Source: https://m.openjurist.org/364/us/137
Timestamp: 2019-08-17 15:28:15
Document Index: 566558751

Matched Legal Cases: ['§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 4', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 4', '§ 7', '§ 4', '§ 1', '§ 7', '§ 7', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 1', '§ 1', '§ 1', '§ 214', '§ 214', '§ 214', '§ 717', '§ 717', '§ 5', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 717', '§ 7', '§ 717', '§ 717', '§ 7']

364 U.S. 137 - Sunray Mid-Continent Oil Co v. Federal Power Commission
364 US 137 Sunray Mid-Continent Oil Co v. Federal Power Commission
SUNRAY MID-CONTINENT OIL CO., Petitioner,
First. Petitioner's argument is based primarily on its construction of § 7(e) of the Act. That section provides that a certificate of public convenience and necessity shall be issued "to any qualified applicant therefor, authorizing the whole or any part of the operation, sale, service, construction, extension or acquisition covered by the application."14 This petitioner urges, makes it clear that the outside limit of what the Commission may authorize is what the applicant proposes. Further, petitioner urges that the language requiring a finding "that the applicant is able and willing properly to do the acts and to perform the service proposed" negates the Commission's authority to go beyond the time limitations the applicant inserts in its proposal; for it is claimed that it cannot be found that petitioner is willing to do more than what it has proposed. Under petitioner's theory, the abandonment provisions of § 7(b) would have application only if it was desired to abandon service while the contract was still in effect.
The argument seems to us unpersuasive even on the face of the statutory language. It depends in the first instance upon freightening the phrase "the whole or any part," obviously intended to give the Commission power to grant less than the whole of an application with a load of negative meaning which nothing in the legislative history indicates that it was to bear. Even without the illumination of the purpose of the Act, it could be argued with equal force that all that was meant was that the certificate to be granted be one sufficient to authorize the specific "sale" proposed; which an unlimited certificate clearly is, in any case. But apart from this, petitioner's contention depends on the assumption that the provisions relied upon speak only in terms of the specific "sale" contemplated by the parties and not in terms of a "service" in the movement of gas in interstate commerce, of which "service" the initial "sale" is the commencement. For under § 7(e) the Commission is authorized to issue a certificate authorizing the "service" covered by the application, as well as a "sale"; and since § 7(c),15 which details the acts for which a certificate is a prerequisite, sets forth no specific antecedent for the "service" to which § 7(e) refers, it might well be thought that one who "engage[s] in the transportation or sale of natural gas," which § 7(c) does refer to, is performing a "service" within the meaning of § 7(e). Certainly there is no more likely antecedent in § 7(c). The structure of § 4(c) presents the same feature,16 and that of the abandonment provisions of § 7(b) themselves17 looks the same way.
Furthermore, within § 7(e) itself, there is found the further requirement to which petitioner itself points—that with respect to an application for a certificate of any nature, a two-part finding must be made: that the applicant is willing and able "to do the acts and to perform the service proposed." Thus, it is evident that all matters for which a certificate is required—the construction of facilities or their extension, as well as the making of jurisdictional sales—must be justified in terms of a "service" to which they relate. Accordingly, § 7(e) itself gives positive indication that the "service" which the Commission's certificate may authorize is something quite apart from simply the specific sales which § 7(c) forbids without a certificate sufficient to authorize them. To be sure, § 7(e) requires that the applicant be found willing to perform the "service" in question; but surely such willingness can be inferred from its willingness to enter into a long-term sales contract. To say that the finding cannot be made in view of the applicant's declared desire to stop and have a look in 20 years as to its continued desire to be subject to regulation, and that this is a limit on its willingness to perform the service that the certificates must respect, is to make effective regulation turn on the desire of the regulated enterprise to be subject to it.18 The willingness to make the proposed "sale" thus must imply willingness to perform the "service" which it represents. Thus even as a verbal argument, petitioner's contentions lack persuasiveness.
It is urged that if it is in the public interest to award only an unlimited certificate, the Commission might attain this end by refusing all applications for a limited one, intimating that an unlimited application would be favorably regarded. But the action of the Commission is refusing the certificate as originally applied for would be subject to judicial review; and once it were held that the Commission had no authority to award a certificate of longer duration than that prayed for, such an indirect method of attaining the same end might well meet judicial condemnation as arbitrary. There is also some suggestion that the Commission might use its power, under § 7(e), of attaching to the certificate "such reasonable terms and conditions as the public convenience and necessity may require," to attach the "condition" that the certificate be permanent. But again, once want of power to do this directly were established, the existence of power to achieve the same end indirectly through the conditioning power might well be doubted; and the acceptance of a certificate for a longer duration than requested might not be said properly to be a "term or condition" of a limited one at all.19 We think the Commission's power to protect the public interest under § 7(e) need not be restricted to these indirect and dubious methods.
The Commission's practice supports its authority here in the terms of § 7(e). It has long drawn a distinction between the underlying service to the public a natural gas company performs and the specific manifestation—the contractual relationship—which that service takes at a given moment. For example, an independent producer may file as its rate schedule its contract of sale with a pipeline company. That contract may provide in explicit terms for an adjustment of rates at a future time—even one foreordained in a precise amount. Yet when the adjustment is made pursuant to the contract, the adjustment is subject, as a "change" in rates, to the procedures of §§ 4(d) and 4(e)—however explicit the upward adjustment was in the contract from the start. Cr. Texas Gas Transmission Corp. v. Shell Oil Co., 363 U.S. 263, 80 S.Ct. 1122. This position of the Power Commission is evidence that the service in which the producer engages is distinct from the contract which regulates his relationship with the transmission company in performing the service. And it has been upheld in every Court of Appeals case on the question. Episcopal Theological Seminary of the Southwest v. Federal Power Comm., 106 U.S.App.D.C. 37, 269 F.2d 228; Bel Oil Corp. v. Federal Power Comm., 5 Cir., 255 F.2d 548, and companion cases; Continental Oil Co. v. Federal Power Comm., 5 Cir., 236 F.2d 839; Cities Service Gas Producing Co. v. Federal Power Comm., 10 Cir., 233 F.2d 726; Mississippi River Fuel Corp. v. Federal Power Comm., 8 Cir., 121 F.2d 159. See United Gas Pipe Line Co. v. Memphis Light, Gas & Water Div., 358 U.S. 103, 110, 79 S.Ct. 194, 198, 3 L.Ed.2d 153. If the Act does not contemplate that in a seller's contract there may inhere the power, of the contract's own accord, to effect a rate change at a future date unchecked by the regulatory scheme, it is hard to believe that it contemplated that contracts would of necessity have the effect of providing for a discontinuance of service, without further leave of the Commission.
Further, the Power Commission has from an early date taken the view that there is a continuing obligation to perform "service" imposed by the Act which outlasts the term of a seller's original contract of sale. As early as 1942 it held that an abandonment of service after the expiry of such a contract had to have Commission approval under § 7(b). United Gas Pipe Line Co., 3 F.P.C. 3, 9. This ruling was made by Commissioners who had been in office during the passage of the Act.20 It was not a fundamental ruling on a broad question of jurisdiction as to which a court might enjoy a wider latitude of review. See Phillips Petroleum Co. v. State of Wisconsin, 347 U.S. 672, 678, 74 S.Ct. 794, 796, 98 L.Ed. 1035. It was rather an early implementation and application of a detail of the statutory scheme by the Commission in a regulatory setting before it. The ruling has been followed, see Panhandle Eastern Pipe Line Co., 11 F.P.C. 167, 172, and we think this contemporaneous and consistent construction, pointing again to a distinction between the underlying "service" to the public and the contractual means by which it is implemented, is to be afforded weight in the construction we make.
Third. But against these considerations, it is urged that United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373, establishes dominant factors which impel one to the construction petitioner would put on the Act. Petitioner claims that Mobile establishes a principle that the Act (unlike many other regulatory schemes)21 in general preserves the integrity of private contracts, and that the judgment below is in conflict with that principle.
The short of the matter is that Mobile recognized that there were two sources of price and supply stability inherent in the regulatory system established by the Natural Gas Act—the provisions of private contracts and the public regulatory power. See 350 U.S., at page 344, 76 S.Ct. at page 380. Petitioner now urges an application of that decision that could make private contracts the only stabilizing factor under the Act. Not only does this reading have nothing to do with the integrity of private contracts which Mobile underwrote, but it makes a severe incursion into the sources of that stability of natural-gas prices and supply to which that decision gave confirmation. Our consideration of this, as well as the rest of petitioner's arguments, leads us to reiterate as our holding the clear implication of what we recently said in Catco: An initial application of an independent producer, to make movements of natural gas in interstate commerce, leads to a certificate of public convenience and necessity under which the Commission controls the basis on which "gas may be initially dedicated to interstate use. Moreover, once so dedicated there can be no withdrawal of that supply from continued interstate movement without Commission approval. The gas operator, although to this extent a captive subject to the jurisdiction of the Commission, is not without remedy to protect himself." 360 U.S. at page 389, 79 S.Ct. at page 1254, 3 L.Ed.2d 1312. That remedy he has, as the Court there said, in the "change" power under § 4(d) when his contract has expired or where his contract permits its use during its term. Under a similar Act, this Court has held to the same effect as we hold today. Pennsylvania Water & Power Co. v. Federal Power Comm., 343 U.S. 414, 423-424, 72 S.Ct. 843, 847-848, 96 L.Ed. 1042.
Once the power of the Commission to issue the certificate without time limitation is established, the other objections of the petitioner fall readily. It is contended that the Commission's order, by requiring the petitioner to supply gas beyond the term of its contract, may, by requiring petitioner to produce more gas than it has contemplated, offend the provision of § 1(b) of the Act that the Act does not apply "to the production or gathering of natural gas." The point was not raised before the Commission, and accordingly is not for our consideration here,22 and we might say in any event that the point is not for evaluation in this certification proceeding, but rather on the specific facts presented in the context of an abandonment application by petitioner under § 7(b), after the expiration of its contract, when and if it desires to make one. We intimate no view as to its merit.23
Other objections seem primarily directed to the point that the Commission imposed the burden of proof on the petitioner to show that the certificate should be limited, in the public interest, rather than itself taking on the burden of supporting its issuance of an unlimited certificate. There is no contention that the Commission was again indulging in the erroneous notion that it had no power to issue a limited certificate. Cf. Sunray Mid-Continent Oil Co. v. Federal Power Comm., 10 Cir., 239 F.2d 97, reversed on other grounds 353 U.S. 944, 77 S.Ct. 792, 1 L.Ed.2d 794. This procedural formulation seems to us well within the Commission's discretion as an implementation of the Act's protective provisions which we have discussed. And, though much urged by petitioner, the fact that the Commission has certificated pipeline operations despite their showing of gas resources of a shorter duration than petitioner's contract term is not inconsistent with the Commission's approach here.24 From the fact that the Commission has issued certificates in the presence of what may prove to be physical limitations on the service to be rendered under them,25 it does not follow that the Commission cannot take care lest these physical problems in the continuation of supply become further complicated by the legal certificate term limitations for which the petitioner contends.
Finally it is suggested that for various reasons which petitioner claims to be related to the public interest, it would be more advantageous if gas producers were given a free hand, after the completion of each contract, to determine for themselves whether they should continue to serve the interstate market. These considerations were not urged before the Commission, and hence we are not called upon to decide whether they would compel a different approach by the Commission to the question of time limitations in certificates, or even whether, in the light of the Act's provisions—particularly the policy expressed in § 7(b)—it would be proper for it so to rely on them. There is no contention made that petitioner demonstrated any specific circumstances in its own case indicating that, despite the Commission's general policy, the public convenience and necessity warranted a limited certificate for it.
52 Stat. 821, as amended, 15 U.S.C. §§ 717-717w, 15 U.S.C.A. §§ 717-717w.
Section 1(b) of the Act provides that to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas." 52 Stat. 821, 15 U.S.C. § 717(b), 15 U.S.C.A. § 717(b).
The text of the section provides: "No natural-gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without the permission and approval of the Commission first had and obtained, after due hearing, and a finding by the Commission that the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or that the present or future public convenience or necessity permit such abandonment." 52 Stat. 824, 15 U.S.C. § 717f(b), 15 U.S.C.A. § 717f(b).
See § 1(18) of the Interstate Commerce Act, as added by the Transportation Act of 1920, 41 Stat. 477, 49 U.S.C. § 1(18),49 U.S.C.A. § 1(18); § 214(a) of the Communications Act of 1934, as amended by the act of March 6, 1943, 57 Stat. 11, 47 U.S.C. § 214(a), 47 U.S.C.A. § 214(a).
"Under such rules and regulations as the Commission may prescribe, every natural-gas company shall file with the Commission * * * schedules showing all rates and charges for any transportation or sale subject to the jurisdiction of the Commission, and the classifications, practices, and regulations affecting such rates and charges, together with all contracts which in any manner affect or relate to such rates, charges, classifications, and services." 52 Stat. 822, 15 U.S.C. § 717c(c), 15 U.S.C.A. § 717c(c).
In pertinent part, § 5(a) of the Act provides: "Whenever the Commission, after a hearing had upon its own motion or upon complaint of any State, municipality, State commission, or gas distributing company, shall find that any rate, charge, or classification demanded, observed, charged, or collected by any natural-gas company in connection with any transportation or sale of natural gas, subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by order * * *." 52 Stat. 823, 15 U.S.C. § 717d(a), 15 U.S.C.A. § 717d(a).
"Unless the Commission otherwise orders, no change shall be made by any natural-gas company in any such rate, charge, classification, or service, or in any rule, regulation, or contract relating thereto, except after thirty days' notice to the Commission and to the public. Such notice shall be given by filing with the Commission and keeping open for public inspection new schedules stating plainly the change or changes to be made in the schedule or schedules then in force and the time when the change or changes will go into effect * * *." 52 Stat. 823, 15 U.S.C. § 717c(d), 15 U.S.C.A. § 717c(d).
"Whenever any such new schedule is filed the Commission shall have authority, either upon complaint of any State, municipality, or State commission, or upon its own initiative without complaint, at once, and if it so orders, without answer or formal pleading by the natural-gas company, but upon reasonable notice, to enter upon a hearing concerning the lawfulness of such rate, charge, classification, or service; and, pending such hearing and the decision thereon, the Commission, upon filing with such schedules and delivering to the natural-gas company affected thereby a statement in writing of its reasons for such suspension, may suspend the operation of such schedule and defer the use of such rate, charge, classification, or service, but not for a longer period than five months beyond the time when it would otherwise go into effect: Provided, That the Commission shall not have authority to suspend the rate, charge, classification, or service for the sale of natural gas for resale for industrial use only; and after full hearings, either completed before or after the rate, charge, classification, or service goes into effect, the Commission may make such orders with reference thereto as would be proper in a proceeding initiated after it had become effective. If the proceeding has not been concluded and an order made at the expiration of the suspension period, on motion of the natural-gas company making the filing, the proposed change of rate, charge, classification, or service shall go into effect. Where increased rates or charges are thus made effective, the Commission may, by order, require the natural-gas company to furnish a bond, to be approved by the Commission, to refund any amounts ordered by the Commission, to keep accurate accounts in detail of all amounts received by reason of such increase, specifying by whom and in whose behalf such amounts were paid, and, upon completion of the hearing and decision, to order such natural-gas company to refund, with interest, the portion of such increased rates or charges by its decision found not justified. At any hearing involving a rate or charge sought to be increased, the burden of proof to show that the increased rate or charge is just and reasonable shall be upon the natural-gas company, and the Commission shall give to the hearing and decision of such questions preference over other questions pending before it and decide the same as speedily as possible." 52 Stat. 823, 15 U.S.C. § 717c(e). 15 U.S.C.A. § 717c(e).
"Except in the cases governed by the provisos contained in subsection (c) of this section, a certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operation, sale, service, construction, extension, or acquisition covered by the application, if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of the Act and the requirements, rules, and regulations of the Commission thereunder, and that the proposed service, sale, operation, construction, extension, or acquisition, to the extent authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied. The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require." Added by the Act of February 7, 1942, 567 Stat. 84, 15 U.S.C. § 717f(e), 15 U.S.C.A. § 717f(e).
"In all other cases the Commission shall set the matter for hearing and shall give such reasonable notice of the hearing thereon to all interested persons as in its judgment may be necessary under rules and regulations to be prescribed by the Commission; and the application shall be decided in accordance with the procedure provided in subsection (e) of this section and such certificate shall be issued or denied accordingly: Provided, however, That the Commission may issue a temporary certificate in cases of emergency, to assure maintenance of adequate service or to serve particular customers, without notice or hearing, pending the determination of an application for a certificate, and may by regulation exempt from the requirements of this section temporary acts or operations for which the issuance of a certificate will not be required in the public interest." Added by the Act of February 7, 1942, 56 Stat. 83, 15 U.S.C. § 717f(c), 15 U.S.C.A. § 717f(c).
"No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission in the application for rehearing unless there is reasonable ground for failure so to do." Section 19(b), 52 Stat. 831, as amended, 15 U.S.C. § 717r(b), 15 U.S.C.A. § 717r(b). Petitioner did not comply with this provision.
Petitioner makes an argument based on the limitations found in a proviso to § 7(a) of the Act, the Commission's authority to require the extension of transportation facilities and the sale of gas to local distributors. 52 Stat. 824, 15 U.S.C. § 717f(a), 15 U.S.C.A. § 717f(a). But the Commission's order in no way relied on § 7(a), and accordingly this argument of petitioner must be rejected.