to Co., L. 273 U.S. Eastern. Pennsylvania 549, 553; Ed. and see Gas Pipeline to Trans- Shell Texas Gas ‍‌​‌‌​‌‌‌​​​​‌​​‌​​‌‌​‌‌​‌​‌​​‌‌‌‌​‌​‌‌​‌‌‌‌​‌‌​‌‍Commission, 252 Co. v. Public Service continental. 23, 40 S.Ct. sub- El Paso Shell repudiated sequently East Ohio Co. Gas. Tax S. Pipe to Line Humble to Processors 499, L.Ed. Ct. 73 1171. Companies. opinion 5. South states: The “The 717(b): 1(b), § 15 § U.S.C.A. reports on Committee the bill which be- provisions ap- Act “The of this shall specifically Natural Gas came the transportation ply to the of natural resale, for that ‘sales or stated so-called commerce, interstate the in to sale in sales in wholesale interstate commerce interstate commerce (for example, by producing sales com- public consumption for ultimate resale * * * panies distributing companies) to * * natural-gas companies and to [by courts] have been considered the to transportation engaged sale, in such character, in local and even in not apply any not shall to other but trans- Congressional absence action not sub- * ** portation or sale of natural ” ject regulation.’ H.R.Rep. to State No. production gathering or to the of nat- 1-2; Cong., 709, 1st 75th Sess. Senate * * ural Rep. 1162, Cong., No. 75th 1st Sess. 1-2. of Missouri ex 4. State rel. Barrett Co., 298, Kansas gathering pipe process consequently line. In Attleboro not utility generated transported regula- power elec- within the Commission’s tion,” tricity; local “By seller positively in Kansas the to the court answered integrated distributing company consummated, the ing an time the was sales are noth- company. gathering process producer-transmission pipe further Phillips done,” 682, far remains to be page So as 331 U.S. at supra, 692, Wisconsin, I ac- page 1488, v. State of 67 S.Ct. at that, concerned, hardly cept, page think L.Ed. at 1749. This case recognizes re- principles studied traditional also Court’s that of con- advisory opinions even statutory fusal to deliver stitutional law and construction equated physics, some- it knows are then are matters with laws of judicial inquiry something will mill and which so where inevitably that more grist, schoolboy’squest its own than come for molecular Supreme Concerning Congres- that Court meant decide identification. gas which, molecu- purpose production beсause sional all sales of to leave ultimately gathering Texas identity, States, flow lar to the the Court stated: York are sales to New Louisiana Congress was “It the intention of interstate commerce. give the States full freedom in Thus, sales, matters. these where way saying another This is but though technically consummated in entirely new case—one we an face commerce, are made dur- crucial issue The never before decided. ing production the course of inter- are in here whether the gathering closely and are so 1(b). At as meant § state commerce with the local incidents nected Phillips issue the outset regula- process render rate admit as “Petitioners conceded Power the Federal Commis- engages Phillips in inter- ‘the sale sion or a inconsistent substantial in- of natural commerce terference with exercise sale’, as, course, Inter- must. regulatory functions, State of Federal Power state Natural Gas Co. jurisdiction of the Federal Power 687-689, Comm., 331 U.S. * * not attach does 1482, 1485-1487, 1742 [1746- page at page 1748],” at 347 U.S. page 1487, at L.Ed. page at page involved page issue second nothing So written so far tells us au- are made is whether these sales here Congress thoritatively in 1938 what gathering. produсtion or the course of prior meant do about sales made fell The similar contention gathering. completion rejecting the Commission’s the Court’s place holding finding plain Did intend this under “We * * opinion that the find- of a remote Federal the control bureau? ing adequate law, basis in is without consequences I think the such far-flung gathering, holding production and are so and so and that disturb- system delicate balance in our those terms are used in sense that sovereignty that, divining of dual 1(b), by Phillips end before the sales legislative judicial will as is func- 672, 678, occur,” tion, v. 1035, States American certainly United Truck- 797, 98 L.Ed. And 534, Company Associations, 543, Natural 310 U.S. Gas v. Fed- 60 Interstate 1059, 1345, 682, 1350, 331 84 L.Ed. Power U.S. and eral S.Ct. 1742, 1482, heavily 91 look at this L.Ed. we so whether 1938 67 S.Ct. Phillips 1957 bifocals. I or cannot on in cannot have re- lenses believe relied way motely this To our case. innocuous decided Interstate’s thought remaking concept “that sales to that it was the the the three contention economy. part companies political a our pipe line are of of the holding fact Since it is of movement6—con- a the Such withdraws from the irrepressible reg- tinuous almost move- states a traditional field for effective major activity ulation of an economic importance ment—from time molecule the the begins general first is once released of the to stir and the welfare Specifically, holding state. will such a until con- from the earth bowels the forbid state of oil and Brooklyn tip sumed at burner the —that production activities state insofar as that to the Court the characteristic which policy at, through, is aimed or works inevitably interstate, im-

makes this prices. use of minimum described, dramatically pact has been Co., pos- Colliery 260 U.S. v. This is no Heisler Thomas 245, 259-260, theoretical acedemic 86, sibility. pres- 67 L.Ed. This a is an actual fact of S.Ct. applicability ent limit- 243: doctrine whose only by judicial ed declara- ultimate consequences “The reach juris- of a earth-ward limits acceptance. repel the contention its yet part un- sale. a of the dictional As possibility, certain- If the or indeed Phillips ascertained of the fallout atomic ty, product exportation or decision, Pipe- Court Natural Gas it to state article from a determines Cor- America v. Panoma commerce before be Compa- poration (Natural Pipeline Gas from of its movement commencement ny Corporation of America Commis- state, to follow would seem Oklahoma), sion of the 349 U. Statе from it is in such commerce held S. 99 L.Ed. growth produc- the instant of tion, jurisdictional that as to within the they coals, as case of Phillips, Oklahoma limits the State of ground. would The result lie apply con- was forbidden to its otherwise nationalize all It would be curious. power prescribe minimum stitutional7 industries; it would nationalize and prices for Oklahoma sold deliver- jurisdiction and withdraw from state ed. The Court brief but awesome commercial control deliver federal finality said: of California the fruits has “In Oklahoma [these cases] South, and its wheat the West attempted fix a minimum South, meats, the cotton gas, pro- paid for after its of Massachusetts and the wool- shoes gathering ended, duction and of other states en industries transports company very inception of their for resale in interstate commerce. is, growth, that the fruits un- Phillips We held in Petroleum Com- picked, cotton and wheat un- pany Wisconsin, [State of] gathered, hides and flesh cattle 794, 98 L.Ed. U.S. hoof,’ yet unshorn, yet ‘on wool transportation that such a sale and yet coal unmined because regulated by cannot be but State varying percentages destined are regula- exclusive surely exported to be for and tion of the Federal Power Commis- case, therefore, Phillips than those their states other sion. production.” controls one.” 349 Co., decision of “sale inter- 6. The Court’s bootstrap is a commerce” Oklahoma, an sale be- clusion: v. State yet these, movement and the move- cause As to said, because of sale. ment occurs the Court Panoma “In those Apart dealing the effect cases we were with constitu- predecessor very Act, questions of this tional the construction * * except (identical state order same the Natural Gas Act upheld price) 44, 45, page 576, was Cities Serv- the at 75 to U.S. S.Ct. 99 Company 866, page & v. Peerless Oil Gas L.Ed. at 867. ice Gas

g93 course, saying 576, Of I pages 99 not that this 44-45, L.Ed. am consequence 866, page makes law invalid the 867. at Congress could unwise. assume that slight com- purposes For of these it is compass within the broad of its consti- that, plain- Panoma fort as to these states powers tutional this over commerce do ly post-produc- said, applied a this was to very thing. fact, But the so often gathering basis For the sale. peated is that did “the Natural Act jurisdictional was the decision the envisage of the federal application inex- of Act. With the the natural-gas entire field limit physical that traces orable characteristic power. constitutional Rather сontem- Queens- Basin to molecules from Permian power plated as the exercise of federal Heights joins body, fleece town specified Act, particularly that the lamb, Mary’s ubiquitous fabled tail to segment were states the goes jurisdiction, so F.P.C. wherever goes regulate powerless Com- to because gath- Panoma. There it after merce Clause the Federal Constitution. ering. before is at wellhead Here it the Federal Power The gathering majority’s completed. The complement was to can Where that far. decision takes us Accordingly, regulatory bodies. the state go? the the To wellside states Congress 1(b) of Act not § Christmas To the bottom tree? Com- prescribed the intended reach well? specified power, but also mission’s enough, fixed far Wherever it is is not power to was not this into which areas extend,” may nor thesis it ever be. For the v. Power Commission Federal Boyles majority’s opinion is mix to Co., Pipe Line 337 Eastern Panhandle Phillips up law come with the star- to 1251, 502-503, 498, pages at U.S. tling legal-statutory interpretation law 1449, page 1255, 1504. page L.Ed. 93 gas, in a once released is because using only Avowedly portion its movement, move- constant state of likely ment, power, then very is it moment it first start- go interstate) think so far? To ed, (intra this meant characterized ignor- to them collective attribute final This means destination. already traditional well-defined prescribes price, of an ance if Oklahoma as reg- regulate9, by policy states Kansas8, in the precedent condition could ulating price oil at which right withdrawal of do- this valuable Indeed, important sold, business. resource, be out mestic the sale of that policy recognized state was such well so would there which alone well— setting days, led that, of those ever neces- at all—was of Connally Oil passage Hot sity commerce, in interstate and such seq. Act,10 This 715 U.S.C.A. et § 15 oc- sale and movement of transportation gears of oil it would under Panoma. casioned fall pre- post-1938 Supreme pending As both shown 8. Now Court before 9. decisions, 77 jurisdiction noted, state efforts had met probable these S.Ct. approval: constitutional 1055, Supreme with Federal Champlin is the action of the Court Corporation Refining Go. v. Kansas, Company Cities Service Gas 210, Commission, 52 S.Ct. Corporation v. State Commission of Kan 1082; Railroad Commis- L.Ed. sas, 180 Kan. 304 P.2d sus Rowan & Nichols Oil sion of Texas Co., taining regula action fixing tory agency price the wellhead see, 1368; Nebbia v. Peo- gas. pending for withdrawal of Also York, 1934, ple State New similar minimum Oklahoma cases, see Corporation origin v. Oklahoma Act had its Execu- 3346; 953-955, promulgated July 11, Nos. 25 U.S.L.W. Mich tive Orders igan Pipe July Wisconsin Line under the National Recovery Corporation Act, Commission of State of Okla 48 Stat. Industrial homa, chap. 90, 710(a), No. 25 U.S.L.W. and strick- U.S.C.A. 894 everyone 1748, 1742, supra, some 91 L.Ed. regulation. And at least state “technically inter- consummated knows of courtroom on a the outside * ** closely oil-gas programs, state commerce are so conservation modern * * * limiting production incidents by connected with * local preventing waste ** by demand,11 as to render rate market to meet an established incon- indirectly, directly Federal Power Commission or do so whether with actually be no sistent or a substantial interference prices. need And there fix regulatory the exercise of its of a the State apology the welfare for this. For substantially functions, jurisdiction of the economy [and] rests whose at- Federal does not in local Power Commission a vital interest on oil and tach,” great prescience. legislative governmental showed sta- means of or legiti- bilizing “That a such a business. Especially if, example, so, the cur * * * stake local interest is at mate holding Fеd rent of the contention justifiably concerned A clear. state is eral that pro Power Commission is followed13 rapid preventing and uneconomic

with price independent for which dissipation of its chief of one may pipe line ducers to a sell their v. resources,” Co. Gas Service Cities by City Detroit, Mich. is controlled 179, Co., at U.S. 340 Peerless Oil & Gas page Commission, v. Federal 97 U.S. Power 220, page 95 187, 215, at 71 S.Ct. App.D.C. 260, 810, de 230 F.2d certiorari 190, page 202. at L.Ed. Pipe nied ‍‌​‌‌​‌‌‌​​​​‌​​‌​​‌‌​‌‌​‌​‌​​‌‌‌‌​‌​‌‌​‌‌‌‌​‌‌​‌‍v. Panhandle Eastern Line Co. pro- early thirties oil in the Ten cent City 34, Detroit, 829, 352 77 S.Ct. elsewhere, calam- duced, Texas as in East case, 1 L.Ed.2d 48. em That with its history ity.12 in its so fresh With phasis part on a of a so- cost data as indeed, like contem- recollection, base, points called if “fair-' rate out that problems a matter porary much then so justified field” can be so is to be beyond consideration, it is for its current produce when it does more than thought my belief to think reasonably necessary permit continued language that, innocuous exploration development of for and letting force (b), a nascent loose it was light That, oft- reserves. repeated might would, could, which either statement that “Protection major completely business alter against exploitаtion consumers at regulation. major field of state thwart natural-gas companies hands of primary recognizing Act,” Vinson, aim of the Natural Gas Chief Justice v. Fed- v. State Interstate 682, Wisconsin, 685, 672, page 331 U.S. 347 U.S. at eral Power 1487, 1035, 1482, 794, page 800, page 690, 74 S.Ct. at 98 L.Ed. page Compact Gas, Aug. Panama ease Conserve Oil down in the celebrated en 27, 1935, 781, 939, Company Ryan, Refining c. 293 U.S. 49 Stat. Extensions v. 446; Aug. 10, 1937, 617; see United c. Stat. July 20, Gilliland, 86, 94, 1071; c. 53 Stat. States pur August 21, 1941, 666; “The 604. c. Stat. 85 L.Ed. * * * July 7, 1943, Connally 383; pose c. 57 Stat. Inter- Compact enforcing laws limit state Oil and Gas olution, Joint states Res- aid the Aug. permitted 28, 1951, ing of oil to be amount c. 65 Stat. fields, designated produced from wells 199. shipment prohibiting oil excess 12. led to what It Governor Texas * * produced com requiring considered insurrection declara- ** President of United merce recently law martial enacted Skeen, Cir., 118 E.2d States v. enjoined by laws were conservation Fed- Sterling Constantin, eral Courts. collective action of the this takes 11. That oil-gas producing states interested Congressional approval pend- now have nine such cases We flected petition and activities of the Interstate for review from the Fed- creation Compact, eral Power Commission. and Gas see Interstate Oil prophesies.15 does, Holding, рage 1049, may it is at mean that as the Court holding positive duty exists, that Power Com- it of the Federal that aggressively self and then sets in re mission train to demand a whole series quirements approve only plain But the that the lowest rate. which makes it may spudded when in, to rate which is most favorable consum- wildcatter he thought possible Brooklyn, e., enterpriser have ers in one, may the lowest i. himself a free to, tradition, could frus- run counter American but when policy gas altogether, well a trate the domestic comes to is sold person Oklahoma,14 Texas, Kansas, New who sells it to another who sells pipe transports it to a a Mexico. who it to distributing company who sells to a surely Congress Again, repeat, could homeowner, public he has util become subject But make other. the one ity. question find do we remains: where far-reaching a declaration of such say For the 'Court to “no such issues purpose? presented are case, in the instant holding jurisdictional enough sale at it will pass upon be time those prohibit, they properly issues if the wellhead does more than and when regulation. invade, presented” forget It and thus affirmatively imposed we so soon what obliga- struggled Magnolia year ago substantial with a which, tiоns of although awesome kind the most Petroleum v. Federal Power utility appropriate Cir., Commission, cer- 236 F.2d and within power the conceded constitutional tiorari denied 352 hardly Congress, have could 1 L.Ed.2d related cases appli- anticipated by for been 174, 174A, where the series Order16 174B engaged person local cation to a in the cases were under review. Not here bringing activity drilling regula- in an validity cerned with the of those Here, oil or that we they well. we see accepting tions and for them what aside, ma- regulations does the state, cannot brush this as in- these with their jority hypothetical pessimistic junctive as mere and criminal sanctions under Deep South, says: In Cities Service Gas v. Peer- Co. 15. In the Court “Pe- less, supra, page 383, 71 argues, however, 340 U.S. at titioner that in- what page page merely regula- at volved here is ‘more than pointed sales,’ out the Oklahoma Court “ tion of the reason our * * give concluded herein will decision rise to certain competitive upon was no market hypothetical predicated there situations Gnymon-Hugoton Field, assumed future actions the Commis- pipe-line integrated well and owners sion, pub- were viz., that should certificates of prices paid pro- necessity peti- able to dictate lic convenience pipe-line outlets, apply refused, Deep ducers without tioner will for be being as a result taken from suspend South must close its wells and petitioner operations, the field at below its economic and that must ob- permission value. It further concluded that the tak- tain the Commission’s before prevailing prices discontinuing ing of at the result- from a well which physical ju- in both economic and found ed waste been to Federal ** present- No such risdiction. issues are long-line pipe-lines by case, instant and will If transmission ed in the be time upon enough pass availability mere location and those issues if and have that monopolistic power properly presented.” prices, to drive down when arc power when, acquiring will their what my dissent, Magnolia 16. See ally, a new and somewhat unusual Commission, Federal Power Federal Power two page 793, especially 236 F.2d together jointly prices to drive move I, page through 808, Part which sets further the name of down consumer regulations forth these and describes public interest? does Oklahoma What do operation in their detail. happens in the meantime? What to its royalty owners, oil landowner its com- treasury? paniеs, banks, public its 20, 21(a), 717s, Sections 15 U.S.C.A. filing, § sell his without first as re- 717t(a), compel They quired 154.92(a), definitive action. under Section rate a compel subjects Noncompliance proving right it now. schedule and his to it. And independent producer penalties very the Order, 154.94, to that same Section 157.23(a) now. Under Or- Section the as does the consistent administrative requires application practice der an for certificate Commission, forbids either public necessity and, of application convenience and the use or of automatic con- performed, once step-up obtained with service tract rate The escalation clauses. operation Section of 157.28 forbids abandonment these Orders the context any. express sale or service without the of the Act under 4 and Sections permission approval 717c, op- Commis- 717d, exposes U.S.C.A. §§ sion, Corporation J. M. v. Fed- possibility Huber erator to the of an irretrieva- Commission, Cir., by suspension eral Power 236 F.2d ble loss for the maximum period months, certiorari denied 352 U.S. of five Humble Oil & Re- fining Commission, 1 L.Ed.2d 324. Co. v. Federal Power Cir., cases]; 244 F.2d 315 Oil Sun [7 industry For an which has been built Commission, v. Federal Power upon inveterate, irrepressible, some- Cir., They subject 244 F.2d flamboyant, people optimism times operator just proving to the burden of great great reap anxious to rewards, suddenly risks take to any proposed and reasonable increase. to make out of it they expose And him all the time to pub- staid and business of a conservative likelihood under 5 the Com- Section represents utility, lic such a radical aban- may mission determine that what he and past donment of the I believe cannot agreed purchaser to, have either his Congress to the meant to do this subsequently filed initial or those rates annually try 'bring, thousands who bring, unjust approved, produces now an bring, hope and oil long- arid which can no unreasonable rate Especially wells. is so since the this be collected. er making very allows first sale which journey Congress a an moleculeto make I would think that when the subjects operator change permanently radically sets enterprise a local free out agency regu- until he of a remote business17 to that a prove utility, to be freed. can himself entitled do so in unmistaka- lated it would very Or- Even since those same more so I would think that it would ble terms. prescribe say only so, prescribe ders cannot make as well that he but not adequate willing changes machinery18 is which he for the fulfillment prescribe completе were there failure As December During 1954, 511,200 producing substance, e., wells. standards i. tools 19,169 29,773 utility making applied wells rate in addition to oil for to be immediately boles, 3,977 gas brought dry wells were The Commission field. this instituting recognized in. Statistical Abstract United its Order this revealing 1956, page 741. R-142 Head- States Docket under ing princinles “Consideration dealing Fixing those of with Applied 18. To us these Methods Phillips decision, by Independent ef- Charged cases since the to be Rates the Commission and its over- fort Sold in In- for Producers staff to assimilate and handle burdened for Resale” which terstate Commerce applications for certifi- thousands of stated: public necessity, Necessary convenience cates determination “2. increases, etc., permitted rate can evoke the Natural Gas rates appreciation sympathic made, for a most demanded or received to be equipped company natural-gas problem for which it was not the choice by Congress. determining In October 1954 there to be used in of methods 2,100 filings 9,702 just any par- and reasonable were some rate rate January recogniz- being received sale. ticular significance ing op- than the basic differences between more fundamental Of produсer Congressional of the work- of a omission erations those of adequate (an budget) pipe-line company, securing staff is desirous of tools undertaking. point significantly of such I have which in this direc- an would thought purpose spectacular tion. that such a take would be soon and would not evident significant At the outset it is eighteen years to discern. jg an interstate” commerce Act commerce, analysis “affecting”19 one In this I have cencentrated Congressional searching upon the out of The test then not how much covered, process, think the intent. In that but rather how much a field produc- specific exemption deliberately so-called it in did it limited gathering part read as a tend tion and is to be to cover. Federal Trade Cornmis though 1(b) Bros., Inc., 349, of as it sion v. and not treated Bunte § also, legislative process, 580, stood alone. In that there S.Ct. 85 L.Ed. 881. The by ory20 parties are other aids advanced the hist “in indicates the information, proposals any suggestions example regulatory or 19. Cf. for other stat- upon possible passed prior bearing contemporaneous- effect the sev- utes the to or upon ly might approaches the have with eral the Natural Act: The Fair public (Act Nat- which the Labor interests towards Standards Act of 1938 of 25, 1938, June ural Gas Act is directed. 52 Stat. 29 U.S.C.A. therefore, 208), regulation in- §§ “3. The extended Federal suggestions viting employment pro- as to the submission of conditions of “in the ap- principles goods and methods to be duction of to the for commerce.” The by plied (Act of rates it in its the Bituminous Coal Act of producers charged independent April 26, 1937, 72) applied be to 50 Stat. Fed- transportation authority directly of natural eral ing” for the sale matters “affect- subject jurisdiction interstate commerce. The National * * * (Act July 5, Commission. Labor Relations Act 151), “4. This a matter of national im- 49 Stat. 29 U.S.C.A. § portance imposed regulation upon and the Commission invites matters “affect- industry, producers, ing” members of gatherers, interstate commerce. pipe-line companies, concisely consumers, distributors, groups One of Petitioner’s briefs and as- history: representative thereof, traces this sociations commissions, municipalities, State originally introduced, any As the bill oth- and persons became the Natural Gas Act defined er interested submit informa- scope jurisdiction tion, sugges- data, views, the Commission’s in comments or writing Cong., concerning problem. these words [K.R. 75th tions in 1st ** *» (1937) ] : sess. provisions ap- hearing hardly supрly “The this Act shall But could ply transportation omitted, of natural what surprised the statute so it not commerce, hearings in interstate to the sale of that after in R-142 pub- such natural for resale to the scheduled December 1954 held lic, natural-gas companies engaged and to various times in the Commission ” * ** transportation 1, 1955, such or sale order December terminated (emphasis supplied). significant finding: R-142 with this “ Similarly, 2(5) original * * ver- gained the information sion of the bill contained this definition of proceeding that, convinces us on the “natural-gas company”: herein, record basis we should “ lay any ‘Natural-gas company’ per- down not rules as to what would means a necessary appropriate engaged transportation be or for consid- son just determining commerce, eration rea- or independent any pro- sonable rates such the sale of for resale to the (emphasis public” supplied). ducer to our under During objection hearings, the Natural Gas Act. was raised “Accordingly, juris- after full bill consideration failure to “confine suggestions, comments, and rec- diction to sold in interstate com- submitted, appears [Hearings ommendations merce.” before the House adoption Foreign the Commission that Committеe Interstate standards, principles, Cong., or methods Commerce on H.R. sess., pp. 75th 1st specting (1937)] matters objecting and issues involved 103-105 The appropriate necessary witness, Hunt, herein is not Mr. Russell G. then of- carrying provisions following out the 2(5): fered the amendment Nat- to § “ ‘Natural-gas company’ per- ural Gas Act. soWe find.” means a proc- standard was ar- transmission interstate” commerce ticulately adopted and use as fuel. essing determine what itself is a activ- being local intrastate (cid:127) ity regarded hardly and can

“sales” were covered. as be “in” interstate commerce.21 That among And since “commerce the states commodity in- certainly, even almost legal conception, is not but a technical evitably, shipped will out practical one, drawn from course activity does make all of the inter- business,” v. United Swift & Co. though done state commerce even States, 196 U.S. part move- the course of 518, 525, 280, 49 must “We ment.22 beginning accordingly end mark my matter, approach particular In com- treat of a kind of interstate to this these, contrary urged practical own considera- ones merce tions,” Dealing, Commission,23 only. Yellow Cab Com- as aids United States v. they do, logs, ore, cotton, pany, iron likе, they fugitive 1567, 2010, 2020, hardly the pansive ex- test fit the 91 L.Ed. cannot gas. property And, not simple physical I do nature of be the one of the gas attempt explore keeps their in move- here to assert or of which constant significance final, legal, since ment from bottom of the well decisive “ ** “* they may continuity’ of tip. be of that class ‘Practical the burner always question part not with cases respect [in which] does make an act power commerce,” Pacific to the extent interstate Southern commerce, protect Gallagher, 167, page Co. v. 177, 306 U.S. at 393, particular 389, page L.Ed. exercise of state 83 but whether power 59 at S.Ct. operation 586, page in view of nature and 593. This is so since with at casinghead gas precede with that local must be deemed to be in conflict paramount authority,” Fruit processing Santa is essential Cruz which extract Packing N.L.R.B., components Company 303 U.S. of it v. economic the valuable ‍‌​‌‌​‌‌‌​​​​‌​​‌​​‌‌​‌‌​‌​‌​​‌‌‌‌​‌​‌‌​‌‌‌‌​‌‌​‌‍656, gas 466, page 453, page prepare 58 at for its at S.Ct. and to * * * Empresa 504; Siderurgica, engaged S.A. v. Coun sale in in- in son 154, ty Merced, 157, gas 69 S.Ct. 337 U.S. of such terstate commerce 995, 1280; Department 1276, public.” L.Ed. 93 sale to the Treasury change, State Indiana v. Wood material this Without amended Preserving 62, Cоrporation, correspond- definition, together 313 61 with a U.S. 1188; 885, appeared ing change 1(b), 85 L.Ed. Southern S.Ct. 167, Gallagher, favorably reported Co. v. 306 out Pacific U.S. bill as 389, 586; (1937) Committee, 59 S.Ct. 83 L.Ed. Atlantic 6586 [H.R. House H.Rept. 709, Cong., Coast Line Railroad Co. v. Standard No. 75th 1st Company, 257, 107, (1937)3 275 Oil U.S. 48 S.Ct. the same form sess. 271; Mining passed. L.Ed. Iron 72 Oliver Com- the Act as Lord, pany 172, v. 262 Federal U.S. 43 S.Ct. also Power Commission See 929; Light Pipe Compa- 526, L.Ed. 67 Utah Power & Eastern Line Panhandle v. Pfost, 498, 165, 548, 512, 513, 16, ny, Co. v. 286 U.S. 52 S.Ct. footnote 337 U.S. 1499, 1038; 1251, page Arkadelphia Milling 93 L.Ed. L.Ed. 69 S.Ct. 76 Com- pany Co., 1509. v. St. Louis R. S. W. 249 U.S. 134, 237, 517; 39 S.Ct. 63 L.Ed. Crescent 21. Cotton Oil See Crescent v. Oil v. Cotton State of Mis- 129, Mississippi, U.S. 257 42 State sissippi, 129, 42, 257 U.S. 42 S.Ct. 66 166; 42, Brown, L.Ed. Parker v. 66 S.Ct. 166; Colliery L.Ed. Heisler v. Thomas 341, 360-361, 307, 63 317 U.S. S.Ct. 87 Company, 245, 259, 260, 260 U.S. 43 S. 331; Compress 315, Federal L.Ed. & 83, 237, 67 L.Ed. 243. Ct. McLean, 17, v. 291 Co. U.S. Warehouse 622; 267, L.Ed. 54 78 Chessaniol S.Ct. See, g., e. Shafer v. Farmers’ Grain Greenwood, City 584, 291 U.S. 54 v. Company, 189, 481, 268 U.S. 45 S.Ct. 69 541, L.Ed. 1004. S.Ct. 78 909; L.Ed. Lemke v. Farmers’ Grain Errol, Company, 50, Town 116 22. See Coe 258 U.S. 42 S.Ct. 66 517, 525, 458; 718; Milling 29 L.Ed. L.Ed. Dahnke-Walker Co. Bondurant, Superior Mississippi, v. State of Oil Co. 257 U.S. L.Ed. 66 L.Ed. page I something 960. But tradicted that what is sold is ultimately do think assist- offer some relevant other than the fuel goes assay attempting ance in Con- what into the transmission lines. Pre- legal gress, generally sumably casing- purchasers buy familiar this cepts throughout applied in field the head for all of its ele- constituent years, Indeed, could Shell, have had mind. ments. in the case of began Phillips contract between it and that, recognize IBut do think we must July It was not until 1950 that analyzed as in the situation which any part of the residue sold Phil- deprived detail in state is lips to El Paso Natural Gas. Until right regulate gas, continuously the residue flared. current also with authoritative decisions Phillips buy during What did these part draw a substantial busi years? twelve What did dur- Shell sell gas produced ness and area from the years? these twelve What made many permitted of state taxation so change merely Phillips because found a of these cases cited in notes Obviously new use or outlet in 1950? Michigan-Wisconsin supra. Pipe In bought casinghead gas for the Calvert, Line Co.v. liquefiable hydrocarbons (nat- valuable the Court unanimous gasoline, ural propane). butane and ly tax, applicable on held that a Texas major These are still a gaso constituent independent at the of an outlet they buy. what The same true in the plant as it flows into the lines con other cases. necting with an transmission interstate system, purchaser violates the Commerce Clause. buys If the for its course, principle Of Panoma multiple use, producer does not the sell jurisdictional to the extent casinghead sales purposes. for the same As to go beyond, gas, to the wellhead or the movem (1) the salе then is for the extrac- ent24 effected such sales is inter liquefiable hydrocarbons, tion of valuable re (2) and must commerce likewise hydrocar- the removal of all valuable bons, (3) moved state taxation under Calvert. processing to eliminate impurities (4) This means that at least to some extent the sale the residue any event, pertinent tax cases and in pipe company to a for resale. Now points up consequence this startling another purposes for sale all four is not a sale yet kind not shown to have been for one. And the Act itself defines Congressional contemplation. jurisdictional within sale as in in- a “sale problems question terstate commerce like the of natural These casinghead gas” public consumption” sale for ultimate is “natural whether categorically and then states the sale is for “resale” or for whether * * * manufacturing apply process re- Act “shall not other and later gas.” artificial, sale of natural sale cannot be determined standards, dictionary defini- mechanical very difficulty attemp- Does not the unauthoritative, judge- or, equally tions ting operations each to define of these as physical of some or made definitions “proсessing” “manufacturing” or phenomenon. scientific analogize chicken, to a dead frozen carefully limits it to otherwise, Freight The Act the sales East Texas Motor gas. Inc., It is uncon- Lines, resale of Express, Frozen Food puts movement, beyond it in terms step 24. Calvert the tax incidence e., transportation processing i. whore have problem in this case not wheth “The and transmission ceased interstate ” * * * gather begun. State could tax the actual er the has commerce Michi gan-Wisconsin Pipe all whether transmitted Calvert, Line Co. v. not, Hope pages 166-167, commerce cf. at U.S. page 401, [274 v. Hall Natural Gas Co. page U.S. at 98 L.Ed. at 639], 1049, supra, but delayed mechanical-physical here has the State whether If movement 49, 52, 54, L.Ed. 917, 922-923, 924, uncontradicted and the pur- fact sales had a substantial that the making ultimately pose fuel than other de- available for transmission

livery suggest consumers, further for resale” “in commerce Congress ef-

was be those meant processing com-

fected after such always, pleted? Here, nearly as applied. For

literal25 test cannot be “* * * meaning plain even when the merely produce did not but absurd results ‘plainly at variance

an unreasonable one legislation as a policy with the pur- whole’ this Court followed words,” pose, literal rather than the Trucking As- United States v. American page sociations, at page page began: have I end I could things? Because

intended all of these not, respectfully I must dissent. think Petitioner, COMPANY,

SHELL OIL COMMISSION, POWER

FEDERAL Respondent.

No. 15900. Appeals Court of States

United Fifth Circuit.

June distributed, widely, why decisive, as it now is and is it is difficult see test is by pipe not served lines. communities two Associate Justices the author propane, very butane is then Phillips. This same dissent soon would so consumption public for “ultimate resold gasoline plant domestic, commercial, example, ex- industrial For ” ** Since, propane and other uses. ‍‌​‌‌​‌‌‌​​​​‌​​‌​​‌‌​‌‌​‌​‌​​‌‌‌‌​‌​‌‌​‌‌‌‌​‌‌​‌‍butane and from the craets chemical-legal gas. casinghead re- Commission’s Court’s This is natural standards, pressure liquid still under duced Tex., City, Kenney, William York F. New petitioner. Ellis, C., William Atty., L. Wil- F. P. Counsel, C., lard Gatchell, W. Gen. F. P. Russell, David Lichtenstein, S. L. Robert Attys., Washington, C., C., F. P. D. Mert

Starnes, Atty. Texas) Asst. Gen. amicus curiae. BORAH, BROWN, Before RIVES and Judges.

Circuit BORAH, Judge. Circuit companion This is Deep case to South Oil of Texas v. Federal Power 15,849, No. F.2d Company, pursuant that Shell Oil to Sec- 19(b) Act, of the Natural (b), seeking U.S.C.A. 717r review of the order of the Federal Power Commis- sion which is the also review Deep in the South case. While the facts the instant case presented are similar to those South, they thereto, are not identical present purposes thеy may and for summarized as follows: Petitioner here- in, Company, engaged Shell Oil exploring for, producing, business of fining marketing petroleum pe- products, respect troleum and with to its operations, produces Texas and sells “casinghead gas” at or near the wellhead McElroy from nineteen oil wells in the eight Field oil wells in Nome “gas gas” Field. It also sells well - one well in latter field. casinghead gas produced which is Whilden, Searls, R. H. Hous- McElroy David T. Phillips Field is sold to ton, Stone, Tex., L. York New Oliver pursuant a Atty. City, Shepperd, John Gen. of Ben tract into entered between Elkins, Searls, Tex., Vinson, assignor Weems & Howard, petitioner’s May 7, Midland, Houston, Tex., Paxton among provides, The contract other gaseous liquid only change ing inevitably a casinghead a is from with it tlio change state, jurisdic- is no in mole- blessings and there from which all gaso- structure, flow, gas? is the not, cular sale of if, a sale If plant why a sale “natural for re- holds, not? And as the Court price dis- Is the sale statewide sale”? can establish the company tributing pay Deep local distributors which Texas Gas must Likewise, suppose Shell such sale? South where South’s volume is but pur- requirement oil the wellhead sold Texas Gas and its 5% casing- output had chaser who in turn sold the moves intrastate 95% 5% Phillips, interstate, why who had sold head in turn cannot the Commission to El residue Paso. Is that fix the for each barrel of this original carry- oil, bearing, gas carrying sale of wellhead oil?

Case Details

Case Name: Deep South Oil Company of Texas v. Federal Power Commission

Court Name: Court of Appeals for the Fifth Circuit

Date Published: Jul 30, 1957

Citation: 247 F.2d 882

Docket Number: 15849

Court Abbreviation: 5th Cir.