Source: https://www.legalcrystal.com/case/99620/atlantic-refining-co-vs-pub-serv-comm-n
Timestamp: 2018-02-20 21:27:33
Document Index: 271031107

Matched Legal Cases: ['§ 7', '§ 7', '§ 5', '§ 7', '§ 717', '§ 5', '§ 5', '§ 4', '§ 7', '§ 7', '§ 7', '§ 5']

Atlantic Refining Co Vs Pub Serv Comm N - Citation 99620 - Court Judgment | LegalCrystal
Atlantic Refining Co. Vs. Pub. Serv. Comm'n - Court Judgment
LegalCrystal Citation legalcrystal.com/99620
Case Number 360 U.S. 378
Respondent Pub. Serv. Comm'n
atlantic refining co. v. pub. serv. comm'n - 360 u.s. 378 (1959) u.s. supreme court atlantic refining co. v. pub. serv. comm'n, 360 u.s. 378 (1959) atlantic refining co. v. public service commission of new york no. 518 argued may 20-21, 1959 decided june 22, 1959 * 360 u.s. 378 certiorari to the united states court of appeals for the third circuit syllabus four independent producers applied to the federal power commission under § 7(e) of the natural gas act for a certificate of convenience and necessity authorizing the sale to an interstate pipeline company of an enormous quantity of natural gas from wells in the gulf of mexico off the shore of louisiana at a much higher rate than the pipeline company was then.....
Atlantic Refining Co. v. Pub. Serv. Comm'n - 360 U.S. 378 (1959)
U.S. Supreme Court Atlantic Refining Co. v. Pub. Serv. Comm'n, 360 U.S. 378 (1959)
1. The facts that the producers limited their application to a firm price agreed upon between them and the pipeline company, refused to accept certification at a lower price, and threatened to cancel the contract and withhold the gas from interstate commerce did not deprive the Commission of jurisdiction. Pp. 360 U. S. 387 -388.
2. The order of the Commission granting the certificates was in error, and it must be vacated and the case remanded to the Commission for further proceedings. Pp. 360 U. S. 382 , 360 U. S. 388 -394.
required by public convenience and necessity is crucial, and a permanent certificate should not be issued unless the proposed rate has been shown to be in the public interest. Pp. 360 U. S. 388 -391.
(b) When the price proposed in an application under § 7(e) is not in keeping with the public interest because it is out of line or because its approval might trigger general price rises or an increase in the applicant's existing rates, the Commission, in the exercise of its discretion, may attach such conditions as it may deem necessary. P. 360 U. S. 391 .
(c) In granting such conditional certificates, the Commission does not determine initial prices, nor does it overturn those agreed upon by the parties. Rather it so conditions the certificates that the consuming public may be protected while the justness and reasonableness of the prices fixed by the parties are being determined under other sections of the Act. Pp. 360 U. S. 391 -392.
(d) If unconditional certificates are issued where the rate is not clearly shown to be required by the public convenience and necessity, relief is limited to § 5 proceedings, and full protection of the public interest is not afforded. P. 360 U. S. 392 .
(e) The record contains insufficient evidence to support a finding of public convenience and necessity prerequisite to the issuance of permanent certificates. Pp. 360 U. S. 392 -394.
This proceeding tests the jurisdiction, as well as the discretion, of the Federal Power Commission in the certificating of the sale of natural gas under § 7(e) of the Natural Gas Act of 1938, as amended, 15 U.S.C. § 717 et seq. [ Footnote 1 ] The Commission has issued a certificate of public convenience and necessity to petitioners, producers of natural gas, [ Footnote 2 ] to sell to petitioner Tennessee Gas Transmission Co. 1.67 trillion cubic feet of natural gas at an initial price of 224 cents per MCF,
Commission. [ Footnote 3 ] The latter is the petitioner in No. 536, which has been consolidated with No. 518.
The four contracts dedicating the gas to Tennessee run from each of the petitioner producers. The contracts call for an initial price of 22.4 cents per MCF for the gas, including 1-cent tax, with escalator clauses calling for periodic increases in specific amounts. [ Footnote 4 ] In addition, they provide for Tennessee to receive the gas at platforms on the well sites out some 15 to 25 miles in the Gulf. This requires it to build approximately 107 miles of pipeline from its nearest existing pipeline point to the offshore platforms at wellhead. The estimated cost was $16,315,412. It further appears that the necessity for the certificates was based on an application of Tennessee, Docket G-11107, in which Tennessee requested certification to enlarge and extend its facilities. This program included the building of a pipeline from southeast Louisiana to Portland, Tennessee, which would carry a large proportion of the gas from these leases. Its cost was estimated at $85,000,000. In addition, the contracts provide that Tennessee give free carriage from the wells to the shore of all condensate or distillate in the gas for the account of producers who have the option to separate it from the gas at shore stations. We need not discuss the contract provisions more minutely, though respondents do claim that
The Presiding Examiner, on March 29, 1957, found that the sales were required by the public convenience and necessity. Continental Oil Co., 17 F.P.C. 563. While he found that the proposed price was higher than any price Tennessee was then paying, he pointed to other prices currently paid for onshore sales "for smaller reserves and smaller future potentials." Id. at 571. The average weighted cost of gas to Tennessee he found would be increased, if the contract price was certificated, by .97 cent per MCF. [ Footnote 5 ] However, he said that no showing had been made that this would lead to an increase in Tennessee's rates to jurisdictional customers or result in an increase in the price governing its other purchases. He refused to condition the certificates on the acceptance of a lower price by the parties on the ground that no "showing of imprudence or of abuse of discretion by management," ibid., had been made that indicated the proposed price could not be accepted temporarily as consistent with the public convenience and necessity, pending review in a § 5(a) proceeding. However, he did condition
We note that the Commission did not seek certiorari here, but has filed a brief amicus curiae. [ Footnote 6 ] It does not urge
I . JURISDICTION OF THE COMMISSION
II . THE VALIDITY OF THE ORDER
52 Stat. 825. [ Footnote 7 ] The Act was so framed as to afford consumers a complete, permanent and effective bond of protection from excessive rates and charges. The heart of the Act is found in those provisions requiring initially that any
Phillips Petroleum Co. v. Wisconsin, 347 U. S. 672 , was decided in 1954, cases instituted under § 5 are still in the investigative stage. This long delay, without the protection of refund, as is possible in a § 4 proceeding, would provide a windfall for the natural gas company, with a consequent squall for the consumers. This the Congress did not intend. Moreover, the fact that the Commission was not given the power to suspend initial rates under § 7 makes it the more important, as the Commission itself says, that "this crucial sale should not be permanently certificated unless the rate level has been shown to be in the public interest." 17 F.P.C. 563, 575.
Act, United Gas Pipe Line Co. v. Mobile Gas Service Corp., supra, but merely the exercise of that duty imposed on the Commission to protect the public interest in determining whether the issuance of the certificate is required by the public convenience and necessity, which is the Act's standard in § 7 applications. In granting such conditional certificates, the Commission does not determine initial prices, nor does it overturn those agreed upon by the parties. Rather, it so conditions the certificate that the consuming public may be protected while the justness and reasonableness of the price fixed by the parties is being determined under other sections of the Act. Section 7 procedures in such situations thus act to hold the line awaiting adjudication of a just and reasonable rate. Thus, the purpose of the Congress "to create a comprehensive and effective regulatory scheme," Panhandle Eastern Pipe Line Co. v. Public Service Comm'n of Indiana, 332 U. S. 507 , 332 U. S. 520 (1947), is given full recognition. And § 7 is given only that scope necessary for
United Gas Pipe Line Co. v. Mobile Gas Service Corp., supra, at 350 U. S. 341 . On the other hand, if unconditional certificates are issued where the rate is not clearly shown to be required by the public convenience and necessity, relief is limited to § 5 proceedings, and, as we have indicated, full protection of the public interest is not afforded.
production in the West Delta area of Louisiana, it is surprising that evidence, if available, was not introduced as to the relative costs of production in the two submerged areas. Moreover, the record indicates that the proposed price was some 70% higher than the weighted average cost of gas to Tennessee; still, no effort was made to give the "reason why." More damaging, was the evidence that this price was greatly in excess of that which Tennessee pays from any lease in southern Louisiana. Likewise the $16,000,000 pipeline to the producers' wells was unsupported by evidence of practice or custom. Respondents contend -- and it stands undenied -- that this alone would add 2 cents per MCF to the cost of the gas. Again, the free movement of distillates retained by the producers was "shrugged off" as being de minimis without any supporting data whatever. Nor was the evidence as to whether the certification of this price would "trigger" increases in leases with "favored nation" clauses convincing, and the claim that it would not lead to an increase in rates by Tennessee was not only unsupported, but has already proven unfounded. [ Footnote 8 ]