*1 m body duty expert whose determine burden Commission’s complicated acted administra- to administer a
composition It has the traffic. important Congressional field. mandate.2 tive task in a difficult pursuant here charged system with the body We should be loathe to interfere in our It is the one regulation as shown In Commission’s conclusions this field. July here, they present record, when, expertise, its order it decided proposed ex- are reconcilable with the directions 15, 1957, that intervenor’s it, majority, would as I see operation not result statute.3 The perimental holding fly directly Capitol’s of this objectionable here into the interference sitting court, banc, Bend en in Coastal WJTV. Communica- Television Co. v. Federal eight imposed condi- The Commission Comm.,4 tions I dissent. and therefore authorization, temporary tions of termina- made and not certain operation inter- for intervenor’s tion of any develop, ex- ference, but if should grant pressly specified only. experimental purposes In addition any provided later it has been involving applica- hearing
comparative regular operations commercial tions 12, they fea- found on sible, should be Channel preference be accorded is to NATURAL COM GAS OKLAHOMA experi- the intervenor virtue PANY, Petitioner, ment. v. imagine in which a field It is difficult COMMISSION, FEDERAL POWER competent Com- is less or the the court Respondent, making a simul- mission more so than in Pipeline Company of Amer Natural Gas comparison the field intensi- taneous ica, al., Intervenors. signals UHF trans- ties of and VHF No. 13783. single a common mitted from a site over Appeals United States Court path. area where a substantial District Columbia Circuit. viewing public percentage of 5, Argued Feb. neighbors 1958. UHF while have VHF sets sets, comparison can be an immediate May 22, Decided 1958. reception of the made of the identical programs time. If telecast at same opera- develop, interference should ceases; appears, if none WJTV has complaint.
no cause for Much can be learned in event. Results well obtained which go far will toward a resolution of the whole intermixture I think the conflict. encouraged, should be thwarted, I in its effort. think the court judgment
should
substitute its
144-145,
Co., 1940,
134,
casting
309 U.S.
Broadcasting
S., 1943,
2. National
v.
Co. U.
437,
Mr. John S. Supreme Oklahoma, bar Court of by special Court, pro vice, hac leave of Flaningan, Mr. A. with whom Washington, Norman C., brief, on D. was for petitioner. Russell, Washington,
Mr. Lee Robert C., respondent. D. for Messrs. Willard Gatchell, Counsel, W. General Federal Power Howard E. Wahren- brock, Solicitor, Federal Power Commis- sion, Kurtz, Attorney, A. and Alvin Fed- Commission, Washington, eral C., respondent. D. were brief on the Ross, Chicago, Ill., Mr. Clarence H. Washing Kratz, whom Mr. John A. C., ton, brief, D. was on the for inter venor, Pipeline Natural Gas ofCo. Amer ica. Raybourne Thompson, Houston,
Mr. Tex., Supreme bar Court Texas, pro vice, by special hac leave Court, with whom Messrs. John J. Wil- Washington, C., son, D. Warren M. Tulsa, Okl., brief, Sparks, were intervenor, Drilling, Inc., al. Oil et Mr. Strickler, Washington, C., H. D. Frank appearance entered an also inter- venor, Drilling, Inc., al. Oil Grandy point southern Oklahoma County, Bazelon, Bas Before Danaher southerly Judges. Oklahoma, Circuit thence tian, Coun- certain in Jack Wise fields Judge. BASTIAN, part Texas, Circuit ties in north central *3 350 miles. Producers’ distance of some opinion appeal This of an seeks review sought applications permission to sell and order of the Power Commis Federal gas in ac- deliver their to Natural and (Commission), Opinion 299 and No. sion cordance with contracts with Nat- their accompanying order of December ural. 80, (1956), 3d 277 16 F.P.C. 16 PUR January 22, 1957, amendatory of order Star), Company (Lone Lone Star Gas January 31, 67, 17 1957, and of F.P.C. order large buyer which had of been sole issuing 85, certificates F.P.C. 17 in gas appli- Texas, in northern filed a rival necessity pur of 7(c) cation under Act. Under § Act, 7(e) Natural Gas suant supply 80,- proposal this Lone Star would 1938, (Acts 21, e. of June as amended. gas Fritch, 000 Mcf of to Natural at Tex- 1942, February 7, 824; 556, c. 52 Stat. as, through pipeline a 230.5-mile which 83; July 25, 61 c. Stat. existing built in from its line 717f). 459; 15 Stat. U.S.d.A. § County, Cotton Oklahoma. Company Pipeline of Natural Gas (Pe- Company Oklahoma Natural Gas (Natural), in this America proceeding, an intervenor titioner) is, fifty for over and has been operated 1931 has since engaged years, in distribution of nat- gas pipeline Panhandle from the natural gas approxi- ural in Oklahoma. It serves and, Illinois, Joliet, in Texas field mately 335,000 ap- customers and uses together affiliate, Texas Illinois with its proximately 125 of billion cubic feet nat- supplies Pipeline Company, Natural Gas gas annually. purchases, ural It now gas requirements of entire natural expected purchase, ap- is proximately the future to Chicago metropolitan area. Natu- required sup- of its 60% existing capac- pipeline, which has ral’s ity plies in southern a maxi- Oklahoma at day, presently 510,000 per of Mcf per mum Mcf. being operated load more than 98% proceedings In the the Com- before growing factor. The record shows that mission, permission intervene in each for natural and unsatisfied demand granted proceedings and all of the sought to ac- Natural exists in this area. Petitioner, the Commission to Cities and, accom- this commodate demand Company, Upham Gas Gas Com- Service this, plish three inde- contracted with Corpora- pany, Utilities Consolidated Gas Sunray producers, pendent Mid-Conti- tion, Central Electric and Illinois Gas Company, Petroleum Oil Warren nent Light Company, Iowa Com- Drilling, Inc., inter- Corporation, and Oil Company, pany, Supply State Fuel buy proceeding, at an venors in City Chicago, Illinois. Natural large Mcf the initial gas 13.90 and Lone Star were each intervenors day 78,000 Mcf which reserves of involving proceedings application producers had discovered Jack those of the other. Counties, Texas. and Wise gas utility opposed intervenors Natural and In October its granting and, alternatively, of certificates producer-suppliers (hereinafter posed that, granted asked if certificates were Producers) applica- to as ferred made Producers, such certificates be condi- tions to certificates receiving tioned Producers no more pur- convenience and gas, which Mcf was al- 7(e) suant Act. Natural’s leged prevailing price to be sought permission application to extend Jack area of and Wise Counties. Chicago-Texas pipeline Panhandle Fritch, Texas, separate hearings southeasterly from After on the two through major gas-producing proposals, proceedngs areas of were consoli- ever, a consoli- rendered found that there was demand dated. The examiner authorized, applica- beyond supply rejected decision now dated approved those of Nat- Lone Lone Star to tion of Star authorized sell average 80,000 Producers, however, daily subject, ural an volume Natural daily Mcf of maximum reduction natural condition which effected a ato 100,000 charged point Mcf at the intersec- initial to be existing pipe- between Lone Star’s Producers. The examiner was line opinion was re- Natural’s south- condition line ern opinion quired Oklahoma. also re- the Commission’s quired al., Co., Natural, Lone Gas event re Cities Service *4 acceptance authorization, regarded Star’s (1955), as PUR 3d 3 which he controlling applica- to file the facts with the and not restricted to Commission an public tion for a certificate of case. conven- in that necessity ience and for facilities neces- parties excepted All examiner’s to the sary capacity to increase the sales of its permitted decision. The Commission system Fritch, Texas, Joliet, between and proceedings reopened for the in- to be Illinois, by 100,000 day. perMcf Lone troduction in evidence of matters that accepted plan, Star filed and Natural had occurred hearings, of the initial since close application pursuant to the Commis- including amendments to Only ap- sion’s order. Petitioner reducing contracts with Producers their pealed from the Commission’s decision. price by provi- 1(' initial Mcf with respecting price 7(e) sions escalation. Under of the Natural Gas § Act, authority the Commission has to is testimony, After further Commis- any qualified applicant sue a certificate to sion omission of an ordered the inter- applicant if it finds that the is able and mediate decision and examiner willing properly perform proposed issued its order of December service and that the service “is or will be granted again applica- That order required by or future tions Natural and Producers without necessity.” course, convenience and Of any price, pro- condition as did but it imposition section authorizes also vide: of conditions. grant “The of the here- certificates in shall not construed as a waiver Petitioner’s main contentions are that requirements granting Section the Commission erred in Act, of the Natural Gas or of imposing Section certificate to Producers without 154 of price condition, because, and Commission’s Rules was con- Regulations requiring tended, thereunder Natural’s exceeded filing prevailing of rate schedules for the the homa, in southern Okla- authorized, service herein and is and that Commission did not prejudice findings any or amake that the increased rate orders which proposed by have been “just or here- Producers was and rea- after be sonable,” made required by 4(a) Commission in as § any proceeding pending Act, now 717c(a). or here- 15 U.S.C.A. That § sec- against after ap- requires instituted or charges that all rates and plicants. Further, by any gas the action taken or made received natural com- proceeding in this pany “just shall reasonable,” not foreclose shall be and prejudice any proceedings nor any future provides “just rate that which is not objection relating operation or to the is and reasonable” unlawful. any price provision or related that, proceed- Petitioner asserts a gas purchase contracts herein in- for a certificate volved.” 7(e), under when § again challenged by party raising The order denied Lone Star’s is rate application pro- question for construction of its as to its substantial ness, reasonable- posed Commission, 4(a) imposes mandatory facilities. The duty how- § gas. pre- gas There is reserve well an essential no on the gas permission Counties, granting requisite Jack and Wise pro- Oklahoma, comparable sale, southern that that the to insure make the to posed gas proceeding. just involved and reasonable. this rates are reserve, areas, Act exclusive these further contends Petitioner gas casinghead gas gas, provisions of well not § but does state not gas au- well 4(a) apply is much more valuable a sale to be not shall casinghead gas. prohibi- 7(e); that the thorized against not 4(a) sales tion of § Counties, Star In Jack Lone Wise all-inclusive reasonable paying policy able to enforce a 4(a) Act; pervades the entire pays for more than it well ap- sales, applies hence it and all casinghead gas, was of which is commenced. plies as it a sale soon January 12(5 increased to Mcf does record claims the Petitioner Oklahoma, In southern Lone Star finding, support and the agreement as to the Petitioner have an find, increased did and are able to enforce “just rea- posed Producers policy paying *5 for both 10(5 Mcf as- error, Petitioner This gas sonable.” casinghead gas gas. This well and granting serts, requires order the Peti- a constitutes two-cent differential. aside since set the certificates be price has not its because tioner increased granting authorized the certificates price in in Jack the increase obtaining gas at its Natural’s in comparison results A Wise area. Counties and, higher cost to its customers a price Mcf 13.9(5 Natural’s cost to time, increased in being gas gas by results prices paid same oth- well for causing by an unwar- competing utilities gas purchasers in relevant areas shows er price prevailing advance ranted price in Natural’s line. is in area. foregoing support facts nec- is evidence of the An examination findings by conclusions reached the Commis- essary whether to determine denying appli in its order refusing to in its discretion sion abused etc., rehearing, Janu for cations issued the certifi- impose price condition ary 1957: Producers. cates issued “* -x- -x- js first, gas contended, reserve in Jack and Wise n largest remaining opinion protect fails un- that our (cid:127)Counties is in mid-conti- ultimate consumers natural dedicated reserve largest charges gas. area, from excessive one of the discov- for nent price years. contended that for the the United in recent is ered in States being by excessive, producers’ Produc- sales is This reserve was discovered prevailing presently and is estimated to above the in ers in 1952 gas. by exten- cubic area traversed Natural’s contain trillion feet of 2% sion; sufficient reason has with Producers that no Natural has contracted authorizing given justify for cubic of this been 750 billion feet Upham Company price; at such Gas have the sale Lone Star impact producers' prices approximately of the
(cid:127)contracted for
the same
approximately
amount,
Natural’s
struc-
in Oklahoma
which leaves
any
will be most
Further
harmful.
cubic feet uncommitted to
ture
trillion
purchaser.
connection,
sought
Oklahoma Natu-
has not
nor
in this
Petitioner
nothing
purchase
is
contends that there
un-
ral
does
seek
it
gas,
purchase
basis of which the
record on the
for it does
committed
Texas;
purchases
any gas
find that
rates
could
and sales
producers
wholly
and reason-
state
(cid:127)are
within the
Oklahoma
of
able,
regulatory authority,
such,
requirement
im-
said to be
con-
.and
7(e)
Act,
pays
posed
of the
for
Section
which Petitioner
trols
said, evidenced,
accompanying order,
and further
it
In the Mat-
opinions and
Company,
certain
ters
of Cities Service Gas
argued
al.,
G-2569,
al.,
Thus
et
decisions.
court
docket No.
is-
concluding
proceed-
that we erred in
sued November
‘A
impact
Natural was
on Oklahoma
of this nature can
is not
paramount concern
place
not matter of
intended to take
of a
ceeding
in this case.
under Section 4
5or
”Act.’
we
likewise
“These contentions
ele-
find
merit. The
to be
A dominant
factor
this case is the
ultimate
ment of
Chicago
need
more
area.
consid-
factor to be
sumer
but one
The Commission found
unsatisfied
determining upon the con-
ered
Chicago
demands
exist
and are in-
involved
venience and
creasing
phenomenal rate,
at a
and the
pointed
given
Here, as
case.
we
demand in the future will
over and
opinion
accom-
No. 299 and
out in
capacity
above the
sales
of Nat-
order,
panying
elements over-
other
existing system 510,000
ural’s
Mcf
may ensue
increases as
balance
day. Natural’s need has been rendered
produc-
from
certification
more acute
underground storage
fact that
Herscher
prices
Natural at the
ers’ sales to
Illinois,
field in
Indeed, may be men-
authorized.
expected
develop
daily
which was
wheth-
some doubt exists
tioned that
supply
1,500,000Mcf,
can be relied on
calling
producer authorizations
er
only 430,000
per day.
Mcf
producer prices would or
lower
*6
The statute makes the issuance of a
Significant-
could be consummated.
ly,
dependent
upon
certificate
“public
of
Chicago,
repre-
City
necessity,”
convenience and
there, has not
sents consumers
sought
delegates
power
it
to the Commission the
rehearing
opinion
No.
duty
finding.
to make that
accompanying order. And al-
and
though
Commission, by
knowledge
expert
pub-
have considered
we
continuing
contact with
natural
relating to Oklahoma
lic interests
gas industry,
qualified
serves,
to make the de-
it
Natural and the customers
terminations
fact and
evaluations
we are unable to conclude that those
policy
which the
interests,
issuance
a certifi-
either as a matter of law
requires.
particular
cate
on
the basis
outweigh
case,
facts in this
more
granting
or denial of a cer
pertinent
represented by
interests
public
convenience and
tificate
neces
Natural and
consumers it serves.
sity
peculiarly
ais matter
within the dis
prevailing prices
“Nor do the
cretion
the Commission. The Commis
the area
such other related
data
imposing
price
action in
sion’s
condi
producing
as market and
to
condi-
tion on the issuance of a certificate was
justify
tions as are available to us
upheld
Service-Signal
in Cities
Oil su
producers’
conclusion that
Sunray
pra; and in
Mid-Continent Oil
prices
or will
are excessive
have the
Co. v. Federal Power
Cir.,
impact which
violent
Oklahoma Nat-
1956,
239 F.2d
reversed on
* * *
envisages.
ural
With re-
grounds,
944,
other
792,
U.S.
77 S.Ct.
spect
to the contention that the
794,
upholding
1 L.Ed.2d
rates have not been
ducers’
shown
authority
Commission’s
to refuse to im
reasonable,’
‘just
require-
to be
pose conditions on the issuance of cer
imposed by
ment
to be
section
said
tificates, the court said:
Act,
7(e) of the
it suffices to com-
entering
ment,
without
into
“Just
has au-
lengthy
question,
thority
impose
upon
discussion of this
conditions
opinion
so, too,
we stated in
that as
No. 288
issuance of a certificate
authority
impose
mission,
Cir., 1956,
refuse to
238 F.2d
cer
conditions.”
tiorari denied
353 U.S.
77 S.
Ct.
3. British thermal units. 644 tailgates gasoline higher figures, price un- producers’ at the extraction, B.T.U. the the gathered gas 14.2 plants. contracts would be cents Before the or. per m.c.f., made, however, Supreme 15.15 than 13.9 were Court cents rather the n by Phillips cents as found the on held i Petroleum v. Co. State Wisconsin, 1954, 74 the 1050 B.T.U. 347 U.S. S.Ct. basis the assumed figure. examiner, presiding 98 L.Ed. The since selling jurisdiction adjustment producers had he eliminated B.T.U. over the gas provision, commerce. had to make a at wholesale in interstate no occasion finding In content what the examiner found to be an to what the B.T.U. as gas escape jurisdiction, al- effort to The would be. neg- though producers required provision, restored the take Natural finding. gas Its at do lected make its the well-head and its own own gathering, being assumption adoption price reduced to Natural’s mere figure compensate. per as fourteen cents m.c.f. to to what the B.T.U. would contrary addition, required pay not, was does in the face evidence Natural record, per dehydra finding toas one-fourth cent m.c.f. amount to a as figure. charge and, stands, As content the record there- B.T.U. ungathered gas required adjust fore, pay price over an higher Concluding price.4 ed amended contracts less high price prevailing per perhaps should exceed the 13.9 cents m.c.f. and as price, per field 15.15 the examiner ordered m.c.f. as cents lowering base but also Nor make did adjustment. upward price elimination of finding gathering the to the cost of as figure B.T.U. above “assumed” in the tracts) m.c.f. taking cent by T.U. charge. dehydration amendment of the contracts was found The the Commission to be 13.9 cents reduction basis,5 including employed price provided by This ungathered gas base and 0.65 cents for adding 1000. from the testimony the Commission was to it as is arrived at on a original 1050 B.T.U. of a cents post-hearing dehydration cent (a one B. m.c.f.6 ord discloses it is what cent between cost at 1.4 cents gas. A Star Since the issues comparison Natural of fields necessary witness But no Natural witness 15.3 cents and 17.55 cents which Natural actual with those at 2.4 as to those gathered of this cost ascertain in this cents. would m.c.f. prevailing 15.3 cent —17.55 was made as proposes to estimated that prices. Thus the case what be. would and a Lone relate range cost rec- tap, producer witness. One of the question: witnesses the. Two fields are predicted tapped initially would have Texas area to be B.T.U. content of 1073 and and the a Lone Star Extension southern Oklahoma through witness estimated ex- 1146. At at those area Oklahoma provided
4. The formula contracts is: _ _ ,. , , content . . . B.T.U. Adjusted x ^ase ™rice Priee=-100Ü- printed e., opinion and 16.3 cents 15.3 cents I. between 6. Commission’s basis; figure 15.6 between gives 1050 B.T.U. joint appendix B.T.U. 1073 B.T.U. 16.6 on a 528), cents and cents (J.A. from the record but “150” opinion, basis; reported 16.55 and 17.55 between cents generally from the typographical B.T.U. on a 1146 basis. cents be a seem to , F.P.C. error.
645 reopened many hearing, pass Natural and which the tension will the presiding tap Texas to the proposes to next. As examiner's determina- longer applicable. price, recites: tions decision are no the initial It unduly burden this order to highest is conceded that the “It attempt specify findings those currently being price paid for nat- which are still material and which gas contracts in the ural * * * supported by are substantial evi- Counties area Jack-Wise dence and those which are not. Ac- per Mcf.” 11^ cordingly, we shall set forth our area, the southern Oklahoma As to the own determinations modi- lieu presiding examiner noted in the initial fying adopting the examiner’s (1) had decision referring decision, however where Co., recently found in Cities Service Gas findings appropriate particular (1955), al., 3 affirmed sub 12 P.U.R.Sd Signal Oil & v. Federal nom. Gas Co. the examiner which still subsist.” 1956, Commission, Cir., F.2d 3 238 “determination” the Commis- 923, 771, 1957, 353 certiorari denied U.S. respect prevail- sion made with to the 1 77 L.Ed.2d “that S.Ct. ing price in the Texas field was the fol- being paid more than Mcf was lowing 10^5 : ** any gas purchased *,” for finding “Nor are we satisfied (2) supported that this was also competitive by conditions Jack record. and Wise Counties area such as overrule or The Commission does not justify fixing upon 11 cents as findings. challenge even examiner’s prevailing price.” says: merely It arriving “In determinations 11 Since cents was conceded to be the follow, highest we have considered price paid7 and there since un- proceedings, entire record these controverted evidence in the record that including presiding examiner’s gas competition there is pur- “keen” for comprehensive on the decision initial area,8 chases in the hearing. However, of vari- because not, contrary pointing could changes parties’ proposals ous record,9 evidence find otherwise. January 1957, Opin- court, after the date of in this but the brief contains no price paid by ion No. support Lone Star record If references. for in the Texas field to 12 escalated cents 30,- assertion lurks somewhere in this page m. f. record, c. But in its I have not found it and opinion order, parties dealt with the then- none of the has called it to onr existing of 11 cents m. f. e. attention. Nor was 1 cent escalation even re- says that, 9. The Commission to be the subsequent deny- ferred to order “prevailing” price, cent must ing rehearing. comparative pur- For apply quantity to the same kind and poses, therefore, proper it seems ques- as the contract here price. is, use we also the 11 cent gas-well tion. The here involved is perhaps, noting producers’ worth gas, casing-head gas (a by- rather provide contracts also for product petroleum refining), and these future escalations. But see 154.- large gas. contracts call for volumes of 94(a), (c) Regu- of the Commission’s that, though The examiner found much lations, .154.94(a), (c). C.F.R. sold in Jack and Wise Coun- Despite casing-head gas, uncontradieted evidence of ties is considerable vol- competition gas-well gas in the Texas field umes of are also sold at (J.A. 80-32), majority figure. asserts that, He cent also found though many purchase Lone Star been able to “enforce” a contracts low-price policy. No such gas, are for small volumes some are presiding very made running either examiner up substantial volumes 12,000 per day. the Commission. The assertion c.m. f. There is evi- apparently dence, moreover, Star, based similar asser- that Lone in its producers pays purchases, made in their brief cent *12 646 finding not, therefore, contract. the Commis- could not on the base a
I do read although Moreover, had expression as that contract dissatisfaction sion’s field prevailing been made months before some seven determination that price Serv- Counties was Commission’s decision Cities in Jack and Wise ice, supra, found per there II cents m.c.f. prevailing price cents. to be ten field field, respect Oklahoma With to the And if it be said that the Commission suggests indirectly when not have known of the contract finding case instant examiner’s certainly Service, it it decided Cities finding in own the Cities Service April re- on when knew of it case, prevailing price supra, is that the Petroleum affirmed in Pan American Corp., higher are per m.c.f. no 10 cents al., Opinion mimeo- No. being gas is erroneous. finds graphed opinion 13-14, pp. its Cities higher price than sold' in that field at finding prevailing field Service that the per This is based 10 cents m.c.f. price in field the southern Oklahoma showing upon by con- that one Natural 10 cents.10 April 19, on tract was made at a sale Oklahoma field up, To sum these the facts about higher question price. The contract price: exam- The was not offered iner, therefore, evidence. prevailing price of 1. The correctly to refused Texas field m.c.f. is cents was submitted sider the contract when it prevailing hearing to an attachment after the as is southern Oklahoma field 10 cents producers. He also brief rejected one of the m.c.f. support the as record argument by producers made Oklahoma 3. The at which the pur- gas Natural, “one-shot” contract was a to sell trans- contracted by utility could an electric chase lated to the same terms at which the foregoing on field have had no effect 10 cent field cent and repeated. He apply, prices because it would not and 17.55 between 15.3 found: m.c.f. cents nothing record as to “The shows Ill buyer oper- or its the nature of the ations, present or future. With preliminary question to An additional scanty information, no useful such our be considered before we address by attempt- purpose be served attack on selves Oklahoma Natural’s possible speculate order the contention the Commission’s contract effect of that Oklahoma Natu intervenors general price in southern Okla- level aggrieved” “party within the ral not a homa.” meaning 19(b) of the Natural Gas Act, 717r(b), therefore overrule U.S.C.A. did standing petit this maintain examiner and contract made order doing so, part Without ion.11 record. My brethren, though finding large it unneces- small volumes alike. None of sary pass question, findings on note this are contradicted these standing Natural’s claim to Oklahoma Commission. “seriously controverted has been majority cent asserts that 10. The spondent and intervenors.” At least with agree- fixed “an in Oklahoma is regard respondent, this observation between Lone Star and Okla- ment” to be in error. The statement would seem far I So have been homa Natural. respondent’s questions presented in find, assertion, ma- like the able jority’s reference to the stand- brief makes no respect assertion ing question. price (supra 8), note is based Texas allegation unsupported altogether producers’ brief. *13 deed, rec imposed in There is abundant evidence before the initial decision argues price already show, condition, ord to as Oklahoma Natural Natural had found, gas presiding large pro- and as examiner contracted with one purchases con ducer in its southern Oklahoma that Natural’s under at substan- tially producers prevailing price13 start above the tracts with field stages nego- upward price spiral and in the southern was in the advanced of field Natural tiation Oklahoma where Oklahoma with others. is obvious that buys gas, detri to the with its latter’s direct Commission of certification producer ment detriment Oklahoma Extension and to the ultimate and price it no evi sales at a consumers serves. There between 15.3 and is cents contrary.12 Yet the 17.55 ready dence to show the cents m.c.f. Natural willing prospect pay Commission concludes “the ad- that similar changes price price producers vanced Oklahoma Natural Oklahoma along consequence price proposed extension, in route lat- gas producer keep is ter will their contracts for Nat- Natural’s available long-term paramount ural too remote be a rather that make matter concern in tracts with Oklahoma this case.” Natural at prevailing price. much lower field It is validity of We need not consider the say no answer to that Natural Oklahoma this Commission’s conclusion in aggrieved will not be until the Commis- gard, because, apart whether from sion sales produc- certifies Oklahoma price spiral not an result Oklahoma will withholding present ers to Natural. The purchases, from Natural’s Texas it from the market of which Oklahoma beyond question the certification that buy present could otherwise constitutes aggrieve project Natural’s will Oklahoma aggrievement and it is “direct imme- by removing from available injury” flowing diate from the The the market. that found Pittsburgh City of certification. v. Fed- begin- purchases “only the Texas are Commission, 1956, eral Power 99 U.S. ning phase program in Natural’s to se- App.D.C. F.2d gas” supplies cure needed and that conclude, therefore, I that Oklahoma “Natural intends for addi- to contract standing Natural has under the Natural gas” “highly volumes of in tional petition I Gas to maintain Act productive areas in southern Okla- question reach now the whether the Com- homa” In- traversed its extension. mission’s order stand. expert witnesses on Numerous testified tho contract the refutation. The parties. Many rely various behalf of the Commission cannot on now the con- opinions price giving their that them stated tract without Oklahoma Natural along Ex- evidentiary route of the Oklahoma all refute chance to its effect. sharply would rise as a tension result to the second matter relied As on purchases I have of Natural’s Texas. the record shows a one testimony contrary price found no cent between differential Lone purchases. refers to none in its Texas Star’s Oklahoma points opinion. 11 cent Because an Texas does support things up push price, conclu- two a 10 cent Oklahoma it First, the one sion: contract made does not follow that a 15.3 cent or 17.55 April 19, 1955, on a rate Oklahoma will cent Texas have no effect higher (see Moreover, 10 cent m. than c. f. Oklahoma. if the two fields supra, p. 22) spiral; economically today started are so unrelated second, pays maintained, that Lone Star less differential can be they Oklahoma As Texas. does not follow that will remain un- matter, shown, they joined by pipe- as I have to tho first related after are argue tapping Natural wished to be- Oklahoma line the reserves both fields. type fore the examiner was the imposition that has no of contract effect 13. After tho rate condi- prevented doing market, appears tion, from but that contract have been rejected the examiner so because both terminated. nothing or certificate IV of the Natural Act visions Gas ground upon principal we responsibility the Fed- makes it urged certification to set aside the attempt to> eral Power Commission to project Extension Oklahoma price a judgment exercise” the pipeline of what any de- to make failed pay instance first should justness rea- termination *14 field in which it takes from a tois the sonableness of gas. purchased previously “That has not the independent producers for pay the says responsibility,” the The the extension. to be carried in Further, applicants.” the “is the position its in Commission’s stated grant argues, the Commission its opinion as follows: con- leave the certificates does not here “ ** * although Accordingly, price unprotected be- sumer interest afford basis the record does not provides: cause the order determining precise what grant “The of the certificates ‘just for the l’ate is reasonable’ shall be construed as a herein con- sold to Natural under its requirements waiver of Sec- producers, in view tracts with the Act, or of tion 4 of the Natural Gas in this case all circumstances 154 of the Commission’s 'Section we cannot conclude Regulations thereunder Rules necessity requires requiring filing of rate schedules only if that this issue certificate authorized, for the service herein is less rate which this sold ** * any prejudice find- and is without proposed price. than the ings or orders been or which have .producers’ rates The matter of the may by the Com- hereafter be made continuing subject super- our proceeding pend- any mission now sufficient vision and control and if ing by or or hereafter instituted therefor, appears reason can against applicants. Further, a factual rec- sidered on basis of proceeding the action taken in this developed appropriate pro- ord in an any prejudice shall not foreclose nor ceeding under the Act.” proceedings objection re- future rehearing denying In its order the Com- lating any operation to the mission further stated: gas pur- provision or related “ * * * respect to the con- With chase herein involved.” contracts producers’ tention that rates arguments of these re- assessment ‘just have not been shown to be regu- quires an examination reasonable,’ requirement said to be provisions lation the Natural Act. Gas 7(e) Act, imposed of the Section an examination shows Such first comment, it suffices to without en- filing requirement the rate § tering any lengthy into discussion of protect Act does not the consumers’ question, that as we stated every 4(c), interests. Under § * * *, ‘A [Cities Service] gas company natural must file with the ceeding of this nature can not and is Commission charges. schedules its rates and place to take the not intended of a provides 4(d) “no Section proceeding under Section or 5 of change by any natural-gas shall be made ” the Act.’ company any such rate” fil- here, brief filed its with the Commission “new sched- suggests14 By 4(e) “any functions with ules.” when such new gard performed only filed,” rates are to be schedule is the proceedings hearing concerning or 5 §§ hold the lawfulness argues and, pending Act. hearing, Natural Gas It that “there of the rate explicit point argument.
14. Natural’s brief makes an
of this
* *
5(a)
proceeding under §
“A
operation
new
may suspend the
long delay in
and,
entail
long
if
is certain to
months
five
rate for as
decision,
there
final
terms of
expires
increased
suspension
damage
undoing
way
done
comple-
before
effective
rate becomes
period.”
public in the interim
may require
com-
to the
hearing,
tion
pany
at 15.
P.U.R.3d
refund
a bond
to furnish
unjustified.
ultimately found
Thus,
amounts
unless the
consumer
protection
afforded
duty
protect
power
provisions of
suspension
refund
rates
interest
reasonable
noted, applies
to situa-
4(e),
proceeding,
it is
7(e)
the §
certification
company
new rate
files a
essentially unpro-
tions where
remain
interest must
existing
changing
rate.
schedule
And,
interest
remains
if that
tected.
filing
initial
apply
of an
very
does
unprotected,
to be
would seem
there
*15
here.
involved
regulation
rate such as is
any
purpose
little
gas industry.15
Supreme
sure,
improper
rate
natural
initial
an
To be
case,
Phillips
5(a)
may
Act
347 U.S.
Court said
under §
attacked
be
page
page
800:
at
provides:
74 S.Ct.
which
against ex-
“Protection of consumers
Commission, after
“Whenever
natural-gas
ploitation at
hands of
hearing
upon
motion
had
own
companies
primary
aim of the
State,
complaint
any
mu-
or
Natural Gas Act.”
commission,
nicipality,
or
State
7(e)
distributing company,
provides:
find that
shall
Section
of the Act
“
* *
*
charge,
rate,
any
or classification
a certificate shall be is-
observed, charged,
demanded,
or col-
any qualified applicant
sued to
natural-gas company
by any
lected
therefor, authorizing the
or
whole
any transporta-
connection
any part
operation, sale,
serv-
subject
gas,
of natural
tion or sale
ice, construction, extension, or ac-
jurisdiction
Commis-
to the
quisition
application,
covered
regulations,
rule,
sion,
any
or that
applicant
if it is found that the
is
affecting
practice,
or contract
willing properly
able and
to do the
charge,
rate,
un-
or classification
perform
acts
the service
unduly
unreasonable,
just,
discrimi-
posed
provi-
and to
to the
conform
natory,
preferential, the Commis-
or
require-
sions
the Act and the
just and
sion shall determine
ments, rules,
regulations
rate, charge, classifica-
reasonable
thereunder,
and that
rule, regulation,
tion,
practice, or
proposed service, sale, operation,
thereafter observed
to be
contract
construction, extension,
acquisi-
or
force,
fix the
and shall
same
tion,
to the extent authorized
**
*.”
order
certificate,
required by
is or will be
present
public
notoriously
or
5(a) proceedings
conven-
But
future
§
necessity;
long
ience and
provision
complicated
otherwise such
and no
application
temporary suspension
shall be denied.
for even
made
power
Commission shall have the
amounts received
rates or for refund of
may
attach to the issuance
portions
ul-
the certifi-
of rates as
under such
timately
rights
cate and to the exercise of
As
found to be unlawful.
be
granted thereunder such reasonable
said in the Cities Serv-
terms and
ease, supra:
conditions as the
ice
making
important
“Pricing
sist
it sound and
function
effective.”
is the most
Oonnole,
regula-
regulation.
General Considerations:
Indeed all other
A Na-
Pains,
tory processes
one,
tion’s Natural-Gas
lead to this
are sub-
Geo.L.J.
(1956).
may
judged
it,
be
ac-
ordinate
they
cording
degree to which
as-
Report
convenience and
sion. In its 1949 Annual
to Con-
quire.
[Emphasis supplied.]”
gress,
p.
example,
114:
it said at
“provisions
Act,”
proposals
One' of
“The rate
in connection
applicant
pipe
be
able
must
found
with the
lines and services
new
willing
perform,
carefully analyzed
all rates
is that
must
ascer-
be
“just
4(a).
statutory require-
be
and reasonable.”
tain whether
Moreover, the
itself has said
ments of
nondis-
reasonableness and
justness
that the
reasonableness
crimination are
met.”
the rate
in a show
is a “vital element”
Report,
p.
In its 1951
it said at
109:
proposed
“that the
or will
service
“To
assure that reasonable
required by
be
or future
nondiscriminatory
are estab-
rates
necessity.”
convenienceand
Cities
lished for all new services author-
case, And
Service
P.U.R.3d at 14.
proceedings
ized in
certificate
Congress
enacting 7(e)
intent
determine the effect of
new con-
give
oppor
Was to
“the
presently
struction
effective
**
*
tunity to
the char
scrutinize
rates,
applica-
each new certificate
con
acteristics of the rate structure in
tion filed with the Commission must
nection
construction
with the
carefully analyzed
be
from a
vital
time when such
extension at a
viewpoint.”
readily
matters can
public
modified as the
*16
p.
Report
And at
127 of
it
may
interest
demand.”16
certify
stated:
therefore,
not,
Commission could
producers’
Natural’s extension
the
issuing
Commission,
“The
in
cer-
being
by
required
public
as
the
sales
pipelines
tificates for new
and exten-
necessity
convenience
without some
existing pipelines
sions of
into new
pro
in the
determination
areas,
certification
market
must
the
review
just
ceeding that the contract rate was
posed
(1)
rates to ascertain
whether
and reasonable.
project
economically feasible,
the
(2)
in those
That the rate feature of a
cases where the
subject
jurisdiction
in
a
rates are
natural
service is
vital element
Commission,
the service should
of the
tory
whether
whether statu-
the- question
(cid:127)
by
public
requirements
required
reasonable-
be certified
necessity
proposi-
is a
ness and
nondiscrimination
are
convenience
recognized by
met.”17
the Commis-
tion often
Cong.,
adequate
H.R.Rep.
1290,
and maintain
77th
1st
service at
No.
ratea
by
Sess.,
prevailing
(1941);
in
lower than
cited
the court
those
in
2-3
the ter-
ritory
Oil,
page
served,
being
Signal
at
774. See
to be
238 F.2d
the inten-
S.Rep.
Congress
effect,
948,
also,
tion of
that
to the same
Cong.,
No.
natural
shall
Sess.,
(1942).
sold in
2d
be
interstate
commerce for
77th
change
public
presently significant
consumption
in
sale for
domestic,
ultimate
for
.The
commercial,
industrial,
Act effected
the Act of
Natural Gas
49,
possible
February 7, 1942,
83,
use at
56 Stat.
other
the lowest
c.
reason-
able rate
7 of
Act of June
consistent with the
which amended
maintenance
adequate
556;
7,
824, by
public
service
c.
Stat.
inter-
(c)
striking
thereof
est.”
out subsection
substituting
(c)
subsections
17. We
note from the record in an-
grant
through (g),
Commis-
was to
other certification case which we have
impose
power
conditions.
sion the
recently
reviewed, Midwestern Gas
original
(c),
subsection
Even under
Transmission Co. v. Federal
power
however,
the Commission’s
supra
note
that
the Com-
beyond ques-
duty
"rates were
consider
.to
mission, overruling
presiding
exam-
provided:
That subsection
tion.
requirement
complete
iner’s
under-
applications
passing
for certifi-
on
“In
presented
lying rate data be
in connec-
necessity,
convenience and.
cates
preliminary proceeding
with a
to de-
give
shall
considera-
due
Commission
requirements,
market
termine
said:
applicant’s ability to render
tion to
eventually
information
“This
must
be
persuade
Supreme
the Com-
What it takes to
Court’s
until the
was
certify
with-
mission that it should not
Phillips
on June
decision
pipe
indicated
out a rate determination is
producers’
independent
rates
Service, supra,
“subject
de-
its decision Cities
be
lines were considered
day
cided the same
as Tamborello.
jurisdiction of the Commission.”
application
Phillips
an Cities Service
involved
effect
The immediate
12 cents
certificate
sell
Commission’s
immense increase
following Phillips
southern Okla-
m.c.f. from the same
year
workload.
pre-
here,
times
where the
five
homa area involved
received
vailing
field
m.c.f.
10 cents
many
applications
as in
certificate
preceding
The Commission
years
decision.18
said:
twelve
injury
producer
Moreover, independent
“In the face
admitted
certifi
problems
many parties
proceeding,
presented
applications
in this
cate
substantially
we
rate struc
from
there
are convinced
different
those
prevailed
area
ture which has
this
dealt with
tofore
certifying pipelines.19
some time should not be disturb
showing
policy
post
adopted
ed without a
more substan
has therefore
poning
justness
appears
record that
tial than
determination
on
change
necessary
producers’ rates to
reasonableness
pro
if,
the level to which the rates
proceeding
subsequent
rate
changed
posed
is itself
presented
to be
basis
the evidence
prop
proceeding,
appears
and reasonable. We find that
certification
applicants
Tamborello,
herein have
certificate
er
11 P.
to do so.
Re
See
-
that a
(1955).
failed to
But
demonstrate
U.R.3d
deciding
Mcf is neces
de
level
12 cents
purpose
the rate
whether
sary
or that
may safely
postponed, the
interest
termination
presentation
requires
*17
requires
which
issuance of
proceeding
“the
of
basic
the certification
charged.”
a
certificate
dictates a
as to the rates to be
facts
necessary
12
to en
of
evidence
rate of
cents is
Ibid. “If on the basis
such
feasibility
sure
appears
ex
the economic
of
to the commission that
project.”
justness
reason
P.U.R.3d at
[12
16.]
amination into the
may
parity
specific rate
inde While
with field
ableness of a
of an
pro
pendent producer
alone be sufficient for
determination
in a certificate
a
justness
ceeding
required,
ample of
and reasonableness
there is
of
rate,20
authority
appropriate
disparity
the statute for
substantial
with field
sufficiently
proceeding.” price
inquiry
is a
be made in that
reliable index of
td
unjustness and unreasonableness
Ibid.
April 4, 1958,
presented in
issued
connection with the final
in Pan American
Corp.,
Petroleum
determination of
et al.
and overall
what
necessity
20. City of Detroit
Federal
U.S.App.D.C.-,
v.
Power Com
quires.”
258 F.2d
108
1955,
mission,
U.S.App.D.C. 260,
97
230
060.
810,
F.2d
certiorari
denied Panhandle
Report of
Federal
18.
Power
Annual
Pipe
City Detroit,
Eastern
1956,
Line Co. v.
1955, p.
87.
Commission
829,
34,
352 U.S.
77 S.Ct.
1 D.Ed.2d
413,
however,
Tamborello,
See,
11
48.
Pan American
supra
19.
Re
P.U.R.3d
Petro
See
question
Corp.,
(1955).
al.,
19,
basic
is the
leum
et
417
A
note
where
apply
pro-
containing
one
which
should
to
on a record
extent
very
showing
production,
little
rates
return-on-rate-baso
cost of
ducers’
rate-fixing
reasonable,
which has been
held
proceeding,
in a
method
developed
4§
rate
regulation
a rate 25
enter-
below
cent
involving large
prevailing
price.
prises
com-
field
investment
But cf. Union Oil
supra
California,
pared
Connole,
al.,
revenue. See
Co. of
et
with
F.P.C. 100
problems,
(1956);
Corp.
15,
For
at 560-61.
other
Bel Oil
note
v. Federal
Opinion
Commission, Cir.,
the Commission’s
No.
255 F.2d
seo
preclude
services,
post-Phillips
rute to
certification without a
for new
first
in its
Indeed,
Report
rate
its ad-
determination.
Annual
watered
the Commission
pro-
suspension
say merely
ministration of
rate
the statement down to
4(e)
giving
Act,
vision of
practice
the Commis-
it “has
followed the
* *
*
guide
“principal
proposed
sion’s
in de-
rates.
consideration to the
termining
* *
suspend
whether or not to
Report (1955) 135.
*.” Annual
comparison
been
of the
year,
And
fur-
the next
proposed price
prices in the
with field
say
ther watered
down its statement
Corp.,
area.” Pan American Petroleum
prac-
generally
that it “has
followed the
al., Opinion
April
issued
No.
pro-
giving
tice of
consideration
*
*
mimeographed opinion, p.
If
*23
posed rates
2 cents over the
an index
field rate was
magnitude
administrative
of the
unjustness
and unreasonableness in
generated
justify
by Phillips may
task
case,
the Cities
Service
it is difficult
greatly
request
en-
for a
see how
4.3 cents
6.55 cents over
larged
appropriation.
staff and
field
cent
Jack
Wise
some,
even,
call for new
in the view of
disregarded
Counties
in-
can be
give
legislation.
however,
not,
It does
stant case.
change
any
warrant
changes
Congress
the statute.24 Unless
here
The Commission was confronted
recognized
law,
as the Commission
project involving purchases of
with a
Service,
is no
“there
basis
Cities
above
cent
at from 39
cent to
distinguish
commission’s
Having failed,
prevailing
price.
field
power
of a
with
issuance
reference to
strong
serious
the face of
‘independent producer,’
to an
certificate
proposed
un-
tentions that
power
here,
exercise
Act,21
4(a)
make
of the
lawful under §
pipeline
reference to
‘interstate
justness
determination
**
ap-
company’
act
The same
*.
rate, the Commis-
reasonableness
plies
653
Commission,
determining
v. Federal Power
the Council
complicated task of
the
justness
152, 155,
1957,
U.S.App.D.C.
251
pro-
102
of the
reasonableness
78
conditioning
S.Ct.
F.2d
denied
rate,
certificate
certiorari
by
posed
7
996,
majority2 said:
filing
That
in which the
rate.
of a lower
Cities Service
was followed
course
“Petitioner claims the Commis-
and,
respect
other
to rates
hearing
with
rate
should have held a
sion
many
cases.25
producer rates,
other
the lawfulness
to determine
the Commis-
course
And
is the
charged
gas sup-
by
rates to be
“
necessary” to follow
it is
sion has said
inquiry may
pliers.
re-
be
But this
be arrived at
proper rate cannot
a
when
proceeding
rather
solved
rate
a
pro-
agreement
in the certification
proceeding
a
than in
for a certificate
110;
ceeding.
Report (1952)
Re
Annual
necessity,
convenience and
Tamborello,
The
at 416.
11 P.U.R.3d
and the
not abuse
Commission did
imposition
rate
a
condition
declining
its discretion in
public,
protect
also
but
pro-
sider the
instant
matter
proponents
the rate.
ceeding.
[Citing Panhandle East-
against
non-
protected
would be
Pipe
ern
Line
v.
Co. Federal
damage
rate
a
inherent
refundable
Commission,
297,
U.S.App.D.C.
pro-
ultimately
in a
5§
held excessive
F.2d
certiorari denied
ceeding.
imposed
rate
If the
335 U.S.
94 L.Ed.
S.Ct.
thought
low, the
too
be
condition is
402.]”
protect
proponents
themselves
can
pur-
not clear
court
whether the
contracting
higher
rate26
ported
(1) merely
hold
Com-
utilizing
relatively speedy corrective
required
mission was not
conduct
machinery
4 of
the Act.
§
hearing
proceeding
a certification
a rate
imposing
rate
alternative to
type
it conducts under
take
certification
condition
Act;
(2)
Commission is
proceeding
re-
whatever evidence
be
required
never
to make
determina-
pro-
quired
support
that the
justness
tion of the
and reasonableness
posed rate is
reasonable.
suppliers’
of
ceeding,
rates in a certification
aspect
the rate
Whether
certifica-
legality
even when the
searching
proceeding
tion
need
be
substantially
ques-
rates is
hearing
may depend upon
tion,
question
if
even
can
particular
the circumstances
case
hearing.
solved
and need not be decided now.
holding
first
was the
If the
only that,
I would hold
when substan-
foregoing alternatives,
de-
Florida
question
justness
tial
exists as
posi-
cision is
inconsistent
reasonableness of
rates involved in
here, for I have not
I would take
application,
a certificate
suggested
Commission’s deter-
impose
if it does not
a rate condition and
*19
justness
reasonable-
mination of
satisfy
it
if
does not
the evidence
depend upon a full-
ness of rates need
proposed
itself
rates are
hearing.
rate
scale
reasonable,
certify
proj-
cannot
prop-
the second alternative is the
If
being required by
public
ect as
language,
interpretation of the court’s
er
necessity.
venience and
followed,
not be
I
it need
because
think
V
dictum,
followed,
and should not be
it is
my
wrong.
I do not consider
view
is fore
it is
It is dictum
because
be-
Advisory
closed
Florida Economic
the case before the court
one
was
cause
See,
example,
Report
granted 1958,
25.
938,
Annual
355 U.S.
certiorari
78
(1953) 112;
(1954)
430,
id.
128.
view proceedings. further mission for
CLARK, Appellant,
Samuel W.
v. PAYNE, al., as Members of Alan W. Beverage Control Board the Alcoholic EVANS, Appellant,
Wilbert G. Columbia, Harry for the District of Friedman, Appellees. v. America, No. 14286. UNITED STATES Appellee. Appeals United States Court 14277. No. of Columbia District Circuit. Appeals Court of
United States Argued May 1958. Columbia Circuit. District of 12, 1958. June Decided May 7, Argued Rehearing Petition for In Banc Denied 22, 1958. May Decided Sept. U.S.App.D.C. 122, also F. See Clark, appellant pro Mr. W. se. Samuel 2d 379. Pair, Corp. B. Asst. Mr. Hubert Coun- Doherty (appointed H. Mr. Cornelius Columbia, for sel District of with court), Washington, C., D. for Gray, Corp. Chester whom Messrs. H. appellant. Counsel, Korman, Principal D. Milton Harry Alexander, Mr. T. Asst. U. S. Counsel, Corp. Asst. and William W. Washington, C., Atty., D. with whom Corp. Pavis, Counsel, were Asst. on the Gasch, Atty., U. Oliver S. Carl Messrs. brief, appellees Payne, and others as Asman, Jr., and Robert Belcher J. W. Beverage members of the Alcoholic Con- Attys., Washington, C., U. S. D. Asst. Board trol for the District Columbia. appellee. on the brief for were Schwartz, Washington, Mr. Morris D. Carroll, Messrs. Lewis Asst. U. S. C., Philip D. whom Messrs. P. Atty., Stirling, Tillman and E. Asst. U. Marenberg Becker, and Martin S. Wash Atty. filed, at the time record was S. ington, C., brief, ap were D. on Washington, C., appear- D. also entered pellee Friedman. appellee. ances Fahy K. Miller, Before Prettyman, Wilbur Before K. Mil Wilbur Judges. Judges. Bastian, Circuit Circuit Burger, ler